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Strengthening the firm’s performance.

Business and Functional Objectives

For a strategy to work, it must be converted into smaller, shorter-term goals and plans. Middle management adopts goals and creates plans to compete in the marketplace. These tactical objectives take less than a year to complete, becoming the building blocks of a successful organizational strategy. At the lower levels of an organization, functional managers concern themselves with the day-to-day operations of the company, their objectives and plans taking days, weeks or months to complete.

Organizational Strategy Elements

Elements important to organizational strategy include resources, scope and the company’s core competency. Because resources are finite, allocating them – people, facilities, equipment and so on – often means diverting them from somewhere else in the organization. Quantifying a strategy’s scope – for instance, becoming No. 1 in North American sales – makes for more focused plans. Finally, competitive advantage refers to what a business is best at – its core competency – along with the sum of what it knows through experience, talent and research.

The Grand Strategies

Organizational strategy falls into categories referred to as grand strategies. Grand strategies include growth, diversification, integration, retrenching and stabilizing. A growth grand strategy refers to high levels of growth achieved, for instance, by adding new locations. Diversification means expanding into new markets or adding dissimilar product lines.

Controlling supply or distribution channels instead of relying on outside companies is vertical integration. Companies achieve horizontal integration by adding similar products and services to their lineup, making them more competitive. Retrenching prunes a company back to its core competency. Companies staying the course adopt a stability strategy