Strategy Management

Topics: Balance sheet, Financial statements, Marketing Pages: 10 (2169 words) Published: August 24, 2013

CHAPTER 8

IMPLEMENTING STRATEGIES: MARKETING, FINANCE/ACCOUNTING, R&D, AND MIS ISSUES

CHAPTER OVERVIEW

Strategies have no chance of being implemented successfully when organizations do not market goods and services well, when firms cannot raise needed working capital, when firms produce technologically inferior products, or when firms have a weak information system. Chapter 8, therefore, examines marketing, finance/accounting, R&D, and MIS issues that are central to effective strategy implementation. Special topics include market segmentation, market positioning, evaluating the worth of a business, determining to what extent debt and/or stock should be used as a source of capital, developing projected financial statements, contracting R&D outside the firm, and creating an information support system. Manager and employee involvement and participation are essential for success in marketing, finance/accounting, R&D, and management information systems activities.

I.THE NATURE OF STRATEGY IMPLEMENTATION

A.Implementation Is a Challenge

1.Less than 10 percent of strategies formulated are successfully implemented. There are many reasons for this low success rate, including failing to segment markets appropriately, paying too much for a new acquisition, falling behind competitors in R&D, and not recognizing the benefit of computers in managing information.

2. Strategy implementation directly affects the lives of plant managers, division managers, department managers, sales managers, project managers, personnel managers, staff managers, supervisors, and all employees.

B. The Strategy Implementation Stage of the Strategic Management Process is shown in Figure 8-1.

II. MARKETING ISSUES

A.Marketing decisions may require policies:

1. To use exclusive dealerships or multiple channels of distribution. 2. To use heavy, light, or no TV advertising.
3. To limit (or not) the share of business done with a single customer. 4. To be a price leader or follower.
5. To offer a complete or limited warranty.
6. To reward salespeople based on straight salary, straight commission, or a combination salary/commission. 7. To advertise online or not.
8. To protect consumer privacy/designate web policies.

a. A marketing issue of increasing concern to consumers today is the extent to which companies can track individuals’ movements on the Internet and are even be able to identify the individual by name and e-mail address.

b.Recently completed research reveals that Web advertising dollars spent by businesses will increase to 27 percent of total advertising expenditures by 2002, up from 17 percent in 1999.

B.Market Segmentation

1.Market segmentation is widely used in implementing strategies, especially for small and specialized firms. Market segmentation can be defined as the subdividing of a market into distinct subsets of customers according to needs and buying habits.

2.Market segmentation is an important variable in strategy implementation for at least three major reasons.

a.First, strategies such as market development, product development, market penetration, and diversification require increased sales through new markets and products.

b.Second, market segmentation allows a firm to operate with limited resources because mass production, mass distribution, and mass advertising are not required.

c.Finally, market-segmentation decisions directly affect marketing mix variables: product, place, promotion, and price, as indicated in Table 8-1.

3. Geographic and demographic bases for segmenting markets are the most commonly employed as illustrated in Table 8-2.

C.Product Positioning

1.After segmenting markets so that the firm can target particular customer...
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