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Unit 7 : Implementing Strategies Marketing / Finance and Accounting -…
Unit 7 : Implementing Strategies Marketing / Finance and Accounting
Strategic Marketing Issues
To be a price leader or a price follower
To offer a complete or limited warranty
To limit ( or not ) the share of business done with a single customer
Rely on single customer or multiple?
To extend an existing product line or create a new line of product
To use exclusive dealership or multiple channels of distribution
One distributor within a definite region or multiple
To use heavy, light, or no TV advertising VS online advertising
How to make advertisement more interactive & to be more effective
Three Key Marketing
Segment markets
effectively.
Subdividing of a market into distinct / separate subsets of customers according to needs and buying habits
It helps strategies such as market development, product development, market penetration, and diversification to increase sales through new markets and product.
It directly affect the market mix variables ( 4ps )
Product
Brand name
Packaging
Style
Product Line
Features and options
Warranty
Service Level
Other Services
Quality
Price
Discount
Allowances
Level
Payment Terms
Place
Outlet Location
Sales Territories
Distribution Coverage
Inventory Levels and Location
Distribution Channels
Transportation Carriers
Promotion
Personal Selling
Sales Promotion
Advertising
Publicity
Bases For Market Segmentation
Demographic
Income
Occupation
Family Size
Education
Gender
Background
Age
Psychographic
Social Class ( Lower / Middle / Upper )
Usage Rate
Geographic
Regions ( North / South / West / East )
City Size ( Urban / Rural )
Develop and use
product-positioning
.
Firm can target particular customer group by finding out what customers want & expect
Product Position / Perceptual Mapping
It develop schematic representation that reflect how your product or services compare to competitors on the most important dimensions to success in the industry
Steps that Involved
Plot major competitors' product or services in the resultant 4-quadrant matrix
Identify areas in the positioning map where the company's products or services could be most competitive in the given target market.
Diagram a two-dimensional product-positioning map with specified criteria on each axis. ( Y-axis = Price / X-axis = Quality )
Develop a marketing plan to position the company's product or services appropriately
Select the key criteria that differentiate the products or services in the industry
Engage customers in
social media
.
Enable customers to interact through social media
Hire social media managers to responds to customer's comments.
Get customers involved in the company website and seek suggestion on product, customer service and ideas.
Successful strategy implementation - firm know what people are saying about the firm and its product
If positive comment - create a valuable content / review that might invite potential customers
If negative comment - embrace the opinion, desires and feeling, and improve any weaknesses
How to best take advantage of social media conservation about the company and industry
Strategic Finance & Accounting Issues
Steps Involved
Perform corporate valuation ( in the events an offer is received or a rival firm is to be acquired )
The valuation of a firm's worth is based on financial facts, common sense and good judgement
Different valuation methods will yield different totals for a firm's worth
Retrenchment and divestiture strategies also may result in the sale of a division or the firm itself
Required both quantitative and qualitative skills
Sellers want to
sell high
/ Buyer want to
buy low
Corporate Value Methods ( 4 types )
Seeks the method that produce larger values
Net Income Method = Net Income * 5
Price-Earnings Ratio Method = ( Stock Price / EPS ) * Net Income
The Net Worth Method = Total Shareholders' Equity ( SE ) - Intangible Assets
Outstanding Share Methods = Share Outstanding * Share Price
Evaluating the worth / value of a business is important in strategy implementation, because numerous strategies are often implemented by acquiring other firms
Analyse financial ratios
Financial Ratio examined based on :
How they compare to industry norms
How they compare with key competitors
How they change over time
Types of Ratio ( 5 types )
Activity Ratios
Fixed Assets Turnovers
Total Assets Turnover
Accounts Receivable Turnover
Average Collection Period
Inventory Turnover
Profitability Ratio
Return On Total Assets ( ROA )
Return on Stockholders' Equity ( ROE )
Net Profit Margin
Earning Per Share ( EPS )
Operating Profit Margin
Price- Earnings Ratio
Gross Profit Margin
Leverage / Debt Ratio
Long-Term Debt-To-Equity Ratio
Times-Interest-Earned Ratio
Debt-To-Equity Ratio
Growth Ratios
Net Income
Earnings Per Share ( EPS )
Sales
Dividends Per Share
Liquidity Ratio
Current Ratio
Quick Ratio
Develop projected / forecast financial statement ( Show expected impact of recommendations )
It is a techniques that allows an organisation to examine the expected result of various action and approaches.
Can be used to forecast the impact of various implementation decisions. E.g. : increase promotion expenses to support market development, increase R7D expenses to support product development
Allows an organisation to compute projected financial ratios under various and industry averages. E.g. : implementation decisions - when compared to prior years and industry averages, financial ratios provide valuable insights.
7-steps involved process
Calculate the projected net income
Subtract from the net income any dividends to be paid for that year. The remaining net income = projected retained earning.
Project BS item, begin with projected retained earning + prior year and forecast stockholders' equity, long-term liabilities, current liability, total liabilities, total assets, fixed assets and current assets.
Use the cash account as the plug figure: to make assets = liability + equity
Use the percentages-of-sales methods to project cost of goods sold and the expenses items in IS
Prepare projected IS before BS
List commentary ( remarks ) on the projected statement for any adjustment made.
Management Initial Public Offering (IPOs) and corporate bonds
Go public with an Initial Public Offering ( IPOs )
Dilutes / reduce the owner's control of the firm
Initial cost can be too high ( lawyers, accountant, and underwriters costs )
Going public
means selling off a % of ownership of a company to other to raise capital
Reason : develop new products, build factory, expand, grow, market products and services.
Issues corporate bonds
This is similar to going to the bank and borrowing money, except that with bonds, the company obtain funds from investors rather than banks.
Reason : Acquisition of assets, fund various strategies, refinance debts,
Determine Capital Structure ( Get capital via debt / equity [ issue share ]? )
The proportion of debt to equity on a SOFP / BS is often referred to as a firm's capital structure
Performing an EPS / EBIT analysis is a common way to determine the appropriate capital structure needed
Accounting Term Explains
Shares authorised = total no. of share that is issued by the company
EBIT = Earnings Before Tax
Shares Outstanding = total no. that they can issues
EBIT = Earning Before Interest and Taxes / Operating Income
EPS = Earning Per Share
EAT = Earnings After Tax
EPS / EBIT Analysis
It is used to determining whether debt, stock, or a combination of the two is the best alternative for raising capital to implement strategies
Involves an examination of the examination fot he impact that debt VS stock financial has on EPS under various expectation for EBIT
Purpose : to determine whether all debt, all stock, combination of both yield the highest EPS values for the firm..
Involved 3-steps process
Computation in performing EPS / EBIT analysis
EPS = Net Income / Number of Share
Plot in EPS / EBIT Chart
Y-Axis = EPS ($)
X-axis = EBIT ( in million )
Plot DF = Debt Financing / CSF = Common Stock Financing / CF = Combo Financing
Input data needed for EPS / EBIT Analysis
Interest Rate (%)
Tax Rate (%)
EBIT Range
$ amount of Capital Needed
Stock / Share Price
Shares Outstanding