Long-Term Objectives and Strategies

(Summury)
Submitted to
Prof. Dr. Motaher Hossain  
(Course code: MGT-550E)

Submitted by
Mohammad Al Amin
ID-1610523
Long-Term Objectives and Strategies

Learning objectives

1. Describe the long term objectives in seven area, qualities of long-term

corporate objectives and balanced scorecard

2. Explain generic strategies

3. Importance of the value disciplines

4. Describe of 15 grand strategies that decision makers use in forming their

company’s competitive plan

5. Understand the creation of sets of long-term objectives and grand

strategies options

Longterm objectives

Long term objectives are part of the strategic planing process where are vision
and mission statement in the organiztion.

Strategic manager wants to long time profit maximization and wealth

maximization. strategic manager think that are the best strategies for sustainable
business. So stretegic manager achive to long term prosperity, they establish
long term objectives in seven areas:

1. Profitability- 5% margin in the year of lunch to be increase over next 5

years, its more applicable for new companies or new SBUs.
2. Productivity- Productivity describes various measures of
the efficiency of production.
3. Competitive position- refers to the place of the company, its products or
services on the widely understood market.
 4. Employee development- a process of working with employees to improve,
enhance, refine and have existing skills, and to also develop newer ones.
5. Employee relation- relationship between employers and employees.
6. Tech leadership- about casting a vision for a future state.
7. Public responsibility-Do somethig for social, like CSR.

Qualities of long term objectives

1. Flexible- companies objectives will be flexible, if anytime management

wants to change the objectibes they changes this. So long term objectives
should be flexible.
2. Measurable- profit, market share, % of share business whatever it is.
3. Motivating- certain revenue from products less then one year old.
4. Suitable-to culture of organization
5. Understanble – it should be understanble to all the employee to the
organization.

The balance scorecard

  Used to identify, improve, and control a business's various functions and

resulting outcomes.

Developed by Robert S. Kaplan and David P. Norton, it directs a company to link

its own long-term strategy with tangible goals and actions.

1. Financial performance- Financial performance is a subjective measure of

how well a firm can use assets from its primary mode of business and
generate revenues. The term is also used as a general measure of a firm's
overall financial health over a given period.
2. Customer knowledge-  to understanding  customers, their needs, wants
and aims.
3. Internal Business processes- The internal process perspective is concerned
with the processes that create and deliver the customer value proposition.
 4. Learning and growth- The learning and growth measures are a means to
assess how the employees and management are working together
to grow the company and to help the employees grow within the company.

Generic strategies

Michael Porter developed three generic strategies, that a company could use to
gain competitive advantage, back in 1980. These three are: cost
leadership, differentiation and focus.

1. Low-cost leadership- Using information systems in a way that gives

customers the lowest prices is the low-cost leadership strategy. With
offering lower prices than competitors.
2. Differentiation- It's how you distinguish what you sell from what your
competitors do, and it increases brand loyalty, sales, and growth.
3. Focus- The Focus on Products principle states that a Product Description
should be written as soon and as clear as possible, so that all stakeholders
will have a clear idea of what to expect.

The Value Disciplines

1. Operational Excellence - Operational excellence is a mindset that embraces

certain principles and tools to create sustainable improvement within an
organization, lead the industry in price and convenience by pursuing a focus
on lean and efficient operations.
2. Customer Intimacy - catering to customers and potential customer needs,
wants, and opinions. It is putting a focus on relationship marketing and
fostering long-term client relationships and customer lifetime value.
3. Product Leadership - Companies that pursue the discipline of product
leadership strive to produce a continuous state of state-of-the-art products
and services
 Grand Strategies
Grand strategies, often called master or business strategies, provide basic
direction for strategic actions.
Indicate the time period over which long-rang objectives are to be achieved

1. Concentrated growth-Involves focusing resources on the profitable

growth of a single product, in a single market, with a single dominant
technology Rationale - Firm develops and exploits its expertise in a
delimited competitive arena, Determinants of competitive market success,
Ability to assess market needs, Knowledge of buyer behavior,Customer
price sensitivity, Effectiveness of promotion.
2. Market development-Consists of marketing present products, often with
only cosmetic modifications to customers in related market areas by
Adding channels of distribution or
Changing content of advertising or promotion.
3. Product development-Involves substantial modification of existing
products or creation of new but related products, Based on penetrating
existing market by Incorporating product modifications into existing items
or Developing new products connected to existing products.
4. Innovation- Involves creating a new product life cycle, thereby making
similar existing products obsolete
5. Horizontal integration-Based on growth via acquisition of one or more
similar firms operating at the same stage of the production-marketing
chain.
6. Vertical integration-Involves acquiring firms, That supply acquiring firm
with inputs (backward integration) or Are customers for firm's outputs
(forward integration)
7. Concentric diversification-Involves acquisition of businesses related to
acquiring firm in terms of technology, markets, or products.
8. Conglomerate diversification-Involves acquisition of a business because it
represents a promising investment opportunity, Primary motivation is
profit pattern of venture, Difference between the approaches,Concentric
 diversification emphasizes commonality whereas conglomerate
diversification emphasizes profits for each individual unit.
9. Turnaround-Involves a concerted effort over a period of time to fortify a
firm's distinctive competencies, returning it to profitability.A turnaround
situation represents absolute and relative-to-industry declining
performance of a sufficient magnitude to warrant explicit turnaround
actions, The immediacy of the resulting threat to company survival posed
by the turnaround situation is known as situation severity , Turnaround
responses typically include two stages of strategic activities,
Retrenchment, Recovery response.
10. Divestiture-Involves selling a firm or a major component of a firm
,Reasons for divestiture, Partial mismatches between acquired firm and
parent firm, Corporate financial needs, Government antitrust action.
11. Liquidation-Involves selling parts of a firm, usually for its tangible asset
value and not as a going concern.
12.Bankruptcy-Two approaches,Liquidation - Involves complete distribution
of a firm's assets to creditors, most of whom receive a small fraction of
amount owed,Reorganization - Involves creditors temporarily freezing
their claims while a firm reorganizes and rebuilds its operations more
profitably, Advantage of a reorganization bankruptcy,Proactive option
offering maximum repayment of a firm's debt in the future if a recovery
strategy is successful.
13.Joint ventures-Involves establishing a third company (child), operated for
the benefit of the co-owners (parents)
14.Strategic alliances-Involves creating a partnership between two or more
companies that contribute skills and expertise to a cooperative
project,Exists for a defined period, Does not involve the exchange of
equity.
15.Consortia-Consortia are defined as large interlocking relationships
between businesses of an industry. In Japan such consortia are known as
keiretsus, in South Korea as chaebols.
A Japanese keiretsu is an undertaking involving up to 50 different firms
that are joined around a large trading company or bank and are
 coordinated through interlocking directories and stock exchanges,
Chaebols are typically financed through government banking groups and
largely are run by professional managers trained by participating firms
expressly for the job.

Selection of Long-Term Objectives and Grand Strategy Sets

Strategic manager simultaneously try to forecast an available grand strategy

can take advantage of preferred opportunities so the tentative objectives can
be met. 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 firm’s direction
and progress from being determined by random forces, it is equally true
that objectives can be achieved only if strategies are implemented