PAN African e-Network Project

Diploma in Business Management

Strategic Management
Semester - I
Session - 2

Vivek Singh Tomar

Module Outcome

Familiarity with the hierarchical structure of

Strategic Intent
Understanding elements of Strategic Plan,
action plan and measures to evaluate the
implementation progress
Understanding the product oriented and
marked oriented ways to define business with
focus of Abels Framework
Identification and categorization of various
stakeholders and their expectations

Module Content

Hierarchy of elements of strategic intent

Vision
Mission
Goals
Objectives
Initiatives
Measures and Targets
Business Definition
Guiding Principals and Organizational Values
Stakeholders and their expectations

Strategic Intent
Strategic intent is the firms motivation to
leverage its resources and capabilities to reach
its vision
Strategic intent must inform all of organisational
life
Strategic intent must take account of the realities
of the organisation and its environment
Strategic intent is more important than strategy

The Pyramid of Purpose

The language of Strategic Intent
Strategic Intent
Vision

Priorities

Decision Criteria

Mission

Aims

Strategic Initiatives

Objectives

Strategies

Strategic Intent in Practice

Acceptable to stakeholders
Consistent with the history and culture of
the enterprise
Must stretch beyond its present
aspirations and practices
Will tend to be based on inspired guess of
the future
Includes both vision and goals

Influences on Strategic Intent

Stakeholder Groups

Context
History & Culture
Ownership Structure
Corporate Values

Inspired guesses
of the future

Strategic Intent
Goals
Survival
Profit
Growth
Shareholder Value

Leadership

Vision
Unique for this
enterprise

The Strategy Formulation Process

Strategic Assessment
Strategic Choice

Form & Impact of Strategic Intent

Be expressed in few words

Pithy and credible
Publicised
Should not be a surprise rather should state
what is already known
Inspire employees, customers, suppliers and
public
Guide decision making

Strategic Intent - Role of Leadership

Inspirational leaders illustrate role

Highly visible
Strategic intent closely related to leader
Surrounded by people who agree
Hence vision widely understood and accepted
However, danger if vision become
inappropriate

Stakeholders influence on Strategic Intent

Any group with an interest in the activities and
results of the enterprise i.e., Shareholders (dominant
stakeholders in commercial enterprises),

Customers, Managers, Staff

Influence tends to vary with the levers of power

they hold shareholders tend to be the most
powerful
Future direction and current actions often strongly
determined by the directors view of the response of
powerful stakeholders

Model for analysing stakeholder power

Extent of
Power
High

Low

Avoid annoying

Least important

Low
Inclination to exercise power

Consult and Involve

Inform

High

Impact of Context on Strategic Intent

Organizational History and Culture

Recent events
Track record
Current performance
Merger residues

Ownership and power structure

Family firms
Founder(s) in residence
Personal goals and agendas

Vision, Mission and Business Definition

Whether you are starting a new company or
improving an existing one, you should define its
purpose for existence. Then it is important to
have a mission, plans and a vision for your
company or business enterprise.
Questions you may have include:
What factors are in the purpose of a business?
How do you define a mission?
What about a business concept?

Vision/Mission Statements
Statements that explain who we are
Type of organization
Products/services
Needs we fill

Statements that explain our direction, our

purpose, our reason for being
What difference do we make?

Statements that explain what makes us

unique
Values
People
Combination of products and services

Major Components of the

Strategic Plan / Down to Action
Strategic Plan

Vision

What we want to be

Action Plans
Evaluate Progress

Mission

Why we exist

Goals
Objectives
Initiatives
Measures
Targets

AI1

M1 M2
T1

T1

What we must achieve to be successful

O1
AI2
M3
T1

O2
AI3

Specific outcomes expressed in

measurable terms (NOT
activities)
Planned Actions to
Achieve Objectives
Indicators and
Monitors of success
Desired level of
performance and
timelines

VISION

: Desired future state; the

aspiration of the Organization

What are our Dreams and Aspirations?

Where do we want to go?

What do we want to look like in 5, 10,
15 years?

 How the organization wants to be perceived in the

future what success looks like
An expression of the desired end state
Challenges everyone to reach for something significant
inspires a compelling future
Provides a long-term focus for the entire
organization
A guiding philosophy
Consistent with organizational value
Influenced by the strengths and weaknesses of the
business

Components of a Vision Statement

Core ideology
Core Values - timeless guiding principles
Core Purpose - reason for being

Envisioned future
Big Hairy Audacious Goals (BHAG) - clearly articulated goals
Vivid description - a graphic description of what success and the future
will be like

Recognition of service to stakeholders

Owners/creditors
Employees
Customers

Essentials of good Business Vision

Statement
A statement that clearly defines the firms
reason for being in business
Should significantly stretch the resources and
capabilities of the farm
Should inspire people in the organization to
achieve things they never thought possible
Should unite people in the organization
toward the pursuit of one common goal

VISION STATEMENTS
McDonalds
To give each customer, every time, an experience that sets
new standards in value, service, friendliness, and quality.

NASDAQ
To build the worlds first truly global securities market . . . A
worldwide market of markets built on a worldwide network
of networks . . . linking pools of liquidity and connecting
investors from all over the world . . . assuring the best
possible price for securities at the lowest possible cost.

21

 Petsmart
To be the premier organization in nurturing
and enriching the bond between people
and animals.
Wachovia
Wachovias vision is to be the best, most
trusted and admired financial services
company.
22

MISSION :It is the unique purpose or

reason for organizations existence.
Overriding purpose in line with the
values or expectations of
the stakeholders

Who are we?

What business are we in?

eBay
We help people trade anything on earth.
We will continue to enhance the online
trading experiences of all collectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity
sellers, and browsers.

 The mission statement of an organization is

normally short, to the point, and contains
the following elements:
Provides a concise statement of why the
organization exists, and what it is to achieve;
States the purpose and identity of the
organization;
Defines the institution's values and philosophy;
and
Describes how the organization will serve those
affected by its work.

Good Mission Statements

Focus on limited number of goals
Stress major policies and values
Define major competitive spheres within which
the company will operate by defining the:
Industry.
Products and applications.
Competence.
Market-segment
Geographical
Vertical limit

NASA
To Explore the
Universe and Search
for Life and to
Inspire the Next
Generation of
Explorers

Examples Good and Bad

Mission Statements
Does a good job of expressing the core
values of the organization. Also conveys
unique qualities about the organization.

Walt Disney
To Make People Happy

Too vague and and unclear. Need more

descriptive information about what makes
the organization special.

 MISSION STATEMENTS
Bristol-Myers Squibb
Our mission is to extend and enhance human
life by providing the highest-quality
pharmaceuticals and health care products.

GlaxoSmithKline
GSKs mission is to improve the quality of
human life by enabling people to do more, feel
better and live longer.
28

 Merck
The mission of Merck is to provide society with superior
products and services by developing innovations and
solutions that improve the quality of life and satisfy
customer needs, and to provide employees with
meaningful work and advancement opportunities, and
investors with a superior rate of return.

Wipro
The mission is to be a full-service, global outsourcing
company.

29

Customers

Products
Services

Markets

Technology
Employees

Public
Image

Mission
Elements
Survival
Growth
Profit
Self-Concept

Philosophy

Importance of Mission
Benefits from a strong mission
Unanimity of Purpose

Resource Allocation

Mission
Organizational Climate
Focal point for work
structure

Mission Statement Evaluation Matrix

Organization
Name

Organization 1
Organization 2

Customers

Products
Services

Markets

Concern for
Survival,
Growth,
Profitability

Technology

Mission Statement Evaluation Matrix

Organization
Name

Organization 1
Organization 2

Philosophy

SelfConcept

Concern for
Public Image

Concern for
Employees

Vision vs. Mission

The vision is more broad and future
oriented the goal on the horizon
The mission is more focused how
you will get to the horizon

GOAL: General statement of Aim or

Purpose.
It is an open ended statement of what
one wishes to accomplish with no
quantification and no time frame for
completion.

 Describes a future end-state desired outcome

that is supportive of the mission and vision.
Shapes the way ahead in actionable terms.
Best applied where there are clear choices about
the future.
Puts strategic focus into the organization
specific ownership of the goal should be
assigned to someone within the organization.
May not work well where things are changing
fast
goals tend to be long-term for environments
that have limited choices about the future.

Developing Goals
Cascade from the top of the Strategic Plan
Mission, Vision, Guiding Principles.
Look at your strategic analysis SWOT,
Environmental Scan, Past Performance, Gaps . .
Limit to a critical few such as five to eight
goals.
Broad participation in the development of goals:
Consensus from above buy-in at the execution
level.
Should drive higher levels of performance and
close a critical performance gap.

Reorganize
Reorganizethe
theentire
entireorganization
organizationfor
forbetter
betterresponsiveness
responsivenessto
tocustomers
customers
We
Wewill
willpartner
partnerwith
withother
otherbusinesses,
businesses,industry
industryleaders,
leaders,and
andgovernment
government agencies
agenciesin
in
order
orderto
tobetter
bettermeet
meetthe
theneeds
needsof
ofstakeholders
stakeholdersacross
acrossthe
theentire
entirevalue
valuestream.
stream.
Manage
Manageour
ourresources
resourceswith
withfiscal
fiscalresponsibility
responsibilityand
andefficiency
efficiencythrough
throughaasingle
single
comprehensive
comprehensiveprocess
processthat
thatisisaligned
alignedto
toour
ourstrategic
strategicplan.
plan.
Improve
Improvethe
thequality
qualityand
andaccuracy
accuracyof
ofservice
servicesupport
supportinformation
informationprovided
providedto
toour
our
internal
customers.
internal customers.
Establish
Establishaameans
meansby
bywhich
whichour
ourdecision
decisionmaking
makingprocess
processisismarket
marketand
andcustomer
customer
focus.
focus.
Maintain
Maintainand
andenhance
enhancethe
thephysical
physicalconditions
conditionsof
ofour
ourpublic
publicfacilities.
facilities.

OBJECTIVE
: Quantification or more precise
statement of objective
Definable: It should defined to compare the performance
Quantifiable: It should be expressed in terms of Value Or Market
share
( Avoid Vague terms such as increase, improve or maximize)

Achievable:

e.g.
To increase sales of product globally by 30% in real terms within 5yrs.
To increase market share for the product in the India from 10%-15%
over 2yrs

 Relevant - directly supports the goal

Compels the organization into action
Specific enough so we can quantify and
measure the results
Simple and easy to understand
Realistic and attainable
Conveys responsibility and ownership
Acceptable to those who must execute
May need several objectives to meet a goal

GOALS

OBJECTIVES

Very short statement,

few words

Longer statement, more

descriptive

Broad in scope

Narrow in scope

Directly relates to the

Mission Statement

Indirectly relates to the

Mission Statement

Covers long time period

(such as 10 years)

Covers short time period

(such 1 year budget cycle)

GOAL

To be
No. 1
in the
market

OBJECTIVE

Increase
market
share by
15% in
three years

STRATEGY
i)

Increase product
promotion
ii) Design product
pricing
iii) Penetration
iv) New market
development
v) Product-Service mix
vi) Quality improvement

Business Definition

 A Business Definition is a clear statement of

the business the firm is engaged in or is
planning to enter.
What is our Business in precise way:
We are in the beauty enriching Business
(Helen and Curtis)
We are in the Business of Computing
Technology (Intel)
We are Watch makers of the nation (HMT)
We are in the transportation business
(TELCO)

Business Definition
Abells Framework

http://www.12manage.com/methods_abell_three_dimensional_business_definition.html

 Business Definition Statements

Define the space that the business wants to
create for itself in competitive terrain
Broadly specifies the opportunities that the
business may exploit within the space and the
threats it may encounter from rival firms in
course of time
Must be defined in broad ways, keeping
changing customer tastes and aspirations in
mind

Product Oriented V/S market Oriented

Company

Product Definition

Market Definition

Railways

We run railways

We are a people and

Goods mover

Oil Company

We Sell Gasoline

We supply energy

Film Producing
Company

We make movies

We make
entertainment

Air conditioning
company

We make air
conditioners

We provide climate
control in the home

Publishing Company

We produce and sell

books

We distribute
information

Copying Company

We make copying
equipments

We help improve office

productivity

Questions to be examined before

defining nature and scope of operations
1) Who is the customer? Where is the
customer located, how to reach the
customer, how does the customer buy
etc.
2) What does the customer buy?
3) What does the customer consider value?

CORE
COMPETENCE

: Resources, Processes, Skills

and Experience, which
provide superior
Competitive Advantage

STRATEGY

: Long Term Direction

STRATEGIC
: Combination of Resources,
ARCHITECTURE Processes and Competencies
to put strategy in action

CONTROL

: Monitoring of Action Steps

to :
(a) Assess effectiveness of
Strategies & Action
(b) Modify Strategies &
Action as necessary

VALUES

What do we prize?
What drives our business?
What are our criteria for making ethical
decisions?

Guiding Principles and Values

Every organization should be guided by a set of
values and beliefs
Provides an underlying framework for making
decisions part of the organizations culture
Values are often rooted in ethical themes, such as
honesty, trust, integrity, respect, fairness, . . . .
Values should be applicable across the entire
organization
Values may be appropriate for certain best
management practices best in terms of quality,
exceptional customer service, etc.

Examples of
Guiding Principles and Values
We
Weobey
obeythe
thelaw
lawand
anddo
donot
notcompromise
compromisemoral
moralor
orethical
ethicalprinciples
principlesever!
ever!
We
expect
to
be
measured
by
what
we
do,
as
well
as
what
we
say.
We expect to be measured by what we do, as well as what we say.

We
Wetreat
treateveryone
everyonewith
withrespect
respectand
andappreciate
appreciateindividual
individualdifferences.
differences.
We
carefully
consider
the
impact
of
business
decisions
on
We carefully consider the impact of business decisions onour
ourpeople
peopleand
andwe
we
recognize
exceptional
contributions.
recognize exceptional contributions.
We
Weare
arestrategically
strategicallyentrepreneurial
entrepreneurialin
inthe
thepursuit
pursuitof
ofexcellence,
excellence,encouraging
encouragingoriginal
original
thought
thoughtand
andits
itsapplication,
application,and
andwilling
willingto
totake
takerisks
risksbased
basedon
onsound
soundbusiness
business
judgment.
judgment.

We
Weare
arecommitted
committedto
toforging
forgingpublic
publicand
andprivate
privatepartnerships
partnershipsthat
thatcombine
combinediverse
diverse
strengths,
strengths,skills
skillsand
andresources.
resources.

MARKETS

Which markets should we be in?

Which markets do we need to create?
What should be our basic Customer
Orientation?

CORE COMPETENCIES

What are we good at?

What do we need to be good at?
How can we leverage our competencies
into products and services for market
we serve?

PRODUCTS & SERVICES

What kinds of products and services

should we provide for the markets we
serve?
How do we use these products to carve
out a market niche?

BUSINESS ENVIRONMENT

What Threats and Opportunities do we

face from Environmental Factors?
How do we track Key Environmental
Activities and Trends?

CRITICAL RESOURCES

Which are the Critical Resources do we

need to do business?
What should we do to ensure a steady
supply of these Resources?

STAKEHOLDERS

Which group of individuals are affected

by the way we do business?
How do we establish win-win
relationship with our stakeholders?

Stakeholders
individuals and groups who have an interest in a
firms performance and an ability to influence its
actions
Interest in performance coupled with ability to
influence the firm through their decision to
support the firm or not companies have
important relationships with their stakeholders.
60

The firm must maintain

performance at an adequate level in
order to maintain the participation
of key stakeholders

Firm
Product Market
Primary Customers
Suppliers

Capital Market

Stock market/Invest
Debt suppliers/Bank

Organizational
Employees
Managers
Non-Managers

62

Corporate Governance and

Stakeholder Management
Corporate governance: the relationship
among various participants in determining
the direction and performance of
corporations
Shareholders
Management (led by the CEO)
Board of directors

Corporate Governance and Stakeholder

Management
Board of directors
Elected representatives of
the owners
Ensure interests and
motives of management are
aligned with those of the
owners
Effective and engaged
board of directors
Shareholder activism
Proper managerial rewards
and incentives

Exhibit 1.4 The Key Elements of Corporate Governance

Stakeholder Management
Two views of stakeholder management
Zero sum
Stakeholders compete for attention and resources
of the organization
Gain of one is a loss to the other

Symbiosis
Stakeholders are dependent upon each other
Mutual benefits

Social Responsibility
Social responsibility: the expectation that
businesses or individuals will strive to
improve the overall welfare of society
Managers must take active steps to make
society better
Socially responsible behavior changes over
time
Triple bottom line

Strategic Management
Perspective
Integrative view of the organization
Assess how functional areas and activities
fit together to achieve goals and
objectives
All managers and employees must take
and integrative, strategic perspective of
issues facing the organization

Strategic Management Perspective

Key driving forces increasing the need for
strategic perspective and involvement
Globalization
Technology
Intellectual capital

These forces are

Interrelated
Accelerating the rate of change and
uncertainty

Enhancing Employee
Involvement

Local Line
Leaders

Have significant profit and

loss responsibility

Enhancing Employee
Involvement

Local Line
Leaders
Executive
Leaders

Champion and guide ideas

Create a learning
infrastructure
Establish a domain for
taking action

Enhancing Employee
Involvement

Local Line
Leaders
Executive
Leaders

Internal
Networkers

Have little positional power

and formal authority
Generate their power
through the conviction and
clarity of their ideas

Thank You
Please forward your query
To: vstomar@amity.edu