COMPANY GOALS AND STRATEGY

Arranged By :

Ayu Amelia (21216231)

Larassati Anggita Putri (24216003)

Nur Ayna Angkat (25216534)

Tiara Ary Gerindra (27216379)

Class :4EB01

FACULTY OF ECONOMICS

GUNADARMA UNIVERSITY

DEPOK

2019
 PREFACE

First of all, thanks to Allah SWT because of the help of Allah, writerfinished writing
the paper entitled “Company Goals and Strategy”right in the calculated time.

The purpose in writing this paper is to fulfill the assignment that given byMr. Widada
as lecturer in Management Control Sytem.

In arranging this paper, the writer trully get lots challenges andobstructions but with
help of many indiviuals, those obstructions could passed.Writer also realized there are still
many mistakes in process of writing this paper.

Because of that, the writer says thank you to all individuals who helps inthe process of
writing this paper. Hopefully allah replies all helps and bless youall. The writer realized that
this paper still imperfect in arrangment and thecontent. Then the writer hope the criticism from
the readers can help the writer inperfecting the next paper. Last but not the least hopefully, this
paper canhelps thereaders to gain more knowledge about Management Control System.

Depok, October 8th 2019

Author

CHAPTER I
 INTRODUCTION

1.1 Background

Management control is a necessity in an organization that practices decentralization.

Management control system is a tool for implementing strategy. The strategy chosen by a
company is part of the environment that influences the design of management control systems.
Each organization has a different strategy, and controls must be adapted to specific strategic
requirements. Different strategies require different task priorities, different success factors and
different skills, perspectives, and behaviors. Therefore, what should be considered in the design
of the control system is whether the behavior that is driven by the system is the behavior
required by an organization.

In the beginning, when organizations were formed, the strategic planning process was
used to select goals and strategies. Then, it is used to select general policies and programs of
action and if necessary to reformulate objectives and complete strategies. The company's goals
are determined by the company's chief executive officer (CEO), taking into account the advice
given by other senior managers, and usually then ratified by the board of directors.

1.2 The Problems

Based on the background that has been explained, the main isssues that will be
discussed in the paper are :

a. What is the definition of goals?

b. What is the definition of strategy?
c. What goals are to be achieved by an organization?
d. What is the concept of corporate strategy and business unit level strategy?

1.3 The Purposes

The purposes of writing this paper in addition to fulfilling the task of Management
Control Systems, the author also expects the reader to know and understand about goals and
strategy of the company or organization.

1.4 Methodology
The method that we use in writing this paper is literature method by searching for literature
related on the books and the internet to the discussion of our paper.
 CHAPTER II

DISCUSSION

1.1 COMPANY GOALS

1.1.1 Definition of Goals
The definition of goals is often synonymous with objectives. In terms of
management accounting, goals (often translated goals) and objectives (often translated
goals) have different meanings even though they are both developed as a process of
organizational planning and control.
Goals have broader and more general meanings, generally without being stated in a
certain period of time, about what the organization wants to achieve, goals are developed in
the strategy planning process. Objective has a more specific meaning, is an inclusion of
what an organization wants to achieve in a certain period of time, the measurement basis
can be determined to assess the achievement of objectives, the purpose is to use management
control processes.
Generally, companies have many goals. One company has different types of
objectives and the number of objectives compared to other companies. Some examples of
company goals are:
• Profitability
• Efficiency
• Employee satisfaction and development
• Quality products and services that satisfy customers
• Social responsibility and relationships or good name in the community
• Market ability
• Maximizing dividends and stock prices
• Life sustainability
• Adaptability
• Society service

These goals are quantitative, some are qualitative. Achievement objectives that are
quantitative can be evaluated clearly, but goals that are qualitative in nature are difficult to
evaluate clearly. However, Among these goals, which is very important for most companies
is to achieve profit. But the statement that the company's goal to achieve profit is vague,
then that goal needs to be made more specific. For shareholders or owners, a high level of
profit must be related to shareholders' investments so that the ability of earnings needs to be
expressed in return on investment (ROI). Return on investment is used as a measure of
profitability for two reasons:

• High sales income does not mean better for shareholders. High income does not
mean that it always inflict to high ROI. Additional income does not always inflict
to additional profits for shareholders.
• High profit in rupiah or high percentage of sales profit does not mean better ROI
for shareholders. High profits must be measured by the investment of
shareholders.

1.1.2 Organizational Management Control

An organization that implements as much as of activities starts its activities by

carrying out the planning process. Planning is implemented in activities that involve
individuals. This individual activity is directed to achieve organizational goals. What is
often forgotten is that individuals as creatures also have personal desires and goals. Personal
goals can be aligned with organizational goals or not. Misalignment of goals results in
organizational goals or individual goals not being achieved. For this reason, a work control
is needed so that individual goals can be aligned with organizational goals. One tool to
achieve this is the existence of a good management control system.
Management control system consists of management structure and management
control process. Management control structures are centered on a variety of responsibility
centers, while the management control process includes the following stages:
• Programming, is the process of choosing a specific program for organizational
activities. The program shows the activities to be carried out by the organization
in the context of implementing its strategy.
• Budgeting, in the budgeting process, budgets are generally prepared by
combining division and departmental budgets, which is the responsibility of the
division manager or department. As part of this process, each program is
translated into activities relating to the manager's responsibilities of each
responsibility center for a period.
• Operations and achievement measurement, data grouped by program is used as
a basis for future programming, whereas data grouped according to the
responsibility center is used to measure the performance or manager of the
 responsibility center. For the interest this last one data about actual results is
reported in such a way so that it can be compared directly with the plan
contained in the budget.
• Reporting and analysis of reports are also used as part of control. Some of them
are passed down from analyzes that develop plans and compare actual
performance with planned performance, accompanied by an explanation of the
deviation between the two, if there is.

1.2 COMPANY STRATEGY

1.2.1 Definition of Strategy

Strategy is the method or plan chosen to achieve organizational goals. goals are
broad statements about what will be realized by the organization, the goal shows the overall
direction which will be headed by the organization, such as increasing revenue, sales or
profits, protecting market share, diversifying or improving quality. The company's strategy
is divided into two, that is corporate strategy and business unit strategy.
1.2.1.1 Corporate Strategy
Definition of Corporate Strategy
Wheelen and David (2008) state that corporate strategy is a strategy that
reflects all direction of the company with the aim of creating growth for the company
as a whole and management of various businesses. There are several choices of
strategies can be applied at this level, depending on the situation and conditions are
happening in the company.
Strategies at the corporate level are the basis for developing strategies used
in corporate strategies, i.e:
(1) Growth strategy, is a strategy based on the growth stage is currently
undergoing by the company.

(2) The stability strategy (stability strategy), is a strategy in overcoming the

decline in income that is being faced by the company.

(3) Retrenchment strategy, is a strategy implemented to reduce the business

of the company.
 Types of Corporate Strategies

David (2010, 248-273) states that the types of strategies consist of 12

strategic actions, namely:

1) Forward Integration Strategy

2) Backward Integration Strategy Strategy
3) Horizontal Integration Strategy Integration

4) Market Penetration Strategy

5) Market Development Strategy Intensive Growth
6) Product Development Strategy Strategy Strategy

7) Concentric Diversification Strategy

8) Horizontal Diversification Strategy Diversification

9) Conglomerate Diversification Strategy

Strategy

10) Depreciation Strategy

Defensive
11) Divestment Strategy
Strategy
12) Liquidation Strategy

Image 1.2 Types of Corporate Strategies

Growth Strategy

This growth strategy is carried out by the company in order to pursue corporate
growth, which can be in the form of increased sales, revenue, business expansion, etc.
which will have an impact on the development or growth of the company. Here are
some strategies that are included in the growth strategy category.

1) Integration Strategy
a) Forward Integration
Strategies that seek to gain ownership or increase greater control over
distributors or retailers.
b) Backward Integration
Strategies that seek ownership or increase greater control over the
company's suppliers.
c) Horizontal Integration
Strategies that seek ownership or increase greater control over a
company's competitors or competitors.
2) Intensive Strategy
Market penetration, market development, and product development are
three types of strategies that are included in the intensive strategy group
(intensive strategy). This strategy is called intensive because the strategy
requires intensive efforts to improve the company's competitive position.
a) Market Penetration
Strategies to increase market share for existing products or services, in
the current market through greater marketing efforts.
b) Market development
Strategies that seek to introduce existing products and services into new
geographical areas.
c) Product development
Strategies that seek to increase sales by improving or modifying existing
products and services or by developing new products.
3) Diversification Strategy
Some companies tend to have different business variations. This strategy
aims to make the company not only depend on one business variable, but
also to develop several types of businesses or other industries. This strategy
 may be underdeveloped because of the difficulty faced by management. In
controlling the activities of different industries, many strategies are needed
and higher supervision is needed. There are three general types of
diversification strategies, which are as follows:
a) Concentric diversification
Strategies to add new products and services, but which are still
related.
b) Diversification of conglomerates
Strategies to add new products and services that are not related to
new customers.
c) Horizontal diversification
Strategies to add new products or services that are not related, for
existing customers.

Defensive Strategy

Under certain conditions the company will prefer a defensive strategy

that will maintain the current position or because of limited conditions, then the
company must at least survive.

a) Collision
The company's strategy to regroup by reducing costs and assets to increase
sales and lower profits.
b) Divestment
Strategies to sell one division or part of the company.
c) Liquidation
Strategies to recognize defeat with the consequence of selling all of the
company's assets in stages, according to the value seen.
 Objectives of Corporate Strategy

The direction of the corporate strategy is divided into three:

1) Growth Strategy
Is a growth strategy for companies by increasing turnover, profits or other
performance. And for non-profit organizations by increasing the number of
clients or communities that are increased, rapidly increasing, or increasing
the programs offered.
2) Stability Strategy
It is a short-term strategy to keep the organism stable, so this organization
should not be used for a long time.
3) Renewal Strategy
It is a strategy to reverse the performance of organizations that tend to
decline. There are two types of renewal strategies :
• Retrenchment : Short-term strategies designed to overcome
organizational weaknesses that resist a decline in organizational
performance
• Turnaround :Strategies designed for situations when organizational
performance deteriorates.

Formulation and Establishment of Corporate Strategies

A corporation or company establishes strategy as the basis for forming a complete

master plan to describe the direction in which a corporation will be able to achieve its
mission and objectives.The established strategy is in order to maximize competitive
advantage and minimize competitive loss or risk. So the preparation of the strategy must
be considered the need for emphasis on the company's core-business. Core here is defined
as corporate customers who really have value or value.
The corporate strategy basically determines the actions taken by a company, in
an effort to gain a competitive advantage by selecting and managing different business
groups and competing in a variety of different market products.
SofjanAssauri further stated that the Corporate Strategy emphasizes on 3 main
issues, namely the strategy of direction, portfolio analysis, and parenting strategy.
Companies that conduct business in a growing industry, must be able to maintain business
continuity or business. Then we need an appropriate growth strategy formulation, by
paying attention and analyzing the company's strengths and weaknesses, opportunities,
strategic resources, and corporate culture.
In a single category company, it utilizes its core competencies to achieve growth
in the industry. Whereas diversified companies make use of operational synergies between
businesses that are based on core competencies and on sharing common resources. But in
companies with unrelated diversification or conglomerates growing specifically through
acquisitions.Where the core competence referred to here is the ability used by the company
to achieve higher performance and add significant value to customers.

Strategy Formulation Process

There are 3 stages of strategy formulation process :

a. Formulation Strategy
Strategy formulation consists of a series of activities which include :
• Determine internal strengths and weaknesses
• Identifying external opportunities and threats
• Creating a business vision and mission
• Set long term goals
• Develop alternative strategies
• Choose a specific strategy to implement
b. Strategy Implementation

Make short-term goals, create policies, design organizational structures, allocate and
control resources and manage strategic changes.

c. Performance Evaluation and Control

• Reviewing external and internal factors that form the basis of the current strategy
• Measuring performance, such as: financial performance, sales performance,
production performance, and other performance
• Taking corrective actions
 1.2.1.2 Business Unit Strategy
Understanding of business unit strategies
Tjiptono (2006) states that a company that uses a business unit level strategy is a
company that can produce various types of products and compete at various levels of
business or market.
So basically the business unit strategy is how to create and maintain competitive
advantages in each industry that a company has chosen to participate in.
Thus the company's business strategy can be emphasized in the Strategic
Business Unit (SBU), Strategic Business Group (SBG), Natural Business Unit (NBU),
and Product Market Unit (PMU). Basically the business unit level strategy has the
following characteristics :

(1) Having a vision and strategy.

(2) Producing products or services related to mission and strategy.
(3) Producing special products or services.
(4) Compete with those approved.

1.2.2 Types of Business Unit Strategies

Porter in Solihin (2012) states that there are three strategies in business units, that is:
a. Cost leadership
This strategy was chosen by companies with a broad scope of competitive scope.
In this strategy the company tries to achieve the lowest cost compared to other
companies that are in one business. The company's cost advantage can come from
applying the right production technology, having access to raw materials that are
more profitable than competitors and so on. The benefit of implementing this
strategy is that it inhibits the entry of potential competitors who want to enter the
same industry.
b. Differentation
Companies that have this strategy must strive to be unique in certain dimensions of
the products they produce, where the uniqueness is considered valuable to
consumers. Differentiation by companies can come from the product itself, order
delivery systems, market approaches, and so on.
 c. Focus
Companies will choose one or several segment groups in an industry then they will
develop strategies that are appropriate for those segments that cannot be well served
by competitors who have wider market coverage. The focus strategy is divided into
two types, namely: Focus on costs (cost focus) and focus on differentiation
(differentiation focus). Cost-focused companies will try to reach customers who
have lower cost products in an industry that cannot be served well by good
companies that have wider market coverage. While companies that focus on
differentiation will try to reach customers who are not well served by other
companies by offering products or services that are different from competitors.

The business unit strategy depends on two interrelated aspects, namely: its mission and
competitive advantage.

1) Business Unit Mission

In companies with diversification, one of the tasks of senior management is to allocate

resources, namely making decisions about the use of cash generated from several business
units to fund growth in other business units. Several planning models have been developed
to assist corporate-level managers in allocating resources effectively. These models
suggest that the company has business units in several categories, identified by its mission;
the right strategy for each category is certainly different.Four business missions according
to Boston Consulting Group (BCG) can be explained as follows:

a. Build

This mission implies a target to increase market share (marketshare) where market
growth is relatively high, but the source of cash is low, so the use of cash is high because
funds are needed to increase market share. Market share itself can be calculated by
dividing the company's sales in a certain year with total sales industry in a particular
year, the result of which is percentage (%).

b. Hold

This strategic mission protects and maintains the business unit's market share and
competitive position in the market.
 c. Harvest

This strategic mission has a goal for maximizing short-term earnings and cash flow.
In this strategic mission, the company already has a high market share even in a state
of relatively low industrial growth.

d. Divest

This strategic mission indicates a decision to dissolve the business or through a

liquidation or the sale of business units outside. This is indicated by the fact that there
are developments over several periods, where the market share is always low while
the growth of the industrial market is also low, so the company cannot grow in a
healthy and profitable manner. Therefore, a possible strategy is to leave the current
business.

2) Competitive Advantage of Business Units

Three interrelated questions must be considered in developing the business unit's

competitive advantage.

a. What industry structure in the place of business units operate ?

b. How should business units exploit the industrial structure?
c. What will be the base of the business unit's competitive advantage? Approach as an
aid in developing more superior and sustainable competitive advantages:
a) Industry Analysis
• The intensity of competition among existing competitors
• Bargaining power of customer
• Bargaining power of supplier
• Threat from substitute goods
• Threat of new entrants to the industry
b) Generic Competitive Advantage

According to Porter, the business unit has a generic way to respond to

opportunities in the external environment and develop sustainable competitive
advantages that are low cost and differentiation.
 c) Low Cost

Cost leadership can be obtained through several approaches such as economies

of scale in production, strict cost control and cost minimization.

d) Differentiation

The main focus of this strategy is to differentiate product offerings produced by

business units, thus creating something unique. Differentiation can be done on
"brand loyalty" such as coca cola in soft drinks, product design and features, security,
service, information technology, such as on HP electronic products, BMW cars,
Mercedez, rolex, etc.

e) Value chain analysis

Theoretically, competitive advantage in the market essentially from providing

better customer value for the same cost or the same customer value for lower costs.
The competitive advantage chain is not meaningfully examined at the level of the
overall business unit, but separates the company into its different strategic activities.

Compatation between Corporate Strategy and Business Unit Strategy

Primary
Generic Strategy
Strategy levels Key Strategy Issues Organization
Options
Levels Involved
Corporate level Are we in the right Single industry Corporate Office
(Overall organizational Diversifikasi yang
Organizational) mix? berhubungan

What industry or Diversification that

sub-industry should isn’t related
we enter?
Business unit level What should be the Build Corporate office
(tingkat unit bisnis) mission of the Maintain and general
business unit? Harvest manager of
business units
How do business Sell General business
units have to Low cost unit manager
compete to make Differentiation
their business
happen?
 CHAPTER III

CLOSING

3.1 Conclusion

Goals have broader and more general meanings, generally without being stated in a
certain period of time, about what the organization wants to achieve, goals are developed in
the strategy planning process.

Strategy is the method or plan chosen to achieve organizational goals. goals are broad
statements about what will be realized by the organization, the goal shows the overall direction
which will be headed by the organization, such as increasing revenue, sales or profits,
protecting market share, diversifying or improving quality. The company's strategy is divided
into two, that is corporate strategy and business unit strategy. Corporate strategy is a strategy
that reflects all direction of the company with the aim of creating growth for the company as a
whole and management of various businesses. And then, a business unit level strategy is a
company that can produce various types of products and compete at various levels of business
or market.So basically the business unit strategy is how to create and maintain competitive
advantages in each industry that a company has chosen to participate in.
 REFERENCES

http://ameliasarisinaga.blogspot.com/2017/05/makalah-strategi-perusahaan.html

http://irawati27.blogspot.com/2017/05/strategi-sistem-pengendalian-manajemen.html?m=1

https://www.academia.edu/13119165/Tujuan_Dan_Strategi_Perusahaan

http://milaakuntansi.blogspot.com/2015/03/tujuan-dan-strategi-perusahaan.html?m=1

http://milaakuntansi.blogspot.com/2015/03/tujuan-dan-strategi-perusahaan.html?m=1
 THE QUESTIONS

1. Return on investment is used as a measure of profitability because ...

a. High sales revenue does not mean better for shareholders
b. High profit in rupiah does not mean a better ROI for shareholders
c. Both of them are correct *
d. Both of them are wrong

2. The strategy to overcome the income slump is being faced by the company is ...
a. Stability strategy*
b. Growth strategy
c. Retrenchment strategy
d. No answer

3. According to the Boston Consulting Group (BCG) there are several missions in
business:
a. 5
b. 7
c. 4 *
d. 3

4. Basically the business unit level strategy has the following characteristics, except:
a. Have a vision and strategy
b. Produce specific products or services
c. Focus on costs and focus on differentiation *
d. Compete with competitors that are clearly known

5. In general, companies have many goals, except:

a. Efficiency
b. Market ability
c. Profitability
d. Fullfill the business unit strategy *
6. Following are the bases used for developing corporate strategy, except:
a. Reciprocal strategy *
b. Growth strategy
c. A savings / reduction strategy (retrenchment)
d. Stability strategy

7. According to David the types of strategies are divided into .... Strategic action.
a. 11
b. 12 *
c. 13
d. 14

8. Integration Strategy is divided into 3 types of strategies, except:

a. Forward integration Strategy
b. Backward Integration Strategy
c. Horizontal Integration Strategy
d. Vertical integration strategy *

9. Definition of growth strategies is ...

a. strategy in overcoming the decline in income that is being faced by the company
b. the strategy applied to reduce the company's efforts
c. The strategy to overcome the income slump is being faced by the company *
d. strategies in the stage of the company do not experience losses

10. According to Tjipto, the business strategy unit is ...

a. business unit level strategy is a company can produce various types of products
and compete at various levels of business or market *
b. business unit level strategies are companies cannot produce various types of
products and compete at various levels of business or market
c. business unit level strategy is a company carries out its activities by following the
development of business model is going
d. business unit level strategy is a company can produce the desired profits by the
company