Strategic Management: Formulation and Implementation

Annual Objectives

Management issues central to strategy implementation include establishing annual objectives that relate logically to the strategy's long-term objectives. Annual objectives are essential for strategy implementation because they:

  1. represent the basis for allocating resources,
  2. are a primary mechanism for evaluating managers,
  3. are the major instrument for monitoring progress towards achieving long-term objectives, and
  4. establish organizational, divisional and departmental priorities.

Annual objectives are specific, measurable statements of what an organization subunit is expected to achieve in contributing to the accomplishment of the business's grand strategy.

Developing Functional Strategies

Functional strategy refers to the set of strategic initiatives taken in one part of a business. Some authors refer to these as functional "strategies": "A functional strategy is the short-term game plan for a key functional area within a company" , some others prefer to regard them "as plans, or tactics, for carrying out the business strategy". A company needs a functional strategy for every major functional activity.

Functional strategies must be developed in the following areas: finance, marketing, production/operations, R&D, and personnel. The primary role of a functional strategy is to support the company's overall business strategy. Functional strategies help in implementation of grand strategy by organizing and activating specific subunits of the company to pursue the business strategy in daily activities.