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Copyright Amity University1

PAN African eNetwork

Project

Diploma in Business Management

Strategic Management

Semester - I

Vivek Singh Tomar


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Copyright Amity University

Familiarity with the hierarchical structure ofStrategic Intent

Understanding elements of Strategic Plan,

action plan and measures to evaluate theimplementation progress

Understanding the product oriented andmarked oriented ways to define business withfocus of Abels Framework

Identification and categorization of variousstakeholders and their expectations

Module Outcome


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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

Module Content


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Strategic intent is the firms motivation to

leverage its resources and capabilities to reach

its vision

Strategic intent must inform all of organisationallife

Strategic intent must take account of the realities

of the organisation and its environment Strategic intent is more important than strategy

Strategic Intent


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The Pyramid of Purpose

The language of Strategic Intent

Decision Criteria

Strategic Intent

Vision

Mission

Priorities ObjectivesAims

Strategic Initiatives Strategies


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Strategic Intent in Practice

Acceptable to stakeholders

Consistent with the history and culture of

the enterprise Must stretch beyond its presentaspirations and practices

Will tend to be based on inspired guess ofthe future

Includes both vision and goals


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Inspired guesses

of the future

The Strategy Formulation Process

Strategic Assessment

Strategic Choice

Stakeholder Groups

Strategic Intent

Survival

Profit

Growth

Shareholder Value

Unique for this

enterprise

Context

History & Culture

Ownership Structure

Corporate Values

Leadership

Goals Vision

Influences on Strategic Intent



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 becomeinappropriate



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



High

Low

Low High

Extent of

Power

Inclination to exercise power

Consult and Involve

Inform

Avoid annoying

Least important

Model for analysing stakeholder power



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 organizat ion

Products/services

Needs w e fi l l

Statements that explain our direction, ourpurpose, our reason for being What dif ference do we make?

Statements that explain what makes usunique Values

People

Combinat ion of p roducts and serv ices



Major Components of the

Strategic Plan / Down to Action

Mission

Vision

Goals

Objectives

Measures

Why w e exist

What we want to be

Indicators and

Moni to rs of success

Desired level of

performance andt imel ines

Planned Act ion s to

Ach ieve Object ives

O1 O2

AI1 AI2 AI3

M1 M2 M3

T1 T1 T1

Specif ic outcomes expressed in

measu rable term s (NOT activ it ies)

Strategic Plan

Action Plans

Evaluate Progress

Targets

Initiatives

What we must achieve to be successfu l



VISION : Desired future state; the

aspiration of the Organization

What are our Dreams and Aspirations?

What do we want to look l ike in 5, 10,

15 years?

Wheredo we want to go?



How the organization wants to be perceived in thefuture 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 builton 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, mosttrusted and admired financial services

company.

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MISSION :It is the unique purpose orreason for organizations existence.

Overriding purpose in line with thevalues or expectations of

the stakeholders

Who are we?

What business are we in?



eBayWe 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 isnormally short, to the point, and containsthe 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 thoseaffected by its work.



Good Mission Statements

Focus on limited number of goals

Stress major policies and values

Define major competitive spheres within whichthe company will operate by defining the:Industry.

Products and applications.

Competence.Market-segment

Geographical

Vertical limit


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Examples Good and BadMission Statements

To Make People Happy

To Explore the

Universe and Search

for Life and to

Inspire the NextGeneration of

Explorers

NASA

Walt Disney

Does a good job of expressing the core

values of the organization. Also conveys

unique qualities about the organization.

Too vague and and unclear. Need more

descriptive information about what makes

the organization special.


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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 ofhuman life by enabling people to do more, feel

better and live longer.

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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 toprovide 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


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Mission

Elements

CustomersMarkets

Employees

Public

ImageSelf-Concept Philosophy

Survival

Growth

Profit

ProductsServices

Technology


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Importance of Mission

Mission

Resource Allocation

Unanimity of Purpose

Organizational Climate

Focal point for work

structure

Benefits from a strong mission


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Mission Statement Evaluation Matrix

Organizat ion

Name Customers

Products

Services Markets

Concern for

Survival ,

Growth,

Prof i tabi l i ty Technology

Organization 1

Organization 2


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Mission Statement Evaluation Matrix

Organizat ion

Name Phi losophy

Self-

Concept

Concern for

Publ ic Image

Concern for

Employees

Organization 1

Organization 2


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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


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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.


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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 organizationspecific 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.


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Developing Goals Cascade from the top of the Strategic PlanMission, 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 executionlevel.

Should drive higher levels of performance and

close a critical performance gap.


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Reorganize the entire organization for better responsiveness to customers

We will partner with other businesses, industry leaders, and government agencies in

order to better meet the needs of stakeholders across the entire value stream.

Manage our resources with fiscal responsibility and efficiency through a singlecomprehensive process that is aligned to our strategic plan.

Improve the quality and accuracy of service support information provided to our

internal customers.

Establish a means by which our decision making process is market and customer

focus.

Maintain and enhance the physical conditions of our public facilities.


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OBJECTIVE : Quantification or more precisestatement of objective

Definable:It should defined to compare the performance

Quantifiable:It should be expressed in terms of Value Or Marketshare

( 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


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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


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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)


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GOAL OBJECTIVE STRATEGY

To be

No. 1

in the

market

Increase

market

share by

15% in

three years

i) Increase product

promotion

ii) Design product

pricing

iii) Penetration

iv) New market

development

v) Product-Service mix

vi) Quality improvement


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Business Definition


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A Business Definition is a clear statement of

the business the firm is engaged in or isplanning to enter.

What is our Business in precise way:

We are in the beauty enrich ing Bus iness(Helen and Curtis)

We are in the Bus iness of Comput ingTechnology (Intel)

We are Watch makers o f the nat ion (HMT) We are in the transportat ion business

(TELCO)


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Business DefinitionAbells Framework

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


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Business Definition Statements

Define the space that the business wants tocreate for itself in competitive terrain

Broadly specifies the opportunities that thebusiness may exploit within the space and thethreats it may encounter from rival firms incourse of time

Must be defined in broad ways, keepingchanging customer tastes and aspirations inmind


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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


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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?


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CORE : Resources, Processes, Skills

COMPETENCE and Experience, which

provide superior

Competitive Advantage

STRATEGY : Long Term Direction

STRATEGIC : Combination of Resources,

ARCHITECTURE Processes and Competencies

to put strategy in action


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CONTROL : Monitoring of Action Steps

to :

(a) Assess effectiveness of

Strategies & Action

(b) Modify Strategies &

Action as necessary


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VALUES

What do we prize?

What drives our business?

What are our cr i ter ia for making ethical

decisions?


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Guiding Principles and Values Every organization should be guided by a set of

values and beliefs

Provides an underlying framework for makingdecisionspart 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.


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Examples of

Guiding Principles and Values

We obey the law and do not compromise moral or ethical principles ever!

We expect to be measured by what we do, as well as what we say.

We treat everyone with respect and appreciate individual differences.

We carefully consider the impact of business decisions on our people and we

recognize exceptional contributions.

We are strategically entrepreneurial in the pursuit of excellence, encouraging original

thought and its application, and willing to take risks based on sound business

judgment.

We are committed to forging public and private partnerships that combine diverse

strengths, skills and resources.


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MARKETS

Which markets should we be in?

Which markets do we need to create?

What should be our basic Customer

Orientation?


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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?


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PRODUCTS & SERVICES

What kinds of products and services

should we provide for the markets weserve?

How do we use these products to carveout a market niche?


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BUSINESS ENVIRONMENT

What Threats and Opportunities do we

face from Environmental Factors?

How do we track Key Environmental

Activities and Trends?


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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?


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STAKEHOLDERS

Which group of individuals are affected

by the way we do business?

How do we establish win-win

relationship with our stakeholders?


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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 tosupport the firm or not companies have

important relationships with their stakeholders.

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The firm must maintainperformance at an adequate level inorder to maintain the participationof key stakeholders

Organizational

EmployeesManagersNon-Managers

Firm

Capital Market

Stock market/Investors

Debt suppliers/Banks

Product Market

Primary CustomersSuppliers


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Corporate Governance and

Stakeholder Management

Corporate governance: the relationship

among various participants in determiningthe direction and performance of

corporations

Shareholders Management (led by the CEO)

Board of directors


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Corporate Governance and Stakeholder

Management Board of directors

Elected representatives ofthe owners

Ensure interests andmotives of management arealigned with those of theowners

Effective and engagedboard of directors

Shareholder activism

Proper managerial rewardsand incentives

Exhibit 1.4 The Key Elements of Corporate Governance


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Stakeholder Management

Two views of stakeholder management

Zero sum

Stakeholders compete for attention and resourcesof the organization

Gain of one is a loss to the other

Symbiosis

Stakeholders are dependent upon each other

Mutual benefits


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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 overtime

Triple bottom line


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Strategic Management

Perspective Integrative view of the organization

Assess how functional areas and activities

fit together to achieve goals andobjectives

All managers and employees must take

and integrative, strategic perspective ofissues facing the organization


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Strategic Management Perspective

Key driving forces increasing the need forstrategic perspective and involvement

Globalization

Technology

Intellectual capital

These forces are

InterrelatedAccelerating the rate of change and

uncertainty


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Enhancing Employee

Involvement Have significant profit and

loss responsibility

Local Line

Leaders


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Enhancing Employee

Involvement Champion and guide ideas

Create a learning

infrastructure

Establish a domain for

taking action

Executive

Leaders

Local Line

Leaders


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Internal

Networkers

Enhancing Employee

Involvement Have little positional power

and formal authority

Generate their powerthrough the conviction and

clarity of their ideas

Local Line

Leaders

Executive

Leaders


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