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Proceedings of Applied International Business Conference 2008
THE ROLE OF SENIOR MANAGERS IN SETTING STRATEGIC AND TACTICAL
OBJECTIVES OF QATARI SHAREHOLDING COMPANIES
Wathek Shaker Ramez ψ
University of Bahrain, Bahrain
Abstract
Setting objectives has a vital role in performing managerial functions--planning, implementing and
evaluating- within an organization. Managers direct their subordinates toward achieving these objectives.
Consequently, a manager can gauge the performance of his subordinates based on achieving specified
objectives in a given period of time. This paper is concerned with the type and time span of strategic and
tactical objectives that are adopted by senior managers for designing strategic and tactical plans in Qatari
shareholding companies. It also aims to identify the leadership patterns of Qatari senior managers in setting
the objectives. The study depends mainly on primary data that is collected through a questionnaire survey,
covering managers in Qatari shareholding companies. The results support the study hypotheses. Senior
managers give great attention to strategic financial objectives while junior managers tend to adopt sales
objectives. In addition, Qatari companies apply centralized/decentralized approach for setting
strategic/tactical objectives respectively.
Keywords: Strategic planning; Objectives; Leadership approach.
JEL Classification Codes: M1; M49.
1. Introduction
Recent developments in the internal/ external business environment have made managers increasingly
concerned about developing and formulating objectives, within their organizations during the last few
decades. Managers set multiple and different types of objectives for the benefit of different entities inside/
outside the organization instead of maximizing the profit for the benefit of shareholders as in previous
decades. In addition, managers adopt strategic objectives instead of short term objectives, to adapt their
organizations to rapid and continuous environmental changes. To cope with these changes, managers apply
the decentralized approach instead of the centralized approach for setting the objectives.
If recent trends in developing and formulating objectives have taken place in many corporations of the
developed nations, they will not be applicable to the organizations of Asian nations. The real situation of
setting objectives reflects the nature of society, type of the organization and the managers' leadership
pattern which, all play a major role in how managers set objectives.
2. Research purpose
This research aims to provide answers to the following questions: What is the nature (type and length) of
strategic/ tactical objectives adopted by senior managers of Qatari shareholding companies? What is the
leadership pattern(s) applied by those managers for setting both types of objectives?
3. Importance of research
Through reviewing the literature of strategic planning in Arabic countries, and in the state of Qatar in
particular, the researcher finds a lack of empirical studies in the field of strategic planning. This research
can be considered the first of its kind in the state of Qatar.
ψ
Corresponding author. Wathek Shaker Ramez. University of Bahrain. Email:[email protected]
Proceedings of Applied International Business Conference 2008
4. Literature review
Functional role of higher management
Academic scholars of management science usually identify three management levels within the
organization:
a- Higher managerial level: Including board of directors, president (or CEO), vice(s) president, executives
of strategic business units.
In the case of small companies such as Qatari ones, which deal with only one product line, there is only one
senior manager, the "General Manager", who is at the top of the management hierarchy, and he is
responsible to the board of directors for managing the company.
b- Middle managerial level: represented by functional managers, such as the marketing manager or director.
c- Lower managerial level: such as product/ brand managers and operating units (e.g., sales, advertising and
sales promotion department) (Foster, 1972).
Regardless of the managers' position within the organization, they are responsible for performing the
managerial functions. However, management scholars have given great attention to the functions of senior
manager(s). Urwick identified these functions by: Forecasting, planning, organizing, directing, coordinating,
controlling and communicating, (Hussey, 1982). Meanwhile, Newman and Logan (1955, p. 38) specified
the managerial functions of the CEO by the following three groups:
- Plan: setting objectives, developing strategies and policies, the long term ones in particular.
- Administration: selecting employees, coordinating, leadership and control.
- Other duties: representing the firm in formal ceremonies and communicating with the
representatives of the government and competitive companies and others.
Based on these functions, some managerial scholars consider that the higher management level and the
CEO in particular, play two roles within the organization, namely: entrepreneur and administrative roles.
The entrepreneurial role covers all strategic planning processes starting with outlining the organization's
mission and ending by selecting the optimal strategic alternatives. Meanwhile, the administrative role
concentrates on the implementation of strategy that requires creating the organization’s culture, directing
employees and motivating them, developing policies and procedures and controlling performance
(Thompson and Strickland, 1984). To accomplish both roles, senior managers have to be aware of the
change in the environment for matching the organization’s resources with the opportunities in the external
environment (SWOT analysis). In addition, senior managers must compromise between their long term
decisions and short term decisions that are focusing on daily activities of all functional units within the
organization, (DuBrin et al., 1989).
Regarding long term decisions, strategic scholars have identified three interrelated strategies within most
organizations, in particular large corporations with multiproduct /market, which are: corporate strategy,
business unit strategy and functional strategy (Walker et al., 2006). In spite of restricting the responsibility
of designing the corporate and business units strategies to senior management level, strategic scholars have
considered the responsibility of formulating the functional strategies (i.e., marketing) which are tactical
plans in nature, to be that of the directors of specialized operational departments (Roger, 1975). Table 1
summarizes the responsibility of managers for setting various strategies and objectives within the
organization.
Performing entrepreneurial role
Strategic authors gave great deal of explanation to how the higher management level performs their
entrepreneurial role. Some authors (e.g., Drucker, 1964; Ansoff, 1968) referred to the complete
responsibility of the CEO in designing and approving corporate strategy, while others (e.g., Foster, 1972)
considered it as a joint responsibility between all parties of the higher management level; board of director,
the CEO and executives of SBU(s).
Regardless of the nature of responsibility, one main question may be asked: to what extent does the higher
management, the CEO in particular, become involved in the formulation process of corporate strategy? The
answer to this question depends on the following factors: (1) the firm's experience in adopting strategic
planning; (2) firm's size, and (3) leadership pattern of the higher management level (Andrews, 1983;
DuBrin, 1989).
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Proceedings of Applied International Business Conference 2008
Table 1: Managers' responsibility for setting different objectives and strategies within the
the organization*
Objectives and strategies
Mission
Corporate strategy &
objectives
SBU strategy &
short-term objectives
Tactical plan & functional
objectives
Board of
directors
Managers' levels
Higher management
Presidents of
level
SBU
//**
/
Directors of
functional
department
//
//
/
//
/
//
//
/
//
Note: * Pearce and Robinson, 1991, 7. ** (//) refers to the main responsibility. (/) refers to the secondary
responsibility of managers.
Senior managers may apply two main leadership patterns to perform their entrepreneurial role: (1) a
centralized leadership approach (Up-Down planning approach); senior mangers are fully responsible for
setting objectives for corporate strategy and other plans within the organization. (2) decentralized
leadership approach (Bottom-Top planning approach), middle and junior managers and employees have the
authority to set the strategic and tactical objectives for the organization. Senior managers have a limited
participation in strategic planning, which is mainly restricted to reviewing and approving the objectives.
Chandler (1961) mentioned in his book "Strategy and Structure" that the centralized approach is mostly
applicable small companies, while the latter approach is mainly valid for large corporations with a
multiproduct/ market.
In addition, the third approach has been developed to combine the previous two approaches. This approach
(Top-Down/Bottom-Up planning approach) concentrates on the initiative of senior managers in setting
corporate strategic objectives and allowing junior managers to set the objectives for their departments.
Consequently, all strategic/ tactical objectives are submitted to the senior managers for coordination and
approval (Smith, 1991).
In general, regardless of the leadership approach adopted within the organization, senior managers, the
CEO in particular, remains completely responsible for the efficiency of planning, particularly strategic
planning, within the organization.
Types of objectives
Maximizing profits for the owner's benefit does not exist any more in modern organizations, as they are
operating in an open system. Therefore, Drucker (1958) advised managers to adopt multiple objectives
instead of one, such as: productivity, competitive position, employee development and social responsibility
besides achieving the optimal level of profits.
In addition, Pearce and Robinson (1997) identified the corporate strategic objectives as follows:
profitability (measured by ROI or other terms), productivity, competitive position (market share), employee
development, labor relationship, innovative superiority and public responsibility.
Although these objectives are outlined for the corporate strategy level, middle and junior managers will use
them as a base for deriving the objectives of their SBUs and consequently their functional departments.
Granger (1964) proposed the "hierarchy of objectives" model for clarifying such a process of setting the
objectives for all planning levels within the organization.
Based on that, Jain (2000, pp. 199-200) listed these groups at the SBU’s objectives:
• Measurement (financial) objectives: such as profitability and cash flow.
• Growth/ Survival objectives such as market standing, productivity and innovation.
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Proceedings of Applied International Business Conference 2008
•
Constraint objectives such as to capitalize on research in certain technologies, avoid style
business with seasonal obsolescence, avoid antitrust problems and assume responsibility
to the public.
Chevalier and Catry (1974) had illustrated that senior managers adopt financial objectives (ex: ROI) more
than other objectives, such as market share. However, such managers' tendencies for adopting objectives
may be reversed at junior manager level, since they are concerned with achieving objectives regardless of
the financial cost.
Traditional financial measurement, such as profits and return on investment, are considered insufficient for
planning and controlling operations in current unstable environment, because they are a short-term rather
than long- term focus, reflecting past performance rather than future prospects and tending to be obsolete
and easily manipulated by managers. To overcome the weaknesses of the traditional measurement system,
Kaplan and Norton (1992, 1996) have introduced the "balances scorecard" (BSC) which is a combination
of non-financial and financial measures. Consequently, the strategic performance measurement system
(SPMS) has been developed to provide managers with means of translating strategy into a coherent set of
performance measurements (financial and non- financial measures) (Chenhall, 2005).
The empirical research
Strategic management researchers have performed many scientific studies regarding the entrepreneurial and
administrative roles of senior managers, particularly the CEO's role, during the last five decades. In this
regard, McNichols (1983) referred to the studies of (March and Simon, 1958; Lindblom, 1968; Wrapp,
1967) which have declared that the CEO is forced to devote most of his time and effort to making short
time decisions (tactical) instead of strategic decisions. The reasons behind such trends were the excessive
functional duties of the CEO and avoidance of uncertainty in the decision making process. In addition,
Quinn (1980) concluded that in spite of not making strategic decisions, the majority of senior mangers
announced little of the general objectives of their organizations, (McNichols, 1983).
On the other hand, based on the survey of large industrial corporations in USA and western Europe,
Harvard Business School (1971) supported Chandler's opinion (1962) which states that senior managers in
one product line organizations, adopt the centralized approach for setting objectives and formulating plans,
whereas multi- product organizations prefer the decentralized approach (Taylor, 1976).
Through conducting personal interviews with the CEOs and marketing managers in foreign subsidiaries
operating in Brazil, Hulbert et al (1980) concluded that those managers had full responsibility in
formulating their annual marketing plan. However, executives at the corporation headquarters differ in their
roles in reviewing and approving these plans according to the corporation nationalities. A limited role had
been observed in the European corporations and vice versa in the American ones, while it was not clear in
the Japanese corporation. On the other hand, Picard (1980) found that executives of European subsidiaries
operating in USA, have a high degree of autonomy in the process of setting objectives and making
decisions.
Regarding Arabic studies, Hamimi and Al Shiegh (1995) concluded that senior mangers of Jordanian
Shareholding companies are mainly applying the centralized management approach in setting strategic
objectives. Meanwhile, Aueob (1997) found that a limited number of Saudi corporations (25 per cent)
practiced the strategic management concept in their operations intensively, while (58.3 per cent) of these
corporations applied this concept partially and the remainder (16.7 per cent) adopted it weakly.
In relation to Asian studies, Jusoh, Ibrahim and Zainuddin (2008) investigated the usage of the BSC
framework and its effect on the performance of Malaysian manufacturers. The study revealed that many
Malaysian companies still depend heavily on the use of financial measures relative to non-financial
measures. However, non- financial measures are gaining momentum, particularly with the customer
perspective. The findings reflect that when companies use all four perspectives of BSC measurement
(financial, customer, internal business process and learning and growth) their performance will be better
than relying only on an individual perspective.
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Proceedings of Applied International Business Conference 2008
5. Research methodology
Research hypotheses
To achieve the purpose of this study, the following hypotheses were formulated:
H1: Senior mangers of Qatari shareholding companies adopt the financial objectives (e.g. profitability)
more than growth/ survival objectives for designing company strategy.
H2: Junior mangers of Qatari shareholding companies adopt growth/ survival objectives (e.g. sales volume
and market share) more than financial objectives for designing the tactical plans of their functional units.
H3: Senior managers of Qatari shareholding companies apply the centralized leadership approach for
setting a company’s strategic objectives.
H4: Senior managers of Qatari shareholding companies apply the decentralized leadership approach for
setting the tactical objectives within their companies.
Data collection and analysis
This study depends mainly on primary data which were collected through questionnaire survey. Therefore,
the questionnaire was designed and distributed personally to the managers of Qatari share holding
companies. According to the nature of this study and its data, which are nominal or ordinal type,
nonparametric statistics were used to analyze the data and test the hypotheses, namely the frequencies and
chi- square technique.
Study population and sampling units
Thirty three Qatari shareholding companies registered by the Ministry of Finance, Economic and
Commerce are covered in this study. Because of the limited number of these companies, the three
management levels (senior, middle and junior) within each company are included in the survey, and thus 99
managers represent the total population of this study. The Census method is applied to collect the data, and
all 99 managers received the questionnaire. Fifty eight managers responded successfully to the survey and
they represent 58.6 % of the total population (Table 2).
Table 2: Demographic Characteristics of Respondents
Characteristics
Nationality
Qatari
Arabian
Foreign
Management level
High management
Middle management
Low management
Period of experience
Less than 5 years
5-10 years
More than 10 years
No response
Education
Secondary School & Lower
Diploma
University Graduate
Postgraduate
Total
Frequency
%
22
34
02
37.9
58.6
03.5
16
20
22
27.6
34.5
37.9
03
14
40
01
05.2
24.1
69.0
01.7
02
08
39
09
58
03.5
13.8
67.2
15.5
100
6. Findings and discussion
Demographic characteristics of the respondents
Table 2 shows that 58.6 % of the respondents out of the total study sample of 58 were Arabian citizens
working in the state of Qatar, while 37.9 % of the respondents were Qatari citizens. They occupied
different managerial positions, 37.9 % were junior managers, 34.5 % were middle managers and the rest
were senior managers. Thus, we expect that the findings of this study will be more representative of the
opinions of middle and junior managers than the opinions of senior managers. The majority of the
participants were highly educated people. 67.2 % of them hold a university degree (B. Sc) and 15.5 % have
a postgraduate degree. In addition, they have a long period of experience in their jobs. 69 % of them have
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Proceedings of Applied International Business Conference 2008
more than 10 years and 24.1 % have 5 to 10 years of experience. Such a long period of experience can
enable the respondents to provide accurate and reliable data about the practical situation of their companies,
which may enhance the quality of this research.
Testing the hypotheses
First hypothesis
Respondents were allowed to select more than one alternative of strategic objectives for their companies.
Consequently, the data of this study show that Qatari shareholding companies adopt multiple objectives for
their strategies instead of one objective, as the total score of respondents' selections exceeds actual
respondents' number (Table 3).
Nevertheless, these objectives differ in their priority, in the adoption process. ROI objective has the highest
score of 29.7 %, social responsibility objective comes in the second order with 23.4 %, while survival and
market share objectives are the third and forth positions of priority respectively. In addition, it is so clear
that Qatari shareholding companies give little attention to achieve profit in the short term 5.7 %.
Accordingly, the study findings support the opinions of some authors such as (Drucker, 1958; Pearce and
Robinson, 1997; Kaplan and Norton, 1996).
Regarding the test of hypothesis, X2 test indicates a non significant relationship between respondents'
managerial profiles and the strategic objectives of Qatari shareholding companies, while a highly
significant result is found based on the total score. These findings mean that all managers confirm the
adoption of long term objectives by Qatari shareholding companies, and thus the first hypothesis is
accepted.
Table 3: Respondents' managerial level and strategic objectives
Mgt Llvel
Hi
mgt
level
Middle
mgt
Low mgt
Total
Strategic Objectives
Cash
Survival
flow
03
06
ROI1
Profits
13
5
Mkt
share
8
27.7%
18
10.6%
03
17%
07
06.4%
06
12.8%
13
25.5%
14
29.5%
16
32.0%
47
29.7%
04.9%
01
02.0%
09
05.7%
11.5%
09
18.0%
24
15.2%
09.8%
06
12.0%
15
09.5%
21.3%
07
14.0%
26
16.5%
23.0%
11.0
22.0%
37.0
23.4%
Social
Res
12
Others2
Total
03
47
100%
61
03
06
100%
50
100%
158
100%
Note: X2 = 3.572, D.f = 8, significant at 0.05 level . X2 (Total) = 37.085, D.f = 5, significant at 0.05 level.
1- ROI cells are merged with profits cells for collecting X2. 2- This column is dropped from the analysis.
Second hypothesis
Table 4 indicates that Qatari shareholding companies tend to achieve more tactical objectives than strategic
ones since the total score of former objectives exceeds the total score of latter ones (193 compared with 158,
Tables 4 and 3). Workers' development objective is the most important objective of all 20.7%, and sales
volume objective comes shortly behind the former one with 19.7%, while increase gross profit and
production volume get the third priority with 18.1% for each one.
In addition, Table 4 reflects no significant differences in the opinions of respondents' management levels
and tactical objectives which Qatari shareholding companies aim to achieve in the future (X2= 4.106), while
a significant result was found based on total score. Based on that, respondents, regardless of their
managerial position, agreed that their companies apply multiple short term objectives for designing tactical
plans, and thus the second hypothesis is accepted. Such findings confirm what other strategic authors
clarified before, (e.g., Chevalier and Catry, 1974) regarding the importance of adoption of growth / survival
objectives (sales volume) rather than the financial objectives at the tactical planning level.
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Proceedings of Applied International Business Conference 2008
Table 4: Respondents' managerial level and tactical objectives
Mgt
Level
High
Middle
Low
Total
Sales
Vol
13
23.6%
11
15.9%
14
20.3%
38
19.7%
Gross
Profit
10
18.2%
12
17.5%
13
18.8%
35
18.1%
Production
Vol
12
21.8%
13
18.8%
10
14.5%
35
18.1%
Tactical Objectives
Cash
Workers
flow
Dev
03
11
05.5%
20.0%
07
15
10.2%
21.7%
05
14
07.3%
20.3%
15
40
07.8%
20.7%
Mkt
share
06
10.9%
11
15.9%
13
18.8%
30
15.6%
Others1
Total
04
55
100%
69
100%
69
100%
193
100%
01
02
07
Note: X2 = 4.106, D.f = 10, significant at 0.05 level. X2 (Total) =12.77, D.f = 5, significant at 0.05 level.
1- This column is not included in the analysis of X2.
Third hypothesis
Total responses were scattered across the alternatives of employees' participation in setting strategic
objectives, always 12.3%; frequently 26.3% and not at all 14.1%. Consequently, there is no unified
leadership pattern practiced by senior managers that can be generalized in all cases of Qatari shareholding
companies, Table 5. In addition, the highest score of responses was given to "sometimes" 29.8% followed
by frequently 26.3%, which means that senior managers permit the employees (managers or workers) to
express their opinions frequently or whenever there is a need for that (sometimes). However, nonsignificant relationships were found between respondents' managerial level (whether between respondents'
subgroups or their total score) and employees' participation in setting strategic objectives, and thus this
hypothesis is accepted. The findings of this study agree with the remarks of some strategic scholars (e.g.,
Chandler, 1963 and Taylor, 1976) regarding the adoption of a centralized leadership approach by senior
managers for setting strategic objectives.
Table 5: Respondents' managerial level and employees' participation
in setting strategic objectives
Mgt level1
Always
Frequently
Sometimes
Rarely
Hi
mgt
level
04
04
04
02
Not at
all
02
%25
03
25.0%
03
25.0%
08
12.5%
01
12.5%
04
%15.8
15.8%
08
36.4%
15
26.3%
42.1%
05
22.7%
17
29.8%
05.3%
07
31.8%
10
17.5%
21.0%
02
09.1%
08
14.1%
Middle
mgt
Low mgt
Total
07
%12.3
No
response2
Total
16
01
01
100%
19
100%
22
100%
57
100%
Note: X2 = 3.247, D.f = 4, significant at 0.05 level. X2 (Total) = 6.772, D.f = 4, significant at 0.05 level.
1- (Always) is merged with (Frequently) and (Rarely) is merged with (Not at all). 2 - It is not included in
the analysis.
Fourth hypothesis
A non-significant relationship was found between respondents' managerial levels and employees'
participation in setting tactical objectives, while a highly significant result was found based on the total
score, Table 6. Managers responses were in favor of employees' participation ("Always" 32.8% and
"Frequently" 34.4%), and thus this hypothesis is accepted.
Based on that, the findings of this study are consistent with the suggestion that a decentralized leadership
approach is adopted for setting tactical objectives (Steiner, 1969).
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Proceedings of Applied International Business Conference 2008
Mgt level1
Hi mgt level
Middle mgt
Low mgt
Total
Table 6: Respondents' managerial level and employees' participation
in setting tactical objectives
Always
07
43.75%
06
30.0%
06
27.3%
19
32.8%
Frequently
07
43.75%
08
40.0%
05
22.7%
20
34.4%
Sometimes
01
06.25%
03
15.0%
08
36.4%
12
20.7%
Rarely
01
06.25%
01
05.0%
02
9.1%
04
06.9%
Not at all
02
10.0%
01
4.5%
03
05.2%
Total
16
100%
20
100%
22
100%
58
100%
Note: X2 = 6.359, D.f = 4, significant at 0.05 level. X2 (Total) = 22.173, D.f = 4, significant at 0.05 level.
1- (Sometimes), (rarely) and (not at all) are merged together for collecting X2.
7. Conclusion and recommendation
This study indicates that Qatari shareholding companies adopt multiple objectives for designing the
company's strategy. Qatari Senior managers apply the strategic orientation in setting these objectives. Thus,
ROI and social responsibility objectives get overall first priority, while achieving profit in the short term
comes at the end. In addition, all Qatari managers agree that financial objectives are more preferable than
growth/ survival ones in formulating a company's strategy.
At the functional unit level, Qatari shareholding companies select a greater number of objectives, relative to
strategic ones, at the tactical planning level. Mainly, employee development objectives comes in the first
order followed by sales volume and then gross profit and production capacity. Selecting such objectives
reflects the actual nature of Qatar. In general, the state of Qatar is characterized by its small population size
and the highest income per capita in the world. Therefore, national companies face difficulties in recruiting
qualified citizens for holding professional and non managerial jobs.
In addition, senior managers adopt the centralized leadership approach to set the strategic objectives, while
the decentralized approach was mainly applied to set the tactical objectives of the Qatari shareholding
companies. Such results can be justified on the bases: (1) The majority of the Qatari companies can be
categorized as a family company type that is owned by members of selected families. (2) Beside the limited
number of qualified managers, the Qatari citizens are willing to hold the senior positions within the
management hierarchy of their companies and letting the managers from other nationalities occupy the
middle and junior positions.
To cope with the instability and dynamicity of the global environment and to increase the efficiency of
strategic planning process, it becomes crucial for Qatari senior managers to get the opinions of other
managers and employees about the type of strategic objectives that they pursue in the future. The
participation of all members of the Qatari company may enhance the rationality of the objectives selection
process and later on the efficiency of implementation activities. In addition, senior managers have to give
more attention to the market share objective, in particular at the tactical planning level. The globalization
movement across the world has gradually reduced the barriers between the national markets. Consequently,
the small companies (e.g., Qatari companies) are facing severe competition from the multinational
companies. To survive this emerging situation, the small national companies have to sustain their market
positions otherwise they will be diminished in the future.
This study provides an opportunity to researchers who are interested in the field of strategic management in
the Arabic and Asian countries. This is especially true if we know that a limited number of empirical
studies have been carried out up to now.
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