Long-Term objectives and Competitive Strategy
Strategic management is primarily concerned with formulating arid implementing competitive strategy.
It does not mean that functional strategies are ignored. Management specialists argue that the time frame for competitive strategy should be consistent, usually from two to five years.
The time frame for long-term objective should also be the same, for both long-term objective and competitive strategy are interdependent.
It is common among business firms to set long- term objectives in terms of growth in assets, growth in sales, growth in market share, improvement of profitability, adoption of vertical integration, expansion of business through diversification, corporate social responsibility, etc.
Competitive strategy is formulated based on long-term objective, which should have a time-line.
For effective implementation of competitive strategy, long-term objectives are broken down to annual objectives.
We should keep in mind that annual objectives serve as milestones for reaching the long-term objectives. Each long-term objective may require a set of annual objectives.
n organization should set annual objectives for production, marketing, finance, research and development, human resources, management information systems, etc: As a strategy-maker, you have to use the annual objectives for strategy implementation. You will use the long-term objectives for strategy formulation.
Since long-term objectives are important measures of managerial performance, they should be established at corporate and functional levels of an organization.
All objectives should be communicated to the stakeholders so that they can understand their role, make appropriate decisions, reduce conflicts among themselves during strategy implementation, set organizational priorities, and set standards for evaluating the performance of the departments, divisions, employees and the entire organization.
