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CHAPTER 9. Implementing Strategy Through Short-Term Objectives, Functional Tactics, Reward System, and Employee Empowerment. Chapter Topics. Short-Term Objectives Functional Tactics that Implement Business Strategies Empowering Operating Personnel: The Role of Policies

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chapter 9

CHAPTER 9

Implementing Strategy Through Short-Term Objectives, Functional Tactics, Reward System, and Employee Empowerment

chapter topics
Chapter Topics
  • Short-Term Objectives
  • Functional Tactics that Implement Business Strategies
  • Empowering Operating Personnel: The Role of Policies
  • Executive Bonus Compensation Plans
strategy implementation
Strategy Implementation

“Planning their Work”

“Working their Plan”

Strategy Formulation

Strategy Implementation

strategy implementation1
Strategy Implementation

Identify short-term objectives

Communicate policies to empower people

Initiate specific functional tactics

Design effective rewards

what are short term objectives
What are Short-Term Objectives?

Provide specific guidance for what is to be done, translating vision into action

role of short term objectives in implementing strategy
Role of Short-Term Objectives in Implementing Strategy
  • “Operationalize” long-term objectives
  • Raise issues and potential conflicts requiring coordination to avoid dysfunctional consequences
  • Identify measurable outcomes of functional activities to be used to make feedback, correction, and evaluation more relevant and acceptable
ex 9 1 potential conflicting objectives and priorities
Ex. 9-1: Potential Conflicting Objectives and Priorities

Chief Executive Officer

Manufacturing

Finance and Accounting

Marketing

  • Distribution channels
  • Customer service
  • Inventory obsolescence
  • Communications and data processing
  • Carrying inventory
  • Production supply alternatives
  • Warehousing
  • Transportation

Responsibilities

  • More inventory
  • Frequent short runs
  • Fast order processing
  • Fast delivery
  • Field warehousing
  • Less inventory
  • Long production runs
  • Cheap order processing

Objectives

  • Lowest cost routing
  • Less warehousing
  • Plant warehousing
relationship of action plans to short term objectives
Relationship of Action Plans to Short-Term Objectives

Specificity – Identify functional activities to be undertaken to build competitive advantage

Identify who is responsible for each action in the plan

Provide a clear time frame for completion

qualities of effective short term objectives
Qualities of Effective Short-Term Objectives

Measurable

Linked to long-term objectives

Priorities

value added benefits of short term objectives
Value-Added Benefits of Short-Term Objectives

Give operating personnel a better understanding of their role in a firm’s mission

Provide basis for accomplishing conflicting concerns

Provide basis for strategic control

Motivation – clarify personnel and group roles in a firm’s strategies

what are functional tactics
What are Functional Tactics?

Key, routine activities that must be undertaken in each functional area to provide the business’s products and services

Translate grand strategies into action designed to accomplish specific short-term objectives

ex 9 4 functional tactics at general cinema corporation
Ex. 9-4: Functional Tactics at General Cinema Corporation

Functional Tactics

Functional Tactics – Marketing

Seek only first-run films by outbidding competition in each local market; provide primarily family-oriented movies , and maintain an admission price only slightly above that of local competition

Soft drink bottling

Corporate Strategy

Business Strategies

Corporate Strategy

Achieve 15-20 percent annual growth through existing businesses and carefully selected diversification into leisure-oriented, consumer-oriented product/service businesses to absorb increasing cash flow from theater and soft drink bottling operations

Concentration and market development selective

Maintain and selectively expand leading nationwide position in the movie exhibition industry to provide positive cash flow for corporate diversification

Functional Tactics – Finance

Use lease or sale and leaseback arrangements of each theater to maximize cash flow for corporate expansions; seek profitability thru’ volume, not higher ticket prices

Movie exhibition

Functional Tactics – Operations

Use multiscreen facilities with minimal maintenance requirements and a joint service area to serve each minitheater

Sunkist products

business strategies and functional tactics
Business Strategies and Functional Tactics

… are different in three ways

Time horizon

Participants who develop them

Specificity

differences between business strategies and functional tactics
Differences Between Business Strategies and Functional Tactics
  • General managers establish long-term objectives and overall business strategies
  • Operating managers establish short-term objectives and functional tactics leading to business level success
what are policies
What Are Policies?

Policies are directives designed to guide the thinking, decisions, and actions of managers and their subordinates in implementing a firm’s strategy

role of policies in implementing strategy
Role of Policies in Implementing Strategy
  • Previously referred to as standard operating procedures, policies increase managerial effectiveness by
    • Standardizing many routine decisions
    • Clarifying discretion managers and employees can exercise in implementing functional tactics
  • Should be derived from functional tactics with key purpose of aiding strategy execution
empowerment and policies
Empowerment and Policies

Training, self-managed work groups, eliminating whole levels of management in organizations, and aggressive use of automation are some of the ways of empowering employees. At the heart of empowerment is the need to ensure that decision making is consistent with the mission, strategy, and tactics of the business while at the same time allowing considerable latitude to operating personnel. One way operating managers do this is through the use of policies

why policies empower people
Why Policies Empower People
  • Establish indirect control over independent action by clearly stating how things are to be done now
  • Promote uniform handling of similar activities
  • Ensure quicker decisions by standardizing answers to previously answered questions
  • Institutionalize basic aspects of organizational behavior
why policies empower people1
Why Policies Empower People
  • Reduce uncertainty in repetitive and day-to-day decision making
  • Counter resistance to or rejection of chosen strategies by organization members
  • Offer predetermined answers to routine problems
  • Afford managers a mechanism for avoiding hasty and ill-conceived decisions in changing operations
advantages of formal written policies
Advantages of Formal Written Policies
  • Require managers to think through policy’s meaning, content, and intended use
  • Reduce misunderstanding
  • Make equitable and consistent treatment of problems more likely
  • Ensure unalterable transmission of policies
  • Communicate authorization or sanction of policies more clearly
  • Supply a convenient and authoritative reference
  • Systematically enhance indirect control and organization-wide coordination of the key purpose of policies
executive bonus compensation plans
Executive Bonus Compensation Plans

The goal of an executive bonus compensation plan is to motivate executives to achieve maximization of shareholder wealth – the underlying goal of most firms

executive bonus compensation plans1
Executive Bonus Compensation Plans

Major Plan Types

Stock Options

Restricted Stock

Cash

Golden Handcuffs

Golden Parachutes