Strategic Mgmt Notes

Chapter 7 ppt notes

**Strategic managers recognize that short-run profit maximization is rarely the best approach to achieving sustained corporate growth and profitability.

*** To achieve long-term prosperity, strategic planners commonly establish long-term objectives in seven areas

7 area long-term objective

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

2. Productivity- Strategic managers constantly try to increase the productivity of their systems. Firms that can improve the input-output relationship normally increase profitability.

3. Competitive position- Larger firms commonly establish an objective in terms of competitive position, often using total sales or market share as measures of their competitive position.

4. Employee development- Employees value education and training, in part because they lead to increased compensation and job security. Providing such opportunities often increases productivity and decreases turnover.

5. Employee relations- Strategic managers believe that productivity is linked to employee loyalty and to appreciation of managers’ interest in employee welfare.

6. Technological leadership-

7. Public responsibility- Managers recognize their responsibilities to their customers and to society at large. In fact, many firms seek to exceed government requirements. They work not only to develop reputations for fairly priced products and services but also to establish themselves as responsible corporate citizens.

5 Qualities of long-term objectives

What distinguishes a good objective from a bad one? What qualities of an objective improve its chances of being attained? These questions are best answered in relation to five criteria; flexible, measurable over time, motivating, suitable, and understandable

1. Flexible- Objectives should be adaptable to unforeseen or extraordinary changes in the firm’s competitive or environmental...