Case Study: Statoil's Ambition To Action

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Question 1 Birkinshaw (2010) defines the management model as a simple set of choices made by executives about how the work of management gets done in terms of how they define objectives, motivate effort, coordinate activities and allocate resources. Statoil’s Ambition to Action (hereafter A2A) was a process that was designed to provide integration from organizational strategy to employee’s actions, while providing sufficient freedom and flexibility. This model entails the company’s overall strategic objectives, key performance indicators, needed actions, and individual goals. The myopia problem can be described as the tendency for managers to be extremely short term oriented. It can be characterised by investors’ unwillingness to make worthwhile…show more content…
It also limited Statoil’s focus on financial measure but placed much emphasis on the most relevant drivers of future performance that create real value for shareholders. (eg. statoil’s two key financial performance indicators were relative total shareholders return and relative return on average capital employed (RoACE) Such performance measures have enabled Statoil to maintain a balance between between short term and long term objectives among its entire business units and provides a more holistic management…show more content…
It enable the company to respond and adjust its forecast and targets through the MIS based on an approval from one level up the organizational structure. Ability to change whenever necessary to meet the changing business environment does not put constraints on managers to manipulate data as a means of meeting short term profits when such changes are beyond their control. Efficient resource allocation: A2A enabled a dynamic resource allocation to entity managers when the resources were needed rather than far in advance as in their periodic budgeting process. It gave freedom to managers in committing resources within their approval limit if they think it would with help the company to achieve it entire strategic objectives. Dynamic performance evaluation approach: The goals of various entities were broken down to individual goals for both delivery and behaviour. This linked employees behaviour to Statoil’s values by weighing employees performance and how they abide by the firm’s values equally
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