Chapter 8

Implementing Strategies: Marketing,

Finance/Accounting, R&D, and MIS Issues

Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Implementing Strategies

“The greatest strategy is doomed

if it’s implemented badly.”
– Bernard Reimann

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The Nature of Strategy
Implementation

Less than 10% of strategies formulated

are successfully implemented!

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Marketing Issues
Marketing decisions requiring policies
 Exclusive dealerships or multiple channels of
distribution
 Heavy, light, or no TV advertising
 To limit or not the share of business with a single
customer
 Price leader or price follower
 Offer complete or limited warranty
 Reward salespeople with commission or salary
 Advertise online or not
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Current Marketing Issues

 Advertising media

 Purpose-based marketing

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Marketing Issues

 Market segmentation

 Product positioning

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Marketing Issues
Market Segmentation

 Subdividing of a market into

distinct subsets of customers
according to needs and buying
habits

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Market Segmentation

Geographic

Demographic

Market Segment
Basis Psychographic

Behavioral

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Market Segmentation
 Market-development, product-
development, market-penetration,
and diversification strategies require
market segmentation
 Market segmentation allows
operating with limited resources;
enables small firms to compete
successfully
 Market segmentation decisions
affect marketing mix variables
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Marketing Mix Variables
 Product
 Place

 Promotion

 Price

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Marketing Issues

Product Positioning

Schematic representations that reflect

how products/services compare to
competitors’ on dimensions most
important to success in the industry

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Product Positioning Steps

1. Select key criteria

2. Diagram map
3. Plot competitors’ products
4. Look for niches
5. Develop marketing plan

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Product-Positioning Map for Banks
Personal

Bank B

Bank A Bank C
Aggressive Conservative
Bank D

Bank E

Impersonal
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Product-Positioning Map for Personal
Computers High Capability

Firm 1

Firm 2

Good Customer Bad Customer

Service Firm 4 Service

Firm 3

Low Capability
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Product-Positioning Map for
Menswear Retail Stores
Very latest, fashionable
menswear

Average specialty
chain
Low Price High Price

Average mass
Average
merchandiser or
department store
discounter

Conservative, everyday
menswear
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Product-Positioning Map for the
Rental Car Market
High Convenience

Firm 1
Firm 2

High Customer Low Customer

Loyalty Loyalty

Firm 3

Low Convenience
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Product Positioning

 Look for a vacant niche

 Don’t serve two segments with
the same strategy
 Don’t position yourself in the
middle of the map

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Finance/Accounting Issues

 Acquiring needed capital

 Developing projected financial
statements
 Preparing financial budgets

 Evaluating the worth of a business

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Finance/Accounting Issues
 Raise capital – short-term debt, long-term
debt, preferred, or common stock
 Lease or buy fixed assets
 Determine appropriate dividend payout
ratio
 LIFO, FIFO, or market-value accounting
 Timeframe of accounts receivable
 Discounts on accounts
 Amount of cash to be kept on hand

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Finance/Accounting Issues
Debt vs. Equity Decisions

 EPS/EBIT analysis
 Earnings per share/earnings before interest
and taxes

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Finance/Accounting Issues
Projected Financial Statement Analysis

 Allows an organization to examine the

expected results of various actions and
approaches

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Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements
1. Prepare income statement before
balance sheet (forecast sales)

2. Use percentage of sales method to

project CGS & expenses

3. Calculate projected net income

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Finance/Accounting Issues
Steps in Preparing Projected Financial
Statements (cont’d)
4. Subtract dividends to be paid from net income
and add remaining to retained earnings

5. Project balance sheet items beginning with

retained earnings

6. List comments (remarks) on projected

statements

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Projected Income Statement

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Projected Balance Sheet

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Finance/Accounting Issues
Financial Budget

Details how funds will be obtained

and spent for a specified period of
time

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Types of Budgets

 Cash budgets  Expense budgets

 Operating budgets
 Sales budgets
 Profit budgets
 Factory budgets
 Capital budgets
 Divisional budgets
 Variable budgets
 Flexible budgets
 Fixed budgets

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Finance/Accounting Issues
Evaluating Worth of a Business

 Central to strategy implementation –

integrative, intensive, and
diversification strategies often
implemented through acquisitions of
other firms

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 Evaluating Worth of a Business
Three Basic Approaches

1. What a firm owns

2. What a firm earns

3. What a firm will bring in the market

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Evaluating Worth of a Business

 Net worth or stockholder’s equity

 Net profit – conservative value

would be five times the firm’s

current annual profits
 Price-earnings ratio method

 Outstanding shares method

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Research & Development Issues

New products and improvement of

existing products that allow for effective
strategy implementation

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Research & Development Issues

Constraints

 Level of support constrained by resource

availability

 Technological improvements shorten

product life cycles

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 Research & Development Issues
Three Major R&D Approaches to
Implementing Strategies
1. First firm to market new technological
products

2. Innovative imitator of successful products

3. Low-cost producer of similar but less

expensive products
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Management Information
Systems (MIS) Issues

Having an effective management

information system (MIS) may be the
most important factor in differentiating
successful from unsuccessful firms.

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MIS Issues
Functions of MIS

 Information collection, retrieval, and

storage
 Keeping managers informed
 Coordination of activities among divisions
 Allows firm to reduce costs

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