Strategic goals are the specific financial and non-financial objectives and results a company aims to achieve over a specific period of time, usually the next three to five years. Strategic goals are important because they: Drive priority setting, resource allocation, capability requirements and budgeting activities.
Define the basis for acquisitions, dispositions, joint ventures, or other forms of strategic alliances and partnerships. Help determine how an organization is to be managed, measured and evaluated, and ensure the alignment of corporate management with strategic direction.
Set the stage for the companies’ organizational structure, culture, and control system. Define what business an organization is in, and therefore commit it to any need to enter new, related industries.
Provide a framework for planning to protect the companys’ market share, enhance product differentiation, and attract the right customers. Improve competitive advantage and sustain superior performance.
Measure executive performance, which in turn influences compensation. Strategic goals are the specific financial and non-financial objectives and results a company aims to achieve over a specific period of time, usually the next three to five years. Strategic oals are important because they:
Top Five Strategic Goals (Diamond et al. 2003)
- Expand revenue share in existing markets, and gain share in new markets
- Increase profitability of units, as well as the company as a whole
- Increase cash flow, through increased volume and increased profit-ability
- Access and retain global assets
- Improve cost structure for long-term maintainable competitive advantage
Types Of Strategic Goals
KPIs: Key Performance Indicators (performance measures) that can be, and are, used to assess and monitor strategic goals. A Short term key performance Indicator, (KPI) is a short term strategy for tracking a strategic goal, and a long term KPI is a medium to longer term strategy for tracking a strategic goal.
- For example, a short term KPI for a strategic goal to increase sales volume is the monthly sales target, and a long term KPI is the growth rate to be achieved over the long term
- (Refer to the discussion on key performance indicators)
Goals Related T Competitive Strategy
- Finding and protecting the keys to profitable growth
- Gain/retain market share
- Improving productivity
- Improve return on investment
- Improve the quality of the product
- Increase the price of the product
- Strengthen advertising to gain market share
Removing Barriers Of Entry
- Government regulations
- Economic issues
- Strength of competition
Goals Related To the Value Chain
Structural Goals
Eliminate in effective parts of the value chain;
- Appropriately utilise capabilities within the organization to enhance competitive advantage, and control product cost
- Better differentiate products in order to facilitate, and sustain, profitable growth
Goals Related To Capabilities And Resources
Lifecycle stages grow and develop (Cavenez & Butler, 2003)
- Develop and exploit core competencies;
- Invest in research and development
- Invest in new products and new technologies
- Develop and exploit core competencies;· Invest in research and development· Invest in new products and new technologies
- Short term, high risk projects
- Growth phase investments
- Expansion into little known product areas
- Headcount and capital investment targets
- Establishing new strategic relationships, sometimes in different countries and different cultures
- Recruiting and training new staff
- Acquisition and internal integration of new staff
- Taking chances on joint-venture opportunities, and co-operation in new geographic areas
- Investment in existing capabilities to deal with new or changing business conditions
- Boosting company-wide performance by increasing the capability of the company as a whole.
- Optimise internal integration and ensure a strong and cost-effective global organisation
- Enhance and optimise management of the local market
- Reduce costs of management
- Development of highly effective strategic alliances with highly efficient partners.
- Acquisition of hyper competencies in all areas of the business.
Goals Related To Learning
- Increase in knowledge and learning and continual enhancement of the company’s practical ability
- Improvement of the quality of the company’s capabilities, working practices and culture
- Development of management capabilities to match a policy of professionalisation
- Development and promotion of new staff as a route to advancement in the new company
- Development and adaptation of new skills within the organisation.
Goals Related To The Business Model Or Business Strategy
- Identify the right business model for profitability, reducing risk and enhancing return on investment
- Increase profitability by getting the right mix of products and services
- Achieve cost-containment
- Identify an appropriate target market for company’s products
- Increase sales, via direct marketing
- Increasing sales through company customer’s using a third-party distribution network
- Improve customer satisfaction
- Reduce customers time and delays in dealing with the company
- Improve the flow of information to and from the company and its market
- Set up firm policies and co-operation with both channel customers and suppliers
- Reduce company’s advertising and sales costs
Goals Related To Distribution Or Channels Of Distribution
- Consolidate channels
- Acquire a previously independent user/distributor
- Identify the right channel for sales
- Merge distribution channels
- Make business specific strategy that will lead to better channel management
- Development of stronger relationships with customers in order to increase customer retention
- Development of stronger relationships with customers in order to increase customer satisfaction
- Increase profitability and lower cost of channels
- Ensure consistent products and services across different geographical areas
- Ensure good customer service
- Get customers to buy products that complement the company’s brand
- Provide incentives for channels
Goals Related To Human Resources
- Create a highly motivated workforce
- Increase employee satisfaction and commitment
- Improve the quality of the workforce, to take advantage of increased knowledge level
- Educate the workforce
- Develop a learning culture in the organisation
- Establish a learning network between different organisations
- Recruit and train new staff
- Professionalise the workforce through high-quality training, development and skills enrichment.
- Select staff with adept skills and abilities
- Develop skills of staff members to meet the company’s long term talent requirements
- Determine training requirements for specific job positions
- Use technology to streamline the training and education of staff
- Develop and stress the importance of interpersonal skills
- Modify working practices and human resource management strategies to take advantage of current technology
- Use the latest technologies to reduce company costs.
Goals Related To Technology
- Identify, acquire and integrate technology
- Develop and adapt leading technology
- Continue to develop new technology within the company
- Deploy technology to gain competitive advantage, to create new products and services, to provide better customer service
- Use the latest technology to reduce costs
- Gain leadership in technology within the industry
- Develop the company’s technological capabilities
- Ensure that the company’s organization is technically effective and capable of adopting new technology.
- Break down technology problems into practical components in order to identify solution.
Goals Related To International Expansion
- Operationalize strategy for international growth through domestic and overseas assignments
- Use established strengths and co-operate with outsiders and new partners
- Use established strengths to achieve competitive advantage in the long term
- Align the culture, politics and motivation of the firm with local requirements
- Identify and target markets
- Set aims for entering new markets that will deliver us the best opportunities for growth
- Use experience from the past and apply it to the new market
- Develop a value-added proposition that shines across borders and countries involved
- Develop a ‘sense of place’ that combines local impact and global identity
- Choose appropriate entry strategies; create an umbrella or regional brand
- Select partners that share its vision and goals
- Develop the critical mass in terms of funding, people, infrastructure, strategy and organisation
- Establish and manage a localised business which will take advantage of local opportunities.
- Manage the transition from old to new markets.
- Review and uncover opportunities and potential problems
- Revise and monitor strategies on a continual basis
- Formulate strategies that take advantage of brand loyalty
- Integrate the local market into the international strategy
- Determine a strategy which takes advantage of synergies between the organization’s international expansion strategy and the firm’s core business activities
- Develop new products or services in line with local preferences
- Develop local assets and reputation to ensure smooth transition
- Operationalize immigration or entry policies at the start of the new venture, to ensure a smooth transition
- Overcome cultural and political barriers
- Guiding the firm through the transition
- Develop long term strategic plans
- Develop a strategic plan for transition that identifies short term and long term actions to be taken
- Ensure sustainability and adherence to the plan throughout the transition
- Use the original plan as a starting point for the development of a localized version
- Clearly identify and define reasons for beginning the transition
- Differentiate between short and long term reasons for ending internationalization
- Continue to develop new strategies and approaches
- Initiate international expansion activities when the company’s core business has developed beyond a particular growth stage or maturity level