FORMULATION OF LONG 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 grand strategy. Long-term objectives were defined as the results a firm seeks to achieve over a specified period, typically five years. Seven common long-term objectives were discussed: profitability, productivity, competitive position, employee development, employee relations, technological leadership, and public responsibility..

Grand strategies were defined as comprehensive approaches guiding the major actions designed to achieve long-term objectives. Fifteen grand strategy options were discussed: concentrated growth, market development, product development, innovation, horizontal integration, vertical integration, concentric diversification, conglomerate diversification, turnaround, divestiture, liquidation, bankruptcy, joint ventures, strategic alliances, and consortia.

Long-Term Objectives
Strategic managers recognize that short-

run profit maximization is rarely the best approach to achieving sustained corporate growth and profitability To achieve long-term prosperity, strategic planners commonly establish long-term objectives in seven areas:
Profitability Competitive Position Development Employee Relations Tech Leadership

Productivity Employee Productivity Public Responsibility

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Qualities of Long-Term Objectives

There are five criteria that should be used

in preparing long-term objectives:

Flexible Measurable Motivating Suitable Understandable

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Grand Strategies
Grand strategies, often called master or

business strategies, provide basic direction for strategic actions Indicate the time period over which longrang objectives are to be achieved Any one of these strategies could serve as the basis for achieving the major longterm objectives of a single firm Firms involved with multiple industries, businesses, product lines, or customer groups usually combine several grand strategies
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Fifteen grand strategy

concentrated growth, market development, product development, innovation, horizontal integration, vertical integration, concentric diversification, conglomerate diversification, turnaround, divestiture, liquidation, bankruptcy, joint ventures, strategic alliances, and consortia.

Selection of Long-Term Objectives and Grand Strategy Sets

When strategic planners study their

opportunities, they try to determine which are most likely to result in achieving various long-range objectives Almost simultaneously, they try to forecast whether an available grand strategy can take advantage of preferred opportunities so the tentative objectives can be met In essence, then, three distinct but highly interdependent choices are being made at one time

Sequence of Selection and Strategy Objectives

The selection of long-range objectives

and grand strategies involves simultaneous, rather than sequential, decisions While it is true that objectives are needed to prevent the firms direction and progress from being determined by random forces, it is equally true that objectives can be achieved only if strategies are implemented
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