2. Implementation Chapter 10 McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

3. Learning Objectives 1. Understand how short-term objectives are used in strategy implementation 2. Identify and apply the qualities of good short-term objectives as applied to your own experiences 3. Illustrate what is meant by functional tactics and how they are used in strategy implementation 4. Gain a general sense of what outsourcing is and how it becomes a choice in functional tactics decisions for strategy implementation 5. Understand what policies are and how to use them to empower operating personnel 6. Understand the use of financial reward in executive compensation 7. Identify different types of executive compensation and when to use each in strategy implementation 10-3

4. Short-Term Objectives  Short-term objectives are measurable outcomes achievable in one year or less  Discussion about short-term objectives helps raise issues and potential conflicts within an organization  Short-term objectives assist strategy implementation by identifying measurable outcomes of action plans or functional activities, which can be used to make feedback, correction, and evaluation more relevant and acceptable 10-4

5. Five steps in implementing the firms strategies  Identifying the short term objectives  Initiate a specific functional tactics  Outsourcing nonessential functions  Empower the employees in the organization  Design effective rewards

6. Short-Term Objectives Short-Term Objectives provide:  Specificity  Time frame for completion  Who is responsible— Accountability 10-6

7. Qualities of Effective Short-Term Objectives  Measurable  Measurable activity  Measurable outcomes  Priorities  Simple ranking  Relative priority / Weights  Linked to Long-Term Objectives  Cascading effect 10-7

8. Short-Term Objectives and Action Plans Their value-added benefits:  They give operating personnel a better understanding of their role in the firm’s mission  The process of developing them becomes a forum for raising and resolving conflicts between strategic intent and operational reality  They provide a basis for developing budgets, schedules, trigger points and other sources of strategic control  They can be powerful motivators, especially when connected to the reward system 10-8

9. Functional Tactics  Functional tactics are the key, routine activities that must be undertaken in each functional area to provide the business’s products and services  In a sense, functional tactics translate thought into action  Every value chain activity in a company executes functional tactics that support the business’s strategy and help accomplish strategic objectives 10-9

10. Functional Tactics  Functional tactics are different from business or corporate strategies in three fundamental ways: 1. Time horizon 2. Specificity 3. Participants who develop them 10-10

11. Outsourcing Functional Activities  Outsourcing is acquiring an activity, service, or product necessary to provide a company’s products or services from “outside” the people or operations controlled by that acquiring company  Outsourcing can save valuable time and money for many organizations 10-11

12. Empowering Operating Personnel: Policies  Empowerment is the act of allowing an individual or team the right and flexibility to make decisions and initiate action  Policies are directives designed to guide the thinking, decisions, and actions of managers and their subordinates in implementing a firm’s strategy 10-12