13. Rudy Harland Seniang Sakti, Slide PP, Strategic Implementation From Short Term Strategy, Functional Level, and Tactic

1. Modul ke:
Fakultas
Program Studi
STRATEGIC MANAGEMENT
Strategic Implementation From
Short Term Strategy, Functional
Level, and Tactic
Rudy Harland Seniang Sakti
55117110019
Dosen Pengampu :
Prof. Dr. Hapzi Ali, CMA
13Pasca Sarjana
Magister
Management

2. Strategic Management, hapzi.ali@mercubuana.ac.id
Strategic Implementation From Short Term Strategy,
Functional Level, and Tactic
Kompetensi:
• Mahasiswa mampu menjelaskan tentang Strategic
Management : Strategic Implementation From Short Term
Strategy, Functional Level, and Tactic.
Materi Pembelajaran:
• Strategic Implementation From Short Term Strategy,
Functional Level, and Tactic.
Indikator:
• Ketepatan menjelaskan tentang Strategic Management :
Strategic Implementation From Short Term Strategy,
Functional Level, and Tactic.

3. Strategic Management, hapzi.ali@mercubuana.ac.id
Strategic Management Model
Company mission &
social responsibility
Long-term objectives Generic & grand strategies
Short-term objectives;
reward system Functional tactics Policies that empower action
Restructuring, reengineering & refocusing the organization
Strategic control & continuous improvement
External Environment Internal analysis
Strategic analysis & choice
Legend
Feedback
Feedback
Possible?
Desired?
Major impact
Minor impact
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.

4. Strategic Management, hapzi.ali@mercubuana.ac.id
Strategy Implementation
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Identify short-term
objectives
Initiate specific functional
tactics
Communicate policies to
empower people
Design effective support
systems
Involves
development
of support
systems that

5. Strategic Management, hapzi.ali@mercubuana.ac.id
What are Short-Term Objectives ?
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Provide specific
guidance for what is to
be done, translating
vision into action

6. Strategic Management, hapzi.ali@mercubuana.ac.id
Role of Short-Term Objectives in Implementing
Strategy
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
1. “Operationalize” long-term objectives
2. Raise issues and potential conflicts requiring
coordination to avoid dysfunctional consequences
3. Identify measurable outcomes of functional
activities to be used to make feedback, correction,
and evaluation more relevant

7. Strategic Management, hapzi.ali@mercubuana.ac.id
Potential Conflicting Objectives and
Priorities
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Chief Executive Officer
Marketing Finance and accounting Manufacturing
•Distribution channels
•Customer service
•Inventory
obsolescence
•Communications
and data processing
•Carrying inventory
•Production supply
alternatives
•Warehousing
•Transportation
ResponsibilitiesObjectives
•More inventory •Less inventory
•Frequent short runs •Long production
runs
•Fast order processing •Cheap order processing
•Fast delivery •Lowest cost routing
•Field warehousing •Less warehousing •Plant warehousing

8. Strategic Management, hapzi.ali@mercubuana.ac.id
Relationship of Functional Tactics (Action Plans) to
Short-Term Objectives
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Specificity - Identify functional
activities to be undertaken to
build competitive advantage
Provide a clear time frame
for completion
Identify who is responsible for
each action in the plan
Action plans
enhance short-
term objectives
in three ways

9. Strategic Management, hapzi.ali@mercubuana.ac.id
Qualities of Effective Short-term Objectives
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Prioritized
Measurable
Linked to long-
term objectives

10. Strategic Management, hapzi.ali@mercubuana.ac.id
Creating Measurable Objectives
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Examples of
Deficient
Objectives
Examples of Objectives with Measurable Criteria
for Performance
To improve
morale in the
division (plant,
department,
etc.)
To improve
support of sales
effort
To improve
firm’s image
• To reduce turnover (absenteeism, number of rejects, etc.)
among sales managers by 10 percent by January 1, 2001.
• To reduce the time lapse between order data and delivery by 8
percent (two days) by June 1, 2001.
• To reduce the cost of goods produced by 6 percent to support a
product price decrease of 2 percent by December 1, 2001.
• To increase the rate of before- or on-schedule delivery by 5
percent by June 1, 2001.
• To conduct a public opinion poll using random samples in the
five largest U.S. metropolitan markets to determine average
scores on 10 dimensions of corporate responsibility by May 15,
2001. To increase our score on those dimensions by an average
of 7.5 percent by May 1, 2002.
Assumption: Morale is related to measurable outcomes (I.e.,
high and low morale are associated with different results).

11. Strategic Management, hapzi.ali@mercubuana.ac.id
Value-Added Benefits of Short-Term
Objectives
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Provide basis for
accomplishing
conflicting concerns
Give operating personnel a
better understanding of their
role in a firm’s mission
Motivation - Clarify personal
and group roles in a firm’s
strategies
Provide basis for
strategic control

12. Strategic Management, hapzi.ali@mercubuana.ac.id
What are Functional Tactics ?
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Key, routine activities
that must be undertaken in each
functional area to provide the
Translate grand
strategies into action
designed to accomplish
specific short-term
objectives
business’s products

13. Strategic Management, hapzi.ali@mercubuana.ac.id
Functional Tactics at General Cinema
Corporation
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Corporate Strategy Business Strategies Functional Tactics
Soft
drink
bottlers
Movie
exhibition
Sunkist
products
Concentration
and market
development
selective
Maintain and
selectively expand
leading
nationwide
position in the
movie exhibition
industry to
provide positive
cash flow for
corporate
diversification.
Functional tactics: Marketing
Seek only first-run films by
outbidding competition in each
local market; provide primarily
family-oriented movies; and
maintain an admission price only
slightly above that of local
competition.
Functional tactics: Finance
Use lease or sale and leaseback
arrangements of each theater to
maximize cash flow for corporate
expansions; seek profitability
through volume, not higher ticket
prices.
Functional tactics: Operations
Use multiscreen facilities with
minimal maintenance
requirements and a joint service
area to serve each minitheater.
Corporate strategy
Achieve 15-20 %
annual growth
through existing
businesses and
carefully selected
diversification into
leisure-oriented,
consumer-
oriented
product/service
businesses to
absorb increasing
cash flow from
theater and soft-
drink bottling
operations.

14. Strategic Management, hapzi.ali@mercubuana.ac.id
Differences Between Business Strategies
and Functional Tactics
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Time Horizon
•Shorter time horizon of
functional tactics
contributes to
successful
implementation by
•Focusing attention
on what needs to be
done now
•Allowing functional
managers to adjust
to changing current
conditions
Specificity
•Greater specificity of
functional tactics
contributes to
successful
implementation by
•Ensuring functional
managers focus on
accomplishments
•Clarifying for top
managers how
functional managers
intend to accomplish
business strategy
•Facilitating
coordination among
operating units
Participants
•General managers
establish long-term
objectives and overall
business strategies
•Operating managers
establish short-term
objectives and
functional tactics
leading to business
level success

15. Strategic Management, hapzi.ali@mercubuana.ac.id
Characteristics of Functional Tactics
in Production/Operations
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
• Viewed as core function of an organization
• Involves converting inputs into value-enhanced
output
• Focuses on decisions regarding
– Basic nature of firm’s POM system,
• Seeks optimum balance between investment input and
production/operations output
– Location
– Facilities design
– Process planning on a short-term basis

16. Strategic Management, hapzi.ali@mercubuana.ac.id
Key Functional Tactics in POM
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Functional
Tactic Typical Questions the Functional Tactic Should Answer
Facilities
and
equipment
Sourcing
Operations
planning
and control
• How centralized should the facilities be?
• How integrated should the separate processes be?
• To what extent should further mechanization or automation be
pursued?
• Should size and capacity be oriented toward peak or normal
operating levels?
• How many sources are needed?
• How should suppliers be selected, and how should relationships with
suppliers be managed over time?
• What level of forward buying (hedging) is appropriate?
• Should work be scheduled to order or to stock?
• What level of inventory is appropriate?
• How should inventory be used (FIFO/LIFO), controlled, and
replenished?
• What are the key foci for control efforts?
• Should maintenance be oriented to prevention or to breakdown?

17. Strategic Management, hapzi.ali@mercubuana.ac.id
Characteristics of Functional Tactics in
Marketing
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
• Lead to strategic success of the firm through the
profitable sale of products/services in target markets
• Clearly identify customer needs that
products/services aim to meet
• Identify where, when, and by whom
products/services are to be sold
• Define how firm will communicate with target
markets
• Directly influence supply, demand, profitability,
consumer perception, and regulatory response
through pricing

18. Strategic Management, hapzi.ali@mercubuana.ac.id
Key Functional Tactics in Marketing
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Functional
Tactic Typical Questions the Functional Tactic Should Answer
Product or
service
Price
• Which products do we emphasize?
• Which products/services contribute most to profitability?
• What product/service image do we seek to project?
• What consumer needs does the product/service seek to meet?
• What changes should be influencing our customer orientation?
• Are we competing primarily on price?
• Can we offer discounts or other pricing modifications?
• Are our pricing policies standard nationally, or is there regional control?
• What price segments are targeting?
• What is the gross profit margin?
Place
• What level of market coverage is necessary?
• Are there priority geographic areas?
• What are the key channels of distribution?
• What are the channel objectives, structure, and management?
• What sales organization do we want?
Promotion
• What are the key promotion priorities and approaches?
• Which advertising/communication priorities and approaches are linked
to different products, markets, and territories?
• Which media would be most consistent with the total marketing
strategy?

19. Strategic Management, hapzi.ali@mercubuana.ac.id
Characteristics of Functional Tactics in
Accounting and Finance
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
• Time frame of finance tactics varies because they direct
use of financial resources supporting the business
strategy, long-term goals, and annual objectives
• Long-term tactics guide decisions in
– Long-term capital investment
– Debt financing
– Dividend allocation
– Leveraging
• Short-term tactics guide decisions in
– Managing working capital and short-term assets
• Accounting-focused tactics have taken on increased
strategic significance in last decade

20. Strategic Management, hapzi.ali@mercubuana.ac.id
Key Functional Tactics in Finance and
Accounting
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Functional
Tactic Typical Questions the Functional Tactic Should Answer
Capital
acquisition
Capital
allocation
Dividend
and
working
capital
manage-
ment
• What is an acceptable cost of capital?
• What is desired proportion of short- and long-term debt? Preferred
and common stock?
• What balance is desired between internal and external funding?
• What risk and ownership restrictions are appropriate?
• What level and forms of leasing should be used?
• What are the priorities for capital allocation projects?
• On what basis should the final selection of projects be made?
• What level of capital allocation can be made by operating managers
without higher approval?
• What portion of earnings should be paid out as dividends?
• Are things other than cash appropriate as dividends?
• What are the cash flow requirements? Minimum and maximum?
• How liberal/conservative should credit policies be?
• What limits, payment terms, and collection procedures are necessary?
• What payment timing and procedure should be followed?

21. Strategic Management, hapzi.ali@mercubuana.ac.id
Characteristics of Functional Tactics in R&D
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
• Assumed a key strategic role in
many firms due to increasing rate
of technological change
• May be more critical instruments of
business strategy in some
industries than in others

22. Strategic Management, hapzi.ali@mercubuana.ac.id
Key Functional Tactics in R&D
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Functional
Tactic Typical Questions the Functional Tactic Should Answer
Basic
research vs.
product and
process
development
Time
horizon
• To what extent should innovation and breakthrough research be
emphasized? In relation to the emphasis on product development,
refinement, and modification?
• What critical operating processes need R&D attention?
• What new products are necessary to support growth?
• Is the emphasis short-term or long-term?
• Which orientation best supports the business strategy? The marketing
and production strategy?
Organiza-
tional fit
• Should R&D be done in-house or contracted out?
• Should R&D be centralized or decentralized?
• What should be the relationship between the R&D units and product
managers? Marketing managers? Production managers?
Basic R&D
posture
• Should the firm maintain an offensive posture, seeking to lead innovation
in its industry?
• Should the firm adopt a defensive posture, responding to the innovations
of its competitors?

23. Strategic Management, hapzi.ali@mercubuana.ac.id
Characteristics of Functional Tactics in HRM
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
• Assumed increasing strategic importance in the
1990s
• Aid long-term success in
– Development of managerial talent and competent
employees
– Creating systems to manage compensation or
regulatory concerns
– Guiding effective utilization of human resources to
achieve both the
• Firm’s short-term objectives
• Employees’ satisfaction and development

24. Strategic Management, hapzi.ali@mercubuana.ac.id
Key Functional Tactics in HRM
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Functional
Tactic Typical Questions the Functional Tactic Should Answer
Recruitment,
selection, and
orientation
Career
development
and training
• What key human resources are needed to support chosen strategy?
• How do we recruit these human resources?
• How sophisticated should our selection process be?
• How should we introduce new employees to the organization?
• What are our future human resource needs?
• How can we prepare our people to meet these needs?
• How can we help our people develop?
Compensa-
tion
• What levels of pay are appropriate for the tasks we require?
• How can we motivate and retain good people?
• How should we interpret our payment, incentive, benefit, and seniority
policies?
Evaluation,
discipline,
and control
• How often should we evaluate our people? Formally or informally?
• What disciplinary steps should we take to deal with poor performance or
inappropriate behavior?
• In what ways should we “control” individual and group performance?
Labor
relations and
EEO
requirements
• How can we maximize labor-management cooperation?
• How do our personnel practices affect women/minorities/
• Should we have hiring policies?

25. Strategic Management, hapzi.ali@mercubuana.ac.id
Role of Policies in Implementing Strategy
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
• Directives designed to guide thinking, decisions,
and actions of managers and employees in
implementing strategy
• Increase managerial effectiveness by
– Standardizing many routine decisions
– Clarifying discretion managers and employees can
exercise in implementing functional tactics
• Should be derived from functional tactics with
key purpose of aiding strategy execution

26. Strategic Management, hapzi.ali@mercubuana.ac.id
Why Policies Empower People
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
1. Establish indirect control over independent action by clearly stating how
things are to be done now
2. Promote uniform handling of similar activities
3. Ensure quicker decisions by standardizing answers to previously answered
questions
4. Institutionalize basic aspects of organization behavior
5. Reduce uncertainty in repetitive and day-to-day decision making
6. Counteract resistance to or rejection of chosen strategies by organization
members
7. Offer predetermined answers to routine problems
8. Afford managers a mechanism for avoiding hasty and ill-conceived decisions
in changing operations

27. Strategic Management, hapzi.ali@mercubuana.ac.id
Advantages of Formal Written Policies
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
1. Require managers to think through policy’s meaning, content, and intended use
2. Reduce misunderstanding
3. Make equitable and consistent treatment of problems more likely
4. Ensure unalterable transmission of policies
5. Communicate authorization or sanction of policies more clearly
6. Supply a convenient and authoritative reference
7. Systematically enhance indirect control and organization-wide coordination of the
key purposes of policies

28. Strategic Management, hapzi.ali@mercubuana.ac.id
Types of Executive Bonus Compensation
Irwin/McGraw-Hill © 2000 The McGraw-Hill Companies, Inc.
Bonus Type RationaleDescription Shortcomings
Stock option
grants
Restricted
stock plan
Golden
handcuffs
Golden
parachute
Cash based on
internal
performance
using finance
measures
Provides incentive for
executive to create wealth
for shareholders as
measured by increase in
firm’s share price
Promotes longer
executive tenure than
other forms of
compensation
Offers an incentive for
executive to remain with
the firm
Offers an incentive for
executive to remain with
firm
Offsets limitations of
focusing on market-based
measures of performance
Right to purchase stock
in the future at a price set
now; compensation
determined by “spread”
Shares given to executive
who is prohibited from
selling them for a specific
time period
Bonus income deferred in
a series of annual
installments; forfeited
with executive
resignation
Executive has right to
collect bonus if loses
position due to takeover,
firing, retirement, or
resignation
Bonus compensation
based on accounting
performance measures
such as return on equity
Movement in share price
does not explain all
dimensions of managerial
performance
No downside risk to
executive, who always
profits unlike other
shareholders
May promote risk-averse
decision making due to
downside risk borne by
executive
Compensation is achieved
whether or not wealth is
created;rewards either
success or failure
Weak correlation between
earnings measures and
shareholder wealth
creation

29. Strategic Management, hapzi.ali@mercubuana.ac.id
Kepustakaan
1. Irwin/McGraw-Hill, © 2000 The McGraw-Hill Companies, Inc.
2. http://faculty.winthrop.edu/robbinsk/MGMT%20480/Session%2019%20Spring%202008.ppt