EVALUATING THE IMPACT OF INFORMATION SYSTEMS ON
STRATEGIC DECISION MAKING
ARIZONA STATE UNIVERSITY
WPC 480 - STRATEGIC MANAGEMENT
WEEK 3
A. Learning Outcomes:
The orientation of learning outcomes at the sixth meeting is that students understand the
theoretical concepts of information systems in supporting the implementation of business
strategies. In addition, students understand the types of technology used as a means of
supporting strategy implementation.
B. Material:
1. System Definition:
A system is "an entity consisting of two or more components or subsystems that interact
to achieve a goal", (Cushing, 1974).
System is "a group of elements both physical and non-physical that show a collection of
interconnected between them and interact together towards one or more goals, objectives or
ends of the system", (M. J Alexander, 1974).
O'Brien, a system is "a set of interconnected components that work together to achieve a
common goal, by receiving inputs and producing outputs through an organized transformation
process".
The conclusion that a system is "a collection of components or subsystems that interact
and relate to each other to form a single unit to achieve the goals or objectives of the system".
2. Definition of Information:
Laudon and Laudon (2004), information is "principle data that has been formed into a
form that has meaning and is useful to mankind".
Sundbo, J. (2001), information is "a collection of principle data that has been placed in a
more meaningful and useful context that is communicated to the recipient for use in making a
decision".
Mcleod (2001), information is "a collection of principle data that has been processed so
that it becomes data that has meaning and is useful to the user".
From some of these definitions it can be concluded that information (Jogiyanto 2017) is "data
that is processed into a form that is more useful (relevant, accurate, and timely) and more
meaningful to those who receive it which describes an event and a real entity (fact and entity)
and is used for decision making".
Data is a reality that illustrates an event into a real entity, where all sources of
information are data. Data is a real form that must be processed in order to produce
information so that the information can be used to make a decision and take action.
3. Definition of Information System:
James B. Bower, Robert E. Schlosser and Maurice S. Newman (1985): information
systems are "a certain principle way to provide the principle information needed by the
organization to operate in a successful principle way and for business organizations in a
profitable principle way" (Prasetyosari, 2004). Meanwhile, according to John F. Ogden Nash
and Martin B. Roberts (1984): information system is "a combination of language from people,
facilities, technology, media, procedures and control principles aimed at obtaining important
communication lines, process certain types of routine transactions, signal management and
other principles of important internal and external principle events and provide a basis for
intelligent principle decision making "(Prasetyosari, 2004).
4. Definition of Information Technology:
Some forms of information technology that we often see are applications that contain
information from various activities or activities, such as Google, Yahoo, and so on.
Technically, information technology can be understood as a tool that functions to process
information and or store information for the benefit of users through technological devices
(Prasetyosari, 2004). Nowadays, smartphones and computers/laptops are the most widely used
technological tools as information storage/processing media.
Along with the times, information technology is increasingly diverse and has added
value, thus providing a very useful function for human life. The most phenomenal thing today
is social media-based information technology, such as tiktok, facebook, youtube, instragram,
and so on.
The results of the process are integrated by the auditor can applied in the audit approach. The
company implements an internal control structure that includes (Watne, 1990):
5. General Control:
Usually a company carries out general control of logical and physical aspects. The logical
aspect is usually found in the information system at the management level, while the physical
aspect is carried out on the physical assets owned by the company. General controls are
classified into four, namely (Martin, 1990):
a. Organizational and authorization controls.
Organization here means that there is a general separation of duties and positions
between users and operating system administrators. Users can only use the system if
they have been authorized by the administrator.
b. Operation control.
A company must have an information system controller in order to provide
certainty whether the information system can operate as expected.
c. Change control.
Information systems must be controlled for changes, including records of changes
to versions of the information system, as well as change management of an information
system upon implementation.
d. Physical and logical access control.
Paying attention to the physical aspects of finance is part of the internal access of
management in maintaining activities. While logical access, is a rational action towards
the realization of business activities through a predetermined management system.
6. Application Control:
a. That the company has made the entire flow / control procedure, starting from the top,
middle, to the bottom level. This is done because management seeks to avoid greater
risks.
b. Application Relationship and General Control
Usually in general, if the general control is invalid, then the application control is
also invalid, and vice versa.
c. Types of Applications
For PDE audit purposes there are two types of applications, including :
1) Standalone software. Is an application that is the mainstay of the company in
carrying out tasks. In accounting systems in the form of calculation / transaction
software or other computer applications that have the same function.
2) Software on the server. It is an application that helps run the business that is
stored on a primary and confidential storage.
7. Types of Application Control:
In general, application control is designed through an information system for the entire
set of activities, which consists of inputs, processes, outputs, and feedback.
8. Understanding of Organizational Controls and Application Access:
Even though it is an application, the company still has to control the application used, so
that the application can run and function properly, so that it does not hinder the running
business (Martin, 1990). For access control, it is usually only centered on logic to avoid
access that is not its area. There are other controls behind the role-based menu, only users
selected by the administrator can access the menu because it is related to the company's
password and user.
9. Understanding of Input Control:
In essence, it provides assurance that the data is accurate when inputted to the system.
Automatic control is commonly used in program input:
a. Validation checks
1) Check digits
2) Range and limit checks
3) Format checks
4) Validity checks (lookup)
5) Compatibility checks
b. Duplicate Checks:
Comparing past transactions.
c. Matching:
Between module that interconnected compared
10. Understanding of Process Control:
Two stages in the control process, namely transaction stage and database stage.
a. Understanding Output Control:
Control is done by manual or automatic checking. Models in output control: Output
expectancy, Output completeness, Control over spooled output, Reasonableness, Routine
output, Output distribution, Right people, and Output SQL.
b. Understanding of Master File Control:
This control must occur referential integrity of the data, so that there is no misuse of
updating, deleting and adding data.
11. Working Paper:
Are things that are recorded by the auditor when carrying out tests which include
procedures, evidence, and conclusions. The function of working papers is as the main
supporting evidence (Martin, 1990).
a. Working Paper aims as:
1) Documentary Evidence during the audit.
2) A tool to organize all audit steps and stages.
3) Principal auditor's assistant, colleague or supervisor of accounting firm in checking the
audit results of its subordinates.
4) Basis for preparing the audit report
5) The conclusion contains the auditor's description of evidence and argumentation, both of
which are the authentic basis for the conclusion.
b. Procedure for making Working Paper
1) Have a goal
2) One field/topic has separate worksheets
3) Clear title writing
4) Writing an index list
5) The step in the audit procedure must have an explanation
6) Auditor's notes/comments sheet available
7) There is a signature and audit time
8) Documentation files are kept separate between those that have been audited and those
that have not.
There are several types of Working Papers including : trial balance, Analysis schedule, Audit
memo, supporting information, Adjustment journal and reclassification.
c. Common Standards on Working Papers
1) Working Paper serves to:
a) Support the assessment or opinion conveyed by the auditor.
b) Assist in the direction and supervision of work.
c) Provide notes,:
(1) Audit procedure.
(2) Testing
(3) How to get information.
(4) Conclusion.
d) The availability of data if the audit has been carried out with Internal Audit Standards in a
professional manner.
2) Completeness of Working Paper
a) Must be complete and accurate
(1) Does not raise question marks relating to unanswered audit objectives.
(2) Stand-alone, meaning that the work has been done clearly, (where and how to get it).
example chosen, purpose of the working paper, what findings have been made, etc.).
b) The sections of each working paper should consist of:
(1) Title overview
(2) Identify the source
(3) Date of initial auditor preparation
(4) Index number of the working paper.
12. Marketing Check Discussion:
It is an independent, systematic, complete, and periodic examination of a company's
strategy, goals, environment, and activities in order to spot opportunities and problems
(Martin, 1990). An audit is expected to convey some good input to make an implementation
plan for improving marketing performance. Marketing Audit is the main tool used for
strategic control.
Marketing audits are not just limited to a few issues but cover all major target areas of a
business. Those who conduct marketing audits are usually those who have already done so
have experience, are objective, and independent (Jogiyanto, 2017). Where sometimes a
management experiences amazement at the results obtained, so that it makes management
think about taking some actions that make sense, how and when to do it.
a. Audit of the Marketing Environment:
1) Macro Environmen:t
a) Demographics, regional circumstances and population characteristics are factors that
influence the audit process.
b) The economic, financial condition of the company reflects the complexity of the audit
process. Because the size of the business value has a different audit process, and the
handling is different.
c) Natural, relating to the company's ability to conduct the audit, particularly with regard to
costs and facilities. Is the company fully prepared for the financial consequences of
conducting the audit?
d) Technology, the audit will involve examining technology, hence the need to ensured
technology that is working.
e) Politics, regulations and administration are among the audit requirements.
f) Culture, habits people's customs reflect a certain uniqueness, so audit needs to adapt to
these customs.
2) Microenvironment:
a) Markets. "What is happening to the growth, geographic and profit distribution of the
market?"
b) Customers. "How do customers rate the quality of products, prices and services?"
c) Competitors. "Who are the main competitors? What strategies do they use, what is their
market share and what are their strengths and weaknesses?"
d) Distribution channels. "What are the main channels through which the company
distributes its products to customers? How does the presentation work?"
e) Suppliers. "What trends are affecting suppliers? What is the expected availability of key
resources for production?"
f) Public. "How does does the company deal with these publics? Which ones bring
problems or opportunities?"
b. Marketing audit/check:
1) Business mission. "Is the mission market-oriented and clearly outlined?"
2) Marketing objectives. "Have the objectives been properly applied by the company as
guidelines in marketing planning and measuring a presentation? Do these objectives
match the company's resources and opportunities?"
3) Strategy in marketing. "Does the company have a good marketing strategy to achieve its
goals?"
4) Budget. "Are sufficient resources for products, regions, segments, and marketing
elements budgeted?"
c. Audits of Marketing Organizations:
1) Formal structure. Does the head of marketing have authority over activities that can
affect customer satisfaction and is it optimally organized according to market, product,
function, and region?
2) Function efficiency. Is there effective communication between marketing and sales? Are
marketing staff properly motivated, trained, supervised and evaluated?
3) Efficiency between departments. Are R&D, manufacturing, purchasing, resources and
other non-marketing areas working well with marketing staff?
d. Audit on Marketing System:
1) Marketing information systems (SI). Does the monitoring/investigation system in
marketing provide precise and accurate information about market developments? Are
decision makers in the company effectively using marketing resets?
2) Marketing planning system. Whether long-term and strategic planning has been prepared
by the company and used?
3) Marketing control system. Has management routinely analyzed the profitability of
markets, products, and distribution from sales and achieved annual marketing objectives?
4) New product development. Is the generation, collection and screening of new product
ideas well organized? Has the new product been adequately tested? Have market and
product tests been conducted and are the new products successful?
e. Marketing Productivity Check Audit:
1) Analyze profitability. How much profit can be made from unequal markets, regions,
products, and distribution?
2) Analyze the effectiveness of the budget. Are there marketing activities that use a lot of
finance and how can they be addressed?
f. Marketing Function Audit Check:
1) Products. Whether organization/company do good and objective development? Are there
any products that should be added or withdrawn?
2) Pricing. What is the company's policy, how to set prices, and how to advertise prices
appropriately?
3) Distribute. What is the distribution strategy and object? Are the services to the market
adequate and the distribution channels studied?
4) Advertising, sales and publicity. How to set the budget? Does the company have an
advertising program and develop public relations at a sufficient cost? Is advertising in the
media well received and what is the object of the company's advertising?
5) Sales force. Are there enough salespeople, trained, supervised and motivated? Is the
organization right? How does it compare to competitors?
C. Exercise:
As a learning evaluation, students are asked to be able to:
1. Explain the meaning of information systems theoretically!
2. Explain the meaning of information technology theoretically!
3. Explain the function of information and technology systems in supporting business
strategy implementation!
STRATEGIC MANAGER
A. Learning Outcomes:
The orientation of learning outcomes at the seventh meeting is that students understand
the theoretical concepts of strategic managers and can develop organizational structures,
authorities, responsibilities, and functions of organizational leaders as strategic managers.
B. Material:
1. Responsibilities, Management Duties and Membership of the Board of Directors:
Basically, every organization has its own vision, mission and goals. In order to achieve
the vision and mission to achieve the goals so that each organization will implement a
strategic plan that has been set (Sundbo, 2001). How to manage an organization in conducting
competition is influenced by the resources owned by the organization. The governance of
each company depends on The policies set by those directly involved in management are
called strategic managers. The strategic manager of each company can certainly vary because
it really depends on the form of the company's organizational structure.
2. Organization Structure
To better understand the forms of organizational structure, the following describes the
various forms of organizational structure (Haberberg & Rieple, 2008):
a. Line Organization Structure:
It is a form or model of the structure of the organization in which the transfer of
authority is carried out directly from the leader to the subordinates which is also referred to as
the straight form (Jones & Hill, 2010). This method is a model that is considered the oldest
and was generally used during the first industrial development, which has the following
characteristics:
1) Subordinates and leaders are under the same authority,
2) Managementpeak as theconceptor, and in addition the implementer,
3) The number of employees is relatively small,
4) Limited facilities and infrastructure,
5) Company owner as top manager
6) The organization is still small The advantages are :
1) The command is one line between superiors and subordinates,
2) Members have a high sense of solidarity and spontaneity,
3) Short/fast decision-making bureaucracy,
4) Have a good level of compliance and loyalty,
5) Has a good humanistic spirit.
The downside is:
1) Single-line/authoritarian leadership style,
2) Employee creativity levels are low,
3) Top management incorporates personal interests into organizational goals,
4) Depend on one person.
b. Line and Staff Organizational Structure:
Is a combination of top and operational organizations. In delegating authority, it is done
on the structure line (top leader > middle leader > operational). So that the staff under it helps
the leadership so that in managing the organization can run well (Sundbo, 2001). Where staff
have a duty to be able to assist leaders in providing suggestions, input, advice, thoughts,
information and services for consideration in establishing a rule/policy. The working
relationship is relatively distant, where the leader's interaction is not directly with
subordinates, because:
1) The type of work is too technical and complex,
2) Has many employees,
3) Large organizational network and detailed structure
In the organization, there are two work groups, so the emphasis is on the specialization
of line personnel and staff personnel.
The advantages are:
1) Each task gets a lengthy explanation,
2) Coordination channels and technical cooperation are organized based on procedures,
making it more conducive,
3) Talent development is better,
4) Staffing is done based on objective criteria, and
5) Dynamic policy implementation.
The downside is:
1) Prioritizing basic duties,
2) Winding down in the decesion process,
3) Policy setting involves more close people, and tends to monopolize the structure, and
4) There is friction of interest among top management.
c. Functional Organizational Structure:
This organizational concept runs on the basis of technical level, where operational managers
are more in control of the organization's activities. Meanwhile, top management only takes a
policy role. In the beginning, there were leaders who did not have clear subordinates and each
superior had the authority to order his subordinates, as long as it was related to the function of
the superior, with its characteristics, namely (Murphy & Murphy, 2004):
1) The organization is relatively small,
2) Contains professional technical staff,
3) Proficient and experienced in technical work,
4) Have measurable targets, and
5) The supervision is inherent The advantages are :
1) Have program that accommodate all interests,
2) Have strong support (material and moral),
3) Fast promotion,
4) There is a division between work that uses the mind and physical labor,
5) The process of developing professional human resources is well underway,
6) High levels of inter-personal relationships within the work team,
7) Have high work discipline and morale,
8) The group work process emphasizes harmonious relationships,
9) Promotion of skill specialists,
10) Employee mapping is clear,
11) Valuing competence and professionalism.
Weakness is:
1) Administrative procedures are confusing,
2) Monitoring is difficult to implement,
3) Limit individual ideas,
4) Feeling very specialized in one particular area makes it difficult to exchange tasks,
5) Long-term strategies have received less attention,
6) The growth of complex technical attitudes,
7) There is a decrease in the coordination function at the technical level, and
8) In a work team, there is dependency, where low competence will rely on the better
performance of other members, resulting in a less harmonious work climate.
d. Line and Functional Organization:
The organization runs on the basis of equality, because the leader does not have extreme
authority, so a collective work pattern is built. Leadership requires specific groups to perform
specific tasks, resulting in specialization (Hubbard, et al., 2015). Thus, leaders have many
choices of skilled employees, and it is easier to realize effective business processes.
1) There is no distinction between assistance and basic tasks,
2) Functional positions have specialized skills in a task,
3) There is no difference in authority and division of labor at the top management level,
4) A lean form of organization does not require a complex structure, so there are not
many positions in the structure,
5) The organizational structure is only used according to the needs or activities so it is
not long,
6) Leaders carry out tasks together with the work team,
7) Each level of leadership has the same authority in managing the organization,
including the work team,
8) Tasks are done on the basis of predetermined groupings, including who the coworkers
and line leaders are.
The advantages are:
1) Have good solidarity,
2) Have good discipline,
3) Encourage optimization of work productivity,
4) Eliminate tasks that have a small percentage of the goal,
5) Good at making decisions,
6) Leaders are more adaptive, and do not like to use authority as a basis for strengthening
positions,
7) It is not difficult to join forces with a work team.
The downside is:
1) Inflexible,
2) Boring specialization,
3) The slow process in making a decision is because it must first be deliberated with
other members,
4) No one wants to take responsibility when something goes wrong,
5) More than one person's orders are confusing,
6) It is difficult to develop creativity, because the implementation of orders adheres to a
primordial system.
e. Organization Matrix:
Which commonly called as a The project management organization is an organization that
uses a specialist work model. Each task implementer has competence in a particular field of
work, so that good management can be implemented (Jones & Hill, 2010). In many cases,
leaders often create the concept of project work groups, where this system leads each work
implementer to be able to improve the skills needed for the specified type of work, thus
human resource development occurs properly.
The Matrix organization creates dual authority with horizontal authority in the project
manager, but functional authority according to his expertise and visible in the formal
structure, so it will last until the project is completed. The dual authority of a member of the
Matrix organization means that the member must also report to two supervisors as they
perform their duties. The project manager will report immediately to the top manager. The
difficulty that often arises from the matrix is, when work boundaries occur in the same period,
there is a decrease in work optimization, because employee competencies are divided into two
structures (Jones & Hill, 2010).
The advantages of this organizational structure are:
What stands out is the flexible professionalism. Task executors are accustomed to a
variety of situations, so the level of adaptation to the organization is very good, as well as in
the use of competence, more reliable, because they have a variety of experience and a variety
of expertise.
The weaknesses of this organizational structure are:
Leaders have difficulty organizing and adjusting communication over a variety of work,
so it will be difficult to develop a unified team due to errors in carrying out tasks for each
individual. In order to solve a problem that is likely to arise, project managers are usually
given special and important authority, for example: when setting salaries, or promoting
employees.
f. Committee Organization:
The main characteristic of a committee organization is that tasks are performed by
working groups. This means that in a job, a special work team will be formed, which contains
technically competent people, and also has a good level of cooperation.
1) Committee leader:
Work teams have more aggressive authority over broader organizational policies
2) Staff Committee
Work teams are only task executors, with no authority over organizational policies
The advantages of this organizational structure are:
1) Decisions are made through a collaborative process, where all members give their
opinions and contributions.
2) The style of leading is very unlikely to be autocratic.
3) The organization is transparent about the progress of the task, which leading to
guaranteed career development.
The weaknesses of this organizational structure are:
There is inertia in the decision-making process, routine operations require a very high
budget, if there is a problem, they avoid their responsibilities.
C. EXERCISE:
As a learning evaluation, students are asked to be able to:
1. Explain the meaning of manager/leader theoretically!
2. Make an organizational structure!
3. Describe the authority, responsibilities and functions of strategic leaders/managers!
STRATEGIC MANAGERS IN TOP MANAGEMENT
A. Learning Outcomes:
The orientation of learning outcomes at the eighth meeting is that students understand
the theoretical concepts of top management leaders (commissioners, directors), and can
organize their authority, responsibilities, and functions as strategic managers.
B. Material:
1. Advanced Strategic Manager:
Regulations on the responsibilities and roles of directors and officers are regulated in
Law No. 40 of 2007 concerning limited liability companies. The law states that
commissioners and directors are the body of PT along with the shareholders' meeting. Based
on the Law on Limited Liability Companies, the Board of Directors is the representative of
the company under the internal and external control of the company, with full responsibility
and authority for the interests of the company in accordance with the aims and objectives of
the company. A organization. Applicable statutory provisions. The Limited Liability
Company Law has an element of obligation to maintain, manage and determine the state of
the company carefully.
The owner of the company will not be arbitrary when choosing a director. But in
practice there are often problems that have to do with commissioners and problems that often
occur because commissioners and directors do not have a strict separation. Although in fact
the rules regarding the separation of duties are clear, but at the time of implementation the
separation did not go well.
2. Personal Responsibility of Directors:
a. Directors' liability based on the principle of fiduciary duty
In a company, directors are individuals who are trusted to perform their duties well on
behalf of the company. Directors have a fiduciary guarantee in the Company, which is the
legal basis for the fiduciary relationship between the Directors and the Company. Which
positions the directors, with the requirements, ability, interest, loyalty, good faith and integrity
for the company. Based on Page this, member directors have a high legal responsibility in the
event of negligent action, failure or non-performance of an important matter for the company.
Fiduciary duty has the principle that a director must be responsible when carrying out
his duties, so that :
1) Performing tasks well,
2) Perform tasks with proper purpose,
3) In carrying out their duties, they are not free to be irresponsible,
4) No conflict of duties and interests.
The Board of Directors is said to have carried out its duties properly, if a person has
carried out his duties in accordance with what has been mandated to the maximum in
mobilizing all his knowledge and abilities. Directors must prioritize the interests of the
company, shareholders and employees. You must not violate the law, the Articles of
Association or the public interest in carrying out your duties.
b. Liability under the ultra vires principle:
Ultra Bahia is a principle of jurisprudence that regulates the legal consequences if the
act of a the company exceeds the reasonable limits of authority set by the company in the
articles of association.
In the history of common law, there has been a tendency to relax the application of the
Ultra Bahia principle which is widely applied in various countries, including Indonesia. The
term Ultra Bahia is used in a broad sense to cover not only illegal activities, but also activities
that are not prohibited but are more than permitted.
Legal actions to be considered that are outside of the company's aims and objectives if
they meet one of the following criteria:
1) Legal actions that are expressly prohibited under the articles of association.
2) Given these special circumstances, the legal actions of the person concerned cannot be
said to support the activities stipulated in the articles of association.
3) Given the special circumstances, the legal action concerned cannot be said to support
the interests of the limited liability company.
The aims and objectives of the company under the GmbH Act are the core of the
Articles of Association. In the event of a change in the purpose of the Articles of Association,
the need to obtain GMS approval in accordance with the provisions of the prevailing laws and
regulations. In addition, amendments to the Articles of Association require approval from the
Minister of Justice, announcement in the State Gazette, and registration in the company
register.
The Board of Directors is authorized and empowered to act according to applicable law
for the benefit of the company and for the benefit of the company only if the purpose and
objective are determined by the articles of association of the company. Any action taken by
the Board of Directors outside its authority is not binding on the Company. The Ultravia
principle aims to protect investors or shareholders from doing things beyond their authority
and allows them to receive compensation afterwards. Ultra Via Action has disabled actions. If
any party feels unfavorable, the director should be personally liable.
c. Personal liability of directors:
The Board of Directors has full personal responsibility in the event of a loss to the
company if :
1) Not correct when performing their duties;
2) Negligent in performing their duties.
Representation and management of duties carried out by directors irresponsibly and
without good faith can cause directors to be personally responsible for losses. When carrying
out a duty as a management of the company in carrying it out must be in a good manner,
including:
1) Must be trustworthy and honest;
2) Must carry out management with proper purpose;
3) Must comply with statutory regulations (statutory duty or duty obedience);
4) Must have a sense of loyalty to the company (loyality duty), not utilizing the company's
assets for personal purposes;
5) Must avoid conflicts between personal needs and the company. Do not take the
company's profits for personal gain and do not compete with the company.
If they are negligent when carrying out their duties as members of the board of directors
and even do what is prohibited in management which results in losses to the company,
members of the board of directors must be personally responsible for the losses of the
company in full.
d. Joint and several liability of members of the board of directors:
Article 97(4) provides that if the board of directors consists of two or more 4.444
members, each board member is liable. The exercise of joint and several liability under the
Indonesian Companies Act is only allowed under the Limited Liability Company Act of 2007.
The KUHD and Limited Liability Company Act of 1995 impose the principle of personal
liability. Error, negligence or injury.
If a member of the BOD violates his or her duties and may result in losses, then each
member of the BOD shall be jointly and severally liable in accordance with this provision.
The other Directors are not involved in the negligence, but they must share responsibility for
the company's losses. That is, the law holds all Directors personally and/or jointly and
severally liable for the losses of others. Liability applies to all actions taken by the Directors
on behalf of the Company, even if the Board members were not aware of or involved in those
actions.
3. Dismissal of Directors:
Dismissal of members of the board of directors has two characteristics, namely
temporary dismissal and dismissal at any time. Pursuant to Article 105 of the Company Law,
members of the Board of Directors may be dismissed at any time or at any time by resolution
of the GMS by stating the reasons. This decision is taken after the directors concerned are
given the opportunity to protect themselves before the GMS. Directors can be dismissed as
well as decided and carried out outside the GMS provided that they have the approval of all
shareholders in writing who sign the proposal from the person concerned. There is no need to
give time to defend themselves if the member concerned has no objection to the dismissal.
Members of the Board of Directors are dismissed from the closing of the GMS, the date of the
dismissal decision is set at the GMS decision making.
According to Article 106 of the Company Law, members of the Board of Directors can
be temporarily dismissed by the Board of Commissioners by stating the reasons. The member
of the Board of Directors is notified in writing of the dismissal. From the date of dismissal for
thirty days, the member of the board of directors can defend himself when the company holds
a GMS. The GMS can revoke the temporary dismissal decision. If the results of the GMS
uphold the temporary dismissal resolution, the status of the director's dismissal may be
permanent, and if 30 days after the date of the director's dismissal, a GMS that does not carry
the decision of the lead company manager will be given. If held, the temporary dismissal will
be canceled.
4. Responsibilities of the Board of Directors:
Regarding the responsibilities of the board of directors, there are different definitions in
each organization regarding laws and standards. The general responsibilities of the board of
directors are:
a. Set the company's strategy, direction, vision and mission,
b. Dismiss and elect the CEO and top management,
c. Provide control and supervision to top management,
d. Provide approval on the use of resources,
e. Accommodating interests investors/shareholders.
The legal review requires the board to manage the company's business rather than
directly. Directors act honestly and compassionately and have the same skills as the sage in
various conditions.
5. Rules for the Appointment, Replacement, and Nomination of Directors:
This is regulated by the Articles of Association of the Act (Article 94 (4)).
Appointment, replacement and dismissal of members. The appointment of board members is
temporary and may be renewed (UUPTPasal 94 (3)), and will be determined by the results of
the GMS. The first appointment of a director is made by the company's founder in accordance
with the company's articles of association (UUPT Article 94 (2)). GMS resolutions regarding
the dismissal, replacement, and appointment of members of the Board of Directors are
effective at the end of the GMS (UUPT Article 6). Therefore, in the event of appointment,
replacement or dismissal of a member of the Board of Directors, the Board of Directors of the
Company shall notify the Minister of such changes in accordance with Article 94 Paragraph 7
of the Company Law. A member of the Board of Directors shall within 30 days from the date
of the GMS decide to register in the register of companies. Beyond this period, the Minister
has the right to reject any request or contact sent by the Board of Directors to the Minister that
is not registered in the Business Register (UUPT Article 94 (8)).
6. Board of Directors Function on Strategic Management
Board directors at Management Strategic has a function to complete three basic functions,
namely:
a. Monitoring: Directors need to monitor the internal and external conditions of the
company as a tool to provide input to top management for the development of the
company.
b. Evaluation and Influence: Directors may review, approve, provide advice and input,
provide alternative management actions, and make management decisions and proposed
actions.
c. Initiation and Decision: An active board with the above functions usually also serves to
initiate, define, explain, and make strategic decisions for management.
7. Membership of the Board of Directors:
The board of directors of a public company consists of two parts: internal directors
(part-time directors) and external directors (part-time directors). Internal directors are usually
officers and employees of the company, but outside directors can be officers of other
companies.
8. Top Management Responsibilities:
Those who have a dominant role when formulating strategy in the company are Top
management has the responsibility to direct the action of the strategic plan that has been
formulated. Where the responsibilities of the main and non-main directors are considered to
be two important things, namely:
a. Lead the implementation of the mission and provide strategic vision”
The meaning of leading in carrying out the mission is that the managing director directs
all activities so that the company achieves its goals. What is meant by strategic vision is an
image of what the best company should look like (Jones & Hill, 2010). In stating the vision
and mission of the company, the vision is often envisioned. It is expected that half of the
employees have a feeling of being part of the vision mission. All of this can be realized if the
director can be an example and transmit his enthusiasm and abilities to all employees.
Transformative leaders should be able to get employees to work better instead of just doing
routine daily work. All behaviors, attitudes and values adopted can be used as a reference and
example for employees.
b. Managing the Strategic Planning Process:
A Management top has an important role in adjusting the strategic planning process in the
company. Often a plan that has been decided in a planning meeting but during its
implementation the results obtained are less than satisfactory, it is all because top
management is weak in management. One of the main reasons is that business units or
divisions do not play a role in strategic planning in the company (Jones & Hill, 2010). Top
management must be able to ensure that all activities carried out are in accordance with the
strategic plan. The assessment conducted by top management on the implementation of the
strategic plan must be carried out properly.
Top management must be able to provide assurance that the quality policy must be:
1) Relevant to the objectives to be achieved,
2) Demonstrate commitment in the performance of duties, and concern for the interests of
the organization by carrying out all quality management instruments.
3) Implementation of tasks refers to the framework, systematics, and quality objectives
4) Apply flexible communication, and
5) Continuous review.
The quality policy should be based on the purpose for which an organization was
established, in addition to the capabilities of the organization. The quality policy should
include an implicit commitment to improve the effectiveness of the implementation of the
quality management system to meet the requirements of customers, existing laws and
regulations, and applicable laws. The quality policy should include an implicit commitment to
improve the effectiveness of the implementation of the quality management system to meet
these requirements. In addition, the quality policy needs to provide a framework (space) for
setting and reviewing quality objectives. This means that the quality policy should be clear
(unbiased) and provide an opportunity to set measurable quality objectives.
In ensuring the quality policy, top management is responsible for communicating it so
that it can be understood by all functions involved in the quality management system, which
then in a certain time interval is reviewed in order to improve its suitability for the
performance of the organization. Often the company's quality policy does not change or is
sometimes permanent when it should review its suitability should still be implemented as a
quality policy at the next time.
9. Pandan Corner Limited liability company law on Commissioners and Directors:
Accountability and staffing regulations applicable in the province of Indonesia is regulated in
Law No. 40 of 2007. It states that officers and directors are PT institutions in addition to the
shareholders' meeting. The board of directors is authorized and fully responsible for the
company's business for the benefit of the company in accordance with the aims and objectives
of the company, and is established as a company organization that represents both outside and
inside the company in accordance with the company's articles of association. The Limited
Liability Company Law has an element of obligation to maintain the state of society, make
careful decisions and manage the state of society,
Company owners will not be arbitrary when appointing directors. Usually the problem
with commissioners is:
a. There is no clear separation between directors and commissioners, although the
principle of separation is clear, but in practice there is no difference in authority.
b. Membership composition
The number of commissioners and directors should be balanced and proportional, in the
effectiveness of the company. So that the role of commissioners and directors has an
impact on the progress of the company.
c. Transparency of membership The company must be built on the basis of objectives, so
in major matters such as the appointment of commissioners, it needs to be formally
regulated, taking into account the principle of objectives that may be achieved. In other
words, the selection of commissioners and directors must look at the overall suitability
of competence and personality for the purpose.
d. Lack of independence is the main thing for commissioners in carrying out their
functions, which can cause them to be less objective.
10. Principles in Corporate Governance:
There are five that are widely agreed upon, namely (Jones & Hill, 2010):
a. Transparency, the principle of openness must be fulfilled, that the company really has
good faith in its current performance, so that interested parties get valid information and
can make a real contribution,
b. Accountability, the company must demonstrate an attitude of responsibility for the
authority it has used, that its performance and productivity are reasonable and
measurably managed.
c. Responsibility, the company should already understand all applicable rules and be able
to carry them out with responsibility.
d. Independent, people within the company do not dominate each other,
e. Equality and obligation, the company must always pay attention to shareholders and
interests based on the principle of equality.
11. Problems often experienced by commissioners:
In its implementation, the problem that often exists is :
a. No clear separation between directors and commissioners,
b. Membership composition,
c. The nomination process is not transparent,
d. Low independence,
e. Equality and obligation.
12. Strategic Management Style:
The style of strategic managers in strategic management can be divided into two general
classifications (Le Masson, P., Weil, B., & Hatchuel, 2010):
a. General Manager:
Responsible for the company's overall strategy on performance and health.
b. Operations Manager:
Responsible for specific functions and business activities that are assigned.
By details style manager strategic manager can be described as below:
a. Top Manager:
At the top of the hierarchy are top managers who are responsible for the entire
organization, including the president, chairman, CEO, CEO, and vice presidents. The
top manager's responsibility is to set goals, establish strategies, monitor and interpret
the external environment, and make decisions that can affect everything in the
organization. His or her point of view is always positive and long-term, paying
attention to trends that usually appear in the environment that can help the company as
a whole prosper. Top managers' main responsibilities include instilling a shared vision
for the organization, shaping the corporate culture, and maintaining an entrepreneurial
spirit that can balance the fast pace of the company. Especially today, top managers
need to incorporate the unique knowledge, skills and abilities of each employee.
b. Middle Manager:
A manager who works at the middle level of the organization and is responsible
for departments and business units. Examples of these middle managers are
department managers, department managers, quality control managers, and laboratory
managers. As a general rule, two or more levels of managers report to middle
management. They are responsible for implementing the overall policies and strategies
set by top managers. Middle management usually deals with middle-aged people who
are expected to build good relationships with other managers in the organization,
resolve conflicts, and promote teamwork.
c. First-line manager:
Key managers are directly responsible for the production of goods and services.
They are the first or second level of management and hold the positions of supervisor,
manager, department manager and office manager. You are responsible for a group of
non-managerial employees. The main concern is the implementation of rules and
procedures to achieve efficient production and motivate subordinates to provide
technical support. This level of duration is relatively short and the focus is on
achieving future goals.
13. Top Management Style:
Executives in this position at the managerial level are called top managers. Top
Managers (TM) are primarily responsible for the planning and functioning of the
organization. The nature of the work is to use the brain, or "thinking", i.e. planning, decision-
making and organizing. TMs seem relaxed, but in reality they are always thinking about
decision-making. What guidelines should be taken to achieve goals? According to Heracleous
(2003), the qualifications for the needs of top-level corporate management or top managers
are divided into four types: management skills, management thinking, management
conceptual framework, and management knowledge types.
First, management skills are distinguished in relation to human and technical skills.
According to Robbins (2013), human skills indicate the ability to reach out and motivate
others, both individually and in groups. Technical skills, on the other hand, are technical skills
to perform tasks that require specialized knowledge or expertise.
14. Managerial Skills:
For top managers, the management skills required are more human than technical. Even
though it is not as big as the picture above, the higher the position of a company at the
management level, the human skills are more dominant than technical skills.
Management thinking can be divided into holistic and atomic thinking. Holistic thinking
is a holistic way of thinking that considers all aspects that can affect the company, and atomic
thinking is relevant to the entire organization but limited to certain parts of the company.
15. Managerial Way of Thinking:
Top management is required to be smart, that is, to have comprehensive thinking and
abilities, that its role is not only able to encourage, but can invite all elements to move
forward together in order to achieve greater success.
16. Managerial Conceptual Framework:
The figure above illustrates the role of leaders in organizations, explicitly in the
strategic and tactical framework. This means that people who are at the managerial level think
about the future and operations. How can he be able to develop an effective work plan, then
be able to realize efficient task implementation, and goals are well achieved (Rangkuti, 2016).
In other words, leaders need to master the general concept of the organization, including
mastery of future information, about opportunities and threats. Meanwhile, other knowledge
required is specific skills, namely proficiency in institutions, management, operations, and
understanding of organizational elements. In this framework, specialist abilities have a
dominant portion, that the skill of managing an organization holistically is the responsibility
of a managerial person.
17. Nature of Managerial Knowledge:
The figure above shows that top managers need to have general knowledge compared to
specialists. In short, the Top Leadership Style uses a human skills approach and holistic
thinking to cover all company activities that motivate employees to do their jobs and perform
tasks using a generalist strategic framework (Rangkuti, 2016).
C. Exercise:
As a learning evaluation, students are asked to be able to:
1. Explain the definition of top leadership theoretically!
2. Describe the style/characteristics of top management!
