Long Term Objectives Formulation

Long Term Objectives Formulation
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

Formulating Long Term Objective.

Introduction Of Long term Objective.

Long term objectives means end results which a company wants to achieve over a long period of time.

Formulation of a long term objectives:
Formulating long term objectives is basically deciding that where we want to see our company in next 5 - years or 7 years or 10 - years.

Achievement of a Long term Objectives:
To achieve long term objective strategic planners commonly establish long term objectives in seven areas.

1) Profitability:
The ability of any firm to operate in the long run depends on attaining an acceptable level of profit.

2) Productivity:
Strategic managers constantly try to increase the productivity of their systems. firms that can improve their input and output relationship normally increase profitability.

3) Competitive position:
one measure of corporate success in relative dominance in the market place. large firms commonly establish Long term objectives in terms of competitive position often using total sales or market shares as measures of their competitive position.

4) Employees Development:
Employees value education and training in part because they lead to increase compensation and job security. providing such opportunities often increase productivity and decrease turnover. Therefore strategic decision makers frequently include employees development objectives in their run plans.

5) Employee relation:
Whether or not they are bound by union contract, firms activity seek good employee relationship. in fact proactive steps in anticipation of employee need and expectations are characteristic of strategic managers.

6) Technological Leadership:
Firms must decide whether to lead or follow in the market place. Either approach can be successful but each can requires a different strategic posture. Therefore many firms state objective with regard to technological leadership.

7) Public Responsibility:
Managers recognize their responsibilities to their customers and to society at large. Many firms seek to exceed government requirements.

What are the Qualities Of Long Term Objectives

Qualities Of Long Term Objectives
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

Qualities of a Long Term Objectives:

Qualities of Long Term Objectives:

Seven criteria that should be used in preparing long term objectives are:
1) Acceptable:
Acceptability is one of the most important quality of Long term objectives.Managers are most likely to pursue objectives that are consistent with their preferences.

2) Flexible:
Long term Objectives should be adaptable to unforeseen or extraordinary changes in the firm's competitive or environmental forecasts.

3) Measurable:
Long term objectives must clearly and concrete state what will be achieved and when it will be achieved..

4) Motivating:
Studies have shown that people are most productive while objectives are set at a motivating level-one high enough to challenge but not so high as to frustrate or so low to be easily attained.

5) Suitable:
Long term Objectives must be suited to the broad aims of the firm, which are expressed in its mission statement.

6) Understandable:
Strategic managers at all levels must understand what is to achieved.

7) Achievable:
Finally Long term Objectives must be possible to achieve.

Types of Generic Strategy

Types of Generic Strategy
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

Types of Generic Strategy

There are three types of Generic Strategy

1) Striving for overall low cost leadership in the industry

2) Differentiation --> change in your strategy in every year is flexible.

3) Focus in low cost + differentiation --> combination of above two points.

What is Generic Strategy?

Generic Strategy
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

Generic Strategy:

Introduction of Generic strategy:

Generic Strategy means core strategy. many planning experts believe that the general philosophy of doing business declared by the firm in the mission statement must be translated into a holistic statement of the firms strategic orientation before it can be further defined in terms of a specific long term strategy.

In other words a long term grand strategy must be based on a core idea about how the firm can best compete in the market place the popular term for this core idea is generic strategy.

Definition Of The balance score card

Definition Of The balance score card:

Introduction to The balance score card:

The balance scorecard is a set of measures that are directly linked to the company's strategy. The balance scorecard allows managers to evaluate the company from four perspectives: financial performance, customer knowledge, internal business processes, learning and growth.

Definition of The balance scorecard.

By "Robert S-kaplan and David"

i) it is a set of measure or factors that are directly linked to company strategies.

2) it directs company to like its strategy with long term goals.

3) it allows managers to evaluate a company from four prospective.

• financial performance
• customers knowledge
• internal business process (Operation activity)
• learning and Growth

Grand Strategies / Growth strategies

Grand Strategies / Growth strategies
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

Grand Strategies/ growth strategies:

Introduction of Grand Strategies/ growth strategies:

While the need for firms to develop generic strategies remains an unresolved debate, designers of planing system agree about the critical role of grand strategies. Grand strategies often called masts or business strategies provide basic direction for strategic action.

Definition of Grand Strategies / Growth strategies:

Grand strategies indicate the time period have we which long range objectives are to be achieved. Thus a grand strategy can be defined as compressive general approach that guides firm's major actions.

Types of Grand Strategies

Types of Grand Strategies
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

Types of Grand Strategies.
There are major 13 important grand strategies/ Generic strategies which are as under.

1. Concentrated Growth:

This is the most important grand strategy. All resources used for growth of a single product in a single market with a single dominated technology. Many of the firms fell victim to merger mania were once mistakenly convinced that the best way to achieve their objective was to pursue unrelated diversification in the search for financial opportunities and synergy.
Market analysis shows that the decline is fueled by negative environmental publicity, perceptions of poor customers services and concern about the price versus value of the company services given the wide array of do it yourself alternative.

2) Market Development:
offering existing products to new customers with slight change. Market development commonly ranks second only to concentration as the least costly and least risky of grand strategies. It consist of marketing present products, often with only cosmetic modification, to customers in related market areas by adding channels of distribution or by changing the content of advertising or promotion.

3) Product Development:
This strategy focus of modification in existing products, development of new product. Product development involves the substantial modification of existing products or the creation of new but related products that can marketed to current customer through established channels.
The product development strategy is based on the penetration of existing markets by incorporating product modifications into existing items or by developing a new product with a clear connection to the existing lines.This is also included in grand strategy.
4) Innovation:
This strategy focus on begining new solutions to the customer problems and totally new product development. In many industries it has become increasingly risky to innovate. Both customer and industrial market have come to expect periodic changes and improvements in the products offered.
5) Horizontal Integration.
Another important type of grand strategy involve horizontal integration. Acquiring one or more firms doing similar business. when firms ling term strategy is based on growth through the acquisition of one or more similar firms operating at the same stage of the production marketing chain its grand strategy is called horizontal integration.

6) Vertical integration:
Acquire firms that supply it with inputs or are customers for its outputs. when firms grand strategy is to acquire firms that supply it with inputs such a raw material or are customer for its outputs such as warehouses for finished products vertical integration is involved. The rason for choosing a vertical strategy are more varied and sometimes less obvious.

7) Concentric Diversification:
Involves the opposition acquisition of business that are related to the acquiring firms in terms of technology, markets or products. Grand strategy involving diversification represent distinctive departure from a firms existing base of operations typically the acquisition or internal generation of a separate business.

8) Conglomerate Diversification:
Occasionally a firm practically a vary large one plans to acquire a business because it represents the most promising investment opportunity available.
Difference between two types of diversification is that concentric diversification emphasize some commodities in market, product or technology whereas conglomerated diversification is based principally on profit consideration.

9) Turn Around:
It is basically retrenchment it is used firm's survival.
i) Cost reduction ii) Asset Reduction.

i) Cost reduction:
Example includes decreasing the workforce through employee attrition leasing rather then purchasing equipment, extending the life of machinery, etc.

ii) Asset Reduction:
Example include the sale of land, building and equipment not essential to basic activity of the firm and elimination of the "perks". Such as company's airplane etc.

10) Divestiture strategy:

A divestiture strategy involves the sale of firms or a major component of it. The reasons for divestiture vary. They often arise because of partial mismatches between the acquired firm and parent corporation. A second reason is corporate financial needs.

11) Liquidation Strategy:
In liquidation a firm sold out its tangible assets. When liquidation is the grand strategy firm typically is sold in parts only occasionally as a whole but for its tangible assets value and not as a going concern.
12) Bankruptcy:
Business failure are playing an increasingly important role in the economy. In an average week more then 300companies fail. More then 75% of these financially desperate firms file for a liquidation bankruptcy the agree to a complete distribution of their assets to creditors most of whom receive a small fraction of the amount they are owed.
13) Corporate Combinations.
The 15 grand strategies discussed above used singly and much more often in combinations represent the traditional alternatives used by firms in united state.

Three newly Popularized grand Strategies

Three newly Popularized grand Strategies
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

There are three newly Popularized Grand Strategies. These three newly popularized grand strategies are:

• Joint venture
• Strategic Alliances
• Consortia

1. Joint venture:

joint venture is newly popularized grand strategy. Occasionally two or more capable firms lack necessary component for success in a particular competitive environment. As the multinational strategies of U.S firms nature, most will include some from of joint venture with a target nation firms. AT & T followed this option in its strategy to produce its own personal computer by entering into several joint ventures with European producers to acquire the required technology and position itself for European expansion.

• Pool of capital
• Patent
• Trade Mark
• Management
• Production on Marketing Equipment.

2. Strategic Alliances

Strategic Alliances are distinguished from join ventures because the companies involved do not take and equity position in one another. In many instances strategic alliances are partnerships that exist for a defined period during which partners contribute their skills and expertise to a cooperative projects.

3. Consortia, Keiretsus and Chaebols.

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.

Limitation of Grand Strategies

Limitation of Grand Strategies
Reviewed by Hammad Naziron Apr 01 2013
Rating: 5

Limitation of Grand Strategies:
Following are some limitations of Grand Strategies:

1. The main problem the grand strategies is that it can not be implement in total. one has to use contribution of different strategies.
2. in an actual decision situation the strategic choice would be complicated by the wider verity of interactive opportunities, feasible company objectives, promising grand strategy options and evaluative criteria.
3. At 1st glance the strategic management model which provides the framework for study seems to suggest that strategic choice decision making leads to the sequential selection of long term objectives and grand strategies. in fact, however, strategic choice is the simultaneous selection of long range objectives and grand strategies.