2.

Describe the benefits MBO and TQM can bring to a new strategic plan

MBO connects a strategy with its performance. To use MBO specific objectives:

What is to be acheived

By whom

How it is to be measured

When the results can be expected

The results of MBO methods are reliable means to determine if a strategy is on course, or if
revisions need to be made

TQM- Two elements

Providing the best customer service as possible

The ongoing need to always be better with whatever you are doing

It is the constant focus on process improvements that should result in:

Lower Costs

3. Evaluate the part corporate culture can play when contemplating implementing a new strategy in a
firm, as a result of an acquisition. Describe briefly the corporate culture in your Strategic Firm.

There are 4 methods of managing corporate culture of an acquired firm:

Integration- Equal merger of both cultures into a new corporate culture

Assimilation- Acquiring a firm’s culture and keeping it intact, but subservient to that of acquiring the
firm’s corporate culture

Seperation- Conflicting cultures kept intact, but kept separate in different units

Deculturation- Force replacement of conflicting acquired firm’s culture with that of the acquiring firm’s
culture.

When attempting to implement a strategy a firm needs to examine how that strategy would fit into the
firm’s current corporate culture.

Changing a culture to fit a new strategy could be time consuming.

4. Discuss the 3 types of controls that a firm can use to evaluate a strategy. Explain examples of each of
these controls.

Output Controls- The end results are the key to measuring this control. Results are compared to
projected objectives. Examples are –MBO’s, revenue results, share of market, customer satisfaction
findings

Behavior Controls- The use of policies, rules, and procedures are used as guidelines with this type of
control. Examples are; Absentee rates, turnover issues, and following company policies. Sometimes
behavior controls are more subjective than objective

Input Controls- These controls tend to use people skills, motivational tools, abilities and values.
Examples are: number of college graduates, hours spent on personnel development courses, and cross
training accomplishments

5. Describe various measurements of corporate performance

Return on investment (ROI)- Result of dividing net income before taxes by the total amount invested in
the company (typically measured by total assets)

Earnings per Share (EPS) Dividing net earnings by the amount of common stock

Return of Equity (ROE) Involves dividing net income by total equity

Operating Cash Flow (OCF) The amount of money generated by a company before the cost of financing
and taxes, is a broad measure of a company’s funds

Free Cash Flow (FCF) The amount of money a new owner can take out of the firm without harming the
business

6. Describe a specific strategic incentive management method you would use for your strategic Audit
Firm

3 strategic incentive management methods:

Weighted-Factor method, Used for measuring and rewarding personnel working on SBU or group
projects where performance factors may vary according to the SBU’s involved.

Long Term evaluation method, Involved with rewarding management personnel working on projects
over a few years

Strategic Funds Method, Focuses on using developmental expenses as a way of working towards future
benefits to the firm