Strategic Management

MODULE 8
SETTING STRATEGIC OBJECTIVES

Learning Objectives:

 Explain the concept of strategic objectives;

 Describe the concept of strategic intent and strategic thrust;
 Characterize what is considered strategic objectives;
 Discuss the objectives at the functional and operating levels; and
 Characterize what is considered a good objective.

Keywords and Phrases to Remember:

Goals and objectives Strategic intent
Strategic objectives Strategic thrust

8.1 The need for Strategic Objectives

After having scanned the macro or external and micro or internal environments
and having set the vision and mission statements, it is a must to transform the qualitative
context of vision and mission statements into something quantifiable. While the vision and
mission statements guide the top management as to what to achieve and how to go about it,
the strategic objectives are expressed in specific quantifiable terms what is envisaged behind
the vision and mission statement. Operationally, this means strategic objectives that the
functional and operating units will be bothered with. It is upon the attainment of such strategic
objectives that the substance and meaning of vision and mission statement are deemed
appreciated. Without a set of quantifiable or measurable strategic objectives, the vision and
mission statement becomes nothing but a dream of its leaders that will never see fruition.
8.2 The Nature of Setting Strategic Objectives
Goals and Objectives may sound ordinary and similar. In the world of strategic
management, however, both terms may be taken as one but have to be associated with vision
and mission statement. In particular, strategic objective is considered a critical component of
the strategic management process. Whereas mission statement addresses the question of who
the company is and the reason for its existence, goals represent the desired general ends
towards which efforts are directed. Objectives on the other hand are specific and quantified
versions of goals.
Given the aforementioned concepts on goals and objectives, the tasks of developing or
setting strategic objectives means doing it in quantifiable terms. The quantitative objective is
something that is to be addressed or achieved by specific groups or operating units of the
business organization. This task can begin by setting out a goal, say; to expand market
coverage and achieve substantial growth. Concretely, this goal has to be expressed in
quantifiable objective say something like; to have a market share of 25 percent and achieve a
gross profit of 15 percent.
Strategic management as a tool for enhancing competitiveness is highly dependent on
the kind of objectives it has set in the short-medium and long-term.
8.3 Strategic Intent vs. Strategic Thrust
For one, advocates of strategic management must internalize, value or imbibe the
concept of strategic intent. Strategic intent connotes a direction and burning desire that a firm
or organization would like to pursue with bulldog tenacity. Sussland (2002) uses the terms
strategic biases and strategic thrusts that are somehow similar or analogous to strategic intent.
The strategic thrust referred to by Sussland insinuates a decision-making process biased by
senior management view or what is called or believed as paradigms. The same author looks at
strategic thrust as focusing management`s attention on a particular area where it wants to
excel. This is where it wants to concentrate its resources so as to develop the superior
competencies and capabilities that will sustain a competitive advantage.
Strategic thrusts as espoused by Sussland take into account the need to directly relevant
variables. It takes into consideration four internal sub-sectors namely; technology products,
customers sector, distribution region and rules of the game resources. These four sub-sectors
are viewed in light of four external considerations whether the market is considered emerging,
developing, maturing, or declining.
8.4 Characteristics of Strategic Objectives
Guided by the aforementioned notions on strategic intent, strategic thrusts, strategic
types and the nature of strategic decisions as described earlier, one leads to the cocept of
strategic objectives-which is essentially a concrete articulation of the company1s vision and
mission. Strategic objectives are characterized by the following:
a) Converts vision and mission into specific performance targets;
b) They serve as yardsticks to track performance;
c) It pushes the firm to be inventive and focused on results;
d) It helps prevent complacency; and
e) The objectives serve as pull or magnet towards common direction.
8.5 Objectives at Functional and Operating levels
The nature of strategic objectives needs to be articulated to the fullest details as
possible and well distributed among functional or operating units. While development of
policies and strategies may be approached in a variety of ways, objectives setting is better off
as a top-down approach rather than a bottom-up approach or better yet, a top-bottom-top
scenario. It has to be so because the top management has to lead in the concretization and
articulation of vision-mission statement to a level of details that is doable and achievable.
Necessarily, there has to be an objective at every level of operational group, unit or functional
department with clear limits and boundaries. What this means is that there must be financial
objectives , marketing, research objectives, etc.
As a top -down approach, objective setting can be done using the following as guide:
a) First, establish organization-wide objectives and performance targets.
b) Next, set business and product line objectives.
c) Then, establish functional and departmental objectives.
d) Individual objectives are established last (e.g., individual performance target or sales
agent quotas).
8.6 Example of Strategic Objectives
While it is preferred that strategic objectives should be very specific and quantified,
certain qualitative strategic objectives can be pursued and they may come in the form of the
following:
a) Increase firm`s market share;
b) Overtake key rivals on quality or customer service or product performance;
c) Attain lower overall cost than rivals;
d) Boost firm`s reputation with customers
e) Attain stronger foothold in international markets;
f) Achieve technological superiority
g) Become leader in new product introductions; and
h) Capture attractive growth opportunities.
To be more relevant and meaningful, however, strategic objectives should expressed in
concrete terms and figures which are measurable . It is important to have strategic objectives
in quantifiable terms so that achievement or success can be expressed in real or percentage
terms.
8.7 What are Considered Good Objectives
The response to the question as to what are considered good objectives can be summed to a
common by word- SMART. The word SMART in this context is describe as follows;
a) Specific. The objective must be concrete and specific to the last detail and is
quantifiable.
b) Measurable. The objective must be tied up to related to the mission statement and
should be measureable.
 c) Achievable. The objectives should not be a dream or desire but should be something
achievable or attainable.
d) Realistic and Resource-oriented. To achieve the vision-mission of the firm, the
objective must be realistic and based on the firm`s resource capabilities both human
and other form of capital or financial resources.
e) Time-bound. There must a time frame or period and limit as to how soon the objectives
can be achieved, preferably soon enough.

Exercises Questions:
1. Distinguish goals from objectives.
2. Briefly describe the notion of strategic intent.
3. Discuss what are considered as strategic objectives.
4. Justify and explain why there is a need for strategic objectives.
5. Enumerate and describe what is considered a smart objective.

References:

 Fundamental of Strategic Management , N.A. Orcullo,Jr., Ph.D.