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HIERARCHY OF
STRATEGIC INTENT
Learning objectives
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You are
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Establishment of
Formulation of Implementation of Strategic
strategic
strategies strategies evaluation
intent
Strategic control
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Strategic Intent
• Strategic intent is the purpose for which an organisation strives for. These
could be in the form of vision and mission statements for the organisation
as a corporate whole.
• At the business level of firms these could be expressed as the business
definition and business model.
• In precise terms, as an expression of aims to be achieved operationally,
these may be the goals and objectives.
• Strategic intent lays down the framework within which firms would
operate, adopt a predetermined direction and attempt to achieve their
goal.
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Understanding Strategic Intent
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Concept of Stretch, Leverage and Fit
G. Hamel and C. K. Prahalad: "Strategy as Stretch and Leverage" Harvard Business Review, Mar - April 1993, pp. 75 - 84.
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Concept of Stretch, Leverage and Fit
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Vision
• Vision articulates the position that a firm would like to attain in distant future.
• Kotter (1990) defines it as a "description of something (an organization, a
corporate culture, a business, a technology, an activity) in the future".
• El-Namaki (1992) considers it as a "mental perception of the kind of environment
an individual, or an organization, aspires to create within a broad time horizon and
the underlying conditions for the actualization of this perception".
• Miller and Dess (1996) view it simply as the "category of intentions that are broad,
all-inclusive, and forward thinking".
• J. Kotter, A Force for Change: How Leadership Differs from Management (London: Free Press, 1990)
• M. S. S. El-Namaki, "Creating a corporate vision" Long Range Planning, Vol. 25, No. 6, (1992), pp. 25 – 29
• A. Miller and G. G. Dess, Strategic Management (2nd. ed.) (New York: McGraw-Hill, 1996), p. 6.
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Benefits of a vision
• Parikh and Neubauer (1993) point out the several benefits accruing to an
organisation having a vision.
– Good visions are inspiring and exhilarating.
– Visions represent a discontinuity, a step function and a jump ahead so that the company
knows what it is to be.
– Good visions help in the creation of a common identity and a shared sense of purpose.
– Good visions are competitive, original and unique. They make sense in the marketplace
as they are practical.
– Good vision foster risk taking and experimentation.
– Good vision fosters long-term thinking.
– Good visions represent integrity: they are truly genuine and can be used to the benefit
of people.
J. Parikh & F. Neubauer: "Corporate Visioning" in International Review of Strategic Management, Vol. 4 edited by D. E.
Hussey), (West Sussex, England: John Wiley & Sons, 1993): 109 - 111.
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Process of Envisioning
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Mission
• Mission is what an organisation is and why it exists.
• Mission is a statement which defines the role that an organisation plays in
the society.
• Thompson (1997) defines mission as the "essential purpose of the
organization, concerning particularly why it is in existence, the nature of
the business(es) it is in, and the customers it seeks to serve and satisfy".
• Hunger and Wheelen (1999) say that mission is the "purpose or reason for
the organization's existence".
J. L. Thompson: Strategic Management: Awareness and Change, (3rd ed.) (London: International Thomson Business Press) 1997, p.6;
J. D. Hunger & T. L. Wheelen: Strategic Management, (Reading, Mass.: Addison Wesley Longman), 1999, p. 10.
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Characteristics of Mission
Statements
• A mission statement defines the basic reason for the existence of the organisation.
Such a statement reflects the corporate philosophy, identity, character, and image
of an organisation. It may be defined explicitly or could be deduced from the
management's actions, decisions or the chief executive's press statements: Some
of the characteristics include:
– It should be feasible
– It should be precise
– It should be clear
– It should be motivating
– It should be distinctive
– It should include major components of strategy
– It should indicate how objectives are to be accomplished
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Abells’ Three Dimensions for Defining a
Business of a Watch Company
Customer functions:
Utility / ornamental
Alternative technologies:
Mechanical / quartz
technology
Customer groups:
children, men or
women
Based on: D.F. Abell: Defining the Business: The Starting Point of Strategic Planning Englewood Cliffs,
N.J. Prentice-Hall, 1980
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Dimensions of a Business
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Business Definition and
Strategic Management
• A clear business definition is helpful for strategic management
in many ways. For instance, a business definition can indicate
the choice of objectives, helps in exercising a choice among
different strategic alternatives, facilitate functional policy
implementation, and suggests an appropriate organisational
structure.
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Levels of Business
• Like strategy, business could be defined at the corporate or SBU levels.
• A single-business firm is active in just one area so its business definition is
simple.
• A large conglomerate, operating in several businesses, would have a
separate business definition for each of its businesses.
• At the corporate level, the business definition will concern itself with the
wider meaning of customer groups, customer functions, and alternative
technologies.
• A highly diversified company organised on a divisional basis could benefit
by having a business definition covering all the three dimensions. Each
division could again have more accurate business definition at the SBU-
level.
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Product/Service Concept
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Business Model
Shafer, Scott M. & Smith, H. Jeff & Linder, Jane C., 2005. "The power of business models," Business Horizons, Elsevier, vol. 48(3), pages 199-207
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Goals and Objectives
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Role of Objectives
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Characteristics of Objectives
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Issues in Objective Setting
• Specificity
• Multiplicity
• Periodicity
• Verifiability
• Reality
• Quality
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Factors for Objective Setting
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The Balanced Scorecard Model
How do we look to shareholders?
Financial Perspective
Objectives Targets
Learning / Innovation
Perspective
Objectives Targets
Based on R.S. Kaplan & D.P. Norton: The Strategy-focused orientation: How Balanced Scorecard Companies Thrive in the
New Business Environment Boston: Harvard Business School Publishing, 2000 and R.S. Kaplan & D. P. Norton: The Balanced
Scorecard: Translating Strategies into Action Boston: Harvard Business School Press, 1996.
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Different Perspectives of a
Balanced Scorecard
• Financial perspective: This perspective considers the financial measures
arising from the strategic intent of the organization. Examples of such
measures are revenues, earnings, return on capital, and cash flow.
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Different Perspectives of a
Balanced Scorecard
• Internal businesses perspective: Internal business processes are the
mechanisms through which performance expectations are achieved.
Examples of such measures are productivity indices, quality measures, and
efficiency.
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A Typical Strategy Map
Long term shareholder value
Source: Based on R.S. Kaplan & D.P. Norton: The Strategy-focused orientation: How Balanced Scorecard
Companies Thrive in the New Business Environment (Boston: Harvard Business School Publishing, 2000) and
R.S. Kaplan & D. P. Norton: The Balanced Scorecard: Translating Strategies into Action (Boston: Harvard
Business School Press, 1996).
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Critical Success Factors
• Critical success factors (CSFs) are crucial for organisational success. When
strategists consciously look for such factors and take them into
consideration for strategic management, they are likely to be more
successful, putting in relatively less efforts.
John F. Rockart, "CEs define their own data needs", in Harvard Business Review (Mar-Apr. 1979): 89.
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Key Performance Indicators
• Key performance indicators(KPIs) are the metrics or measures in
terms of which the critical success factors are evaluated.
• KPIs help an organization define and measure progress toward its
objectives. They give everyone in the organization a clear picture of
what is important and what they need to do to accomplish
objectives. They are a helpful tool for organizations to motivate
their employees towards achievement of objectives. KPIs are
applied in business intelligence to gauge business trends.
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