Discussion Questions and CaseQuestions for Discussion

1.How does the concept translate thought into action bear on the r e l a t i o n s h i p b e t w e e n business strategy and operating strategy? Between longterm and short-termobjectives?

Business strategy is strategy formulation. It is based on a sound analysis of the businesssinternal and external environment. However, currently they are still rather abstract com!aratively" notions of how the firm should com!ete. #o ma$e business strategy become a reality, the !eo!le in an organi%ation that actually &do the wor$' of the businessneed guidance in exactly what needs to be done today and tomorrow to ma$e those long( term strategies become reality. #hus, as the strategy moves from a business strategy to ano!erating strategy it becomes more s!ecific and action oriented. )imilarly, short(termob*ectives &o!erationali%e' long(term ob*ectives. #hey !rovide s!ecific guidance for theimmediate time frame that hel!s in achieving the long(term ob*ectives.
2.How do unctional tactics di strategies? er rom corporate and business

+ages ,-.(/01 describe the role of functional tactics. 2unctional tactics are the $ey,routine activities that must be underta$en in each functional area 3 mar$eting, finance, !roduction4o!erations, 56D, and human resource management 3 to !rovide the businesss !roducts and services. In a sense, functional tactics translate thought grandstrategy" into action designed to accom!lish s!ecific short(term ob*ectives. 7xhibit 10.8 on !age /00 illustrates the differences between functional tactics and cor!orate and business strategy using the exam!le of California +i%%a 9itchen.
!."hat #ey concerns must unctional tactics address in mar#eting? $ i n a n c e ? % & ' ? %ersonnel?

#he exam!le of California +i%%a 9itchen shown in 7xhibit 10.8 on !age /00 hel!s answer this :uestion. In addition, ;!!endix -

covers functional tactics in detail. In the financearea functional tactics must address issues such as the $ind of financing arrangement to be used for ex!ansion, !roviding financial hel! to $ey su!!liers, and the firms dividend !olicy. In mar$eting the areas covered could be< =hat !roduct mix should we offer toattract our customers> =hat should our !ricing !olicy be> In o!erations< How to geteconomies of scale> =here should we locate our manufacturing facilities> In !ersonnel<=hat should be our recruitment methods> How should we com!ensate our em!loyees>
(.How do policies aid strategy implementation? )llustrate your answer.

+ages /0/(/0? cover the role of !olicies. =hile s!ecific functional tactics !rovideguidance and initiate action im!lementing a businesss strategy, em!loyees also need to be em!owered to ma$e decisions or fulfill customer needs. +olicies !rovide thisem!owerment. #hey are directives designed to control decisions while defining allowablediscretion within which o!erational !ersonnel can execute business activities.
*.+se ,-hibits 1../ and 1..1. to e-plain ive e-ecutive bonus compensation plans.

7xhibit 10.. !age /0@" describes the five ty!es of executive bonus com!ensation !lansand 7xhibit 10.10 !age /1/" matches each !lan to the strategic goal of the organi%ation.)toc$ o!tion grants give the right to !urchase stoc$ in the future at a !rice set now. It is agood !lan to use in cor!orate turnaround and growth situations, when o!erations need to be globali%ed and in a restructuring situation.In a restricted stoc$ !lan, shares are given to executives who are !rohibited from sellingthem for a s!ecific time !eriod. #hey are good to use when the goal is to increase assetsunder management and when there is a need to streamline o!erations.=hen bonus income is deferred in a series of annual installments, the !lan is called agolden handcuff. #his is a good !lan to use when the goal is to reduce cor!orate turnover.Aolden

!arachutes give executives the right to collect the bonus if they lose their !ositiondue to ta$eover, firing, retirement, or resignation. =hen the goal is to defend againstunfriendly ta$eovers or there is a need to evaluate suitors ob*ectively, a golden !arachuteis useful.2inally, a cash based bonus system !ays a bonus based on accounting !erformancemeasures such as return on e:uity. #his system is used when the goal is to grow the share !rice incrementally or to im!rove o!erational efficiency.
0.)llustrate a policy1 an objective1 and a unctional tactic in your personal career strategy.

; !olicy is a guide to action. ; !olicy in a !ersons career strategy could relate to behaving ethically in all situations. ;n ob*ective could be to get a management !osition by age /0. ; functional tactic would be to extend ones formal education by getting anBB;. )tudents are li$ely to come u! with a variety of !olicies, ob*ectives, and functionaltactics.
2."hy are short-term objectives needed when long-term objectives are already available?

)hort(term ob*ectives &o!erationali%e' long(term ob*ectives. In other words, while long(term ob*ectives hel! in ensuring that the firm is !ursuing its strategy in the long(term, itneeds several short(term measures to guide immediate thin$ing. 2or exam!le, if wecommit to a ,0 !ercent gain in revenue over five years long(term ob*ective", what is our s!ecific target or ob*ective in revenue during the current year, month, or wee$ to indicatethat we are ma$ing !rogress short(term ob*ectives">
Explain how policies aid strategy implementation
;lso $nown as standard o!erating !rocedures, !olices aid strategy im!lementation by standardi%ing many routine 4 re!etitive decisions and by clarifying the discretion managers and em!loyees can use in executing those functional tactics which serve to im!lement the strategy. )everal other ways in which !olicies aid strategy im!lementation include< C #hey establish indirect control over inde!endent action by clearly stating how things are to be

done nowD C #hey !romote uniform handling of similar activitiesD C #hey ensure :uic$er decisions by standardi%ing answers to recurring :uestionsD C #hey institutionali%e basic as!ects of organi%ation behaviorD C #hey reduce uncertainty in re!etitive and day(to(day decision ma$ingD C #hey counteract resistance to or re*ection of chosen strategies by organi%ation membersD C #hey offer !redetermined answers to routine !roblemsD C #hey afford managers a mechanism for avoiding hasty decisions.