Chapter 7Long-Term Objectives and Strategies
Before we learn how strategic decisions are made, it is important to understand the two principal components of any strategic choice; namely, long-term objectives and the grandstrategy. The purpose of this chapter is to convey that understanding.Long-term objectives are defined as the result a firm seeks to achieve over a specified period,typically five years. Seven common long-term objectives are discussed: profitability, productivity, competitive position, employee development, employee relations, technologicalleadership, and public responsibility. These, or any other long-term objectives, should beacceptable, flexible, measurable over time, motivating, suitable, understandable, andachievable.Grand strategies are defined as comprehensive approaches guiding the major actions designedto achieve long-term objectives. Fifteen grand strategy options are discussed: concentratedgrowth, market development, product development, innovation, horizontal integration,vertical integration, concentric diversification, conglomerate diversification, turnaround,divestiture, liquidation, bankruptcy, joint ventures, strategic alliances, and consortia.
1.Discuss seven different topics for long-term corporate objectives.2.Describe the seven qualities of long-term corporate objectives that make themespecially useful to strategic managers.3.Explain the generic strategies of low-cost leadership, differentiation, and focus.4.Discuss the importance of the value disciplines.5.List, describe, evaluate, and give examples of the 15 grand strategies that decisionmakers use as building blocks in forming their company’s competitive plan.6.Understand the creation of sets of long-term objectives and grand strategies options.
I0.Long-Term ObjectivesA0.Strategic managers recognize that short-run profit maximization is rarely the bestapproach to achieving sustained corporate growth and profitability.10.An often repeated adage states that if impoverished people are given food, theywill eat it and remain impoverished, whereas if they are given seeds and toolsand shown how to grow crops, they will be able to improve their condition permanently. A parallel choice confronts strategic decision makers:a0)Should they eat the seeds to improve the near-term profit picture andmake large dividend payments through cost-saving measures such as