Page 49 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Chapter 1. Executive Compensation Framework 35

Future Vision
Mission

Strategies

Issues
Threats and Opportunities
Goals
Objectives
Now Core Competencies

Figure 1-10. Strategic thinking illustration

to do an IPO, an expected hot and dry summer should present opportunities for soft drink
sales, a new competitor with a better-priced product than our bestseller will create problems,
and a new EPA standard will raise manufacturing costs. It is imperative that the issues raised
be addressed by strategies. The best strategies are developed outside-in, not inside-out.
Namely, it is by carefully examining the external threats and opportunities and not focusing
solely on the internal factors that one is likely to have the most impact.
Strategies

The word strategy is derived from the Greek word strategos which means commander or gen-
eral, the one who decides on action taken to defeat one’s enemies. It is a fitting meaning in
the business world. Business strategies capitalizing on threats and/or opportunities to achieve
goals and objectives include product additions and deletions; centralization vs. decentraliza-
tion; acquisitions and divestitures; quality and process positioning; and expansion and down-
sizing. However, these strategies are subsets of an overall major business strategy. As shown
in Figure 1-11, there are six different types of strategies, each focused on one of the earlier
described stakeholders. They are as follows:

• Product/service innovation focuses on creating new markets with new or existing
products/services.
• Employee intimacy focuses on an Employer of Choice objective, creating a
work environment where individuals want to come to work and to give their best
efforts.
• Customer satisfaction means providing reliable products/services at prices the cus-
tomer considers excellent value. The emphasis is both on getting new customers and
getting existing customers to buy more.
• Shareholder return means increased dividends and rising stock prices to create
shareholder wealth.
• Operational optimization focuses on productivity (cost, quantity, and quality).
• Community partnership means providing plenty of good-paying jobs and not con-
taminating the environment.