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Strategic management planing for domestic and global competition 14th john robinson chapter 10

Chapter 10


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Learning Objectives

Understand how short-term objectives are used in strategy implementation

Illustrate what is meant by functional tactics and how they are used in
strategy implementation

Identify and apply the qualities of good short-term objectives to your own

Gain a general sense of what outsourcing is and how it becomes a choice in
functional tactics decisions for strategy implementation
Understand what policies are and how to use them to empower operating
Understand the use of financial reward in executive compensation
Identify different types of executive compensation and when to use each in
strategy implementation


Short-Term Objectives

Short-term objectives

measurable outcomes achievable or intended to be achieved in one year or


Short-Term Objectives (contd.)

Short-term objectives “operationalize” long-term objectives.

Short-term objectives assist strategy implementation by identifying measurable
outcomes of action plans or functional activities, which can be used to make
feedback, correction, and evaluation more relevant and acceptable

Discussion about and agreement on short-term objectives help raise issues and
potential conflicts within an organization


Ex. 10.2

Potential Conflicting Objectives and Priorities


Short-Term Objectives
Short-Term Objectives provide:


Time frame for completion

Who is responsible—Accountability


Qualities of Effective Short-Term Objectives

Cascading: From long-term objectives to short-term objectives


Qualities of Effective Short-Term Objectives (contd.)


Measurable activity
Measurable outcomes


Simple ranking
Relative priority / Weights

Linked to Long-Term Objectives

Cascading effect


Ex. 10.3 Creating Measurable Objectives


Ex. 10.4

Milliken Global Environmental Objectives


Functional Tactics

Detailed statements of the “means” or activities that will be used by a company to achieve
short-term objectives and establish competitive advantage.


Functional Tactics (contd.)

In a sense, functional tactics translate thought into action

Every value chain activity in a company executes functional tactics that support the
business’s strategy and help accomplish strategic objectives


Functional Tactics (contd.)

Functional tactics are different from business or corporate strategies in three
fundamental ways:

– Specificity
– Time horizon
– Participants who develop them


Ex. 10.5 Specificity in Functional Tactics vs. Business Strategy


Outsourcing Functional Activities

Outsourcing is obtaining work previously done by employees inside the
company from sources outside the company


Ex. 10.7

Outsourcing is Increasing


Empowering Operating Personnel: Policies

Empowerment is the act of allowing an individual or team the right and
flexibility to make decisions and initiate action


Empowering Operating Personnel: Policies (contd.)

Policies are broad, precedent-setting decisions that guide or substitute for
repetitive or time-sensitive managerial decision making.


Creating Policies That Empower

Policies establish indirect control over independent action
Policies promote uniform handling of similar activities
Policies ensure quicker decisions by standardizing answers to recurring questions
Policies institutionalize basic aspects of organization behavior


Creating Policies That Empower (contd.)

Policies reduce uncertainty in repetitive and day-to-day decision making
Policies counteract resistance
Policies offer predetermined answers to routine problems
Policies afford managers a mechanism for avoiding hasty decisions


Innovation Time Out Policy

Refers to what is usually an official company guideline, or policy, establishing an amount of
time during each work week an employee, or specific types of employees (e.g., engineers)
can at their choice set aside from their regular assignment to work on innovative, new ideas
they are thinking about.


Advantages of Formal, Written Policies


They require managers to think through the policy’s meaning, content,
and intended use
They reduce misunderstanding
They make equitable and consistent treatment of problems more likely
They ensure unalterable transmission of policies
They communicate the authorization or sanction of policies more clearly
They supply a convenient and authoritative reference
They systematically enhance indirect control and organization wide
coordination of the key purposes of policies


Bonus Compensation Plans

Company shareholders typically believe that the goal of a bonus compensation
plan is to motivate executives and key employees to achieve maximization of
shareholder wealth.
However, the goal of shareholder wealth maximization is not the only goal that
executives may pursue.
An executive compensation plan that contains a bonus component can be used
to orient management’s decision making toward the owners’ goals.


Types of Bonus Compensation Plans

Stock options

The right, or “option” to purchase company stock at a fixed
price at some future


Bonus Compensation Plans (contd.)

Restricted stock

Stock given to an employee who is prohibited or “restricted” from selling
the stock for a certain time period and not at all if they leave the company
before that time period.


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