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. 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
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.
Discuss seven different topics for long-term corporate objectives.
Describe the seven qualities of long-term corporate objectives that make them
especially useful to strategic managers.
Explain the generic strategies of low-cost leadership, differentiation, and focus.
Discuss the importance of the value disciplines.
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.
Understand the creation of sets of long-term objectives and grand strategies options.
Strategic managers recognize that short-run profit maximization is rarely the best
approach to achieving sustained corporate growth and profitability.
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:
Should they eat the seeds to improve the near-term profit picture and
make large dividend payments through cost-saving measures such as