Implementing Strategies ( Part 2 )

Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, & MIS Issues ,[object Object],[object Object],[object Object],[object Object],[object Object]

Chapter Outline The Nature of Strategy Implementation Marketing Issues Finance/Accounting Issues

Chapter Outline ( cont’d ) Research & Development (R&D) Issues Management Information Systems (MIS) Issues

[object Object],[object Object],Implementing Strategies

[object Object],The Nature of Strategy Implementation

[object Object],[object Object],[object Object],[object Object],Nature of Strategy Implementation Low Success Rate – Strategy Implementation

[object Object],[object Object],[object Object],[object Object],Nature of Strategy Implementation Successful Strategy Implementation

[object Object],Marketing Issues

[object Object],[object Object],[object Object],[object Object],[object Object],Marketing Issues Marketing Decisions requiring policies

[object Object],[object Object],Marketing Issues Centrally important to Implementation

[object Object],Marketing Issues Market Segmentation

[object Object],[object Object],[object Object],[object Object],Marketing Issues Market Segmentation

[object Object],[object Object],[object Object],[object Object],[object Object],Marketing Issues Market Segmentation

Marketing Mix – Component Factors Service level Warranty Transportation carriers Product line Inventory levels/locations Packaging Publicity Sales territories Brand name Payment terms Sales promotion Outlet location Style Discounts & allowances Personal selling Distribution coverage Features Level Advertising Distribution channels Quality Price Promotion Place Product

Marketing Issues Market Segment Basis Psychographic Behavioral Geographic Demographic

[object Object],[object Object],[object Object],[object Object],[object Object],Marketing Issues Geographic

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Marketing Issues Demographic

[object Object],[object Object],[object Object],Marketing Issues Psychographic

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Marketing Issues Behavioral

[object Object],Marketing Issues Product Positioning

Marketing Issues Product Positioning Customer Wants Customer Needs

Product Positioning Steps Product Positioning Steps 2. Diagram Map 1. Select Key Criteria ,[object Object],[object Object],4. Look for niches 5. Develop Marketing Plan

Product Positioning Map Low Convenience High Customer Loyalty Low Customer Loyalty High Convenience Firm 1 • • Firm 2 • Firm 3 Rental Car Market Low Customer Loyalty High Convenience Firm 1 • • Firm 2 • Firm 3 Rental Car Market

[object Object],[object Object],[object Object],[object Object],Marketing Issues Product Positioning as Strategy Implementation Tool

[object Object],Finance/Accounting Issues

[object Object],[object Object],[object Object],[object Object],Finance/Accounting Issues Essential for implementation

[object Object],[object Object],[object Object],Finance/Accounting Issues Decisions based on Finance/Accounting

[object Object],[object Object],[object Object],[object Object],Finance/Accounting Issues Decisions based on Finance/Accounting

[object Object],[object Object],Finance/Accounting Issues Capital acquisition to implement strategies

[object Object],[object Object],Finance/Accounting Issues Debt vs. Equity Decisions

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],EPS-EBIT Analysis (in $millions) Heinz Company – Year End 2001

EPS-EBIT Analysis (in $millions) – Heinz Company 2.05 4.12 2.06 4.17 2.04 4.08 EPS 357.5 357.5 350 350 362.5 362.5 # Shares outstanding 733 1473 721 1461 740 1480 EAT 257 517 254 514 260 520 Taxes 26% 990 1990 975 1975 1000 2000 EBT 10 10 25 25 0 0 Interest (5%) $1000 $2000 $1000 $2000 $1000 $2000 EBIT ($982.4 in 2001) Low High Low High Low High Financing Financing Stock Financing

[object Object],[object Object],Finance/Accounting Issues EPS-EBIT Analysis Heinz

[object Object],Finance/Accounting Issues Projected Financial Statements

[object Object],[object Object],[object Object],Finance/Accounting Issues Steps in Preparing Projected Financial Statements

[object Object],[object Object],[object Object],Finance/Accounting Issues Steps in Preparing Projected Financial Statements (cont’d)

Projected Income Statement for Litten Company (in millions) 4.75 4 Retained Earnings 5.00 2 Dividends 9.75 6 Net Income 50% rate 9.75 6 Taxes 19.50 12 EBT 3.00 3 Interest 22.50 15 EBIT 5% of sales 7.50 5 Administrative Expense 10% of sales 15.00 10 Selling Expense 45.00 30 Gross Margin 70% of sales 105.00 70 Cost of Goods Sold 50% increase 150.00 100 Sales Projected Income Statement Remarks Projected Year 2005 Prior Year 2004

[object Object],Finance/Accounting Issues Financial Budget

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Finance/Accounting Issues Types of Budgets

[object Object],[object Object],[object Object],[object Object],Finance/Accounting Issues Types of Budgets

[object Object],Finance/Accounting Issues Evaluating Worth of a Business

[object Object],[object Object],[object Object],Finance/Accounting Issues Evaluating Worth of a Business: 3 Basic Approaches

[object Object],Research & Development Issues

[object Object],[object Object],Research & Development Issues Constraints

[object Object],[object Object],[object Object],Research & Development Issues 3 Major R&D approaches to implementing strategies

[object Object],Management Information Systems (MIS) Issues

[object Object],[object Object],[object Object],[object Object],MIS Issues Functions of MIS

[object Object],For Review (Chapter 8) Cash Budget Marketing Mix Variables EPS/EBIT Analysis Outstanding Shares Method Management Information Systems (MIS) Price-Earnings Ratio Method Market Segmentation Product Positioning

[object Object],For Review (Chapter 8) Projected Financial Statement Analysis Research & Development (R&D) Vacant Niche

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Implementing Strategies ( Part 2 )