Week 05 W. Rofianto, ST, MSi · The Balanced Scorecard operational objectives. Division Level Corporate Level ... Market Penetration McDonald’s selling millions of “Shrek the

Strategies in Action Week 05

W. Rofianto, ST, MSi

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

Varying Performance Measures by Organizational Level

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

Porter’s Five Generic Strategies

Meeting the Challenge of High-Velocity Change

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?