Generic goal hierachies

1. Generic goal hierachies Fred Wenstøp Fred Wenstøp: Hax & Majluf

2. Corporate strategy • Decision maker • Central executive officer (CEO) • Decision contexts • Strategic posture of the firm • Strategic thrusts • Resource allocation • Managerial infrastructure • Human resources • Management of key personnel • A. C. Hax and N. S. Majluf (1996). The Strategy Concept and Process, Prentice Hall Fred Wenstøp: Hax & Majluf

3. Corporate strategyGoal hierarchy • Maximize the value of the firm • Maximize the interests of the stakeholders • Employees • Customers - price, quality, environmentally safe products • Shareholders - earnings/share • Suppliers - % of suppliers' sales to the firm • Communities - %work places, env. emissions • Maximize growth - sales, employees, operation income • Maximize market share • Maximize profitability - ROA, ROE • Maximize liquidity Fred Wenstøp: Hax & Majluf

4. Corporate strategyGoal hierarchy • Sub-objective: maximize the interests of employees • Job satisfaction • Job performance • Turnover • Absenteeism • Motivation • Job security • Career prospects • Psychological stress • Safety health conditions • Income Fred Wenstøp: Hax & Majluf

5. Functional strategyFinance • Decision contexts: • Mergers and acquisitions • Equity management and dividends policy • Long term debt financing • Working capital management • Pension fund management • Tax management • Objectives • Capital market: Maximize price/earnings ratio, etc. • Maximize profitability: ROA, ROE, ROI • Risk: beta • Cost of Capital (debt and equity) • Growth of assets, earnings, sales Fred Wenstøp: Hax & Majluf

6. Decision contexts Selection, promotion, placement Appraisal Rewards Management development Objectives Maximize job satisfaction Maximize Job performance Minimize Turnover Minimize Absenteeism Maximize Motivation Maximize Job security Maximize Career prospects Minimize Psychological stress Maximize Safety health conditions Maximize Income Functional strategyHuman Resources Management Fred Wenstøp: Hax & Majluf

7. Decision contexts Selection of technologies Timing of new introduction Project selection Objectives Maximize R&D productivity product performance / investment Maximize rate of return in R&D investment Maximize rate of new product introduction Maximize royalties of sales of technologies Maximize level of technological competence Functional strategyTechnology Fred Wenstøp: Hax & Majluf

8. Decision contexts Selection, evaluation and development of suppliers Quality management of purchased goods Materials management of purchased goods Value analysis, price/cost analysis and standardization Objectives Minimize costs Maximize services performance % of orders on time ave. delay on delinquent orders Maximize quality % of orders meeting specifications, etc. Functional strategyProcurement Fred Wenstøp: Hax & Majluf

9. Decision contexts Facilities, number of plants, size and location Capacity Choice of process technologies Product scope Quality management Objectives Minimize costs Maximize delivery reliability Maximize product quality Maximize flexibility to volume changes and new product introduction Functional strategyManufacturing Fred Wenstøp: Hax & Majluf

10. Decision contexts Product strategy New product development and introduction Distribution strategy Price strategy Promotion strategy Objectives Maximize Product strategy sales growth, market share, relative market share, breadth of product line, market coverage Maximize Distribution strategy Efficiency of distribution channels, customer service levels, distribution costs, sales force productivity Maximize price strategy Price sensitivity Maximize promotion strategy product segmentation, brand acceptance Functional strategyMarketing Fred Wenstøp: Hax & Majluf