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Strategic Mgmt ch10

Strategic Mgmt ch10

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Published by: farazalam08 on Feb 17, 2011
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Chapter 10Implementation
0Chapter Summary
The first concern in the implementation of business strategy is to translate that strategy intoaction throughout the organization. This chapter discusses five considerations for accomplishing this. Short-term objectives translate long-range aspirations into this year’stargets for action. Functional tactics translate business strategy into daily activities peopleneed to execute. Outsourcing nonessential functions normally performed in-house frees upresources and the time of key people to concentrate on leveraging the functions and activitiescritical to the core competitive advantages around which the firm’s long range strategy is built. Policies are empowerment tools that simplify decision making by empoweringoperating managers and their subordinates. Rewards that align manager and employee priorities with organizational objectives and shareholder value provide very effectivedirection in strategy implementation.
0Learning Objectives
1.Understand how short-term objectives are used in strategy implementation.2.Identify and apply the qualities of good short-term objectives to your own experiences.3.Illustrate what is meant by functional tactics and understand how they are used in strategyimplementation.4.Gain a general sense of what outsourcing is and how it becomes a choice in functionaltactics decisions for strategy implementation.5.Understand what policies are and how to use policies to empower operating personnel inimplementing business strategies and functional tactics.6.Understand the use of financial reward in executive compensation.7.Identify different types of executive compensation and when to use each in strategyimplementation.
0Lecture Outline
I0.Short-Term ObjectivesA0.To makes business strategies, grand strategies, and long-term objectives become areality, the people in an organization who actually “do the work” of the business needguidance in exactly what they need to do.10.Short-term objectives held do this.a)
Short-term objectives
are measurable outcomes achievable or intendedto be achieved in one year or less. b)They are specific, usually quantitative, results operating managers setout to achieve in the immediate future.2.Short-term objectives help implement strategy in at least three ways:
208
 
a)Short-term objectives “operationalize” long-term objectives. b)Discussion about and agreement on short-term objectives help raiseissues and potential conflicts within an organization that usually requirecoordination to avoid otherwise dysfunctional consequences.c)
Exhibit 10.1, Potential Conflicting Objectives and Priorities
,illustrates how objectives within marketing, manufacturing, andaccounting units within the same firm can be very different even whencreated to pursue the same firm objective.d)Finally, short-term objectives assist strategy implementation byidentifying measurable outcomes of action plans or functional activities,which can be used to make feedback, correction, and evaluation morerelevant and acceptable.3.Short-term objectives are usually accompanied by action plans, whichenhance these objectives in three ways.a)First, action plans usually identify functional tactics and activities thatwill be undertaken in the next week, month, or quarter as part of the business’s effort to build competitive advantage. b)The important point here is
 specificity
 —what exactly is to be done.c)We will examine functional tactics in a subsequent section of thischapter.d)The second element of an action plan is a clear 
time frame for completion
 —when the effort will begin and when its results will beaccomplished.e)A third element action plans contain is identification o
who isresponsible
for each action in the plan.f)This accountability is very important to ensure action plans are actedupon.4.Because of the particular importance of short-term objectives in strategyimplementation, the next section addresses how to develop meaningful short-term objectives.a)
Exhibit 10.2, Top Strategist
, provides a
 BusinessWeek 
interview withSymantec CEO John Thompson about the nature and importance of short-term objectives to Symantec’s success.B.Qualities of Effective Short-Term Objectives1.Measurablea)Short-term objectives are more consistent when they clearly state
what 
isto be accomplished,
when
it will be accomplished, and
how
itsaccomplishments will be
measured 
. b)Such objectives can be used to monitor both the effectiveness of eachactivity and the collective progress across several interrelated activities.c)
Exhibit 10.3, Creating Measurable Objectives
, illustrates severaleffective and ineffective short-term objectives.
209
 
d)Measurable objectives make misunderstanding less likely amonginterdependent managers who must implement action plans.e)It is far easier to quantify the objectives of 
line
units than of certain
 staff 
areas.f)Difficulties in quantifying the objectives often can be overcome byinitially focusing on
measurable activity
and then identifying
measurable outcomes
.2.Prioritiesa)Although all annual objectives are important, some deserve priority because of a timing consideration or their particular impact on astrategy’s success.(1)If such priorities are not established, conflicting assumptions aboutthe relative importance of annual objectives may inhibit progresstoward strategic effectiveness.(2)Anne Mulcahy’s turnaround of Xerox described at the beginning of this chapter emphasized several important shot-term objectives.(3)But it was clear throughout Xerox that her highest priority in thefirst two years was to dramatically lower overhead and productioncosts so as to satisfy the difficult challenge of continuing to investheavily in R&D while also restoring profitability. b)Priorities are established in various ways.(1)A simple ranking may be based on discussion and negotiationduring the planning process.(2)However, this does not necessarily communicate the real differencein the importance of objectives, so such terms as primary, top, andsecondary may be used to indicate priority.(3)Some firms assign weights to establish and communicate therelative priority of objectives.(4)Whatever the method, recognizing priorities is an importantdimension in the implementation value of short-term objectives.3.Linked to Long-Term Objectivesa)Short-term objectives can add breadth and specificity in identifying whatmust be accomplished to achieve long-term objectives. b)The link between short-term and long-term objectives should resemblecascades through the firm from basic long-term objectives to specificshort-term objectives in key operation areas.(1)The cascading effect has the added advantage of providing a cleareference for communication and negotiation, which may benecessary to integrate and coordinate objectives and activities atthe operating level.C.The Value-Added Benefits of Short-Term Objectives and Action Plans
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