Goals tell where a business wants to go; strategy answers how it plans to get there. Every business must tailor a strategy for achieving its goals. The strategy must then be refined into specific programs that are implemented efficiently and corrected if they are failing to achieve the intended objectives.
Objectives and goals. Goals describe objectives that are specific with respect to magnitude and time. Here are some sample objectives: profitability, sales growth, market-share improvement, risk containment, innovativeness, reputation, etc. Remember, objectives should be stated quantitatively, so that they become goals.
In order to keep goals realistic and consistent, here are some key goal tradeoffs to consider:
- Short-term profits versus long-term growth
- High profit margin versus high sales volume
- Deeper penetration of existing markets versus developing new markets
- profit goals versus nonprofit goals
- High growth versus high stability
Now, here are Porter’s three generic strategy types:
- Overall cost leadership. Here the business works hard to achieve the lowest costs of production and distribution so that it can price lower than its competitors and win a large market share. Firms pursuing this strategy must be good at engineering, purchasing, manufacturing, and physical distribution, etc. and need less skill in marketing.
- Differentiation. Here the business concentrates on achieving superior performance in some important customer benefit area valued by the market as a whole. It can strive to be the service leader, the quality leader, the style leader, the technology leader, etc.; but it is hardly possible to be all of these things. The firm cultivates those strengths that will give it a differential performance advantage along some benefit line. Thus the firm seeking quality leadership must make or buy the best components, put them together expertly, inspect them carefully, and so on…
- Focus. Here the business focuses on one or more narrow market segments rather than going after the whole market. The firm gets to know the needs of these segments and pursues either cost leadership or some form of differentiation within the target segment.
Once the business has has developed its principal strategies, it must work out supporting programs. For example, if the the business has decided to attain technological leadership [think Apple], it must run programs to strengthen its R&D department, gather technology intelligence, develop leading-edge products, train the technical sales force, develop ads to communicate its technological leadership, and so on…