Strategies in Action

Topics: Strategic management, Strategic planning, Management Pages: 16 (3415 words) Published: March 5, 2013



FMA42FC1 – BUS 403


Long Term Objectives

Performance goals of an organization, intended to be achieved over a period of five years or more. Long-term objectives usually include specific improvements in the organization's competitive position, technology leadership, profitability, return on investment, employee relations and productivity, and corporate image.

The Nature of Long Term Objective

Objectives should be quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable, and congruent among organizational units. Objectives are commonly stated in terms such as growth in assets, growth in sales, profitability, market share, degree and nature of diversification, degree and nature of vertical integration, earnings per share, and social responsibility. Long-term objectives are needed at the corporate, divisional, and functional levels in an organization. They are an important measure of managerial performance.

Varying Performance Measures by Organizational Level

OrganizationalBasis for Annual Bonus Merit Pay

Corporate-75% based on long term objective
-25% based on annual objective
Division-50% based on long term objective
-50% based on annual objective
Function-25% based on long term objective
-75% based on annual objective

The Desired Characteristics of Objective

8.Congruent across department

The Benefits of Having Clear Objective

1.Provide direction by revealing expectations
2.Allows synergy
3.Aid in evaluation by serving as standard
4.Establish priorities
5.Reduce uncertainty
6.Minimize conflicts
7.Stimulate exertion
8.Aid in allocation of resources
9.Aid in design of jobs
10.Provide basis for consistent decision making

Two Types of Objective

Financial Objective
Strategic Objective

Financial Objective

Financial objectives include ones 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.

Strategic Objective

Strategic objectives include ones such as larger market share, quicker on-time delivery than rivals, quicker design-to-market times than rivals, lower costs than rivals, higher product quality than rivals, wider geographic coverage than rivals

Strategists should avoid the following alternative ways to "not managing by objectives."

• Managing by Extrapolation
• Managing by Crisis
• Managing by Subjective
• Managing by Hope

Balanced scorecard

The balanced scorecard is a strategy evaluation and control technique that derives its name from the perceived need of firms to balance´ financial measures, which are oftentimes used exclusively in strategy evaluation and control with non-financial measures such as product quality and customer service.

A balanced scorecard for a firm is simply a listing of all key objectives to work towards along with an associated time dimension of when each objective is to be accomplished, as well as a primary responsibility or contact person, department, or division for each objective.

Types of Strategies

These are alternative strategies that an enterprise could pursue can be categorize into 11 actions: forward integration, backward integration, horizontal integration, market penetration, market development, product development, related...
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