ST Chapter 10

Flashcard maker : Lily Taylor
short-term objective
measurable outcomes achievable or intended to be achieved in one year or less – specific and quantitative
how do short-term objectives implement strategy
1. short-term objectives operationalize long-term objectives
2. discussion of st objectives raise issues and potential conflicts within an organization that require coordination
3. st objectives assist strategy implementation by identifying measurable outcomes of action plans or functional activities
qualities of effective short-term objectives
– measurable: make misunderstandings less likely
– priorities: bc of timing or impact on the strategy
– cascading: from lt to st objectives
functional tactics
key, routine activities that must be undertaken in each functional area in order to provide the business’s products and services
– used to achieve short term strategies and establish competitive advantage
benefits of aligning functional tactics with business strategy
– gives operating personnel a better understanding of their role
– process of developing them can resolve conflicts
– working through tactics provides a basis for budgets, schedules, trigger points, critical factors, etc.
– can be powerful motivators
differences between functional tasks and business strategies
1. specificity: business strategies provide general direction, functional tactics are specific activities
2. time horizon: functional must be done now or soon, business strategies are 3-5 yrs out
3. participants who develop them: strategy = general manager, tactics = subordinates who run the operating areas
– helps ensure managers know what needs to be done and focus on accomplishing results
– clarifies how managers intend to accomplish the business strategy – increases managements confidence in and sense of control over the business strategy
– facilitates coordination among operating units by clarifying areas of independence and potential conflict
time horizon
– focuses the attention of managers on what needs to be done now to make strategies work
– allows managers to adjust changing current conditions
acquiring an activity, service, or product necessary to provide a company’s products from “outside” the company
allowing an individual or team the right and flexibility to make decision and initiate action
directives designed to guide the thinking, decisions, and actions of managers and their subordinated in implementing a firm’s strategy
how policies empower
1. establish indirect control over independent action – control decisions but allow employees to make them without top management
2. promote uniform handling of similar activities
3. ensure quicker decisions through standardization of answers
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. predetermined answers to routine problems
8. afford managers a mechanism for avoiding hasty and ill-conceived decisions in changing organizations
7 advantages of formal policies
1. require managers to think through the policy’s meaning, content, and intended use
2. reduce misunderstanding
3. consistent treatment of problems
4. ensure unalterable transmission of policies
5. communicate the authorization or sanction of policies
6. supply a convenient and authoritative reference
7. systematically enhance indirect control
stock option grants
right to purchase company stock at a fixed price at some future date
– movement in share price does not explain all dimensions of managerial performance
restricted stock plan
prohibited from selling the stock for a certain time period and not at all if they leave
golden handcuffs
compensation is deferred
– may promote risk-averse decision making due to downside risk borne by executive
golden parachute
guarantees cash payment if the exec is fired, quits, or retires
– compensation achieved either way
– weak correlation between earnings measures and shareholder weather creation

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