Chapter 8:Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues

Question 1

The Nature of Strategy Implementation

Answer 1

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

Question 2

Low Success Rate – Strategy Implementation

Answer 2

• 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

Question 3

Successful Strategy Implementation

Answer 3

• Market goods & services well
• Raise needed working capital
• Produce technologically sound goods
• Sound information systems

Question 4

Marketing decisions requiring policies

Answer 4

• 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

Question 5

The New Principles of Marketing

Answer 5

• Don’t Just talk at consumers- work with them through the marketing process
• Give consumers a reason to participate
• Listen to- and join- the conversation outside the company’s website
• Resist the temptation to sell, sell, sell. Instead attract, attract, attract
• Don’t control online conversations, let it flow freely
• Find a marketing technologists, a person with three excellent skill sets (marketing, technology and social interaction
• Embrace instant messaging

Question 6

Current Marketing Issues

Answer 6

• Advertising media
• Purpose-based marketing
• Market segmentation
• Product positioning

Question 7

Market Segmentation

Answer 7

• Subdividing of a market into distinct subsets of customers according to needs and buying habits
• 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

Question 8

Market Segment Basis

Answer 8

• Geographic
• Demographic
• Physcographic
• Behavioral

Question 9

Marketing Mix Variables

Answer 9

• Product
• Price
• Place
• Promotion

Question 10

Marekting Mix- Component Factors: Product

Answer 10

• Quality
• Features
• Style
• Brand Name
• Packaging
• Product Line
• Warranty
• Service Level

Question 11

Marketing Mix- Component Factors: Price

Answer 11

• Level
• Discount and allowances
• Payment Terms

Question 12

Marketing Mix – Component Factors: Place

Answer 12

• Distribution Channels
• Distribution Coverage
• Outlet Location
• Sales territories
• Inventory levels/locations
• Transportation carriers

Question 13

Marketing Mix – Component Factors: Promotion

Answer 13

• Advertising
• Personal Selling
• Sales Promotion
• Publicity

Question 14

Product Positioning

Answer 14

• Schematic representations that reflect how products/services compare to competitors’ on dimensions most important to success in the industry
• Look for a vacant niche
• Don’t serve two segments with the same strategy
• Don’t position yourself in the middle of the map

Question 15

Product Positioning Steps

Answer 15

• Select key criteria
• Diagram map
• Plot competitors’ products
• Look for niches
• Develop marketing plan

Question 16

Finance/Accounting Issues

Answer 16

• Central to strategy implementation
• Acquiring needed capital
• Developing projected financial statements
• Preparing financial budgets
• Evaluating the worth of a business
• 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

Question 17

Debt vs. Equity Decisions

Answer 17

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

Question 18

Projected Financial Statement Analysis

Answer 18

• Allows an organization to examine the expected results of various actions and approaches

Question 19

Steps in Preparing Projected Financial Statements

Answer 19

• Prepare income statement before balance sheet (forecast sales)
• Use percentage of sales method to project CGS & expenses
• Calculate projected net income
• Subtract dividends to be paid from net income and add remaining to retained earnings
• Project balance sheet items beginning with retained earnings
• List comments (remarks) on projected statements

Question 20

Financial Budget

Answer 20

• Details how funds will be obtained and spent for a specified period of time

Question 21

Evaluating Worth of a Business

Answer 21

• Central to strategy implementation – integrative, intensive, and diversification strategies often implemented through acquisitions of other firms

Question 22

Evaluating Worth of a Business- Three Basic Approaches

Answer 22

1. What a firm owns
2. What a firm earns
3. What a firm will bring in the market

Question 23

Evaluating Worth of a Business cont’d.

Answer 23

• 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

Question 24

Research & Development Issues

Answer 24

• New products and improvement of existing products that allow for effective strategy implementation
• Constraints:
• Level of support constrained by resource availability
• Technological improvements shorten product life cycles

Question 25

Three Major R&D Approaches to Implementing Strategies

Answer 25

• First firm to market new technological products
• Innovative imitator of successful products
• Low-cost producer of similar but less expensive products

Question 26

Management Information Systems (MIS) Issues

Answer 26

• Having an effective management information system (MIS) may be the most important factor in differentiating successful from unsuccessful firms.

Question 27

Functions of MIS

Answer 27

• Information collection, retrieval, and storage
• Keeping managers informed
• Coordination of activities among divisions
• Allows firm to reduce costs