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CHAPTER 8 • IMPLEMENTING STRATEGIES: MARKETING, FINANCE/ACCOUNTING, R&D, AND MIS ISSUES 279

Key Terms and Concepts

Cash Budget (p. 272) Price-Earnings Ratio Method (p. 275)
EPS/EBIT Analysis (p. 262) Product Positioning (p. 257)
Financial Budget (p. 271) Projected Financial Statement Analysis (p. 266)
Management Information System (MIS) (p. 277) Purpose-Based Marketing (p. 257)
Market Segmentation (p. 257) Research and Development (R&D) (p. 275)
Marketing Mix Variables (p. 258) Tweet (p. 255)
Multidimensional Scaling (p. 260) Vacant Niche (p. 260)
Outstanding Shares Method (p. 275) Wikis (p. 253)

Issues for Review and Discussion

1. Review a company’s Web site that you are familiar with. Discuss the extent to which that organi-
zation has instituted the new principles of marketing according to Parise, Guinan, and Weinberg.
2. For companies in general, identify and discuss three opportunities and three threats
associated with social networking activities on the Internet.
3. Do you agree or disagree with the following statement? “Television viewers are passive
viewers of ads, whereas Internet users take an active role in choosing what to look at—
so customers on the Internet are tougher for marketers to reach.” Explain your reasoning.
4. How important or relevant do you believe “purpose-based marketing” is for organizations
today?
5. Why is it essential for organizations to segment markets and target particular groups of
consumers?
6. Explain how and why the Internet makes market segmentation easier.
7. A product-positioning rule given in the chapter is that “When there are only two competitors,
the middle becomes the preferred strategic position.” Illustrate this for the cruise ship
industry, where two firms, Carnival and Royal Caribbean, dominate. Illustrate this for the
commercial airliner building industry, where Boeing and Airbus dominate.
8. How could/would dividends affect an EPS/EBIT analysis? Would it be correct to refer
to “earnings after taxes, interest, and dividends” as retained earnings for a given year?
9. In performing an EPS/EBIT analysis, where does the first row (EBIT) numbers come from?
10. In performing an EPS/EBIT analysis, where does the tax rate percentage come from?
11. For the Litten Company in Table 8-8, what would the Retained Earnings value have to have
been in 2009 on the balance sheet, given that the 2010 NI-DIV value was $4?
12. Show algebraically that the price earnings ratio formula is identical to the number of shares
outstanding times stock price formula. Why are the values obtained from these two methods
sometimes different?
13. In accounting terms, distinguish between intangibles and goodwill on a balance sheet. Why
do these two items generally stay the same on projected financial statements?
14. What are the three major R&D approaches to implementing strategies? Which approach
would you prefer as owner of a small software company? Why?
15. Suppose your company has just acquired a firm that produces battery-operated lawn mowers,
and strategists want to implement a market-penetration strategy. How would you segment the
market for this product? Justify your answer.
16. Explain how you would estimate the total worth of a business.
17. Diagram and label clearly a product-positioning map that includes six fast-food restaurant
chains.
18. Explain why EPS/EBIT analysis is a central strategy-implementation technique.
19. How would the R&D role in strategy implementation differ in small versus large organizations?
20. Discuss the limitations of EPS/EBIT analysis.
21. Explain how marketing, finance/accounting, R&D, and management information systems
managers’ involvement in strategy formulation can enhance strategy implementation.
22. Consider the following statement: “Retained earnings on the balance sheet are not monies
available to finance strategy implementation.” Is it true or false? Explain.
23. Explain why projected financial statement analysis is considered both a strategy-formulation
and a strategy-implementation tool.