MGMT8058048 Session 02

STRATEGY FORMULATION,
EXECUTION, AND
GOVERNANCE
SESSION 02 – CHAPTER 02
PART 1 & 2
MGMT8058048 STRATEGIC MANAGEMENT IN BUSINESS
SESSION LEARNING OUTCOMES
UPON COMPLETION OF THIS SESSION, STUDENTS

ARE EXPECTED TO BE ABLE TO:
LO 1: FORMULATE MANAGEMENT ISSUES AND

CONDUCT APPROPRIATE STRATEGY ANALYSIS.
LO 2: APPLY APPROPRIATE APPROACHES AND

TECHNIQUES IN STRATEGY FORMULATION.
STRATEGY FORMULATION, EXECUTION, AND
GOVERNANCE
ACHIEVING
SETTING
UNDERSTANDING COORDINATION OPERATING
STRATEGIC AND ROLE OF BOARD
STRATEGIC OF STRATEGIC EXCELLENCE AND CONCLUSION
FINANCIAL OF DIRECTORS
VISION INITIATIVES EXECUTING
OBJECTIVES
STRATEGY
CHAPTER LEARNING OBJECTIVES
LO2-1: UNDERSTAND WHY IT IS CRITICAL FOR COMPANY MANAGERS TO HAVE A CLEAR STRATEGIC
VISION OF WHERE A COMPANY NEEDS TO HEAD AND WHY.
LO2-2: EXPLAIN THE IMPORTANCE OF SETTING BOTH STRATEGIC AND FINANCIAL OBJECTIVES.
LO2-3: EXPLAIN WHY THE STRATEGIC INITIATIVES TAKEN AT VARIOUS ORGANIZATIONAL LEVELS
MUST BE TIGHTLY COORDINATED TO ACHIEVE COMPANYWIDE PERFORMANCE TARGETS.
LO2-4: RECOGNIZE WHAT A COMPANY MUST DO TO ACHIEVE OPERATING EXCELLENCE AND TO

EXECUTE ITS STRATEGY PROFICIENTLY.
LO2-5: IDENTIFY THE ROLE AND RESPONSIBILITY OF A COMPANY’S BOARD OF DIRECTORS IN

OVERSEEING THE STRATEGIC MANAGEMENT PROCESS.
CASE STUDY DISCUSSION
DEVELOPING A STRATEGIC
VISION, A MISSION, AND
CORE VALUE
A STRATEGIC VISION DESCRIBES “WHERE WE ARE GOING”—THE
COURSE AND DIRECTION MANAGEMENT HAS CHARTED AND THE
COMPANY’S FUTURE PRODUCT-CUSTOMER-MARKET-
TECHNOLOGY FOCUS.
SETTING OBJECTIVE
TYPE DESCRIPTION
GRAPHIC PAINTS A PICTURE OF THE KIND OF COMPANY THAT MANAGEMENT IS TRYING TO
CREATE AND THE MARKET POSITION(S) THE COMPANY IS STRIVING TO STAKE OUT.
DIRECTIONAL IS FORWARD LOOKING; DESCRIBES THE STRATEGIC COURSE THAT MANAGEMENT

HAS CHARTED, AND THE KINDS OF PRODUCT-MARKET-CUSTOMER-TECHNOLOGY
CHANGES THAT WILL HELP THE COMPANY PREPARE FOR THE FUTURE.
FOCUSED IS SPECIFIC ENOUGH TO PROVIDE MANAGERS WITH GUIDANCE IN MAKING

DECISIONS AND ALLOCATING RESOURCES.
FLEXIBLE IS NOT SO FOCUSED THAT IT MAKES IT DIFFICULT FOR MANAGEMENT TO ADJUST TO

CHANGING CIRCUMSTANCES IN MARKETS, CUSTOMER PREFERENCES, OR
TECHNOLOGY.
FEASIBLE IS WITHIN THE REALM OF WHAT THE COMPANY CAN REASONABLY EXPECT TO
ACHIEVE.
DESIRABLE INDICATES WHY THE DIRECTIONAL PATH MAKES GOOD BUSINESS SENSE.
Source: Based partly on John P. Kotter, EASY TO COMMUNICATE
Learning Change (Harvard Business School
IS EXPLAINABLE IN 5 TO 10 MINUTES AND, IDEALLY, CAN BE REDUCED TO A SIMPLE,
Press, 1996) MEMORABLE “SLOGAN”
SETTING OBJECTIVE
ARE RELATED TO A FIRM’S

WHAT KINDS OF STRATEGIC
STRATEGIC OBJECTIVES. MARKETING STANDING AND
OBJECTIVES TO SET:
COMPETITIVE VITALITY.
IF ACHIEVED, INDICATE THAT

ARE LEADING INDICATORS OF
A FIRM’S FUTURE FINANCIAL
A FIRM’S FUTURE FINANCIAL
PERFORMANCE WILL BE
PERFORMANCE AND BUSINESS
BETTER THAN ITS CURRENT
PROSPECTS.
OR PAST PERFORMANCE.
AN ENGAGING,
INSPIRATIONAL VISION:
PROVIDES DIRECTION AND ENERGIZES

EMPLOYEES.
UNDERSTANDING MAKES THE ORGANIZATION’S CASE FOR “WHERE

STRATEGIC VISION WE ARE GOING AND WHY.”
EVOKES POSITIVE SUPPORT AND EXCITEMENT.
ENLISTS THE COMMITMENT OF COMPANY

PERSONNEL TO ENGAGE IN ACTIONS THAT MOVE
THE COMPANY IN ITS INTENDED DIRECTION.
WHY A SOUND, WELL-COMMUNICATED
STRATEGIC VISION MATTERS:
IT CRYSTALLIZES SENIOR EXECUTIVES’ OWN

VIEWS ABOUT THE FIRM’S LONG-TERM
DIRECTION.
IT REDUCES THE RISK OF RUDDERLESS

DECISION MAKING BY MANAGEMENT AT
UNDERSTANDING ALL LEVELS.
STRATEGIC VISION IT IS A TOOL FOR WINNING THE SUPPORT

OF EMPLOYEES TO HELP MAKE THE VISION
A REALITY.
IT PROVIDES A BEACON FOR LOWER-LEVEL

MANAGERS IN FORMING DEPARTMENTAL
MISSIONS.
IT HELPS AN ORGANIZATION PREPARE FOR

THE FUTURE.
CRITICAL FOR
MANAGERS TO HAVE
A CLEAR STRATEGIC
STRATEGIC MISSION, VISION, AND PROFIT
VISION OF WHERE
THE COMPANY NEEDS • OCCASIONALLY, COMPANIES STATE THAT THEIR MISSION
IS TO SIMPLY EARN A PROFIT.
TO HEAD AND WHY • PROFIT IS MORE CORRECTLY AN OBJECTIVE AND A
RESULT OF WHAT A FIRM DOES.
PROFIT IS THE OBVIOUS INTENT OF EVERY

COMMERCIAL ENTERPRISE.
• PROFIT IS NOT “WHO WE ARE AND WHAT WE DO.”
THE IMPORTANCE OF A SHARED
VISION FOR THE COMPANY AND
HOW IT ALIGNS THE ENTIRE
ORGANIZATION
OBJECTIVES
• AN ORGANIZATION’S PERFORMANCE
TARGETS—THE RESULTS MANAGEMENT
WANTS TO ACHIEVE.
STRETCH OBJECTIVES
• SET PERFORMANCE TARGETS HIGH
ENOUGH TO STRETCH AN ORGANIZATION
TO PERFORM AT ITS FULL POTENTIAL AND
DELIVER THE BEST POSSIBLE RESULTS.
STRATEGIC INTENT
• EMBODIED IN THE ORGANIZATION’S
RELENTLESS PURSUIT OF AN AMBITIOUS
STRATEGIC OBJECTIVE, CONCENTRATING
THE FULL FORCE OF ITS RESOURCES AND
COMPETITIVE ACTIONS ON ACHIEVING
THAT OBJECTIVE.
A SHARED VISION
HELPS TO ENSURE THAT EVERYONE WITHIN THE

ORGANIZATION IS WORKING TOWARDS THE SAME
GOALS AND
THE IMPORTANCE IN ALIGNING

A COMPANY'S VISION WITH ITS
MISSION AND VALUES
IT IS CRITICAL TO FOSTER
WITHIN A COMPANY OF:
A SENSE OF
PURPOSE COMMITMENT
UNITY
ENSURING THE VISION
ACHIEVABLE REALISTIC
CHALLENGES IN DEVELOPING COMMUNICATING THE VISION TO INSPIRE AND MOTIVATE

EMPLOYEES
AND COMMUNICATING A CLEAR
STRATEGIC VISION RATHER THAN JUST CONFUSING OR BORING THEM.
REQUIRES A DEEP UNDERSTANDING OF THE COMPANY'S
STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

HOW STRATEGIC VISION,
MISSION, AND VALUES
NAVIGATED THROUGH
STRATEGIC INFLECTION POINTS
A STRATEGIC INFLECTION POINT

OCCURS WHEN SIGNIFICANT CHANGES IN AN INDUSTRY
REQUIRE THAT MANAGEMENT MUST EVALUATE THE RISKS OF
CHANGING THE COMPANY’S FUTURE DIRECTION RATHER THAN
STAYING ON ITS ESTABLISHED COURSE.
A STRATEGIC PLAN
MAPS OUT WHERE A COMPANY IS HEADED, ESTABLISHES
STRATEGIC AND FINANCIAL TARGETS, AND OUTLINES THE
COMPETITIVE MOVES AND APPROACHES TO BE USED IN
ACHIEVING THE DESIRED BUSINESS RESULTS.
ASTRA'S VISION STATEMENT:

• "TO BE ONE OF THE BEST-MANAGED
CORPORATIONS IN THE ASIA PACIFIC
A CLEAR STRATEGIC VISION WITH SUSTAINABLE GROWTH AND
SOLID FINANCIAL STRUCTURE”
AND ALIGNMENT WITH ITS
MISSION AND VALUES • “TO BE AN INTELLIGENT AND AGILE
CORPORATION FOCUSING ON OUR
PEOPLE, CUSTOMERS, AND SOCIETY"
A CLEAR STRATEGIC VISION AND

ASTRA'S MISSION STATEMENT:
ALIGNMENT WITH ITS MISSION AND VALUES
"TO PROSPER WITH THE NATION BY PROVIDING THE BEST VALUE TO

OUR STAKEHOLDERS, REINFORCES ITS COMMITMENT TO THE
COMMUNITIES IT OPERATES IN TO BE A LEADING COMPANY IN
INDONESIA AND THE IMPORTANCE OF PROVIDING CUSTOMERS WITH
HIGH-QUALITY PRODUCTS AND SERVICES."
THE COMPANY'S VALUES,
• INTEGRITY, TEAMWORK, INNOVATION, AND CUSTOMER SATISFACTION
• REFLECTED IN ITS DAILY OPERATIONS AND DECISIONS
• AS THE FOUNDATION FOR THE COMPANY'S ACTIONS, DECISIONS, HELP MAINTAIN ITS CULTURE AND INTEGRITY
CREATE A STRONG CORPORATE CULTURE THAT SUPPORTS ASTRA'S COMPANY

MISSION AND VISION
THIS ALIGNMENT ENSURE THAT ALL EMPLOYEES ARE WORKING TOWARDS THE SAME
GOAL AND THAT THE COMPANY STAYS ON TRACK TOWARD ITS ASPIRATIONS
NAVIGATED THROUGH STRATEGIC INFLECTION POINTS
• A STRATEGIC INFLECTION POINT REFERS TO A

SIGNIFICANT CHANGE IN A COMPANY'S BUSINESS
STRATEGY OR AN OPERATING ENVIRONMENT THAT
REQUIRES A FUNDAMENTAL SHIFT IN ITS APPROACH TO
REMAIN COMPETITIVE
FIRST STRATEGIC INFLECTION POINT WAS
NAVIGATED THROUGH STRATEGIC
IN THE LATE 1990S WHEN THE ASIAN
INFLECTION POINTS
FINANCIAL CRISIS HIT THE REGION
• RATHER THAN CUT BACK ON

INVESTMENTS AND PULL BACK FROM THE
MARKET, ASTRA DOUBLED DOWN ON
THEIR STRATEGY AND CONTINUED TO
INVEST IN THE REGION
• GAINED MARKET SHARE WHILE
COMPETITORS RETRENCHED,
POSITIONING THEMSELVES AS A LEADER
IN THE INDONESIAN MARKET
NAVIGATED THROUGH STRATEGIC INFLECTION SECOND STRATEGIC INFLECTION POINT WAS THE
POINTS SHIFT TOWARD DIGITALIZATION
• ASTRA RECOGNIZED THE GROWING IMPORTANCE

OF TECHNOLOGY AND MADE SIGNIFICANT
INVESTMENTS IN DIGITAL CAPABILITIES FOR THE
WHOLE GROUP'S STRATEGIC FOCUS
• ALLOWED ASTRA TO REMAIN COMPETITIVE AND
MEET THE CHANGING DEMANDS OF CUSTOMERS
• BY ANTICIPATING AND SUCCESSFULLY NAVIGATING
THESE STRATEGIC INFLECTION POINTS, ASTRA WAS
ABLE TO CONTINUE ITS GROWTH AND MAINTAIN
ITS POSITION AS A LEADING PLAYER IN THE
INDONESIAN MARKET
CASE STUDY DISCUSSION CONCLUSION
THE CASE IS A TESTAMENT TO A PRIME

EXAMPLE OF THE IMPORTANCE OF
• A CLEAR STRATEGIC VISION, ANTICIPATING AND NAVIGATING THROUGH
• A WELL-DEFINED MISSION STATEMENT AND VALUES STRATEGIC INFLECTION POINTS TO REMAIN
• ALIGN WITH THE COMPANY'S OBJECTIVES, COMPETITIVE AND CONTINUE GROWTH
• THE ROLE IT PLAYS IN DRIVING A COMPANY'S
SUCCESS
EXERCISE
CAN ANYONE THINK OF HOW ASTRA'S VISION AND MISSION HAVE

HELPED DRIVE ITS SUCCESS?
HOW HAS THE COMPANY ENSURED ALIGNMENT ACROSS ITS ENTIRE

ORGANIZATION?
HOW DO YOU THINK ASTRA'S VISION AND MISSION WILL HELP GUIDE
THE COMPANY'S FUTURE GROWTH AND EXPANSION?
END PART 1 AND PART 2
EXECUTION, AND
GOVERNANCE
PART 3
CRAFTING A STRATEGY
MEANS ASKING:
HOW TO ATTRACT AND PLEASE CUSTOMERS?
HOW TO COMPETE AGAINST RIVALS?
CRAFTING A STRATEGY HOW TO POSITION THE FIRM IN THE

MARKETPLACE AND CAPITALIZE ON ATTRACTIVE
OPPORTUNITIES TO GROW THE BUSINESS?
HOW BEST TO RESPOND TO CHANGING

ECONOMIC AND MARKET CONDITIONS?
HOW TO MANAGE EACH FUNCTIONAL PIECE OF

THE BUSINESS?
HOW TO ACHIEVE THE FIRM’S PERFORMANCE

TARGETS?
OBJECTIVES TO SET:
STRATEGIC OBJECTIVES
CRAFTING A STRATEGY ARE RELATED TO A FIRM’S MARKETING

STANDING AND COMPETITIVE VITALITY
ARE LEADING INDICATORS OF A FIRM’S

FUTURE FINANCIAL PERFORMANCE AND
BUSINESS PROSPECTS
IF ACHIEVED, INDICATE THAT A FIRM’S FUTURE

FINANCIAL PERFORMANCE WILL BE BETTER
THAN ITS CURRENT OR PAST PERFORMANCE
IN MOST FIRMS, CRAFTING STRATEGY IS A
COLLABORATIVE TEAM EFFORT THAT INCLUDES
MANAGERS IN VARIOUS POSITIONS AND AT
VARIOUS ORGANIZATIONAL LEVELS
CRAFTING A STRATEGY CRAFTING STRATEGY IS RARELY SOMETHING ONLY

HIGH-LEVEL EXECUTIVES DO
A FIRM’S OVERALL STRATEGY IS A COLLECTION OF

STRATEGIC INITIATIVES AND ACTIONS DEVISED BY
MANAGERS UP AND DOWN THE WHOLE
ORGANIZATIONAL HIERARCHY
STRATEGY IMPLEMENTATION EVALUATION
OBJECTIVES ARE AN ORGANIZATION’S
PERFORMANCE TARGETS—RESULTS MANAGEMENT
WANTS TO ACHIEVE
THE IMPORTANCE OF
SETTING BOTH FINANCIAL OBJECTIVES RELATE TO THE FINANCIAL
PERFORMANCE TARGETS MANAGEMENT HAS
STRATEGIC AND ESTABLISHED FOR THE ORGANIZATION TO ACHIEVE
FINANCIAL OBJECTIVE
STRATEGIC OBJECTIVES RELATE TO TARGET OUTCOMES
THAT INDICATE A COMPANY IS STRENGTHENING ITS
MARKET STANDING, COMPETITIVE VITALITY, AND
FUTURE BUSINESS PROSPECTS
THE ROLE OF MANAGING FINANCIAL OBJECTIVES IN
A SUCCESSFUL BUSINESS
LINKAGE BETWEEN FINANCIAL OBJECTIVES ARE CRUCIAL IN SETTING

STRATEGIC OBJECTIVES THE TARGETS AND DIRECTION FOR THE COMPANY'S
FINANCIAL PERFORMANCE
TO FINANCIAL
OBJECTIVES FINANCIAL OBJECTIVES FOCUS ON ACHIEVING
SPECIFIC FINANCIAL RESULTS
HOW THEY DRIVE THE OVERALL INCREASING
REVENUE
IMPROVING PROFIT
MARGINS
REDUCING COSTS
SUCCESS OF THE COMPANY
STRATEGIC OBJECTIVES FOCUS ON THE COMPANY'S
LONG-TERM VISION AND MISSION
DESIGNED TO HELP THE COMPANY ACHIEVE ITS OVERALL GOALS

CASE STUDY
DISCUSSION
FINANCIAL OBJECTIVES AS
THE IMPORTANCE A CRUCIAL ROLE
STRATEGIC OBJECTIVES
• ON SETTING THE TARGETS AND
IN WORKING WITH DIRECTION FOR THE COMPANY'S
• FOCUS ON THE COMPANY'S
LONG-TERM VISION AND
FINANCIAL PERFORMANCE
AN EFFECTIVE MISSION
• FOCUS ON ACHIEVING SPECIFIC
• DESIGNED TO HELP THE
FINANCIAL FINANCIAL RESULTS, SUCH AS
COMPANY ACHIEVE ITS OVERALL
• INCREASING REVENUE,
MANAGEMENT • IMPROVING PROFIT MARGINS,
GOALS
• REDUCING COSTS
THE CASE HIGHLIGHTS
• THE IMPORTANCE OF REGULARLY REVIEWING AND ADJUSTING OBJECTIVES AS NEEDED
THE FINANCIAL DIFFICULTIES, AND SUBSEQUENT BANKRUPTCY CHARGE

BY ITS CREDITORS, AS A CLEAR INDICATION
• HOW THE COMPANY MAY NOT HAVE HAD CLEAR FINANCIAL OBJECTIVES
• ITS FINANCIAL OBJECTIVES WERE NOT BEING MET BY NOT HAVE BEEN EFFECTIVELY
MANAGING ITS FINANCES TO MEET THOSE OBJECTIVES
THE COMPANY HAD TO MAKE NECESSARY ADJUSTMENTS TO AVOID FURTHER FINANCIAL STRUGGLES
THE FURTHER FINANCIAL OBJECTIVES MAY INVOLVE
INCREASING ITS REVENUE AND

PROFITS
STRATEGIC OBJECTIVES ARE EQUALLY IMPORTANT
REDUCING COSTS
IMPROVING ITS OVERALL

FINANCIAL PERFORMANCE TO PROVIDE THE DIRECTION FOR THE COMPANY'S OVERALL SUCCESS
MORE EFFECTIVE MANAGEMENT
OF ITS FINANCES
THE CASE A PRIME EXAMPLE ON:
• THE IMPORTANCE IN ALIGNING OBJECTIVES WITH A COMPANY'S VISION AND
MISSION
• THE NEED TO REGULARLY REVIEWING AND ADJUSTING OBJECTIVES AS NEEDED
• ALL OF THOSE CAN DRIVE A COMPANY'S SUCCESS
THE SIGNIFICANCE OF SETTING OBJECTIVES

• THE IMPORTANCE OF BALANCING ITS FINANCIAL AND STRATEGIC
OBJECTIVES TO ENSURE THAT THE COMPANY CAN SURVIVE AND
THRIVE IN THE LONG-TERM
IMPROVING CUSTOMER
SATISFACTION
THE NEW
EXPANDING ITS ROUTE NETWORK
STRATEGIC
OBJECTIVES INVESTING IN NEW TECHNOLOGY TO
IMPROVE OPERATIONAL EFFICIENCY
MIGHT INCLUDE
BECOMING A LEADING AIRLINE IN
THE REGION
APPLY SMART
FRAMEWORK TO SHORT-TERM LONG-TERM
ACHIEVE THESE OBJECTIVES OBJECTIVES
OBJECTIVES
• CAREFULLY CONSIDER THE SHORT- • DESIGNED TO BE ACHIEVABLE • FOCUSED ON THE COMPANY'S

TERM AND LONG-TERM FINANCIAL WITHIN A YEAR OR LESS LONG-TERM VISION AND MISSION
OBJECTIVES AND IMPLEMENT • FOCUS ON IMMEDIATE GOALS • DESIGNED TO HELP ACHIEVE
STRATEGIES OVERALL GOALS OVER SEVERAL
YEARS
BALANCED SCORECARD APPROACH CAN BE A
USEFUL TOOL
• AS THE PERFORMANCE MEASUREMENT
• EVALUATE THE COMPANY'S PROGRESS TOWARD ITS
THE BALANCED SCORECARD CONSIDERS
OBJECTIVES FINANCIAL AND NON-FINANCIAL FACTORS
• MAKE NECESSARY ADJUSTMENTS CONTRIBUTING TO A COMPANY'S SUCCESS
THE APPROACH ALLOWS TO MEASURE REGULAR MONITORING ITS PROGRESS AND

PERFORMANCE MAKING NECESSARY ADJUSTMENTS
• FINANCIAL • TO ENSURE STAYS ON TRACK TO ACHIEVE ITS OBJECTIVES
• CUSTOMER SATISFACTION • TO CONTINUE TO DRIVE ITS SUCCESS.
• INTERNAL PROCESS
• OPERATIONAL EFFICIENCY
• LEARNING AND GROWTH PERSPECTIVES
• AS A COMPREHENSIVE PICTURE OF ITS OVERALL
PERFORMANCE
THE RECENT LEGAL BATTLE FACED BY PT GARUDA INDONESIA SERVES AS AN IMPORTANT LESSON FOR ALL COMPANIES.
HIGHLIGHTS THE IMPORTANCE
• HAVING CLEAR, MEASURABLE, AND ACHIEVABLE STRATEGIC AND FINANCIAL OBJECTIVES

• ALIGNING THESE OBJECTIVES WITH A COMPANY'S VISION AND MISSION
• REGULARLY REVIEWING AND ADJUSTING OBJECTIVES AS NEEDED
THE BALANCED SCORECARD APPROACH TO PERFORMANCE MEASUREMENT
• AS POWERFUL TOOL TO EVALUATE A COMPANY'S PROGRESS

• MAKE NECESSARY ADJUSTMENTS TO ACHIEVE ITS OBJECTIVES
• HELP TO DRIVE SUCCESS
WHETHER IT'S A SHORT-TERM OR LONG-TERM OBJECTIVE, COMPANIES MUST BE PROACTIVE IN SETTING AND ACHIEVING THEIR GOALS TO
ENSURE LONG-TERM SUCCESS
END PART 3
EXECUTION, AND
GOVERNANCE
PART 4
A COMPANY’S STRATEGY-
MAKING HIERARCHY
CRAFTING STRATEGY IS A COLLABORATIVE

EFFORT
COORDINATION OF INVOLVES MANAGERS FROM VARIOUS

STRATEGIC INITIATIVE LEVELS OF THE ORGANIZATION
SHOULD BE COHESIVE AND MUTUALLY

REINFORCING, FITTING TOGETHER LIKE A
JIGSAW PUZZLE
REQUIRES CHOOSING AMONG THE VARIOUS

STRATEGIC ALTERNATIVES
CORPORATE
STRATEGY
THE STRATEGIC
INITIATIVES TAKEN AT BUSINESS
STRATEGY
VARIOUS
ORGANIZATIONAL LEVELS
FUNCTIONAL
MUST BE TIGHTLY COORDINATED TO
AREAS STRATEGIES
ACHIEVE COMPANYWIDE
PERFORMANCE TARGETS
OPERATING
STRATEGIES
THE STRATEGIC THE CHALLENGES OF
ALIGNING INITIATIVES WITH
INITIATIVES TAKEN AT COMPANYWIDE

PERFORMANCE TARGETS
VARIOUS
ORGANIZATIONAL LEVELS LACK OF A
LACK OF
CENTRALIZED
MUST BE TIGHTLY COORDINATED TO MANAGEMENT
COMMUNICATION
AND COLLABORATION
ACHIEVE COMPANYWIDE STRUCTURE FOR
COORDINATING
IN COORDINATING
PERFORMANCE TARGETS INITIATIVES

INITIATIVES
EFFECTIVE A CENTRALIZED
COMMUNICATION MANAGEMENT
AND COLLABORATION STRUCTURE
IMPLEMENTING AND
EXECUTING THE CHOSEN
STRATEGY
ALIGNMENT
BEST PRACTICES FOR BETWEEN
ENSURING THE DIFFERENT
COORDINATION OF DEPARTMENTS AND
LEVELS OF THE
STRATEGIC INITIATIVES
IMPLEMENTING AND ORGANIZATION
EXECUTING THE CHOSEN

STRATEGY REGULAR
ASSESSMENTS
OF EACH
REGULAR INITIATIVE'S
TO ACHIEVE TO CREATE A
CLEAR AND OPEN MEETINGS SUCCESS IN
COMMUNICATION
BETTER COMPETITIVE
TO REVIEW ACHIEVING
PERFORMANCE ADVANTAGE
COMPANY-
PROGRESS WIDE
PERFORMANCE
TARGETS
CORPORATE BUSINESS
THE IMPORTANCE OF STRATEGY STRATEGY
ALIGNMENT BETWEEN PRIMARILY CONCERNED
DIFFERENT ESTABLISHES AN
WITH STRENGTHENING THE
COMPANY’S MARKET
DEPARTMENTS AND OVERALL GAME PLAN

FOR MANAGING A SET
POSITION
LEVELS OF THE OF BUSINESSES IN A

DIVERSIFIED,
ORGANIZATION MULTIBUSINESS
COMPANY
BUILDING COMPETITIVE
ADVANTAGE IN A SINGLE
BUSINESS COMPANY OR A
SINGLE BUSINESS UNIT OF A
DIVERSIFIED MULTIBUSINESS
CORPORATION
THE IMPORTANCE OF ALIGNMENT BETWEEN DIFFERENT DEPARTMENTS
AND LEVELS OF THE ORGANIZATION
STRATEGY DESCRIPTION
IS ORCHESTRATED BY THE CEO AND OTHER SENIOR EXECUTIVES AND

ESTABLISHES AN OVERALL GAME PLAN FOR MANAGING A SET OF
BUSINESSES IN A DIVERSIFIED, MULTIBUSINESS COMPANY
CORPORATE ADDRESSES THE QUESTIONS OF HOW TO CAPTURE CROSS-BUSINESS
STRATEGY SYNERGIES, WHAT BUSINESSES TO HOLD OR DIVEST, WHICH NEW
MARKETS TO ENTER, AND HOW TO BEST ENTER NEW MARKETS—BY
ACQUISITION, CREATION OF A STRATEGIC ALLIANCE, OR THROUGH
INTERNAL DEVELOPMENT
IS PRIMARILY CONCERNED WITH BUILDING COMPETITIVE ADVANTAGE IN

BUSINESS A SINGLE BUSINESS UNIT OF A DIVERSIFIED COMPANY OR
STRATEGY STRENGTHENING THE MARKET POSITION OF A NONDIVERSIFIED SINGLE
BUSINESS COMPANY
ARE CONCERNED WITH ACTIONS RELATED TO PARTICULAR FUNCTIONS OR

FUNCTIONAL
PROCESSES WITHIN A BUSINESS (MARKETING STRATEGY, PRODUCTION
-AREA
STRATEGY, FINANCE STRATEGY, CUSTOMER SERVICE STRATEGY, PRODUCT
STRATEGIES
DEVELOPMENT STRATEGY, AND HUMAN RESOURCES STRATEGY)
ARE RELATIVELY NARROW STRATEGIC INITIATIVES AND APPROACHES FOR

OPERATING MANAGING KEY OPERATING UNITS (PLANTS, DISTRIBUTION CENTERS,
STRATEGIES GEOGRAPHIC UNITS) AND SPECIFIC OPERATING ACTIVITIES SUCH AS
MATERIALS PURCHASING OR INTERNET SALES
A WELL- CLEAR
THE IMPORTANCE OF COORDINATED AND COMMUNICATION,
ALIGNMENT BETWEEN ALIGNED SET OF
STRATEGIES
COLLABORATION,
AND A CENTRALIZED
DIFFERENT • HELP AN ORGANIZATION MANAGEMENT
DEPARTMENTS AND ACHIEVE ITS GOALS

• ENSURING ALL
STRUCTURE ARE KEY
TO SUCCESS
LEVELS OF THE RESOURCES ARE
ALIGNED AND WORKING
ORGANIZATION TOWARDS THE SAME

OVERALL OBJECTIVES
CASE STUDY
DISCUSSION
BANK CENTRAL ASIA SET STRATEGIC WIDE RANGE OF PRODUCTS ARE

• ONE OF THE LARGEST BANKS INITIATIVES AND PRODUCTS AND SERVICES DESIGNED
IN INDONESIA FINANCIAL OBJECTIVES AT • PERSONAL AND CORPORATE • TO MEET THE FINANCIAL
• THE INDONESIAN CONSUMER VARIOUS BANKING NEEDS OF ITS CUSTOMERS
AND RETAIL FINANCIAL SERVICE • INVESTMENT BANKING • TO SUPPORT THE BANK'S
ORGANIZATIONAL LEVELS
LEADER OVERALL STRATEGY
THAT ALIGN WITH ITS • WEALTH MANAGEMENT
OVERALL MISSION
CORPORATE STRATEGY IS THE OVERALL PLAN THAT GUIDES A COMPANY'S OPERATIONS AND DETERMINES ITS
GOALS AND OBJECTIVES AT THE HIGHEST MANAGEMENT LEVEL
BCA'S CORPORATE STRATEGY
SETS THE TONE FOR ITS OVERALL DIRECTION AND FOCUS OUTLINES THE BANK'S MISSION, VISION, AND VALUES
REFLECTED IN BCA'S WIDE RANGE OF PRODUCTS AND SERVICES
PERSONAL AND CORPORATE BANKING INVESTMENT BANKING WEALTH MANAGEMENT

BUSINESS STRATEGY
CONCERNS THE
INCLUDES DEVELOPING THE STRATEGY
DIRECTION AND SCOPE
BCA'S BUSINESS AND PROMOTING ITS ALIGNED WITH THE
OF A PARTICULAR
STRATEGY PRODUCTS AND BANK'S CORPORATE
BUSINESS UNIT WITHIN
SERVICES STRATEGY
THE LARGER
ORGANIZATION
• OUTLINES HOW BCA WILL ACHIEVE • PERSONAL AND CORPORATE BANKING • ENSURING ITS OVERALL DIRECTION
ITS CORPORATE GOALS • INVESTMENT BANKING AND FOCUS ARE REFLECTED IN ITS
• FOCUSING ON SPECIFIC MARKETS AND • WEALTH MANAGEMENT BUSINESS OPERATIONS
PRODUCTS
FUNCTIONAL-AREA STRATEGIES ARE THE PLANS AND ACTIONS OF EACH FUNCTIONAL AREA WITHIN THE
ORGANIZATION
STRATEGIES ARE DESIGNED TO SUPPORT

FINANCE
THE COMPANY'S BUSINESS THE MARKETING DEPARTMENT MAY HAVE A STRATEGY FOR
MARKETING AND CORPORATE STRATEGIES
PROMOTING BCA'S SERVICES TO SPECIFIC TARGET MARKETS
ENSURE THAT EACH PERSONAL AND CORPORATE

FUNCTIONAL AREA WORKS INVESTMENT BANKING WEALTH MANAGEMENT
BANKING
OPERATIONS TOWARDS THE SAME GOALS
AND OBJECTIVES
OPERATING STRATEGY REFERS TO THE SPECIFIC PLANS AND ACTIONS PUT IN PLACE TO
ACHIEVE THE GOALS AND OBJECTIVES OF THE ORGANIZATION
COVERING ALL OF THE DAY-TO-DAY ACTIVITIES NECESSARY TO ACHIEVE THE COMPANY'S

GOALS AND OBJECTIVES
DECISIONS ABOUT IMPLEMENTING BCA'S PRODUCTS AND SERVICES TO ENSURE

• PRODUCTION THEY ARE DELIVERED EFFECTIVELY TO MEET CUSTOMERS' NEEDS
• DISTRIBUTION • PERSONAL AND CORPORATE BANKING
• MARKETING, ETC • INVESTMENT BANKING
• WEALTH MANAGEMENT
COORDINATING INITIATIVES TO OVERCOME THESE THE BANK HAS ALSO

CAN BE A REAL CHALLENGE CHALLENGES IMPLEMENTED A CENTRALIZED
COORDINATING STRATEGIC • A LACK OF COMMUNICATION AND • THE IMPORTANCE OF EFFECTIVE MANAGEMENT STRUCTURE
INITIATIVES IS ESSENTIAL TO COLLABORATION AMONG COMMUNICATION AND • TO HELPS COORDINATE INITIATIVES BY
DEPARTMENTS COLLABORATION
MEET BCA'S OVERALL PROVIDING A CLEAR LINE OF
• CONFLICTING PRIORITIES • ENSURING THAT EACH INITIATIVE IS AUTHORITY
PERFORMANCE TARGETS ALIGNED WITH THE OVERALL STRATEGY
• A LACK OF A CENTRALIZED • ENSURING EVERYONE IS WORKING
MANAGEMENT STRUCTURE AND PERFORMANCE TARGETS TOWARDS THE SAME GOALS
THE IMPORTANCE OF ALIGNMENT AN ALIGNED STRATEGIES AND
• AT DIFFERENT DEPARTMENTS WORKING TOGETHER
• AT DIFFERENT LEVELS OF THE ORGANIZATION • PROVIDE A COMPREHENSIVE PLAN FOR
ACHIEVING THE COMPANY'S GOALS AND
OBJECTIVES
• ENSURE THAT ALL OF ITS ACTIVITIES WORK
TOWARDS THE SAME OVERALL PURPOSE
BUT UNALIGNED STRATEGIES CREATES

• CONFUSION
• MISALIGNMENT OF RESOURCES,
• REDUCED EFFECTIVENESS
• LEADING TO LOWER OVERALL PERFORMANCE
THE CASE DEMONSTRATES APPLYING BEST PRACTICES, ORGANIZATIONS
• THE IMPORTANCE OF COORDINATION BETWEEN CAN ACHIEVE THEIR GOALS AND BECOME
STRATEGIC INITIATIVES TAKEN AT VARIOUS LEADERS IN THEIR RESPECTIVE INDUSTRIES.
ORGANIZATIONAL LEVELS THOSE ARE:
• A CLEAR COMMUNICATION,
• COLLABORATION
• A CENTRALIZED MANAGEMENT STRUCTURE
IN ACHIEVING ITS GOALS AND BECOME THE THE BANK'S SUCCESS

INDONESIAN CONSUMER AND RETAIL • TESTAMENT TO THE IMPORTANCE OF COORDINATION
FINANCIAL SERVICE LEADER, BCA AND ALIGNMENT BETWEEN DIFFERENT DEPARTMENTS
HOLISTICALLY FOCUSES ON: AND LEVELS OF THE ORGANIZATION
• CORPORATE
• BUSINESS
• FUNCTIONAL-AREA
• OPERATING STRATEGIES
END PART 4
EXECUTION, AND
GOVERNANCE
PART 5
DECIDING IF THERE IS A NEED FOR CHANGE:
EVALUATING MAKING
MONITORING
THE FIRM’S CORRECTIVE
FOR DISRUPTIVE
RECENT ADJUSTMENTS
DEVELOPMENTS
ACHIEVING OPERATING PERFORMANCE TO STRATEGY
EXCELLENCE AND
EXECUTING STRATEGY
STRATEGY EXECUTION IS AN ONGOING AND
UNEVEN PROCESS OF ORGANIZATIONAL
LEARNING
A FIRM’S VISION, OBJECTIVES, STRATEGY, AND APPROACH

TO STRATEGY EXECUTION ARE NEVER FINAL
OBJECTIVES TO SET:
STRATEGIC OBJECTIVES ARE RELATED TO A

ACHIEVING OPERATING FIRM’S MARKETING STANDING AND
COMPETITIVE VITALITY
EXCELLENCE AND
EXECUTING STRATEGY STRATEGIC OBJECTIVES ARE LEADING
INDICATORS OF A FIRM’S FUTURE FINANCIAL
PERFORMANCE AND BUSINESS PROSPECTS
IF ACHIEVED, INDICATE THAT A FIRM’S FUTURE

FINANCIAL PERFORMANCE WILL BE BETTER
THAN ITS CURRENT OR PAST PERFORMANCE
OPERATING EXCELLENCE
OFTEN THE DIFFERENCE BETWEEN A

CRUCIAL ASPECT OF A COMPANY'S
SUCCESSFUL AND AN UNSUCCESSFUL
SUCCESS
STRATEGY
ACHIEVING OPERATING
EXCELLENCE AND A COMPANY MUST BE ABLE TO EXECUTE ITS STRATEGY
EFFICIENTLY AND EFFECTIVELY TO ACHIEVE ITS DESIRED
PROFICIENT EXECUTING OUTCOMES
STRATEGY
IN ACHIEVING OPERATING EXCELLENCE AND EXECUTE ITS
STRATEGY EFFECTIVELY A COMPANY MUST HAVE
EFFECTIVE
STRONG LEADERSHIP A POSITIVE CULTURE TECHNOLOGY IN
PLACE
OPERATIONAL EXCELLENCE KEY SUCCESS FACTORS
LEADERSHIP
THE LEADER OF A COMPANY
A GREAT LEADER WILL
PLAYS A CRUCIAL ROLE IN
A COMPANY'S LEADERS ARE INSPIRE AND MOTIVATE
LEADERSHIP PLAYS A VITAL SETTING THE TONE AND
RESPONSIBLE ACTIVITIES LEADERS MUST POSSESS THE THEIR TEAM TO STRIVE FOR EFFECTIVE LEADERSHIP IS
ROLE IN EXECUTING A DIRECTION FOR THE
ALIGN WITH THE COMPANY'S ABILITY EXCELLENCE AND EXECUTE VITAL
COMPANY'S STRATEGY ORGANIZATION WHICH THEIR
STRATEGY SUCH AS: THE COMPANY'S STRATEGY
ACTIONS AND DECISIONS CAN
WITH PASSION AND PURPOSE
MAJORLY IMPACT
TO ACHIEVING
TO SET THE EMPLOYEE FOR SETTING BY COMMUNICATE OPERATING
DIRECTION MOTIVATION GOALS TO CREATE A THE STRATEGY EXCELLENCE AS IT
VISION EFFECTIVELY TO HELPS TO CREATE A
EMPLOYEES POSITIVE WORK
ENVIRONMENT
PROVIDING
MORALE DEVELOPING PLANS
GUIDANCE
CREATE AN
INSPIRE THEIR ENVIRONMENT ENSURES THAT
CREATING A VISION EMPLOYEES TO THAT FOSTERS EMPLOYEES ARE
THAT INSPIRES AND OVERALL WORK TOWARDS A INNOVATION, MOTIVATED AND
MAKING DECISIONS COMMON GOAL CREATIVITY, AND ENGAGED
MOTIVATES PERFORMANCE
EMPLOYEES COLLABORATION
CULTURE
CULTURE IS A COMPANY'S • A POSITIVE AND SUPPORTIVE COMPANY CULTURE CAN AS SIGNIFICANT DRIVER IN ACHIEVING
OPERATIONAL EXCELLENCE
EMPLOYEES' COLLECTIVE BEHAVIOR • A POSITIVE CULTURE CAN HELP TO CREATE A SENSE OF UNITY AND PURPOSE WITHIN AN
AND BELIEFS ORGANIZATION, WHICH IS CRUCIAL FOR ACHIEVING OPERATING EXCELLENCE
A COMPANY'S CULTURE SHOULD • ITS VALUES AND MISSION AND

ALIGN WITH • ENCOURAGE EMPLOYEES TO WORK TOGETHER TOWARD A COMMON GOAL
• HAVE HIGHER LEVELS OF EMPLOYEE ENGAGEMENT

COMPANIES WITH A STRONG • LEADING TO INCREASED PRODUCTIVITY
CULTURE OFTEN • IMPROVED CUSTOMER SATISFACTION
• BETTER OVERALL PERFORMANCE
TO DEVELOP AND MAINTAIN A • OPEN COMMUNICATION

STRONG CULTURE, COMPANIES MUST • INCLUSIVITY
PRIORITIZE • EMPLOYEE DEVELOPMENT
TECHNOLOGY
THE USE OF TECHNOLOGY

• HELP COMPANIES TO INNOVATE AND
STAY AHEAD OF THE COMPETITION
COMPANIES THAT LEVERAGE • AS THE ESSENTIAL FOR LONG-TERM

SUCCESS
TECHNOLOGY MAY INCLUDE
• USING SOFTWARE AND SYSTEMS TO
COMPANIES MUST HAVE THE STREAMLINE PROCESSES
RIGHT TECHNOLOGY IN PLACE • AUTOMATE TASKS

• MAKE DATA-DRIVEN DECISIONS
• TO SUPPORT THEIR OPERATIONS • IMPROVE ORGANIZATIONAL
TECHNOLOGY PLAYS A KEY ROLE • ENSURE THEY CAN EXECUTE THEIR COMMUNICATION AND
IN ACHIEVING OPERATING STRATEGY EFFICIENTLY COLLABORATION
EXCELLENCE
• TECHNOLOGY IS ESSENTIAL FOR
ACHIEVING OPERATIONAL EXCELLENCE
IN TODAYS FAST-PACED, HIGHLY
COMPETITIVE BUSINESS ENVIRONMENT
CONCEPTUAL APPLICATION
EXAMPLES
AMAZON
OPERATING EXCELLENCE
AND EXECUTING GOOGLE
STRATEGY IN PRACTICE
SOUTHWEST AIRLINES
APPLE
A GREAT EXAMPLE OF OPERATIONAL
EXCELLENCE THROUGH LEADERSHIP AND A
FOCUS ON TECHNOLOGY
JEFF BEZOS AS THE CEO ABLE TO CREATE AND EXECUTE

THE COMPANY'S STRATEGY OF BECOMING THE WORLD'S
LARGEST ONLINE RETAILER
LEADERSHIP IN AMAZON
HIS CLEAR VISION AND DIRECTION, FOSTERED
• A CULTURE OF INNOVATION
• MADE BOLD DECISIONS TO PROPELLED THE COMPANY'S GROWTH
HE WAS KNOWN FOR HIS INNOVATIVE AND CUSTOMER-

FOCUSED APPROACH
• INVESTED HEAVILY IN TECHNOLOGY TO IMPROVE ITS OPERATIONS
AND PROVIDE THE BEST POSSIBLE CUSTOMER EXPERIENCE
COMPANIES WITH STRONG CULTURES TEND TO HAVE MORE
MOTIVATED, ENGAGED, AND PRODUCTIVE EMPLOYEES.
GOOGLE'S UNIQUE CULTURE IS ONE OF THE KEY REASONS FOR
ITS SUCCESS WHICH:
• VALUES INNOVATION, CREATIVITY, AND COLLABORATION
• PROVIDES EMPLOYEES WITH AN ENVIRONMENT TO FOSTERS THESE QUALITIES.
• AS A RESULT, GOOGLE HAS BEEN ABLE TO EXECUTE ITS STRATEGY AND
CULTURE IN GOOGLE MAINTAIN ITS COMPETITIVE ADVANTAGE CONSISTENTLY
AND SOUTHWEST
AIRLINES
SOUTHWEST AIRLINES AS EXAMPLE HAS ACHIEVED
OPERATIONAL EXCELLENCE THROUGH A STRONG CULTURE AND
FOCUS ON EMPLOYEE ENGAGEMENT
• THE COMPANY KNOWN FOR ITS FUN AND LIGHTHEARTED APPROACH
• ITS EMPLOYEES ARE ENCOURAGED TO BE CREATIVE AND TAKE RISKS TO
IMPROVE THE CUSTOMER EXPERIENCE
• SOUTHWEST ACHIEVED HIGH LEVELS OF CUSTOMER SATISFACTION AND
OPERATIONAL EFFICIENCY
TECHNOLOGY PLAYS AN IMPORTANT ROLE IN EXECUTING A COMPANY'S
STRATEGY AND CAN HELP A COMPANY TO OPERATE
• MORE EFFICIENTLY
• IMPROVE CUSTOMER EXPERIENCE
• INCREASE INNOVATION.
INVESTING IN TECHNOLOGY CAN GAIN A COMPETITIVE ADVANTAGE BY
TECHNOLOGY IN APPLE • IMPROVING PROCESSES,

• STREAMLINING OPERATIONS,
• CREATING NEW PRODUCTS AND SERVICES.
APPLE'S INVESTMENT IN TECHNOLOGY HAS ENABLED THE COMPANY TO

EXECUTE ITS STRATEGY OF CREATING INNOVATIVE PRODUCTS AND SERVICES
THAT DIFFERENTIATE IT FROM ITS COMPETITORS
• APPLE’S FOCUS ON TECHNOLOGY HAS CREATED PRODUCTS THAT ARE NOT ONLY INNOVATIVE BUT
ALSO USER-FRIENDLY, MAKING IT EASIER FOR CUSTOMERS TO USE AND ENJOY ITS PRODUCTS
IGNATIUS JONAN WAS THE FORMER PRESIDENT HIS LEADERSHIP STYLE AND APPROACH ARE ACHIEVING OPERATIONAL EXCELLENCE AND
AND DIRECTOR OF PT KERETA API INDONESIA EXAMPLES OF STRATEGY FORMULATION AND EXECUTING STRATEGY REQUIRES
• HE IS WIDELY REGARDED AS A LEADER WHO EXECUTION IN PRACTICE • LEADERSHIP
TRANSFORMED THE COMPANY AND THE INDONESIAN • CULTURE
TRANSPORTATION SECTOR • TECHNOLOGY
LEADERSHIP HE CREATED A
HE WAS MORE A
HE LED BY EXAMPLE,
SHOWING HIS
VISION FOR THE
• IGNATIUS JONAN WAS A LEADER WHO EMPLOYEES THAT HE
FUTURE OF KAI,
TRANSFORMATIONAL INSPIRED AND WAS FULLY
AND HE RALLIED HIS
LEADER FOCUSED ON MOTIVATED HIS COMMITTED TO
TEAM TO WORK
• PEOPLE EMPLOYEES TO IMPROVING THE
TOGETHER TO
WORK TOWARDS A COMPANY AND
• CREATIVITY ACHIEVE THAT
COMMON GOAL ENCOURAGING THEM
• LONG-TERM VISION VISION
TO DO THE SAME
THE
HE CUSTOMER-
HE EMPHASIZED CENTRIC
CULTURE IMPLEMENTED
REFORMS AND
INITIATIVES
HE IDENTIFIED AREAS FOR
IMPROVEMENT
THE
IMPORTANCE
OF CUSTOMER
SATISFACTION
CULTURE
HELPED KAI
STAND OUT
FROM ITS
COMPETITORS
IGNATIUS JONAN HIS FOCUS ON

HE CREATED A
UNDERSTOOD THAT PEOPLE,
CULTURE OF
A STRONG CREATIVITY, AND TO IMPROVE KAI’S ENSURED THAT HIS
INNOVATION
CORPORATE LONG-TERM VISION PERFORMANCE DEMONSTRATING EMPLOYEES WERE WHICH PLAYED A
CAN LEAD TO A WHERE EMPLOYEES
CULTURE IS ALIGNS WITH THE AND CUSTOMER TOOK CONCRETE HIS ABILITY TO FULLY COMMITTED KEY ROLE IN
COMPETITIVE WERE
ESSENTIAL FOR IMPORTANCE OF A SATISFACTION AS STEPS TO ADDRESS TURN A STRATEGIC TO PROVIDING THE IMPROVING THE
ADVANTAGE IN THE ENCOURAGED TO
ACHIEVING COMPANY CULTURE ONE OF THE THEM VISION INTO BEST POSSIBLE COMPANY'S
MARKETPLACE DEVELOP NEW AND
OPERATIONAL THAT SUPPORTS STRATEGY TANGIBLE RESULTS CUSTOMER PERFORMANCE
CREATIVE
EXCELLENCE AND AND ENCOURAGES EXECUTION EXPERIENCE
SOLUTIONS TO
EXECUTING INNOVATION AND
PROBLEMS
STRATEGY COLLABORATION
TECHNOLOGY
• PLAYED A CRUCIAL ROLE IN JONAN'S EFFORTS TO MODERNIZE THE RAILWAY INFRASTRUCTURE AND IMPROVE OPERATIONAL EFFICIENCY
• HE RECOGNIZED THAT TECHNOLOGY COULD BE A GAME-CHANGER FOR KAI
• HE INTRODUCED SEVERAL NEW TECHNOLOGIES TO IMPROVE OPERATIONAL EFFICIENCIES, SUCH AS ONLINE TICKETING AND ENHANCED ONBOARD
EXPERIENCES
THE INTRODUCTION OF ONLINE TICKETING AND OTHER TECH-DRIVEN INITIATIVES AS KEY STRATEGY SUCCESS TO SET KAI
APART FROM ITS COMPETITORS
MODERNIZING THE RAILWAY INFRASTRUCTURE ALLOWED THE COMPANY TO PROVIDE FASTER AND MORE RELIABLE
SERVICES
BY LEVERAGING TECHNOLOGY, TRANSFORM KAI INTO A MODERN AND INNOVATIVE COMPANY WELL-POSITIONED FOR
FUTURE SUCCESS
THE TRANSFORMATIONAL LEADERSHIP OF
IT'S CRUCIAL TO HAVE STRONG IGNATIUS JONAN DEMONSTRATES THE
ACHIEVING OPERATING EXCELLENCE AND LEADERSHIP, A POSITIVE CULTURE, AND A IMPORTANCE OF A SUPPORTIVE COMPANY
EXECUTING STRATEGY ARE CRUCIAL TECHNOLOGY-FOCUSED APPROACH TO CULTURE, A CLEAR STRATEGIC VISION, AND
ASPECTS OF STRATEGIC MANAGEMENT SUCCEED AND ACHIEVE GOALS AND EFFECTIVE EXECUTION THROUGH
MAINTAIN COMPETITIVE ADVANTAGE TECHNOLOGY IN ACHIEVING OPERATIONAL
EXCELLENCE AND EXECUTING STRATEGY
IGNATIUS JONAN FOCUS ON PEOPLE,

SERVES AS AN EXCELLENT EXAMPLE OF
CREATIVITY, AND LONG-TERM VISION
HOW A LEADER CAN LEVERAGE KEY
TRANSFORMED PT KERETA API INDONESIA
SUCCESS FACTORS TO DRIVE CHANGE AND
INTO A MORE EFFICIENT AND CUSTOMER-
SUCCEED IN INDONESIAN BUSINESS
CENTRIC COMPANY
END PART 5
EXECUTION, AND
GOVERNANCE
PART 6
THE BOD ROLE IN A COMPANY IS CRUCIAL
IN OVERSEEING THE STRATEGIC
MANAGEMENT PROCESS
RESPONSIBLE FOR SETTING THE COMPANY'S VISION AND

OBJECTIVES AND GUIDING THE SENIOR MANAGEMENT
TEAM IN IMPLEMENTING THE STRATEGY
ROLE OF THE BOARD OF ENSURES THE COMPANY'S OVERALL SUCCESS AND
DIRECTORS ACCOUNTABILITY TO ITS STAKEHOLDERS
RESPONSIBLE FOR OVERSEEING ITS OVERALL STRATEGY

AND ENSURING THAT THE COMPANY IS ON THE RIGHT
TRACK TO ACHIEVE ITS VISION AND OBJECTIVES
THE "GUARDIANS" OF THE COMPANY, ENSURING THAT

ALL THE IMPORTANT DECISIONS ARE MADE WITH THE
COMPANY'S AND ITS STAKEHOLDERS' BEST INTERESTS IN
MIND
BOD ROLES IN THE STRATEGY-
FORMULATION, STRATEGY-EXECUTION
PROCESS
OVERSEE THE FIRM’S FINANCIAL ACCOUNTING AND

REPORTING PRACTICES.
CORPORATE GOVERNANCE: DILIGENTLY CRITIQUE AND OVERSEE THE COMPANY’S

THE BOARD OF DIRECTORS DIRECTION, STRATEGY, AND BUSINESS APPROACHES.
EVALUATE THE CALIBER OF SENIOR EXECUTIVES’

STRATEGY-MAKING AND STRATEGY-EXECUTING
SKILLS.
INSTITUTE A COMPENSATION PLAN FOR TOP

EXECUTIVES THAT REWARDS THEM FOR ACTIONS
AND RESULTS THAT SERVE SHAREHOLDER INTERESTS.
STRONG BOARDS LEAD TO GOOD CORPORATE GOVERNANCE
A STRONG, INDEPENDENT BOARD OF DIRECTORS REFLECTED WITH:
IS WELL-INFORMED ABOUT THE COMPANY’S PERFORMANCE
THE ROLE AND GUIDES AND JUDGES THE CEO AND OTHER TOP EXECUTIVES
RESPONSIBILITY OF A HAS THE COURAGE TO CURB MANAGEMENT ACTIONS IT BELIEVES ARE
COMPANY’S BOARD OF INAPPROPRIATE OR UNDULY RISKY
DIRECTORS CERTIFIES TO SHAREHOLDERS THAT THE CEO IS DOING WHAT THE BOARD EXPECTS
PROVIDES INSIGHT AND ADVICE TO MANAGEMENT
IS INTENSELY INVOLVED IN DEBATING THE PROS AND CONS OF KEY DECISIONS AND
ACTIONS
PROCTER & GAMBLE (P&G) ENRON: THE RISE AND FALL
ROLE OF THE BOARD OF WORLD-RENOWNED CONSUMER GOODS

COMPANY.
HIGHLIGHTS THE IMPORTANCE OF HAVING A
STRONG AND INDEPENDENT BOARD OF
DIRECTORS
DIRECTORS AND IMPLEMENTED A RIGOROUS GOVERNANCE THEY SHOULD HOLD THE COMPANY'S
EXECUTING STRATEGY IN STRUCTURE MANAGEMENT ACCOUNTABLE
PRACTICE PUT IN PLACE EFFECTIVE STRATEGIC

DECISION-MAKING PROCESSES
ENSURE THAT THE COMPANY'S OPERATIONS
ARE CONDUCTED ETHICALLY AND
RESPONSIBLY
ENABLING P&G TO CONTINUE TO GROW

AND SUCCEED IN A CONSTANTLY CHANGING
MARKET.
THE COMPANY HAS BEEN PLAGUED BY RISKY INVESTMENT STRATEGY
• DEBT • IN 2018, HAD INVESTED IN RISKY AND
• MISMANAGEMENT QUESTIONABLE ASSETS
PT JIWASRAYA IS A STATE-OWNED • ALLEGATIONS OF CORRUPTION • STOCKS IN PENNY COMPANIES AND PROPERTY
INSURANCE COMPANY IN INDONESIA DEVELOPMENT PROJECTS
• RESULTED IN A SIGNIFICANT FINANCIAL LOSS
• LED TO A LOSS OF TRUST IN THE COMPANY AND A
DECLINE IN ITS BUSINESS PERFORMANCE
A WEAK GOVERNANCE STRUCTURE, AND

FAILD TO EXERCISE PROPER DUE
THE LACK OF EFFECTIVE GOVERNANCE ITS BOARD OF DIRECTORS FAILED TO
DILIGENCE OR SCRUTINIZE INVESTMENT
AND OVERSIGHT PROVIDE ADEQUATE OVERSIGHT TO THE
DECISIONS
MANAGEMENT TEAM
ALLEGATIONS OF CORRUPTION WHICH THE INDONESIAN GOVERNMENT RESPONSE
SEVERAL OF ITS EXECUTIVES WERE • INJECTED FUNDS
IMPLICATED • APPOINTED A NEW BOARD OF DIRECTORS TO PROVIDE
STRONGER GOVERNANCE OVERSIGHT
• CORRUPTION CASES,
• EMBEZZLEMENT • LEGAL ACTION AGAINST THOSE INVOLVED IN
CORRUPTION CASES
• MONEY LAUNDERING
THE CASE HIGHLIGHTS

• THE IMPORTANCE OF EFFECTIVE GOVERNANCE IN
ENSURING A COMPANY'S SUCCESS
• THE LACK OF PROPER GOVERNANCE AND OVERSIGHT
CAN LEAD TO RISKY DECISIONS AND CORRUPT
PRACTICES
• CAN LEAD TO A COMPANY'S DOWNFALL
• ILLUSTRATES THE NEED FOR TRANSPARENCY AND
ACCOUNTABILITY IN CORPORATE PRACTICES
PT SUMBER ALFARIA TRIJAYA TBK, ALSO KNOWN STRONG GOVERNANCE STRUCTURE AND
AS ALFAMART EFFECTIVE BOARD OF DIRECTORS
• LEADING RETAIL COMPANY IN INDONESIA • TRANSPARENT DECISION-MAKING PROCESS
• ESTABLISHED IN 1989 • STRONG CULTURE OF ACCOUNTABILITY
• OPERATES >17,000 STORES ACROSS INDONESIA. • ENSURE BUSINESS ACTIVITIES CONDUCTED IN AN ETHICAL
• SPECIALIZES IN PROVIDING DAILY NEEDS AND CONVENIENCE AND RESPONSIBLE MANNER
STORE ITEMS
• FOOD, BEVERAGES, HOUSEHOLD ITEMS, AND PERSONAL
CARE PRODUCTS
RECOGNIZED AS ONE OF THE BEST GOOD

CORPORATE GOVERNANCE (GCG) COMPANIES
IN INDONESIA.
• RECEIVED MULTIPLE AWARDS FOR ITS COMMITMENT TO GCG
• TOP 50 PUBLIC COMPANIES IN GCG FROM IICD AND
SWA MAGAZINE
• REFLECT ALFAMART'S COMMITMENT TO ETHICAL
PRACTICES AND TRANSPARENCY IN ITS BUSINESS
OPERATIONS
THE COMPANY'S BOARD OF DIRECTORS PLAYS A ALFAMART ALSO KNOWN FOR

CRITICAL ROLE IN ENSURING THE COMPANY'S LONG- • FOCUS ON INNOVATION AND TECHNOLOGY
TERM SUCCESS • IMPLEMENTED SEVERAL TECHNOLOGY-DRIVEN INITIATIVES
• PROVIDES GUIDANCE AND OVERSIGHT TO THE MANAGEMENT • E-WALLET AND A MOBILE APP
TEAM • IMPROVE CUSTOMER CONVENIENCE
• ENSURES THE COMPANY'S STRATEGIES AND INITIATIVES ARE • ENHANCE THE SHOPPING EXPERIENCE
ALIGNED WITH ITS VISION AND OBJECTIVES • THESE INITIATIVES DIFFERENTIATE FROM ITS COMPETITORS AND
• ENSURES THE COMPANY COMPLIES WITH ALL LEGAL AND MAINTAIN MARKET SUPERIOR PERFORMANCE
REGULATORY REQUIREMENTS
• MAINTAINS HIGH ETHICAL STANDARDS
HIGHLIGHTS THE IMPORTANCE OF
THE CASE OF PT JIWASRAYA IS A
EFFECTIVE GOVERNANCE IN ENSURING A PT SUMBER ALFARIA TRIJAYA TBK
CAUTIONARY TALE FOR COMPANIES.
COMPANY'S STRATEGY APPLICATION
• THE COMPARISON BETWEEN BOTH • IT HIGHLIGHTS THE IMPORTANCE OF • A LEADING RETAIL COMPANY IN
COMPANIES HIGHLIGHTS THE EFFECTIVE GOVERNANCE INDONESIA
IMPORTANCE OF EFFECTIVE • THE ROLE OF THE BOARD OF DIRECTORS • ACHIEVED SIGNIFICANT SUCCESS
GOVERNANCE IN ENSURING THAT A IN ENSURING A COMPANY'S SUCCESS. • STRONG GOVERNANCE STRUCTURE
COMPANY'S STRATEGY IS ALIGNED WITH • EXAMPLE OF HOW POOR GOVERNANCE • EFFECTIVE BOARD OF DIRECTORS
ITS VISION AND OBJECTIVES. AND CORRUPT PRACTICES CAN LEAD TO A • FOCUS ON INNOVATION AND
• A BOARD OF DIRECTORS PLAYS A COMPANY'S DOWNFALL TECHNOLOGY
CRUCIAL ROLE IN OVERSEEING THE • THE NEED FOR TRANSPARENCY AND
STRATEGIC MANAGEMENT PROCESS AND • THE COMMITMENT TO ETHICAL
ACCOUNTABILITY IN CORPORATE PRACTICES AND TRANSPARENCY HAS
ENSURING THAT A COMPANY IS PRACTICES
GOVERNED WITH HELPED IT TO MAINTAIN ITS POSITION AS
A LEADER IN THE INDONESIAN MARKET.
• TRANSPARENT
• ACCOUNTABLE
• ETHICAL
KEY TAKEAWAYS FROM TODAY'S SESSION AND TO MAINTAINING A COMPANY'S MARKET
THE 2ND CHAPTER OF THE TEXTBOOK PERFORMANCE, REQUIRES:
• BUSINESSES CAN ENHANCE THEIR ABILITY TO MAKE • TRANSPARENCY
INFORMED DECISIONS AND ACHIEVE THEIR STRATEGIC • ACCOUNTABILITY
GOALS • EFFECTIVE MANAGEMENT
• THE IMPORTANCE OF EFFECTIVE GOVERNANCE • ETHICAL BUSINESS PRACTICES
• CRITICAL FOR A COMPANY'S SUCCESS
• A KEY COMPONENT OF THE STRATEGIC MANAGEMENT
PROCESS
THE COMPARISON BETWEEN THESE TWO IN CONCLUSION,

COMPANIES SHOWS THE ROLE OF THE BOARD • THE BOARD OF DIRECTORS PLAYS A VITAL ROLE IN THE
OF DIRECTORS IN ENSURING EFFECTIVE STRATEGIC MANAGEMENT PROCESS OF A COMPANY
GOVERNANCE • PROVIDE OVERSIGHT AND DIRECTION, ENSURING THE
COMPANY IS ON THE RIGHT TRACK TO ACHIEVE ITS VISION
• HIGHLIGHTS THE IMPORTANCE OF TRANSPARENCY, AND OBJECTIVES
ACCOUNTABILITY, EFFECTIVE MANAGEMENT, AND ETHICAL
BUSINESS PRACTICES IN ENSURING THAT A COMPANY'S
STRATEGY IS ALIGNED WITH ITS VISION AND OBJECTIVES.
REFERENCE
• John E. Gamble, Margaret A. Peteraf, Arthur Thompson (2020), "Strategic
Management: The Quest for Competitive Advantage” 7th Edition, McGraw-Hill
Higher Education.
• .
END PART 6 & CHAPTER 2

MGMT8058048 Session 02

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MGMT8058048 Session 02

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STRATEGY FORMULATION,

UPON COMPLETION OF THIS SESSION, STUDENTS

LO 1: FORMULATE MANAGEMENT ISSUES AND

LO 2: APPLY APPROPRIATE APPROACHES AND

LO2-4: RECOGNIZE WHAT A COMPANY MUST DO TO ACHIEVE OPERATING EXCELLENCE AND TO

LO2-5: IDENTIFY THE ROLE AND RESPONSIBILITY OF A COMPANY’S BOARD OF DIRECTORS IN

DIRECTIONAL IS FORWARD LOOKING; DESCRIBES THE STRATEGIC COURSE THAT MANAGEMENT

FOCUSED IS SPECIFIC ENOUGH TO PROVIDE MANAGERS WITH GUIDANCE IN MAKING

FLEXIBLE IS NOT SO FOCUSED THAT IT MAKES IT DIFFICULT FOR MANAGEMENT TO ADJUST TO

ARE RELATED TO A FIRM’S

IF ACHIEVED, INDICATE THAT

PROVIDES DIRECTION AND ENERGIZES

UNDERSTANDING MAKES THE ORGANIZATION’S CASE FOR “WHERE

EVOKES POSITIVE SUPPORT AND EXCITEMENT.

ENLISTS THE COMMITMENT OF COMPANY

IT CRYSTALLIZES SENIOR EXECUTIVES’ OWN

IT REDUCES THE RISK OF RUDDERLESS

STRATEGIC VISION IT IS A TOOL FOR WINNING THE SUPPORT

IT PROVIDES A BEACON FOR LOWER-LEVEL

IT HELPS AN ORGANIZATION PREPARE FOR

PROFIT IS THE OBVIOUS INTENT OF EVERY

HELPS TO ENSURE THAT EVERYONE WITHIN THE

THE IMPORTANCE IN ALIGNING

CHALLENGES IN DEVELOPING COMMUNICATING THE VISION TO INSPIRE AND MOTIVATE

REQUIRES A DEEP UNDERSTANDING OF THE COMPANY'S

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

A STRATEGIC INFLECTION POINT

ASTRA'S VISION STATEMENT:

A CLEAR STRATEGIC VISION AND

"TO PROSPER WITH THE NATION BY PROVIDING THE BEST VALUE TO

CREATE A STRONG CORPORATE CULTURE THAT SUPPORTS ASTRA'S COMPANY

NAVIGATED THROUGH STRATEGIC INFLECTION POINTS

• A STRATEGIC INFLECTION POINT REFERS TO A

• RATHER THAN CUT BACK ON

• ASTRA RECOGNIZED THE GROWING IMPORTANCE

THE CASE IS A TESTAMENT TO A PRIME

CAN ANYONE THINK OF HOW ASTRA'S VISION AND MISSION HAVE

HOW HAS THE COMPANY ENSURED ALIGNMENT ACROSS ITS ENTIRE

HOW TO ATTRACT AND PLEASE CUSTOMERS?

HOW TO COMPETE AGAINST RIVALS?

CRAFTING A STRATEGY HOW TO POSITION THE FIRM IN THE

HOW BEST TO RESPOND TO CHANGING

HOW TO MANAGE EACH FUNCTIONAL PIECE OF

HOW TO ACHIEVE THE FIRM’S PERFORMANCE

CRAFTING A STRATEGY ARE RELATED TO A FIRM’S MARKETING

ARE LEADING INDICATORS OF A FIRM’S

IF ACHIEVED, INDICATE THAT A FIRM’S FUTURE

CRAFTING A STRATEGY CRAFTING STRATEGY IS RARELY SOMETHING ONLY

A FIRM’S OVERALL STRATEGY IS A COLLECTION OF

LINKAGE BETWEEN FINANCIAL OBJECTIVES ARE CRUCIAL IN SETTING

DESIGNED TO HELP THE COMPANY ACHIEVE ITS OVERALL GOALS

THE CASE HIGHLIGHTS

• THE IMPORTANCE OF REGULARLY REVIEWING AND ADJUSTING OBJECTIVES AS NEEDED

THE FINANCIAL DIFFICULTIES, AND SUBSEQUENT BANKRUPTCY CHARGE

THE FURTHER FINANCIAL OBJECTIVES MAY INVOLVE

INCREASING ITS REVENUE AND

IMPROVING ITS OVERALL

THE SIGNIFICANCE OF SETTING OBJECTIVES

• CAREFULLY CONSIDER THE SHORT- • DESIGNED TO BE ACHIEVABLE • FOCUSED ON THE COMPANY'S

THE APPROACH ALLOWS TO MEASURE REGULAR MONITORING ITS PROGRESS AND

HIGHLIGHTS THE IMPORTANCE

• HAVING CLEAR, MEASURABLE, AND ACHIEVABLE STRATEGIC AND FINANCIAL OBJECTIVES

THE BALANCED SCORECARD APPROACH TO PERFORMANCE MEASUREMENT