ch 9 -1 copyright © 2011 pearson education. strategic management: concepts and cases arab world...

Strategic Management: Concepts and CasesArab World EditionFred R. DavidAbbas J. AliAbdulrahman Y. Al-Aali

Chapter 9: Implementing Strategies:Marketing, Finance / Accounting, R&D, and MIS Issues


Chapter Outline


• The Nature of Strategy Implementation

• Marketing Issues

• Finance/Accounting Issues

• Research & Development (R&D) Issues

• Management Information Systems (MIS) Issues

“The greatest strategy is doomed if it’s implemented badly.” – Bernard Reimann

Implementing Strategies

“Without planning and integrated studies for our investment projects, we certainly lose our competitive edge.” – Abdul Rahman Bin Ali Al Jeraisy Chairman, Al Jeraisy Group



Source: Adapted from Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 3 (June 1988) 40.

The Nature of Strategy Implementation


• Strategy implementation means change

• Less than 10% of strategies formulated are successfully implemented!

• Failing to segment markets appropriately

• Paying too much for a new acquisition

• Falling behind competition in R&D

• Not recognizing benefit of computers in managing information


Reasons for the low success rate of strategy implementation:


• Market goods & services well

• Raise needed working capital

• Produce technologically sound goods

• Sound information systems


Ways to successful Strategy Implementation:


Marketing Issues


Marketing variables affect success/failure of strategy implementation

Marketing decisions requiring policies:

• Whether to use exclusive dealerships – multiple channels of distribution

• Whether to use heavy, light, or no TV advertising

• Whether to reward sales people

• Whether to be a price leader or price follower

• Whether to advertise online or not

Marketing Issues


Centrally important to implementation:

• Market segmentation

• Product positioning

Marketing Issues


Market SegmentationSubdividing of a market into distinct subsets of customers according to needs and buying habits

Marketing Issues


Things that directly affect marketing mix variables:

• Product• Place• Promotion• Price

Marketing Issues

Market Segmentation (cont’d)


Marketing Issues

Market SegmentBasis PsychographicPsychographic

BehavioralBehavioral

GeographicGeographic

DemographicDemographic


Marketing Issues


Product PositioningSchematic representations that reflect how products/services compare to competitors’ on dimensions most important to success in the industry

Product Positioning Steps

Product-Positioning Steps

2. Diagram Map

1. Select Key Criteria

3. Plot Competitors’ Products

4. Look for Niches

5. Develop Marketing Plan


• Look for vacant niche

• Avoid sub optimization

• Don’t serve 2 segments with same strategy

• Don’t position in the middle of the map

Marketing Issues

Product Positioning as Strategy Implementation Tool


Finance/Accounting Issues


Central to strategy implementation

• Acquiring needed capital• Developing projected financial statements• Preparing financial budgets• Evaluating worth of a business


Essential for Implementation


• Raise capital – short-term, long-term, preferred, or common

stock

• Lease or buy fixed assets

• Determine appropriate dividend payout ratio

• Establish % discount on accounts for terms

• Determine the amount of cash kept on hand


Decisions Based on Finance/Accounting


• Debt• Equity


Capital Acquisition to Implement Strategies


Projected Financial StatementsAllow an organization to examine the expected results of various actions and approaches



Financial BudgetDetails how funds will be obtained and spent for a specified period of time




• Cash budgets• Operating budgets• Sales budgets• Profit budgets• Factory budgets

• Expense budgets• Divisional budgets• Variable budgets• Flexible budgets• Fixed budgets

Types of Budgets


1. What a firm owns

2. What a firm earns

3. What a firm will bring in the market


Three Basic Approaches:


Evaluating Worth of a Business

Research & Development Issues


New products and improvement of existing products that allow for effective strategy implementation.

• Level of support constrained by resource availability• Technological improvements shorten product life cycles


Constraints


1. 1st firm to market new technological products

2. Innovative imitator of successful products

3. Low-cost producer of similar but less expensive products


Three Major R&D Approaches to Implementing Strategies


Management Information Systems (MIS) Issues


Information is the basis for understanding the firm. It’s one of the most important factors differentiating successful from unsuccessful firms.

• Information collection, retrieval/ feedback , and storage

• Keeping managers informed

• Coordination of activities among divisions

• Allow firm to reduce costs

MIS IssuesFunctions of MIS


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