49056172-Strategic-Mgmt-ch07 - Chapter 2 Strategy,...

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Chapter 7 Long-Term Objectives and Strategies 0Chapter Summary 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. The purpose of this chapter is to convey that understanding. Long-term objectives are defined as the result a firm seeks to achieve over a specified period, typically five years. Seven common long-term objectives are discussed: profitability, productivity, competitive position, employee development, employee relations, technological leadership, and public responsibility. These, or any other long-term objectives, should be acceptable, flexible, measurable over time, motivating, suitable, understandable, and achievable. Grand strategies are defined as comprehensive approaches guiding the major actions designed to achieve long-term objectives. Fifteen grand strategy options are 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. 0Learning Objectives 1. Discuss seven different topics for long-term corporate objectives. 2. Describe the seven qualities of long-term corporate objectives that make them especially useful to strategic managers. 3. Explain the generic strategies of low-cost leadership, differentiation, and focus. 4. Discuss the importance of the value disciplines. 5. List, describe, evaluate, and give examples of the 15 grand strategies that decision makers use as building blocks in forming their company’s competitive plan. 6. Understand the creation of sets of long-term objectives and grand strategies options. 0Lecture Outline I0. Long-Term Objectives A0. Strategic managers recognize that short-run profit maximization is rarely the best approach to achieving sustained corporate growth and profitability. 10. An often repeated adage states that if impoverished people are given food, they will eat it and remain impoverished, whereas if they are given seeds and tools and shown how to grow crops, they will be able to improve their condition permanently. A parallel choice confronts strategic decision makers: a0) Should they eat the seeds to improve the near-term profit picture and make large dividend payments through cost-saving measures such as 130
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laying off workers during periods of slack demand, selling off inventories, or cutting back on research and development? b0) Or should they sow the seeds in the effort to reap long-term rewards by reinvesting profits in growth opportunities, committing resources to employee training, or increasing advertising expenditures? 2.
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This note was uploaded on 06/02/2011 for the course BA 13213 taught by Professor Deez during the Spring '10 term at Aarhus Universitet, Aarhus.

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49056172-Strategic-Mgmt-ch07 - Chapter 2 Strategy,...

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