Formulating Objective and Strategies Modul 5.

slide1. Formulating Objective and Strategies Modul 5.<br>
slide2. Strategic Management Model 2 Develop Vision & Mission Statement Establish Long-term Objective Generate, Evaluate, Choose Strategies Implement Strategies Mgt’ Issues Implement Strategies Mkt, Fin, R&D, Prod/Op, MIS Measure, Evaluate Performance Perform External Audit Perform Internal Audit Strategy Formulation Strategy Implementation Strategy Evaluation<br>
slide3. “notable quotes” Alice said, “would you please tell me which way to go from here?” The cat said, “that depends on where you want to get to”
Lewis Carrol

Start from the end 3<br>
slide4. What is Long-Term Objective ? Long-term objective, represent the results expected from pursuing certain strategies Strategies, represent the actions to be taken to accomplish long-term objectives Time frame for objective & strategies should be consistent 2 – 5 years.<br>
slide5. Long-term Objective Objective should be quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable and congruent among organizational units.
Term of objective : growth in assets, growth in sales, profitability, market share, degree and nature of diversification, earning per share and social responsibility.
Varying performance measure by organizational level : 5 Org’ Level Basis for Annual Bonus or Merit Pay Corporate 75% based on Long-term objectives
25% based on Annual Objectives
Division 50% based on Long-term objectives
50% based on Annual Objectives
Function 25% based on Long-term objectives
75% based on Annual Objectives<br>
slide6. Characteristic of Objectives Quantitative
Measurable
Realistic
Understandable
Challenging
Hierarchical
Obtainable
Congruent across departments<br>
slide7. Benefits of Having Clear Objectives Provide direction by revealing expectation
Allow synergy
Aid in evaluation by serving as standard
Establish priority
Reduce uncertainty Minimize conflict
Stimulate exertion
Aid in allocation of resources
Aid in design of jobs
Provide basis for consistent decision making<br>
slide8. Financial vs Strategic Objectives Growth in revenue
Growth in earning
Higher dividends
Larger profit margin
Greater ROI
Higher EPS
Rising Stock Price
Improve Cash flow Larger market share
Quicker on time delivery than rivals
Shorter design-to-market times than rivals
Lower cost than rivals
Higher product quality than rivals
Wider geographic coverage than rivals
Achieving technological leadership
Consistently getting new or improved product to market ahead than rivals Financial Objectives Strategic Objective<br>
slide9. The Balanced Scorecard 9 “Untuk suskes secara finasial, bagaimana kita harus nampak di hadapan pemegang saham?” Objectives Measures Targets Initiatives Financial Visi & Strategi Untuk mencapai visi kita, bagaimana kita harus nampak di hadapan pelanggan Objectives Measures Targets Customer Initiatives Untuk memuaskan pemegang saham dan pelanggan, proses bisnis apa yang diperbaiki Objectives Measures Targets Internal Business Process Initiatives Objectives Measures Targets Learning and Growth Initiatives Untuk mencapai visi kita, bagaimana akan mempertahankan kemampuan untuk berubah dan berkembang Ref : BSC (Kaplan)<br>
slide10. Con’t 10 Long term shareholders value Revenue Growth Financial Perspective Productivity Relationship Image Customer Perspective Product & Service Attr.ibutes Price Brand Function Time Quality Partnership Internal Process Perspective Learning & Growth Perspective Information Capital Organization Capital Human Capital Cause and Effect Relationship
Menggambarkan rantai dari logika yang merubah/ mentranformasikan dari aset tak berwujud menjadi nilai yang terukur Customer Value Proposition
Menjelaskan kondisi yang akan menciptakan
Value untuk pelanggan Value Creating Processes
Menentukan proses-proses yang akan
Mentranfoemasikan aset tak berwujud
Menjadi hasil keuangan dan Customer Clustering of Assets and
Activities
Menentukan aset tak berwujud yang harus
diselaraskan dan diintegrasikan untuk
menciptakan value Operation Management Processes Customer Management Processes Innovation Processes Regulatory and Social Processes<br>
slide11. Alternative Strategies Defined and Example 11<br>
slide12. Con’t 12<br>
slide13. Peranan strategi yang digunakan di masa lalu
Derajat ketergantungan organisasi terhadap pihak eksternal
Sikap terhadap resiko
Faktor politis di dalam organisasi
Pertimbangan waktu
Reaksi pesaing Faktor –faktor yang mempengaruhi pilihan strategi<br>
slide14. Alternative Strategies Integration Strategies
Forward Int’
Backward Int’
Horizontal Int’ Intensive Strategies
Market Penetration
Market Dev’
Product Dev’ Diversification Strategies
Related Divers’
Unrelated Diversification Defensive Strategies
Retrenchment
Divestiture
Liquidation<br>
slide15. Levels of Strategies Large Company Small Comapny<br>
slide16. Kelompok Strategi, Fokus Masalah, dan Instrumen Analisis Hendrawan Supratikno dkk, 2005<br>
slide17. Corporate Strategy Relationship in Single Business 17 Corporate Strategy Marketing Policies & Plan Production – Operation Management Policies & Plans Financial Policies and Plans Personal – Labor relation Policies & Plans Accounting Policies & Plans R & D Policies and Plans Middle & Supervisory Management Top Management<br>
slide18. Corporate Strategy Relationship in Multi Business 18 Corporate Strategy Marketing Policies & Plan Production – Operation Management Policies & Plans Financial Policies and Plans Personal – Labor relation Policies & Plans Accounting Policies & Plans R & D Policies and Plans SBU-2 Strategy SBU-3 Strategy SBU-1 Strategy Corporate Management SBU Top Management Middle & Supervisory Management<br>
slide19. The What of Company’s Strategy The pattern of actions and business approaches that define a company’s strategy Actions to gain sales and marketshare via lower prices, more performance features, more appealing design, better quality or customer service, wider production selection etc. Actions to respond to changing market conditions and other external circumtances Actions to enter new geographic or product markets or exit existing ones Actions to merge with or acquire rival companies Actions to form strategic alliances and collaborative partnerships Efforts to persue new market opportunities and defend against threats to the company’s well-being Actions and approaches that define how the company manages research and development, production, sales and marketing, finance and other key activities Actions to strengthen competitive capabilities and correct competitive weaknesses Actions to diversity the company’s revenues and earnings by entering new businesses<br>
slide20. 1. Strategi Pertumbuhan : Bagaimana menggerakkan organisasi ke depan, peningkatan level operasi, tumbuh lebih cepat.
Konsentrasi
Integrasi vertikal
Integrasi Horisontal
Diversifikasi : Terkait dan tak terkait, Pengembangan internal, akuisisi, merger, joint venture, kerja sama dengan partner dari luar)
2. Strategi Stabilitas : Strategi dimana organisasi mempertahankan ukuran organisasinya dan level operasi bisnisnya sekarang.
3. Strategi Pembaruan: Bagaimana membalik kinerja organisasi yang cenderung menurun -> Pengurangan (retrenchment) dan perubahan haluan (turnaround) Strategi Korporat<br>
slide21. Porter’s Generic Strategies Cost Advantage Competitive
Scope Broad
Target Narrow
Target Lower Cost Differentiation 1. Cost Leadership 2. Differentiation 3A. Cost Focus 3B. Differentiation
Focus Strategi Bisnis : memusatkan perhatian pada bagaimana memaksimalkan daya saing suatu unit usaha<br>
slide22. Existing Product New Product Existing
Market New
Market Penetration
Strategies Market
Development
Strategies Product
Development
Strategies Diversification
Strategies Ways to Elaborate a Given Business<br>
slide23. Strategies of Differentiation Price Differentiation.
Image Differentiation.
Support Differentiation.
Quality Differentiation.
Design Differentiation.
Undifferentiation.<br>
slide24. Strategies of Scope Unsegmentation.
Segmentation.
Niche.
Customizing.<br>
slide25. Elaborating the Core Business Penetration Strategies.
Market Development Strategies.
Geographic Expansion Strategies.
Product Development Strategies.<br>
slide26. Strategi : Fungsional 1. Strategi produksi dan operasi
(Skala ekonomi, Efek pembelajaran, kurva pengalaman)
2. Strategi pemasaran
(Segmentasi, targeting, positioning)
3. Strategi keuangan
(Sumber internal, eksternal dan modal sendiri)
4. Strategi sumber daya manusia (SDM)
5. Pencapaian tujuan organisasi : rekruitment, seleksi, orientasi, pengembangan karier.<br>
slide27. Porter’s Five Generic Strategies Type-1
Type-2 Type-3 ----- ----- Type-3 Type-4
Type-5 Generic Strategies Cost Leadership Differentiation Focus Size of Market Large Small Type-1 Cost Leadership-Low cost
Type-2 Cost Leadership – Best Cost
Type-3 Differentiation
Type-4 Focus-Low Cost
Type-5 Focus Best Value<br>
slide28. Cost Leadership Strategies (Type-1 and Type-2) A primary reason for pursuing forward, backward and horizontal integration strategies is to gain low-cost or best-value cost leadership benefits.
Can be especially effective when the market is composed of many price-sensitive buyers.
It must achieve their competitive advantage in ways that are difficult for competitors to copy or match.
Cost of overall Value Chain must lower than competitor’s total cost
Perform value chain activities more efficiently than rivals
Revamp the firm’s overall value chain to eliminate or bypass some cost producing activities 28<br>
slide29. Differentiation Strategies (Type-3) Different strategies offer different degree of differentiation, differentiation doesn’t guarantee competitive advantage, especially if standard products sufficiently meet customer needs.
A differentiation strategy should be pursued only after a carefully study of buyer’s needs and preference.
Strong coordination among R&D and marketing function
Effective if hard or expensive for rivals to duplicate<br>
slide30. Focus Strategies (Type-4 & Type-5) A low-cost (type-4) or Best-Value (type-5) focus strategy can be especially attractive under the following conditions :
Target market niche is large, profitable, and growing
Industry leaders do not consider the niche to be crucial to their own success.
etc<br>
slide31. Means for Achieving Strategies 31 Cooperation Among Competitors.
For collaboration between competitors to succeed, both firms must contribute distinctive, such as technology, distribution, basic research or manufacturing capacity  Example : Airline Industry Joint Venture / Partnering
JV is a popular strategy that occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity  share equity in new entity
Other cooperative arrangements : R&D partnership, cross-distribution agreement, cross-licensing agreement, cross-manufacturing agreement  Nokia and Facebook Inc.<br>
slide32. Merger/ Acquisition
Merger occurs when to organization of about equal size unite to form one enterprise.
Acquisition occurs when a large organization purchase (acquires) a smaller firm, or viceversa.
When merger and acquisition is not desired by both parties  take over or hostile takeover
When merger and acquisition is desired by both parties  friendly merger Outsourcing
Business-process outsourcing (BPO) involves companies taking over the functional operation such as human resources, information system, payroll, accounting, customer service. The reasons are :
It less expensive
Allow the firm to focus on its core business
It enable the firms provide better service First Mover Advantage
It refers to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival’s firm. 32<br>
slide33. Requirement for Generic Competitive Strategy 33 Generic
Strategic Commonly Required Skill
And Resources Common Organizational
Requirement Overall Cost
Leadership Sustained capital investment and access to capital.
Process Engineering Skill
Intent supervision of labor
Product design for ease in manufacture
Low-cost distribution system Tight cost control
Frequent, detailed control report
Structured organization and responsibilities
Incentives based on meeting strict quantitative targets. Differentiation Strong marketing ability
Product engineering
Creative flare
Strong capabilities in basic research
Corporate reputation for quality or technological leadership
Strong cooperation from channel Strong coordination among function in R&D, product development and marketing.
Subjective measurement and of incentives instead of quantitative measure.
Amenities to attract highly skilled labor, scientist or creative people Focus Combination of the above policies directed at the particular strategic target. Combination of the above policies directed at the regular strategic target.<br>
slide34. Risk of Generic Strategy 34 Risk of Cost Leadership Risk of Differentiation Risk of Focus Cost of leadership is not sustained :
Competitor imitate
Technology change
Other bases of cost of leadership erode.

Proximity in differentiation is lost.

Cost focusers achieve even lower cost in segment Differentiation is not sustained :
Competitor imitate
Bases for differentiation become less important to buyers.

Cost Proximity is lost.

Cost focusers achieve even lower cost in segment The focus strategy is imitated
The target segment becomes structurally unattractive :
Structure erode
Demand disappears

Broadly targeted competitors overwhelm the segment :
The segment’s differences from other segment narrow
The advantage of abroad line increase.

New focusers sub-segment the industry<br>
slide35. Vertical Integration 35<br>
slide36. Corporate Combination 36 Joint Ventures Strategic Alliances They are distinguished from joint ventures because the companies involved do not take an equity position in one another. For example one partner provides manufacturing capabilities, while second partner provides marketing capabilities. Consortia / Konsorsium Consortia are defined a large interlocking relationship between businesses of an industry, consortia project are increasing in number and in success rates. Outsourcing Involve farming out certain value chain activities to outside vendors<br>
slide37. Merger and Acquisition Merger and acquisition are especially suited for situation in which alliance and partnership not enough to provide a company with access to needed resources and capabilities.
Merger, is pooling of equals with the newly created new name of Co’
Acquisition, is combination in which one company, the acquirer, purchases and absorbs the operation of another, acquirer. 37 The Strategic Objective :
To gain more market share, create more efficient operation.
To expand geographic coverage
To expand product categories or international
To gain access new technologies
To try to invent new industry<br>
slide38. Five Generic Competitive Strategies 38 Low Cost Differentiation Type of Competitive Advantage Market Target Broad Cross section of Buyers A narrow buyer segment (market niche)<br>
slide39. Five Distinct Competitive Strategy Low-cost provider strategy, striving to achieve lower overall cost than rivals and appealing to a broad spectrum of customer, usually under pricing rivals.
A broad differentiation strategy, seeking to differentiate the company’s product offering from rivals in ways that will appeal to a broad spectrum of buyers.
A best-cost provider strategy, giving customers more value for the money by incorporating good-to-excellent product attribute at lower cost than rivals.
A focused (or market niche) strategy based on low cost, concentrating on a narrow buyer segment and outcompeting rivals by having lower cost than rivals and thus being able to serve niche member at lower price.
A focused (or market niche) strategy based on differentiation, concentrating on a narrow buyer segment and outcompeting rivals by offering niche member customize attribute that meet their taste and requirement better than rival’s product. 39<br>