Long term strategy concepts and applications

Long-Term Strategy

Patton and the Eisenhower of modern, corporate America: Pfizer vs. Foot Locker

Having a clear goal is usually praised in management literature: keeping one's 'eye on the prize' and planning all subsequent strategy around that goal seems like a noble aim. However, without a clear step-by-step sense of how to get to that goal, fuzzy thinking can ensue, and what seems like a clear goal can dissipate into airy slogans. Yet both strategies have their positive aspects. The distinction in tactical vs. long-term planning can be seen in the approaches of two great generals, Patton and Eisenhower, in their mutual goal to win World War II. Eisenhower focused on the moment-by-moment action of destroying German manufacturing capabilities, while Patton focused on the final American goal, that of taking Berlin. The success of the American effort is no doubt rooted in the conjoining of the philosophies of two men.

This distinction between tactical strategy and a singular focus on a long-term future goal can also be seen in the approaches of two great American companies, Pfizer and Foot Locker. Pfizer, along with the other large pharmaceutical manufacturing companies, tends to focus on 'silver bullet' drugs -- drugs that will result in a quick spike in demand and make a large profit for the company, until the patent on the carefully-researched drug 'goes generic.' It is necessary for pharmaceutical companies to generate highly profitable drugs, and Pfizer's focus is almost always upon miracle drugs. But by focusing on a long-term goal, and a potential windfall that will be the 'next' Prozac, Claritin, or Viagra, companies such as Pfizer can also find themselves facing catastrophic failures. "Miracle drugs are irresistible to Big Pharma, even though it is nearly impossible to tell if they work" until a great deal of money has been spent upon drug trials (Jannarone 2010). When Pfizer has been unable to create such silver bullets in its own labs, it has resorted to partnerships with other companies.

Pfizer's most recent miracle drug was designed to be a treatment for Alzheimer's disease. Yet the drug "fell flat in a late-stage trial" and Pfizer's share price immediately fell 2%. The new Alzheimer's drug was being produced in conjunction with Medivation, a California-based drug company, and the partnership cost Pfizer an initial $225 million. "Its failure is a stark reminder of the risks for Big Pharma of trying to buy its way to new drug pipelines" (Jannarone 2010). Instead of trying to build a brand, Pfizer hoped to 'buy into' the next big drug solution, and failed in its Patton-like strategy of focusing on the goal, and trying to leap over the many hurdles in creating its own new drug.

In contrast, the athletic shoe store Foot Locker has shown a successful Eisenhower-style approach by focusing on tightening its budget and cutting costs. Although streamlining is not a sexy 'big picture' strategy, by shying away from seeking market domination and taking a conservative strategy, Foot Locker showed a fourth quarter profit, despite a dismal market overall in the apparel industry. "Foot Locker announced another wave of store closures and a revamped management structure that combines the Lady Foot Locker chain with its three other brands. [CEO] Sterne Agee said it was 'essential' for the company to reduce its store base in the U.S. By at least 300 stores…[but] the rent and inventory savings would more than offset any revenue losses" from closing the stores (Kell 2010).