FOUNDATIONS OF STRATEGIC MANAGEMENT HISTORICAL
DEVELOPMENT FROM MILITARY TO BUSINESS APPLICATIONS
ARIZONA STATE UNIVERSITY
WPC 480 - STRATEGIC MANAGEMENT
WEEK 1
A. Learning Outcomes:
Increased student knowledge about the development of strategic management from time
to time, so that students are able to create applied strategic management concepts needed by
companies as demanded by the times.
B. Material:
1. History of Strategic Management:
Strategic planning is a systematic continuous development through a decision made by
using as much anticipatory knowledge as possible, systematic organization of various kinds of
activities used to carry out all that has been decided and assess the results by doing systematic
feedback. So it is no exaggeration that in the implementation of strategic management
strategic planners are the most important part (Katsioloudes & Abouhanian, 2009).
Strategos (stratas = military and agic = lead) which means "generalship" comes from
Greek where strategy is a plan made by generals to win a war. In general, the definition of
strategy can be interpreted as a way to achieve a predetermined goal or target. The article
written by Porter entitled "Competitive Strategy in Harvard Business Review, 1996", defines
strategy as "a set of different action activities to deliver unique value". Strategy according to
Burgelman, Maidique, & Wheelwright (1996) is "all activities that are full of competition
through various ways of business approaches to achieve a targeted and satisfactory
performance".
In developed countries, the development of strategic management has four stages,
namely:
a. Financial Control and Budgeting (1900s)
b. Long-term Plan (from 1950s)
c. A strategic plan for a company (from the 1960s)
d. Strategy Management (from 1970s media)
2. Old Order:
After the Independence of the Republic of Indonesia (1945 to 1950) where at the time
of early independence the economic and financial conditions were not good, the cause was
high inflation caused by uncontrolled currency in circulation and even more than one in
circulation. There were three currencies that temporarily prevailed in the government of the
Republic of Indonesia, namely Japan, the government of De Javasche Bank, and the Dutch
East Indies.
The Commander of the Allied Forces for Netherlands East Indies (AFNEI) made an
announcement on March 6, 1946, "NICA money is valid in areas controlled by the Allies".
The Government of the Republic of Indonesia in October 1946 issued the new banknotes
Oeang Republik Indonesia (ORI) to replace Japanese money. Because the amount of money
in circulation at that time was very much based on monetary theory, it greatly affected the
level of price increases.
To overcome the problem of economic difficulties, the Indonesian government made
various efforts, including:
a. In July 1946, Ir. Surachman as the Minister of Finance at that time implemented the
National Loan Program with the approval of the BP-KNIP.
b. Conducting rice negotiations with India to break the blockade, cooperating with private
companies in America, and breaking through the blockade by the Dutch in Sumatra to
reach Malaysia and Singapore.
c. In February 1946, an Economic Conference was held with the aim of obtaining a
unanimous agreement to tackle economic problems that were urgent and had to be
resolved immediately, including: clothing problems, problems with the administrative
status of plantations, and problems with food production and distribution.
d. On January 19, 1947, the Economic Planning Board was established.
e. In 1948, the Rationalization of the Armed Forces (Rera) and Reconstruction
(Rekonstruksi) were held, to transfer the manpower of former war members to more
productive areas.
f. The essence of the Kasimo Plan is about an effort to achieve self-sufficiency in
foodstuffs by implementing practical directives. It is hoped that with self-sufficiency in
food prices the economy will be better.
3. Liberal Democracy Period (1950-1957):
The liberal period occurred between 1950 and 1957 because at that time the economic
and political systems used liberal principles. Where in accordance with the theories of the
classical school of thought which is said to be laissez faire that the economy is left to market
share. Indigenous entrepreneurs at that time still could not compete and were still weak to
compete with outside entrepreneurs, especially those from China. Because Indonesia had just
become independent, the liberal system eventually worsened the economic situation.
To overcome economic problems for the better, the government made various efforts,
including :
a. On March 20, 1950 Gunting Syarifuddin cut the value of money in circulation or
sanering so that inflation did not occur and prices fell.
b. Trying to encourage indigenous importers so that they can compete with non-native
companies by granting import licenses only to indigenous importers, imports of certain
types of goods are limited as well as providing credit to indigenous companies so that
they can compete and participate in developing the state national economy, and creating
national entrepreneurs called the Benteng Program in Nasir's Cabinet. But the efforts
made were less successful because they could not compete with non-native importers
and still had a high consumptive nature owned by native entrepreneurs.
c. On December 15, 1951, the nationalization of De Javasche Bank was changed to Bank
Indonesia through Law no.24 of 1951 with functions as a circulation bank and central
bank.
d. The Ali Sastroamijojo cabinet, initiated by Mr. Iskak Cokrohadisuryo, practiced the Ali-
Baba economic system through an agreement to cooperate between local/native
entrepreneurs and non-native entrepreneurs from China. Non-native entrepreneurs from
China were required to provide training to local/native entrepreneurs, and local
entrepreneurs were given licenses as well as credit provided by the government. Due to
the inexperience of the indigenous national entrepreneurs, this program became a tool
only in order to obtain credit subsidies provided by the government, so again this
program could not be successful.
e. The results of the RTC were unilaterally canceled, including the dissolution/cancellation
of the Indonesian Union Netherlands. So that many entrepreneurs who came from the
Netherlands sold their companies but these companies could not be taken over by
indigenous entrepreneurs.
4. Guided Democracy Period (1959-1967):
Indonesia runs a guided democracy system and Indonesia's economic structure which
leads to an ethatism system that all is regulated by the government as a result of the issuance
of the "presidential decree" July 5, 1959. By using a guided democracy system, it is hoped
that it can have a better impact, namely the creation of welfare and equality in the economic,
social and political fields (Mazhab Socialism). The Indonesian government at that time in
taking its economic policies was still unable to improve the situation so that economic
improvements were made, including:
a. On August 25, 1959, a devaluation was announced to decrease the value of the currency
where: denominations of Rp.1000.00 were simplified to Rp.100.00 denominations of
Rp.500.00 were simplified to Rp.50.00 and froze all deposits in banks that exceeded Rp.
25,000.
b. In order to achieve Indonesia's socialist economy in a guided manner, the Dekon
(Economic Declaration) was formed. In reality, this led to stagnation in the Indonesian
economy, with prices of goods rising by a staggering 400% from 1961 to 1962.
c. On December 13, 1965, another devaluation was announced to reduce the value of the
currency, where the Rp 1000 was reduced to Rp 1. What happened to the community
was that the new rupiah was only valued ten times higher even though the new rupiah
should have been valued 1000 times the old rupiah, so that the actions taken by the
government which should have suppressed the inflation rate, on the contrary, inflation
was increasing.
The unsuccessfulness of the government's policies in overcoming economic/monetary
problems was exacerbated by the government's extravagant spending or lack of budgetary
frugality. The government undertook many lighthouse projects that resulted in political
tensions with Western countries and Malaysian countries. As a consequence of Indonesia's
choice to implement a democratic system, the Indonesian government has been forced to
adopt a democratic system guided, which means that the Indonesian people are more inclined
to choose the East (socialism) both in economics, politics, and in other fields.
5. New Order Period:
The main priority at the beginning of the New Order was political and economic
stabilization. In 1966, the inflation was very high, reaching 650% per year, so the government
carried out programs that were as much as possible oriented towards saving State finances,
securing the basic needs of the people and controlling high inflation which was very urgent to
do. Based on past learning, the Orba period preferred to use a mixed economic system which
of course was still within the economic framework of Pancasila democracy because
experience based on the past use of the liberal economy turned out to make local
entrepreneurs unable to compete with foreign entrepreneurs and when using the etatism
system also could not make things better.
When a problem occurs and in certain situations, the market is not left to determine
itself because it requires the involvement of the government when determining economic
policy. This is a limited application of "Keynes' theory of government intervention in the
economy".
The government policy carried out for the economic sector is that development is
carried out in all fields which are reflected in eight lines that are evenly distributed in the
problems of "education and health, employment opportunities, business opportunities,
participation of women and the younger generation, distribution of development, basic needs,
and justice". All of this is carried out for development over a long period of 25 to 30 years,
the implementation of which is carried out in stages every five years, known as Pelita (Five-
year development).
In 1984 the Indonesian people were able to feel the results by reducing the poverty rate,
succeeding in self-sufficiency in rice, making improvements in measures for people's welfare
such as increasing the number of involvement in education, decreasing the number of babies
who died, and in the field of industrialization can increase rapidly. In preventive checks to
reduce the number of babies born and known as the KB (Family Planning) program and
regulate the minimum age of people who will marry, it was also successfully carried out in the
1990s. New Order government. In addition to these successes, there were also influences from
policies during the New Order government that were not good, including environmental
pollution due to the destruction of natural resources, the occurrence of striking economic
inequality in regions, occupational groups and groups in society that were very pronounced,
and increasing foreign debt. The New Order government carried out development that was
laden with corruption, collusion and nepotism (KKN) which created conglomerations and bad
businesses. The development that was carried out prioritized economic growth without paying
attention to balancing development in the field of fair social and political life. Although
successful in development and growth in the economic field has also increased, the
development carried out by the nation is fundamentally not strong / very fragile. Which can
result in the event of a crisis in Indonesia will be able to feel the worst impact because as a
result of the world economic crisis, the rupiah will weaken very quickly, prices will soar
drastically, so that it can cause chaos in the economic field and even trigger discomfort in all
fields.
6. Reform Order:
After the New Order era collapsed, it was replaced by the Reform Order. The president
was BJ Habibie who started the Reform Order and on economic issues did not make big steps.
His policy prioritized control over politics. Then president BJ Habibie was replaced by
president Abdurahman Wahid through the MPR session. Under President Abdurrahman
Wahid, no major action was taken to free the country from the downturn. In fact, many
economic problems inherited from the New Order had to be resolved, including corruption,
collusion and nepotism (KKN), economic recovery, the performance of state-owned
enterprises, controlling inflation, and maintaining the rupiah exchange rate. Due to several
events, Megawati replaced Abdurahman Wahid as president.
7. Formative Management:
This formative management method views the management function as a process of
creating or completing goals. Henry (2021) Process effectiveness can be measured by whether
organizational activities are effectively organized, coordinated, controlled, and planned. Since
its inception, standardized management has tended to be profit-oriented or commercial, so it is
considered incompatible with the concept of more public administration public service-
oriented. Through the formulation of business management functions emulated by
POSDCORB, standardized management processes can be easily identified. Some common
functions are detailed as follows:
a. Planning; is the process of deciding the purpose of activities to be carried out in order
to achieve a goal at some time in the future (Porter, 1997). Planning is twofold: setting a
goal and determining what activities must be undertaken to achieve the set goal. The
function of this element can produce results and incorporate strategies, policies and
objectives.
b. Organization; Organization in a job is something that is considered very urgent in
conveying information to members in the organization about the power structure for
each member in the organization so that they can understand who to give and receive an
order from (Porter, 1997). In order to improve the practicality of work and the quality of
work the organizing process requires good cooperation where people who work
individually or alone the results will be less satisfactory than people who work in teams
or work together. In addition, the organizing process can improve communication
between members. With clarity in the organizational structure, it can provide an
overview of communication among its members.
c. Staffing; is a job that is done in order to get qualified personnel and according to the
needs of the organization and the right amount (Porter, 1997).
d. Coordinating, is a process that is carried out as a whole in an activity from various
work units in the organization in order to achieve a more effective and efficient goal
(Porter, 1997). Without good coordination between members in the existing parts will
cause a job to be undirected and each will work according to their own wishes so that it
can harm the organization as a whole.
e. Motivation, is a process of providing enthusiasm and a sense of optimism to members
of an organization so that they do their work more confidently and can complete work
that is in line with the goals set by the organization (Hossler, 1990). The mechanism of
motivation can be better understood through needs affecting enthusiasm at work, and
enthusiasm at work can influence achievement of a goal. So, a manager must be able to
understand the spirit of his subordinates and the nature of human needs.
f. Control, is a function of management to obtain conformity between activities that are
being carried out with newly planned activities (Hossler, 1990). The control function is
closely related to a plan that is feedback for the results of the planning that has been set
in the future.
8. History of Modern Theory:
Human civilization continues to develop, the science that humans have is also
increasingly advanced with various discoveries, so that in its development science is grouped
into three, namely:
a. Exax, is a science that studies all forms, symptoms, and existence related to the state of
the universe and its contents universally which have definite properties and cannot be
separated by space and time (Sukmana, 2021). Exax sciences include physics,
chemistry, and biology.
b. Social, is a science that studies all the symptoms that exist in human beings and It has to
do with all aspects of life that occur in society (Sukmana, 2021).
For example, economics, psychology, law, etc.
c. Humanities, which is a science related to art. For example, dance, painting, literature,
and others (Sukmana, 2021).
One example of social science that developed starting in 1800 is management science,
with the classical school appearing first. With so many figures expressing their opinions about
management science, the classical theory is growing but still causes a lot of dissatisfaction in
some groups and figures so that a new theory emerges, namely Neo Classic. Changes in the
joints of life that cause fast-paced development then re-emerge a new flow or theory called
modern management science.
9. Emerging Figures in the Modern Management School:
There are two streams that develop in modern management science, where the first
stream is a stream whose development is closely related to humans, which is often known as
organizational behavior. While the second modern management flow is the science of
organizational behavior management developed with scientific foundations known as the
Quantitative flow or Operation Research and Management Science / Operations Management
(Fachruddin, 2016).
Behavior in organizations in its development is marked by several figures who have
new opinions or views on human behavior and the social system that occurs. The Flow of
Behavior in Organizations with its figures is:
a. Abraham Maslow, argues that there is an Ego, Super Ego, and a Hierarchy of Human
Needs.
b. Douglas McGregor, "proposed theory X and theory Y".
c. "Frederick Herzberg", put forward a "two-factor and hygienic theory of motivation".
d. Jane Mounton and Robert Blak, discuss the managerial grid and five styles of leading.
e. Chris Argyris, views organizations as relationships between cultures and social systems.
f. "Edgar Schein", researched many group dynamics in organizations.
10. Developments in Strategic Management:
In the beginning, the idea of being strategic in managing an organization was still very
simple is still in accordance with the state of the environment that can affect it (Warren,
2008). The model of strategic planning is still very simple when the state of the organization's
environment is normal and in line with the interests of an organization, what happens is only
focused on meeting the operational standards of management that have been determined,
especially on product standards and financial standards. With the strategy of environmental
assessment, identity profile, mission and vision as we know today's management strategy is
increasingly modern and advanced, an organization has a relationship related to being able to
give an indication of what the organization wants and of course this strategy requires a lot of
thought that is not immediately finished.
The environment of an organization that changes in an erratic manner and with
uncertainty of direction is certainly different from the environment of an organization when it
is often profitable and tends to have a high turnover rate, so a plan that is initiated must have a
higher level of complexity. Managing a management must be able to influence the future
itself not only required to anticipate the future. The tendency of linearity and the principle of
time series, instead management is always asked to have many scenarios so that later if the
situation is different, it is ready to deal with it and has a good solution.
Management does not focus only on financial management issues but must be directed
more at production management in order to have the ability / strength in terms of marketing
development (socialization) and public service services, especially in executing and
formulating a strategy in competing more competitive (Shrivastava, 1986). The history of the
development of strategic management is simplified with four stages that are benchmarked in
developed countries, namely:
a. Strategic Management
b. Strategic Planning
c. Long-term planning
d. Budget Oversight
The model initially known by leaders/executives of an organization is the control of an
organization's budget and finances which is a model of organizational planning (Hill & Jones,
2011). This model was only invented in the early forties where at that time the environment
that existed in an organization was very different organizations still tend to have a high degree
of stability. This model does not mean that it cannot be found today.
Relatively small and young organizations usually still use this model, so that executive
management becomes the source of thought and the source of making an organizational plan
not yet in written form but in planning only for the coming year in determining costs and
activities. Because the validity of a strategy is still in a very short time and there is no budget
for investment in the long term, it actually cannot be called strategic planning.
The industrial revolution that became a trend at that time was characterized by
producing as many goods as possible at the cheapest cost so that management focused its
attention on the efficiency of the production mechanism by controlling management. Meeting
the budget that has been decided is a measure to assess a performance that is the goal of the
production process must be owned by an organization (Hill, Jones, & Schilling, 2014). The
low quality of human resources, the low quality of production results, economic activities that
require high production costs, and the low quality of production results. Costs and poor use of
budgets are the tendencies of non-profit organizations.
C. Exercise:
As a learning evaluation, students are asked to be able to:
1. Explain the development of strategic management in Indonesia from the old order to the
reformation period!
2. Explain formative management!
3. Explain the developments in strategic management!
COMPANY GOALS, VISION, MISSION AND PHILOSOPHY
A. Learning Outcomes:
The orientation of learning outcomes at this third meeting is that students understand the
theoretical concepts of organizational philosophy so that they can make goals, vision and
mission of the organization as a strategic step in achieving goals.
B. Material:
1. Company Vision and Mission:
The power of strategic management can be reflected in the vision and mission.
a. Definition of Vision and Mission:
A vision is a desire for the future of a company. A vision can provide motivation and
aspiration to the company and can also provide signs and guidance to a company in planning
a strategy to be used, While the mission is the goal that the company must achieve, where the
vision and mission are the goals that the founder of the company wants to achieve (Hill, et,
al., 2014). Vision is a thought conveyed verbally through writing that describes the ideals of
individuals and groups for future progress, which if associated with a bold vision approach is
a thought conveyed verbally or speech that is affirmative. In this sense we can conclude that a
vision for the future focuses on goals for the future.
According to Kotler's opinion "quoted by Sedjati (2015)", vision is a statement of the
purpose of the organization which is shown in the form of services and products offered,
usually in the form of meeting current and future needs (long term), and presenting adequate
facilities as an integration of services and products.
According to Dr. Wibisono, "the vision contains a big plan to be achieved within a
certain period. Vision makes the company more optimistic and act realistically (Sedjati,
2015). It can be decided that vision is necessary for the organization to be able to ensure
success and sustainability for the organization in the future. Some visions are characterized as
effective:
1) Measurable,
2) Desirable,
3) Clear direction,
4) Encouraging/hopeful,
5) Appropriate to the circumstances and environment, and
6) Imagible.
Vision in a company functions as :
1) The foundation for controlling and utilizing resources.
2) A platform to unify the company's goals, objectives and direction,
3) Building and shaping the culture within the company (cooperate culture),
b. Duration of Company Vision:
A better future is the focus of a vision that the company wants to achieve, although in its
implementation it is uncertain how long it will take, maybe five years or even take longer
because it is caused by changes in several fields that are very fast and there is a change of
leadership in the organization / company.
c. Company Vision Planning:
A company must have a clear desire and have certainty about the focus of activities that
will be aimed in which direction and what is prioritized by the company to continue to be able
to carry out its functions properly so that future desires can be achieved according to plan,
then in making the vision of a company must be clear, detailed and focused to have a clear,
detailed and focused vision, the company must consider and analyze the possibilities that will
occur in the future, combine the expectations and obstacles that exist in the external
environment, and form the strengths and weaknesses that exist in the internal environment
(Sedjati, 2015). When making a vision of the company must understand and understand
correctly the business the company is running in what field, then a management or leader of a
company must be able to determine the results to be achieved, focus on prioritizing activities
to develop the business into the future, and be able to see various kinds that might occur in the
future.
The vision must be carried out as well as possible so that what the company aspires to in
the future can be achieved, and must be supported by activities and programs that lead to the
company's future achievement of a goal so that the vision is not just an empty slogan.
d. Strategic Characterization of Vision and Mission:
As we know that the vision and mission really shows where the direction and purpose of
the company is so that when determining and making the vision and mission of a company in
making it should not be in a perfunctory way because if there is an error in determining and
making the vision and mission, the direction of the company becomes unclear and the
movement is not in accordance with what we want (Sedjati. 2015). Strategies that are carried
out to determine the vision and mission include determining the direction for the future,
identifying what is to be achieved, and providing a picture with questions of where and what
will be done.
2. Company Mission:
a. Company Mission:
A mission has a broader sense of an organization's strategy and purpose than more
specific guidelines, in a typical statement, a mission is a statement, not a measurable target,
but a goal an expression of views, attitudes, and goals (Jeffs, 2008). The mission of a
company is a description of an expression of determination in order to advance the company.
a better expression of the mission is to define the efforts of each smaller group in the
organization, so that employees will be able to better understand the purpose and what they
will do, for example, in one group of companies there are those who sell programs to
customers, other employees sell logical data models to those who develop programs.
The mission of the organization in the company's structure can define the purpose,
limitations of the company's business activities. Drucker" said that "mission or mission is
why we exist "what we believe"./ We can do why we exist" and "as the main reason for the
existence of the organization" (Wibowo, 2020).
Mission is something that determines a need that the company wants and tries to meet
these needs According to Benedicta and Prasetyo, the mission in terms of services and
products needed by the market, must be provided by the company (Yunus, 2016). the
company in planning to make a mission must be realistic so that it can produce goods and
services that can fulfill what is market needs, quality, and fulfills the desires and expectations
of its customers.
Wheelen's statement quoted by Yunus (2016), the mission is "a sentence that contains
the purpose and reason for the existence of an organization that contains what the company /
organization provides to the community, in the form of goods and services". The purpose of a
mission is to be able to inform the organization's objectives to those concerned, both inside
and outside the organization, which contains the history of the establishment, direction and
objectives of the company. In making a mission, you should use language that is easy to
understand, can benefit all parties involved and is a good and effective statement. The mission
can be used as a direction in the business world by the company.
Steps in developing a mission statement:
1) Combine words into sentences that are aligned with the mission of the company,
2) Focus on the highest priority and use clear sentences,
3) Use sentences that are as interesting as possible that can be appealing,
4) A brainstorming process is needed in order to align the sentences that illustrate an
organization.
The criteria for a good mission are:
1) Jargon and meaningless words are avoided,
2) Communicating significant direction,
3) It focuses on the capabilities and competencies that the organization has,
4) Can be implemented over the next few years.
The mission of an organization/company is generally designed to accomplish the following:
1) The stated goals and objectives of the organization can be translated into targets so that
time, cost and performance parameters can be controlled and estimated.
2) Provides a basis for motivating the use of resources in the organization.
3) Develop standards and a basis for allocating resources in the organization.
4) Build a good organizational climate.
5) Providing focal point assistance to anyone who is in favor of the goals and direction of
the organization also deters all those who do not participate further when conducting
activities.
6) Facilitate the translation of goals and objectives into work structures, assignment of
tasks to elements of responsibility within the organization.
7) Ensure agreement on organizational goals.
The benefits of missions in developing a company:
1) Can run company programs that have been designed based on more objective missions
and targets.
2) Can focus on the steps to be taken.
3) Can provide a clear direction for activities.
4) Can assist employees in knowing the direction to take.
5) Can prevent employees from making the wrong move.
6) Can guide action at various levels. A step-by-step approach to formulating a mission:
1) Identify "stake holders".
2) If there are differences that exist in a mission, they can be reconciled by various
stakeholder interests.
3) Communicate the mission to both internal and external stakeholders.
4) Describes the business to be run at the time of establishment of the company owner.
b. Formulating the Mission:
Running a business certainly begins with a belief and desire from an entrepreneur. The
first time a company is established requires thoughts to set a company mission in running its
business is usually based on fundamental beliefs, including (Yunus, 2016):
1) Concepts about business can be conveyed and emulated by employees and stakeholders.
2) Products or services from companies can be useful for fulfilling what people need from
inadequate markets.
3) Production technology can produce goods or services that are competitive in price and
quality.
4) Business activities can not only survive but can grow and be profitable.
5) Management philosophy can produce public judgment that can provide financial and
psychological benefits / rewards for parties willing to invest their energy and funds to
help the company succeed.
3. Characteristics of Strategic Vision and Mission:
As we have described above, that in determining and formulating a vision and mission
should not be arbitrary or careless. Vision and mission are things that really determine where
the company is going (Yunus, 2016). If there is a slight mistake in formulating and
determining the vision and mission, the direction of the company is not in accordance with
what is desired. The strategy to form a mission is by determining a company into small parts
and building a strong sense of purpose and identity of the company. Strategic leaders can start
a business with the concept of what the company can and cannot do and the direction the
company will go.
4. Company Goals and Objectives:
a. Definition of Purpose:
Capon's (2008) "Modern Organization" objective is "a statement of the desired state of
affairs which the organization intends to realize and as a statement of the future state of affairs
which the organization as a collective tries to bring about".
So goals are a form of specific realization of a predetermined mission that can be done
in the short and long term and are the key to success. Vision, mission and statements are goals
to be achieved, so you must identify the objectives of a strategy. With a goal that can direct
something that the organization wants to achieve within the company's SWOT boundaries
regarding strategic perspectives.
Companies must determine a goal that will be achieved later clearly so that everything
done by the company will ultimately be achieved by the company / organization (Langford &
Male, 2008). Goals need to be set, because they can help coordinate decisions, help realize the
mission, help assess the company's achievements, and can help define the organization in the
environment,
There are two forms of goals: short-term goals and long-term goals. Goals in the short
term are usually more detailed than goals in the long term, where the difference lies in the
writing and length of time to achieve them.
According to Peter F. Drucker (2012) "The Practice Of Management" Objectives have
several scopes, namely:
1) Market Position
Determine what percentage of the market the company will control.
2) Innovation
Determine the target of goods and services that the company wants to achieve.
3) Productivity
4) Determine goals company in using resources more efficiently.
5) Employee performance and attitude
Make an effort assess the level of performance so that can be actually measured.
6) Manager achievement development
Defines how to assess a manager's expected performance.
7) Monetary and physical resources
Make an effort as efficiently as possible possible in using and obtaining resources.
8) Profitability
Set targets so that it can return to the owners of the company which is calculated as an
index.
9) Social responsibility
Determine the purpose of the company so that it can have a beneficial impact on
society.
A goal is said to be good or not determined by how useful it is for the company. The
requirements for producing good goals include that goals must be realistic, flexible, specific,
measurable, and consistent.
The basic elements of goal setting (Cohen & Cyert, 1973) in "Strategy Formulation and
implementation" are:
1) Goods and services can satisfy and benefit consumers.
2) To produce quality goods, technology is used as well as to reduce production costs.
3) The support of existing resources and by working hard so that it can increase the growth
and profit of the organization.
4) Transmit and communicate good concepts to employees and shareholders.
The purpose of the company's objectives is set so that the criteria for assessing the
success and failure of the company in implementing an appropriate strategy in order to see the
results the end of a goal. Where these criteria are: measurable, fit for purpose, understandable,
can be achieved acceptability, flexible, and become a driver for performance improvement,.
The criteria used can provide guidance to assess the company's performance rationally and
objectively.
b. Company Objectives:
It is a way to run its business operations by determining what a company wants to
achieve in the form of a detailed and measurable amount that must be stated in the objectives
of an operation. In setting goals, it should be determined as a step to improve the mission with
a measurable amount in a short time or in the long term so that it is expected that the goal can
be achieved.
In determining goals, you should use the SMART principle, namely (Drucker, 2012):
1) S stands for 'specific', meaning that the target must be clear. For example, the work is
completed according to the specified schedule.
2) M stands for 'Measurable' which means measurable. for example, the work reached at
least 90% completed on schedule.
3) A stands for 'Achievable' meaning the target must be achievable and rational. for
example, the production capacity standard is
140pcs/month, so it is impossible to set it to 200pcs/month.
4) R stands for 'Relevant' meaning that it is in accordance with the process of establishing
quality objectives. for example, the production department in making production plans
on time.
5) T stands for 'Time Bound' meaning a clear time limit. for example, a month must
produce five products.
5. Company Strategy:
A strategy is a method used to gain victory in achieving a goal.
According to Drucker (2012) there are five definitions of strategy:
a. As a plan is a program or planned steps to achieve a set of goals or ideals that have been
determined, it is the same as the concept of strategic planning.
b. A pattern is a consistent pattern of past behavior, using strategies that are conscious
rather than planned or intended.
c. Positioning is determining the brand, product or company in the market based on the
conceptual framework of consumers or policy makers, a strategy mainly determined by
external factors.
d. As a tactic, it is a specific maneuver to trick or outwit an opponent.
e. As a perspective, it is executing strategies based on existing theories or using the natural
instincts of the head or way of thinking or ideology.
6. Company Philosophy:
Over time, companies often encounter problems that are difficult to solve, so that the
company's vision and mission will be affected. To overcome this when planning its mission
statement, each company needs to develop a philosophy that can be used as a guide in
carrying out daily activities and can also be used as a guide in solving any existing problems
(Robson, 1997).
Philosophy is the Greek term "philosophia" (philos / philein: love, like) and (Shophia:
knowledge, wisdom, wisdom). Philosophia thus means love for the science of philosophy.
Which in Indonesian becomes philosophy. A more practical meaning Philosophy is what is in
the mind, while philosophizing is a way of thinking seriously and deeply radically to the roots
of truth or philosophizing means seeking the truth of something.
Josh Spiro (2010) writing in an article said that "A company's philosophy is a
distillation of its culture or ambience into a group of core values that inform all aspects of its
business practices" or in other words, the company's philosophy is a distillation of the
company's culture or ambience that informs all aspects of business practices into a group of
core values. In the free encyclopedia wikipedia it is stated that "The philosophy of business
considers the fundamental principles that underlie the formation and operation of a business
enterprise; the nature and purpose of a business, and the moral obligations that pertain to it."
Thus, the philosophy of business is defined as "a principle that is used as a guide by the
company in running a business which is then used as a reference for building its company".
"Creed" (Company Creed) often referred to as the philosophy of the company is the
main part of corporate culture which is the deepest component of a culture whose values must
be embedded in every behavior of employees (Ledford Jr, et, al., 1995). The "company creed"
statement is often included in the mission statement. The basic philosophy as a priority that
has been made a commitment and belief by strategic decision makers in running the company
that reflects the credo of the company. However, statements of philosophy from companies
are often too general rather than a commitment to the values that were the original goal so that
they are more like public relations publications.
For example, the credo of the Japanese company "Matsushita" chose the word "Water"
as its philosophy, with the reasoning: "water is everywhere and is needed by everyone, water
flows to lower places". The flowing water philosophy has consequences for the equal income
of employees.
7. Linkages between Vision, Mission, Goals, Corporate Philosophy and Operational
Objectives:
If a company does not have a vision, mission and goals, of course the performance of
the company is not clear in its direction and is easily swayed by external circumstances so that
it acts spontaneously as many small traders do. Vision, mission, and goals are certainly owned
by every company where the philosophy will provide the direction that will be achieved by a
company that is said to be of medium to high scale (Robson, 1997).
To achieve a vision, a mission is needed which is something that must be done by the
institution in its business. The elaboration, explanation and statement of the vision is
something that the company will achieve within a certain time in what becomes a goal which
is divided into two forms of goals, namely in the short term or goals in the long term, which
distinguishes the two only in the period of time to achieve the goal and how to write it.
A far-sighted view of a goal and what to do to achieve it is the definition of a vision. To
carry out the concept of vision usually exists in the context of individuals and companies.
Vision is used to achieve the goals that have been set with the best results from creativity and
imagination as a motivation for action. So with a vision a person will be able to use his mind
to achieve what he wants (Robson, 1997). People who have a vision in their lives can see
many things that will happen in the future.
A vision statement describes the future of where one wants to be and the events that will
occur in ten or twenty years in the future with the hope that everything goes as planned to
achieve the goal (Kozami, 2002). A foundation that guides the company in running the wheels
of business which is then used as a reference for building a company called a corporate
philosophy, with the support and high commitment of employees in order to carry out the
philosophy of the company, it is hoped that they can maintain the necessary situation in order
to achieve good performance. Motivating employees to always strive earnestly to achieve a
product that has excellence, quality and excellen service with all their heart. When
understanding something deeply and correctly with consistency and with a firm belief in the
philosophy of the company everything that is difficult to implement will be easy to overcome.
Leadership that needs to be applied by a company, including (Cohen & Cyert, 1973):
a. Transformational leadership is a leader must involve employees in setting the mission
and can also inspire employees;
b. Transcendental leadership is something that contains spiritual elements and if a
company becoming big does not make it miserly; and
c. Quite leadership is teaching and giving freedom to employees to be innovative and
creative according to their abilities because good performance will not be born from
coercion and threats (arrogance).
C. Exercise Test:
As a learning evaluation, students are asked to be able to:
1. Explain the theoretical concept of organizational philosophy!
2. Create an organization's vision and mission!
3. Create goals for the organization to achieve!
