Objectives and Types of Strategies (Meaning and Explanation)

We explain what the objectives and strategies of a company are, what types of each exist and their differences.

Objectives and strategies

In the business world, we often talk about the objectives set and the strategies necessary to achieve them. However, it is possible that there is a margin of confusion regarding each concept that we must first resolve.

First of all, An objective is an arrival point, whether long, medium or short term. It is a task that we want to fulfill, a goal that we want to achieve, which is why they are usually based, in the case of companies, on their mission, vision and values, that is, on what they want to become.

Types of objectives

There are different ways to classify objectives, depending on what they pursue. For example, it is possible to distinguish between short, medium or long-term objectives, depending on how close their fulfillment is in time: near, medium or distant. But in each of these cases we can also distinguish between:

Essential objectives those who are fundamental to the organization, who provide it with meaning and are its north, its goal, without which the company would lack purpose and would not know where to go. For example, a logging company may have the essential objective of conquering the regional wood niche.
Instrumental objectives those that must be met in order to move towards achieving the essential objectives, that is, secondary, partial objectives, which are not part of the business foundation, but without which it would be impossible to meet the important objectives. For example, the logging company in the previous example is going to have to deal with the sustainability of wood, in order to grow until it fills the region's niche.

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Instead, Strategies are the way the organization plans to meet those objectives that is, the action plan or the roadmap towards it. This concept is fundamental to design the company's procedure, since it does not make sense to propose actions that are not part of any strategy, that is, that do not lead to the fulfillment of any of the corporate objectives.

Types of strategies

Like objectives, strategies can be very diverse and varied, depending on what purpose they pursue or what type of actions they intend to develop. Thus, it is possible to speak of:

Integration strategies when they propose actions that tend to control distributors, suppliers or competitors, that is, when they promote business dominance.
Intensive strategies when they pursue the improvement of the company's positioning through intensive plans for market penetration, market development or product development, that is, strategies that seek to increase business power with existing products.
Diversification strategies when they raise the need to safeguard or protect the company's assets, to improve its competitiveness compared to the rest of the market. These are defensive actions that may consist of divestment, risk-sharing, shrinkage and liquidation strategies.
Growth strategies when they seek to take advantage of an opportune moment to expand the company's sales, profits and markets.
Stability strategies when they focus on sustaining the current situation of the company and thus preserving its size and line of business.
Reduction strategies when methods of downsizing the company are proposed to correct poor performance, whether by making cuts, reorienting the company, cutting distribution costs, etc.