Summary:
This chapter brings strategic management to life with many contemporary examples. Sixteen types of strategies are defined and exemplified, including Michael Porter’s generic strategies: cost leadership, differentiation, and focus. Guidelines are presented for determining when it is most appropriate to pursue different types of strategies. An overview of strategic management in nonprofit organizations, governmental agencies, and small firms is provided.
Long-term Objectives:
Long-term objectives represent the results expected from pursuing certain strategies whereas strategies represent the actions to be taken to accomplish long-term objectives. The time frame for objectives and strategies should be consistent, usually from two to five years. Objectives serve as standards by which individuals, groups, departments, divisions, and entire organizations can be evaluated. Long-term objectives are needed at the corporate, divisional, and functional levels of an organization. They are an important measure of managerial performance. Success only rarely occurs by accident; rather, it is the result of hard work directed toward achieving certain objectives.
The Nature of Long-Term Objectives:
Objectives should be quantitative, measurable, realistic, understandable, challenging, hierarchical, obtainable, and congruent among organizational units. Each objective should also be associated with a timeline. Objectives are commonly stated in terms such as growth in assets, growth in sales, profitability, market share, degree and nature of diversification, degree and nature of vertical integration, earnings per share, and social responsibility.
Benefits of Clear Objectives: * Provide direction by revealing expectations * Allow synergy * Aid in evaluation by serving as standards * Establish priorities * Reduce uncertainty * Minimize conflicts