Long-Term Objectives
Objectives
� Quantifiable
Strategies represent the actions to be taken to accomplish long term objectives (usually 2-5 years).
� Quantifiable
� Measurable
� Realistic
� Understandable
� Challenging
� Hierarchical
� Congruent
� Timeline
Financial Objectives
� Growth in revenues
� Growth in earnings
� Higher dividends
� Higher profit margins
Financial vs. Strategic Objectives
Strategic Objectives
� Larger market share
� Achieving ISO 14001
� Shorter design-to-market
� Lower Cost
� Higher earnings per share
� Improved cash flow
� Higher product quality
� Wider geographic coverage
� Managing by Extrapolation
“If it ain’t broke, don’t fix it.”
� Managing by Crisis
The true measure of a good strategist is the ability to fix problems
Not Managing by Objective
problems
� Managing by Subjectives
“Do your own thing, the best way you know how.”
� Managing by Hope
The future is full of uncertainty and if first you don’t succeed, then you may on the second or third try.
Robert Kaplan & David Norton
� Strategy evaluation & control technique
� Balance financial measures with nonfinancial measures
� Balance shareholder objectives with customer &
The Balanced Scorecard
operational objectives
Division Level
Corporate
Level
Large Company
Types of Strategies
Company
Level
Small Company
Operational Level
Functional Level
Division Level
Functional Level
Operational Level
Types of Strategies
Forward Integration
Vertical Integration Strategies Backward Integration
Horizontal Integration
Market Penetration
Intensive Strategies Market Development
Product DevelopmentProduct Development
Diversification StrategiesRelated Diversification
Unrelated Diversification
Retrenchment
Defensive Strategies Divestiture
Liquidation
2007 Examples
Forward Integration Southwest Airlines selling tickets through Galileo
Backward Integration Hilton Hotels could acquire a large furniture manufacturer
Horizontal Integration Huntington Bancshares and Sky Financial Group merged
Market Penetration McDonald’s selling millions of “Shrek the Third” items to a healthier
image
Market Development Burger King opened its first restaurant in Japan
Product DevelopmentProduct Development Google introduced “Google Presents” to compete with PowerPoint
Related Diversification MGM Mirage is opening its first non-casino luxury hotel
Unrelated Diversification Ford Motor Company entered the industrial bank business
Retrenchment Discovery Channel closed 103 mall-based and stand-alone stores
DivestitureWhirlpool sold its struggling Hoover floor-care business to Techtronic
Industries
Liquidation Follow Me Charters sold all of its assets and ceased doing business
Joint Venture/Partnering
Two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity.
Merger/Acquisition
Two organizations of about equal size unite to form one enterprise / a large organization purchases (acquires) a smaller firm or vice versa.
Means for Achieving Strategies
large organization purchases (acquires) a smaller firm or vice versa.
First Mover Advantages
Benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms
Outsourcing
Companies taking over the functional operations of other firms
Nonprofit and Governmental Organization
� Educational Institutions
� Medical Organizations
� Governmental Agencies and Departments
1. Indonesian strategy implementation (Vertical Integration, Intensive, Diversification, Defensive Strategies)
a) The example, one for each category
b) The reason behind the strategy
c) Literature support
Experiential Exercise
2. Your Campus Alternative strategy
a) What strategy?
b) Why?
c) What do you expect with that kind of strategy?