Objectives of strategic management

Explain the main objectives of strategic management.

In strategic management, there are strategic objectives and financial objectives. Additionally, all objectives are either short-run or long-run types. When planning a firm's strategy it is important to have objectives in mind and to understand the differences between the types of objectives.

1.Strategic Objectives: Strategic objectives deal with the firm's position in the model. You might do this, for example, by positioning the firm relative to the external forces -- bargaining power of customers, bargaining power of suppliers, threat of new entrants, threat of substitutes, and competition within the industry -- that can impact a business. Strategic objectives might include expanding market share, changing market position or under-cutting a competitor's costs.

2.Financial Objectives: Managers use financial objectives to measure strategic performance. For example, if the firm's strategic objective is to increase efficiency, the financial objective could be to increase return on assets or return on capital. Financial objectives, derived from management accounting, are more concrete.

3.Short-run Objectives: Financial and strategic objectives can either be short-run or long-run objectives. Short-run objectives deal with the immediate future. They typically focus on tangible goals that management can realize in a short time. An example of a short-run objective might be to increase monthly sales.

4.Long-run Objectives: Long-run objectives target the firm's long-term position. While short-run objectives focus on a firm's annual or monthly performance, long-run objectives concern themselves with the firm's development over several years. Examples of long-term objectives might be to become the market leader or to attain sustainable growth.