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

• 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 t

Chapter 10

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• 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

Short-Term Objectives

• Short-term objectives

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 organization

• 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

Ex 10.2 Potential Conflicting Objectives and Priorities

5

Qualities of Effective Short-Term Objectives

Qualities of Effective Short-Term Objectives

• Relative priority / Weights

• Linked to Long-Term Objectives

• Cascading effect

Ex 10.3 Creating Measurable Objectives

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Ex 10.4 Milliken Global Environmental Objectives

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

13

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

15

Ex 10.7 Outsourcing is Increasing

Empowering Operating Personnel: Policies

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

17

Empowering Operating Personnel: Policies

(contd.)

• Policies are broad, precedent-setting decisions

that guide or substitute for repetitive or sensitive managerial decision making.

time-Creating Policies That Empower

• Policies establish indirect control over

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

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

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

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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Bonus Compensation Plans (contd.)

• Golden handcuffs

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

installments).

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.

Key Terms (contd.)

• Short-term objective

• Social computing

• Social Computing Guidelines

• Stock options