LONG-TERM OBJECTIVES

Long-term objectives represent the results expected from pursuing certain strategies. Objectives
should be quantitative, measurable, realistic, understandable, challenging, hierarchical,
obtainable, and congruent among organizational units. Each objective should also be associated
with a timeline. Objectives provide a basis for consistent decision making by managers whose
values and attitudes differ.
Long-term objectives need to be reached in organization, division, and functional level. Bonus or
merit pay for managers today must be based to a greater extent on long-term objectives and
strategies. Table 5-1 below shows the relation between amount of bonus and performance
evaluation.

Financial vs Strategic Objectives

Financial objectives include those associated with growth in revenues, growth in earnings,
higher dividends, larger profit margins, greater return on investment, higher earnings per share,
a rising stock price, improved cash flow, and so on.
Strategic objectives include things such as a larger market share, quicker on-time delivery than
rivals, shorter design-to-market times than rivals, lower costs than rivals, higher product quality
than rivals, wider geographic coverage than rivals, achieving technological leadership,
consistently getting new or improved products to market ahead of rivals, and so on.

Avoid Not Managing by Objectives

Managing by Extrapolation
The Idea is to keep doing the same things in the ways because things are going well

Managing by Crisis
The act of reacting rather than acting, causing the decision making processes are based on
events and situation

Managing by Subjective

Built on the idea that there is no general plan for which way to go and what to do.

Managing by Hope
Based on the fact that future is laden with great uncertainty, and it is possible if we try, we
do not succeed

Balanced Scorecard

Balancing financial measures and non-financial measures

Balancing shareholder objectives with customer and operational objectives

Listing all key objectives to work toward, along with an associated time dimension of when
each objective is to be accomplished as well as a primary responsibility

TYPES OF STRATEGIES
Level of Strategies

Large Companies

Small Companies

Integration Strategies
A strategy that needs intensive reports if a firms competitive position with existing products
improves.

Market Penetration
Seeking increased market share for present products or services in present markets through
greater marketing efforts.
Ex: Coke spending millions on its new slogan Open Happiness
When is penetration an effective strategy?

Current markets are not saturated with particular product or service

The usage rate of present customers could be increased significantly

The market shares of major competitors have been decreasing while total sales
industry are increasing

Market Development
Introducing present products or services into new geographic areas.
Ex: Wal-mart opens their new stores in China, IKEA opens in Indonesia, Estee Lauder
introduces their products in Nigeria.
When is market development an effective strategy?

New untapped of unsaturated market exists

An organizations is very sucessfull at what it does

An organizations has excess production capacity

Product development
A strategy that increased sales by improving or modifying present products or services.
Usually need large research and development expenditures.
Ex: Pepsodent releases new product called Pepsodent Expert which combines formulas
from the other products, Estee Lauder releases new skin care product called Advance
Night-Eye Repair which has more advance benefits from the older product
When is product development an effective strategy?

Major competitors offer better quality products at comparable prices

An organizations competes in a high growth industry

An organizations has especially strong research and development capabilities

Diversification Strategies

Related diversification
Businesses said to be related when their value chains posses competitively valuable cross
business strategic fits.
Ex: Estee Lauder has subsidiaries in typical kind of product which is beauty products
When related diversifications may be an effective strategy?

When an organizations has a strong management team

When a organizations can competes in a no grwoth or slow growth industry

When an organizations product are currently in the declining stage of the product life
cycle

Unrelated diversification
Businesses said to be unrelated when their value chains are so dissimilar that no
competitively valuable cross business relationships exists.
Ex: Unilever has contrast diversified products such as beauty products, foods, cleaning
products, etc. Cipaganti has not only travel agent business but also mining company.
When related diversifications may be an effective strategy?

When revenues derived from an organizations current products or services would

increase significantly by the adding the new unrelated products

When an organizations present channels of distributions can be used to market the new
products to current customers

Can highly competitive in no growth or slow growth industry

Defensive Strategies

Retrenchment
Occurs when an organization regroup through cost and asset reduction to reverse declining
sales and profit.
Ex: The worlds largest steelmaker, ArcelorMittal, shut down half of its plants and laid off
thousands of employees even amid worker protests worldwide

Divestiture
Selling a division or part of an organization and used to raise capital for future strategic
acquisitions or investment.

Ex: The British airport firm BAA Ltd. divested three UK airports, Estee Lauder acquires Coach
and Donna Karan New York for their fragrance division, IBM acquires Lenovo for their
software division.

Liquidation
Selling all of a companys asset
Ex: Michigan newspapers such as the Ann Arbor News, Detroit Free Press, and Detroit News
liquidates hard-copy operations

MICHAEL PORTERS FIVE GENERIC STRATEGIES

Strategi ini memberikan organisasi kesempatan untuk meraih keunggulan kompetitifnya melalui
tiga dasar yang berbeda yaitu cost leadership, differentiation, dan focus. Ketiga landasan dasar
ini disebut generic strategies.
Cost leadership menekankan pada strandar produksi produk dengan biaya per-unit yang sangat
rendah untuk konsumen yang sensitive terhadap harga. Differentiation memiliki tujuan untuk
memproduksi produk dan jasa yang unik dalam dunia industry dan ditujukan pada konsumen
tang tidak begitu mempedulikan harga. Sedangkan Focus bertujuan untuk memproduksi barang
dan jasa yang dapat memenuhi kebutuhan dari konsumen kelompok kecil.
Adapun lima strategi generic porter adalah:
Cost leadership low cost strategy
Menawarkan harga barang atau jasa kepada konsumen pada harga terendah yang
tersedia di pasar.

Cost leadership best value strategy

Menawarkan produk atau jasa pada konsumen dengan nilai harga terbaik yang ada di
pasar. Tujuannya adalah menawarkan serangkaian produk pada harga serendah
mungkin disbanding kompetitor

Differentiation
Bertujuan menghasilkan produk atau jasa yang dianggap unik di industry dan ditujukan
bagi konsumen yang relative peka terhadap harga

Focus low cost (niche group)

Menawarkan produk pada sekelompo kecil konsumen pada harga terendah di pasar

Focus best value ( focus differentiation)

Bertujuan menawarkan kepada konsumen kecil produk atay jasa yang dengan lebih baik
memenuhi selera dan permintaan mereka disbanding produk pesaing