Strategic management planning for domestic and global competition 14th ed pearce robinson chapter 10

Learning Objectives• Understand how short-term objectives are used in strategy implementation • Identify and apply the qualities of good short-term objectives to your own experiences • I

Chapter 10

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Learning Objectives

• Understand how short-term objectives are used in strategy implementation

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

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

• 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 personnel

• Understand the use of financial reward in executive compensation

• Identify different types of executive compensation and when to use each in strategy implementation

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Short-Term Objectives

• Short-term objectives

• measurable outcomes achievable or intended

to be achieved in one year or less.

3

Short-Term Objectives (contd.)

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

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

Ex 10.2 Potential Conflicting Objectives and Priorities

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Qualities of Effective Short-Term Objectives

Qualities of Effective Short-Term Objectives

• Relative priority / Weights

• Linked to Long-Term Objectives

• Cascading effect

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Ex 10.3 Creating Measurable Objectives 9

Ex 10.4 Milliken Global Environmental Objectives

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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

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Functional Tactics (contd.)

• Functional tactics are different from business

or corporate strategies in three fundamental ways:

– Specificity– Time horizon– Participants who develop them

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Ex 10.5 Specificity in Functional Tactics vs Business

Strategy 14

Outsourcing Functional Activities

• Outsourcing is obtaining work previously

done by employees inside the company from sources outside the company

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Ex 10.7 Outsourcing is Increasing

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Empowering Operating Personnel: Policies

individual or team the right and flexibility to make decisions and initiate action

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Empowering Operating Personnel: Policies

(contd.)

• Policies are broad, precedent-setting

decisions that guide or substitute for repetitive or time-sensitive managerial decision making.

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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

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Creating Policies That Empower

(contd.)

• Policies reduce uncertainty in repetitive and day decision making

day-to-• Policies counteract resistance

• Policies offer predetermined answers to routine problems

• Policies afford managers a mechanism for avoiding hasty decisions

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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

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Advantages of Formal, Written Policies

1 They require managers to think through the policy’s meaning, content, and intended use

2 They reduce misunderstanding

3 They make equitable and consistent treatment of problems more likely

4 They ensure unalterable transmission of policies

5 They communicate the authorization or sanction of policies more clearly

6 They supply a convenient and authoritative reference

7 They systematically enhance indirect control and organization wide coordination of the key purposes of policies

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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.

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Types of Bonus Compensation Plans

• Stock options

 The right, or “option” to purchase

company stock at a fixed price at some future

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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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Bonus Compensation Plans (contd.)

• Golden handcuffs

compensation is deferred (either a restricted stock plan or bonus income deferred in a series of annual

installments).

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Bonus Compensation Plans (contd.)

• Golden parachutes

guarantees a substantial cash payment if the executive quits, is fired, or simply

retires.

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Bonus Compensation Plans (contd.)

• Cash bonuses

cash bonuses.

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Key Terms (contd.)

• Short-term objective

• Social computing

• Social Computing Guidelines

• Stock options

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