14670761 Annual Objectives UNIT I

8/6/2019 14670761 Annual Objectives UNIT I

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Strategy Implementation


2/23

Strategy Implementation

Translating thought into a Strategic action Three Concern Areas:

Identification of Measurable, Mutually

determined annual objectives

Development of Specific Functional Strategies

Communication of Concise policies to guidedecisions


3/23

Annual Objectives

Translation of Long Term aspirations into Yearsbudget

Specific basis for Monitoring & Controlling

organizational Performance Alert Top Management to variations in Key

Performance Areas

Specific, Measurable statements of what anorganization subunit is expected to achieve in

contributing to accomplishment of Businesss

Grand Strategy


4/23

Annual Objectives

Qualities of Effective Annual Objectives:

Linkage to Long Term objectives Add breadth & specifies what must be accomplished in

order to achieve long term objective Provide Targets for performance of operating areas

Consistency in Annual Objectives: What, When & How Measurement

Measurable: Measurable activity & measurable outcomes

Priorities: Prioritize short term objectives Objectives critical to success deserve additional attention


5/23

Qualities of Effective Annual Objectives

Acceptable Flexible

Suitable

Motivating

Understandable

Achievable


6/23

Annual ObjectivesBenefits of Annual Objectives:

Tangible & Meaningful focus through which managerstranslate long term objectives & grand strategies intospecific actions

Clarity of Purpose: A better understanding of each

persons role in business mission Link b/w Strategic Intent & operating reality: Process

to form annual objectives form for addressingconflicting political concerns

Basis for Strategic Control: Developing budgets,schedules, Trigger points & other mechanisms forcontrolling strategy implementation


7/23

Annual Objectives

Motivational Pay Offs in strategyImplementation - Link to Business reward

structure


8/23

Functional Strategies

Functional Strategy is short term game plan for a key

functional area within a company Specific details about how key functional areas are to be

managed in the near future

Areas of Marketing, Finance, Production, R&D &

Personnel Implementing Grand Strategy by organizing &

activating specific sub units of the company to pursuethe business strategy in daily activities

Translate Grand Strategy into action designed toaccomplish specific annual objectives

Identify & coordinate actions that support the grandstrategy & improve the likelihood of accomplishingannual objectives


9/23

Distinction B/W Grand & Functional

Strategy

Time Horizon: Shorter for Functional Strategy

Identify & coordinate short term actions

Shorter time span focuses managers attention onwhat needs to be done now to make grand strategy

work

Shorter time framework allows functional managers

to recognize current conditions & adjust to changing

conditions in developing functional strategies


10/23

Distinction B/W Grand & FunctionalStrategy

Specificity: More specific than Grand Strategy

Functional actions but Grand Strategy provides general

direction

Specific guidance to acc annual objectives

How to meet annual objectives

Adds Substance, Completeness & meaning to what a

specific sub unit of a business must do

Clarifies Top Management how functional managers intend

to accomplish grand strategy

Facilitate coordination b/w operating units within orgn by

clarifying areas of interdependence & potential conflict


11/23

Distinction B/W Grand & FunctionalStrategy

Participants: Functional strategy is delegated by business level

manager to principal subordinates for running

operating area of the business

Involvement of operating managers essential as he is

the front runner & active involvement increases

commitment to strategies developed


12/23

Functional Strategies in theMarketing Area

Product: Identification of customer needs

Features, Product Lines, Packaging, Quality & NPD

Product Service Concept & Target Markets

Most profitable Product lines

Changes to influence customer orientation

Which products do we emphasize


13/23

Price Approach to pricing strategy: Cost oriented,

market oriented or competition oriented

Discounting structures

Pricing policies: National or Regional differences Price Segments to be Targeted

Profit margins

Market Skimming or Market Penetration


14/23

Place

Decisions regarding channel management

Level of Market Coverage

Priority geographic areas

Channel objectives & Structures

Sales organization structure

SCM


15/23

Promotion

Key Promotion priorities & Approaches

Advertising, Communication priorities &

approaches linked to different products or

markets Media Management

Promotion Budgeting


16/23

Functional Strategies in the Finance Area

Capital Acquisition: Acceptable cost of capital

Desired proportion of short term & long term

debt; Preferred & common equity

Balance b/w Internal & External Funding Appropriate Risk & Ownership structures

Levels & Forms of leasing for providing assets


17/23

Capital Allocation: Priorities for Capital Allocation Projects

Final selection of Projects Capital Allocation by operating Managers w/o

approval

Dividend & Working Capital Management: Proportion of earnings as dividends Importance of dividend stability Cash Flow Requirements; Minimum &

Maximum Cash balances Liberal/ Conservative Credit Policies Payment timings & Procedures


18/23

Functional Strategies in the R & D Area

Research vs. Commercial Development: Emphasis on Innovation & Break Through

Emphasis on product development, Refinement

& modification

Time Horizon: Short Term or Long Term

Orientation to support business strategy


19/23

Organizational Fit: In House R & D or contracting out

Centralized or Decentralized

Basic R&D Posture: Offensive posture leading Innovation &

Development in Industry

Defensive posture reacting to competitorsdevelopment

Functional Strategies in the R & D Area


20/23

Functional Strategies in Personnel

Development of Managerial Talent: Employee Recruitment, Selection & Orientation

Career Development & Counseling, Training &

Development

Compensation & Regulatory Concerns: Compensation, Labor/Union Relations

Competent & Well Motivated: Discipline, Control & Evaluation

Performance Appraisal, 360 degree Feedback

D l i & C i ti C i


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Developing & Communicating Concise

Policies

Policies: Directives designed to guide thethinking, decisions & actions of managers &subordinates in implementing orgn strategy

Guidelines for establishing & controlling

ongoing operations consistent with Firmsstrategic objectives

Increase managerial effectiveness by

standardizing routine decisions & controllingdiscretion of managers

Policies are derived from functional strategieswith key purpose of aiding strategy execution


22/23

Purpose of Policies

Indirect control over Independent Action

Uniform Handling of Similar Actions

Quicker decisions by standardizing answers

Institutionalize the basic aspects of Orgn. Behavior

Reduce Uncertainty in Repetitive & day to daydecision making

Counteract resistance to or rejection for chosen

strategies by organization members Predetermined answer to routine problems

Afford managers a mechanism for avoiding hasty &ill conceived decisions in changing operations


23/23

Policies

Policies can vary in their strategic

significance

Policies can be externally imposed or

internally driven

Documents

14670761 Annual Objectives UNIT I