Business Policy and Strategic Analysis Unit 2

STRATEGIC INTENT
Introduction:

Strategic Intent refers to the purposes the organization strives for. These purposes may be
expressed in terms of hierarchy of strategic intent. Broadly stated these could be in the form
of a vision and mission statements for the organization as a corporate whole. At the business
level of the firms, these could be expressed as the business definition and business model.
When stated in precise terms, as an expression of aims to be achieved operationally, these
may be the goals and objectives. Generally, strategic intent lay down a frame work within
which firm would operate, adopt predetermined direction and attempt to achieve their goal.
Overall, strategic intent points to what a firm should set out to achieve.

Concept of Strategic Intent:

Hamel and Prahalad coined the term ‘Strategic Intent’ which they believe is an obsession
with an organization: i.e. An obsession of having ambitions that may be out of proportion to
their resources and capabilities. This obsession is to win at all levels of the organization,
while sustaining that obsession in the quest for global leadership.

Meaning of Strategic Intent:

On the one hand, strategic intent envisions a desired leadership position and establishes the
criterion the organization will use to chart its progress and the same time, strategic intent is
more than simply unfettered ambition. - Hamel
and Prahalad

Active Management processes covered by Strategic Intent:

 Focusing the organization’s attention on the essence of winning.

 Motivating people by communicating the values of the target.
 Leaving room for individual and team contributions.
 Sustaining enthusiasm by providing new operational definition as circumstances
change.
 Using strategic intent consistently to guide resource allocation.

Eg: The late Dhirubhai Ambani of the Reliance Group is credited with having a strategic
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intent of being gloabal leader in his field of activity by being lowest cost producer of
polyester products – a status achieved by a relentless pursuit of scale, vertical integration and
operational effectiveness.

The understanding of strategic intent is aided by three important concepts. i.e Stretch,
Leverage and Fit.

Concept of Stretch, Leverage and Fit:

Stretch:
Stretch is a misfit between resources and aspirations.

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Leverage:
Leverage refers to concentrating, accumulating, complementing, conserving and recovering
resources in such a manner that the meager resource base is stretched to meet the aspirations
that an organization dares to have.

Fit:
Fit means positioning the firm by matching its organizational resources to its environment.

Understanding the concept:

The Strategic fit is central to the strategy school of positioning where techniques such
as the SWOT analysis are used to assess organizational capabilities and environmental
opportunities. Strategy then become a compromise between what the environment has got to
offer in terms of opportunities and the counter offer that the organization makes in the form
of its capabilities.
The ideas of stretch and leverage belong appropriately to the learning school of
strategy where the capabilities are not seen as constraints to achieving and the environment is
perceived not as something which is considered as given but as something which can be
created and moulded.
You would appreciate that the idea of strategic intent could work in both the cases,
though it might be perceptively different in terms of the levels at which the aspirations are
set. Under fit, the strategic intent would seem to be more realistic; under stretch and leverage
it could be idealistic. Yet, in both the cases, it is essentially a desired aim to be achieved.
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Business Policy and Strategic Analysis Unit 2

VISION

Introduction:

Aspirations, expressed as strategic intent, should lead to tangible results; otherwise they
would just be castles in the air. Those results are the realization of the vision of an
organization or an individual. It is what ultimately a firm or a person likes to become.
Therefore vision articulates the position that a firm would like to attain in distant future.
Hence, the vision encapsulates the basic strategic intent.
Eg: For Instance some of you say in 10 years or may be even earlier, would like to become
general managers managing an SBU in a large, diversified multinational corporation.

Definition of Vision:

“Description of something (an organization, a corporate culture, a business, a technology, an

activity) in the future.” - Kotter
Or
“Category of intentions that are broad, all inclusive and forward thinking.”
-Miller and
Dess

Nature of Vision:

1) Vision is dreamt of more than articulated.

2) Vision could be hazy and vague.
i.e Vision is just like the dream that one experienced the previous night and is not able
to recall in the broad day light.
3) Vision is a powerful motivator to action.
e.g: Walt Disney probably wanted to make people happy this vision leads him to
establish Disney land.
4) Often, it is from the actions vision could be derived.
All visionaries had a vision that might have gradually become clear as they took
actions to materialize their dreams.

The Process of Envisioning:

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Well conceived vision

Core Ideology Envisioned Future

Core Value Long Term audacious goals

Core Purposes Vivid description of Achievement

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A well conceived vision consists of two major components: i) Core ideology and ii)
Envisioned Future.

i) Core ideology:
Core ideology defines the enduring character of an organization that remains unchanged as it
experiences change in technology, competition or management styles etc. The core ideology
rests on two components.
a) Core Values - The essential and enduring code of belief of an organization

b) Core Purposes – Organization’s reason for being.

ii) Envisioned Future:

The envisioned future too consists of two components
a) A 10 – 30 years audacious goals and

b) Vivid description of what it will be like to achieve those goals.

Many organizations mention terms such as corporate philosophy, corporate values and the
like, that are used to convey what they stand for and what principles guide them in strategic
and day to day decision making. These terms are all part of an effort to state what the
organization's vision is.

Benefits of Vision:

1) Good visions are inspiring and exhilarating.

2) Vision represent a discontinuity, a step function and jump ahead so that the company
knows what it is to be.
3) Good visions help in the creation of a common identity and a shared sense of purpose.
4) Good visions are competitive, original and unique. They make sense in marketplace
as they are practical.
5) Good visions foster risk taking and experimentation.
6) Good visions foster long term thinking.
7) Good visions represent integrity: they are truly genuine and can be used to the benefit
of people.
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Business Policy and Strategic Analysis Unit 2

MISSION
Introduction:

The essence of vision is a forward looking view of what an organization whishes to become;
Mission is what an organization is and why it exists. Organizations are found for a purpose.
Although the purpose may change over time, it is essential that stakeholders understand the
reason for organizations existence, (i.e. Organizations Mission). Therefore, Mission is a
statement which defines the role that organization plays in the society. To understand
Mission in detail ‘Mission is an enduring statement of purpose that distinguishes one business
from other similar firms.’ The obvious purpose of a mission statement is to give a public
announcement to insiders and Outsiders about what the firm stand for, what makes the firm
different and a more effective competitor.

Definition:

“Purpose or Reason for the organization’s existence”. - Hunger and Wheelen.

Or

“Essential purpose of the organization, concerning particularly why it is in existence, the

nature of the businesses it is in and the customers it seeks to serve and satisfy”.

- Thompson

Characteristics:

1) It should be feasible:
A mission should always aim high but it should not be an impossible statement. It
should be realistic and achievable. Its Followers must find it credible. But feasibility
depends on the resources available to work towards a mission.

2) It should be precise:
A mission statement should not be so narrow as to restrict the organizations activities,
nor should it be too broad to make itself meaningless. Mission statement must be
defined with a reasonable outline within which an organization could operate.
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3) It should be clear:
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A mission statement should be clear enough to lead to action. It should not just be a
high sounding set of platitudes meant for publicity purposes.

4) It should be motivating:
A mission statement should be motivating for members of the organization and the
society and they should feel it worthwhile working for such an organization or being
its customers.

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5) It should be distinctive:
A mission statement which is unsystematic is likely to have little impact. If all
manufactures of similar products defined their mission in a similar fashion, there
would not be much of a difference among them. But if one of them defines
themselves as distinctive, it would register in the public mind.

6) It should indicate the major components of strategy:

A mission statement, along with the organizational purpose should indicate the major
components of the strategy to be adopted.

7) It should indicate how objectives are to be accomplished:

Besides indicating the broad strategies to be adopted, a mission statement should also
provide clues regarding the manner in which the objectives are to be accomplished.

Components of a Mission Statement:

A good mission statement consists of nine basic components which serve as a practical frame
work for evaluating and writing a mission statement.

1. Customers: Who are the firm’s customers?

2. Products or services: What are the firm’s major products or services?

3. Markets: Geographically, where does the firm compete?

4. Technology: Is the firm technologically current?

5. Concern for survival, growth, and profitability: Is the firm committed to growth and
financial soundness?

6. Philosophy: What are the basic beliefs, values, aspirations and ethical priorities of the
firm?

7. Self concept: What is the firm’s distinctive competence or major competitive advantage?

8. Concern for public image: Is the firm responsive to social, community and environmental
concerns?
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9. Concern for employees: Are employees a valuable asset of the firm?

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How do firms formulate Mission?

A firm may formulate mission statement in different ways. Some of the possible ways are

1. Most organizations derive their mission statements from a particular set of tasks they
are called upon to perform in the lights of their Individual, national or global
priorities.
2. Mission statement could be formulated on the basis of the vision that the entrepreneur
decides in the initial stages of an organization’s growth.

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3. The mission, in a number of cases, is drawn up by the Owner- Manager or Chief

Executive Officer or Top Management, based on certain beliefs, desires and
aspirations.
4. Consultant may also be called upon to make an in-depth analysis of the organization
to suggest an appropriate mission statement.

Communicating the Mission:

Communicating the mission statement is as important as formulating it well. This is so since

a positive relationship exists between the performance of a company and the number of
methods used to communicate and distribute a mission statement. High visibility of the
mission statements posted on the multiple locations is an effective tactic to aid mission
familiarity and recognition by employees. There are several methods to communicate the
mission statement within the organizations, such as

1. Annual reports,
2. Posters,
3. Employee manuals,
4. Company information kits, word of mouth publicity,
5. Seminars and Workshops,
6. Newsletters and
7. Advertisements.

A mission statement, once formulated and communicated, should serve the organization for
many years. But a mission may become unclear as the organization grows and adds new
products, market and technologies to its activities. Then the mission has to be reconsidered
and re examined to either change or discard it and evolve a fresh statement of the
organizational mission.

Benefits of Mission Statement:

1) Reference Point:
The mission guides the operations of a firm by providing proper direction and the
sense of purpose. Objectives and strategies are generally designed; keeping the broad
picture offered by mission in back ground.
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2) Educative value:
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The mission educates people about corporate vision and purpose: Why the company is
there, what existence it seeks, where it wants to go in future etc. When everyone is
able to understand the corporate mission properly, a kind of unity of purpose is
achieved.

3) Motivating Force:
The mission offers broad road map to all people. They draw meaning and direction
from it. The targets are set, work is assigned, resources are committed to best use and
people can now compare themselves against the benchmarks set by the mission. They

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can change direction whenever they go off the track and set everything along right
paths. Mission helps people understand organizational priorities and commit resources
accordingly.

4) Productive use of Resources:

The mission help ensure that the organization will not pursue conflicting purposes. It
does not allow the constituents of an organization to move in different directions. As a
result, resources are put to best use avoiding wastage and conflicts at various levels.

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Business Policy and Strategic Analysis Unit 2

BUSINESS DEFINITION
Introduction:

A business definition is a clear statement of the business the firm is engaged in or planning to
enter. It answers the question: What is our business, in precise way. It defines the ‘space’ that
the business wants to create for itself in a competitive terrain. They broadly specify the
opportunities that the business may exploit within that space keeping in mind the changing
customer tastes and aspirations and the threats it may encounter from the rival firms in course
of time.

Definition:

“Defining business along three dimensions: customer groups, customer needs and alternative
technologies.” - D.F.Abell

Dimensions of Business Definition:

Customer Needs
(What is being satisfied?)

Customer Groups
Alternative Technologies (Who is being satisfied?)
(How the need is being satisfied?)

Prerequisites for Business Definition:

An organization need to define its business covers three vital aspects. They are

1. The product / service concept:

A product or service concept is the way in which a firm likes to position its products/
services in the market, in terms of product features, quality, price, service,
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distribution, differentiating elements etc. While trying to position its product /

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services in distinct manner, the company should not lose sight of its present and
potential rivals, competitive environment, changing preference of customers etc. A
firm therefore need to define its business in a way that allows it to focus on its
strengths in a pin pointed way and march ahead of its rivals with confidence.

2. Customer Segment:
A firm cannot appeal to all buyers in the market in the same way since buyers are too
numerous, too widely scattered and too varied in their buying needs and buying
practices. Also different firms vary widely in their abilities to serve different segments

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of the market. Under the circumstances, covering a lot of ground without any focus
does not ensure success. Each firm, therefore, need to focus its energies and resources
in the target market that is best suited to its core competencies. Target marketing
involves three steps:
a) Market segmentation, b) Market targeting and c) Market positioning.

3. Value Creation:
A firm, in the final analysis, has to define the factor that offer ‘value’ to customers in
terms of say low price, high quality, fast delivery, novel features, excellent after sales
service etc. Simply stated, value is the ratio between what the customer gets and what
he gives. To survive and flourish in the competitive market, a firm should always
define its business in terms of how it is going to offer certain benefits to customers
more effectively than its rivals.

Benefits of Business Definition:

1. It removes the crisis of identity which results either in inefficiency or ineffectiveness.

When a company takes up activities outside the domain of business definition, it
generally faces the risk and variation with it corporate identity. This lead to identity
crisis.
2. It helps in creating synergy within the organization. If different strategies of company
are linked through a business definition, it results in considerable synergy.
3. It facilitates in picking up appropriate growth strategies, diversification strategies and
acquisition etc. For instance, acquisition or growth or diversification strategies are
guided by business definition; whether the acquired firm or new entity or new product
fits into overall business definition.
4. Business definition provides unique insight to companies operating in competitive
markets where the customer is an important external stake holder of the firm.
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Business Policy and Strategic Analysis Unit 2

BUSINESS MODEL
Introduction:

‘Business Model’ is quite a popular term now and is used frequently to express a number of
ideas, among them ‘creation and marketing of value’ being the major theme. Ordinarily,
business models are often expressed in the form of question: how does the organization make
money?

Eg:

1) E- news papers are able to offer free internet edition on account of the online
advertisement revenue they earn from the advertisers.

2) A Kirana dukan (provisional store) owner buys commodities and products at a price and
then applying a mark up, sells them at retail prices thus earning revenue and profit.

Each of the organization is using a particular business model.

Definition:

“A representation of firm’s underlying core logic and strategic choices for creating and
captring value within the value network.”

Importance of Business Model:

1. Business models have an intimate relationship with the strategy of an organization.

Strategies result in choices; a business model can be used to help analyze and
communicate these strategic choices.
2. Business models are down to earth prescriptions to implement strategies. i.e.
Strategies are not expected to answer the question: how to make money? Business
model can enable us to answer precisely that.
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 Business Policy and Strategic Analysis Unit 2

GOALS AND OBJECTIVES

Introduction:

Goals denote what an organization hopes to accomplish in a future period of time. They
represent the future state or outcome of effort put in now. A broad category of financial and
non-financial issues are addressed by the goals that affirm sets. Objectives are the ends that
state specifically how the goals shall be achieved. They are concrete and specific in contrast
to goals that are generalized. In this manner, objectives make the goals operational. While
goals may be qualitative, objectives tend to be mainly quantitative in specification. This way
they are measurable and comparable. This fine distinction between goals as broadly stated
aims and the objectives as specifically stated aims. Any organizations always have a potential
set of goals. It has to exercise a choice from among these goals. This choice must be further
elaborated and expressed as operational and measurable objectives. Hence for the rest of the
topic we consider objectives rather than goals.

Characteristics of objectives:

1. Objectives should be understandable:

Because objectives play an important role in strategic management and are put into use in
variety of ways, they should be understandable by those who have to achieve them.

2. Objectives should be concrete and specific:

To say that ‘Our company plans to achieve a 12 percent increase in sales’ is certainly better
than stating that ‘Our company seeks to increase its sales’. The first statement implies a
concrete and specific objective and is more likely to lead and motivate the managers.

3. Objectives should be related to a time frame:

If the first statement given above is restated as ‘Our company plans to increase its sales by
the end of two years’, it enhances the specificity of objectives. If the objectives related to a
time frame, then managers know the duration within which they have to be achieved.

4. Objectives should be measurable and controllable:

Many organizations perceive themselves as companies which are attractive to work for. If
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measures like the number and quality of job applications received, average emoluments of
this objective with respect to comparable companies in particular industry and in general.
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5. Objectives should be challenging:

Objectives that are too high or too low are both demotivating and, therefore, should be set at
challenging but not unrealistic levels. To set a high sales target in a declining market does not
lead to success. Conversely, a low sales target in a burgeoning market is easily achievable
and, therefore leads to suboptimal performance.

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6. Different objectives should correlate with each other:

Organizations set many objectives in different areas. If objectives are set in one area,
disregarding the other areas, such an action is likely to lead to problems. Trade offs are
required to be made so that different objectives correlate with each other, are mutually
supportive and result in synergistic advantages.

7. Objectives should be set within constraints:

There are many constraints i.e. Internal as well as External, which have to be considered
during objective setting. All these constraints limit the organization’s ability to set and
achieve objective.

Issues in objective setting:

1. Specificity:
Objectives may be stated at different levels of specificity. At one extreme, they might
be very broadly stated as goals, while at the other, they might be specifically stated
targets. Many organizations state corporate as well as general, specific, functional and
operational objectives. Note that specificity is related to the organizational level for
which a set of objectives has been stated. The issue of specificity is resolved through
stating objectives at different levels and prefixing terms such as corporate, general
and particular so that they serve the needs of performance and its evaluation.

2. Multiplicity:
Since objectives deal with a number of performance areas, a wide variety of them
have to be formulated to cover all aspects of the functioning of an organization. No
organization operates on the basis of a single or few objectives. The issue of
multiplicity deals with different types of objectives with respect to organizational
levels, importance, ends, functions, and nature. Another issue related to multiplicity is
the number and type of objectives to be set. Too few or too many objectives are both
unrealistic. Organization need to set adequate and appropriate objectives so as to
cover all the major performance areas.

3. Periodicity:
Objectives are formulated for different time periods. It is possible to set long term,
medium term and short term objectives. Generally, organizations determine objectives
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for the long and short term. Whenever this is done, objectives for different time
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periods have to be integrated with each other. Long term objectives are, by nature,
less certain and are therefore stated in general terms. Short term objectives, on the
other hand are relatively more certain, specific and comprehensive. One long term
objective may result in several short term objectives; several short term objectives
converge to form long term objectives.

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4. Verifiability:
Each objective has to be tested on the basis of its verifiability. In other words, t should
be possible for manager to state the basis on which to decide whether an objective has
been met or not. Only verifiable objectives can be meaningfully used in strategic
management. Related to verifiability is the question of quantification. A definite way
to measure any objective is to quantify it. But it may be neither possible nor desirable
to quantify each and every objective. In such cases qualitative objectives have to be
set. These objectives could also be verified, but not to the degree of accuracy possible
for quantitative objectives. It can be said that the issue of verifiability could be
resolved through the judicious use of combination of quantitative and qualitative
objectives.

5. Reality:
It is common observation that organizations tend to have two sets of objectives:
official and operative. Official objectives are those which organizations profess to
attain, while operative objectives are those which they seek to attain in reality. For
example many organizations state one of their official objectives as the development
of human resource. But whether it is also an operative objective depends on the
amount of resources allocated human resource development.

6. Quality:
Objectives may be both good as well as bad. The quality of an objective can be
judged on the basis of its capability to provide a specific direction and tangible basis
for evaluating performance.

Important areas of objective setting:

According to Drucker, objectives need to be set in the eight vital areas. They are

1. Market Standing
2. Innovation
3. Productivity
4. Physical & Financial Resources
5. Profitability
6. Manager performance and development
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7. Workers performance and attitude

8. Public Responsibility.
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Factors influencing objectives:

1. The forces in the environment:

These take into account all the interests, sometimes coinciding but often conflicting of
the different stake holders in an organization. Each group of stakeholders has claims
or expectations which have to be considered while setting objectives. It is important to
note that the interest of the various stake holders may change from time to time,
necessitating a corresponding shift in the importance attached to different objectives.
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2. Realities of enterprise resources and internal power relationships:

These mean that objectives are dependent on the resources capability of a company as
well as the relative decisional power that different groups of strategists wield with
respect to each other in sharing those resources. Resources, both material and human,
place restrictions on the objective achieving capability of the organization. Internal
power relationships too have an impact on the objectives in different ways. A
dominant group of strategists such as BOD, CEO may wield considerable power to set
objectives in consonance with their respective views. Again, power configurations
within a firm are continually changing, the relative importance attached to different
objectives may also vary over a period of time

3. The value system of the top executive:

This has an impact on the corporate philosophy that organizations adopt with regard
to strategic management in general and objectives in particular. Values, as an
enduring set of beliefs, shape perceptions about what is good or bad, desirable and
undesirable. This applies to the choices of objectives too. For example entrepreneurial
values may result in importance being given to profit objectives, while a philanthropic
attitude and values of social responsibility may lead to setting socially oriented
objectives.

4. Awareness by the Management:

Awareness of the past objectives may lead the organization to a choice of objectives
that has been emphasized in the past due to different reasons. For instance, a dominant
chief executive lays down a set of objectives and the organization continues to follow
it, or marginally deviates from it in the future. This happens because organizations do
not depart radically from the path that they have been following in the recent past.
Whatever changes occur in their choices of objectives, take place incrementally in an
adaptive manner.

Benefits of objectives:

1. Objectives define the organizations relationship with its environment:

By stating its objectives, an organization commits itself to what it has to achieve for
its employees, customers and the society in large.
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2. Objectives help an organization pursue its vision and mission:

By defining the long term position that an organization wishes to attain and the short
term targets to be achieved, objectives help an organization in pursuing its vision and
mission.

3. Objectives provide the basis for strategic decision making:

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By directing the attention of strategists to those areas where strategic decisions need
to be taken, objectives leads to desirable standards of behavior and, in this manner,
help to coordinate strategic decision making.

4. Objectives provide the standards for performance appraisal:

By stating targets to be achieved in a given time period and the measures to be
adopted to achieve them, objectives lay down the standards against which
organizational as well as individuals performance could be judged. In the absence of
objectives, an organization would have no clear and definite basis for evaluating its
performance.

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Business Policy and Strategic Analysis Unit 2

STRATEGY
Introduction:

The concept of strategy is central to understanding the process of strategic management. The
term strategy is derived from a greek word ‘Strategos’ which means generalship – the actual
direction of military force, as distinct from the policy governing its deployment. Literally, the
word ‘strategy’ means the art of the general. In business parlance, there is no definite
meaning assigned to strategy. It is often used to mean a number of things. Strategy is the
overall plan of a firm deploying its resources to establish a favorable position and compete
successfully against its rivals. Strategy describes a frame work for charting a course of action.
It explicates an approach for the company that builds on its strengths and is a good fit with
the firms external environment. It is basically intended to help firms achieve competitive
advantage. Competitive advantage allows a firm’s unique ability to perform activities more
distinctively and more efficient than rivals. A firm’s distinctive competence or unique ability
here implies those special capabilities, skills, technologies or resources that enable a firm to
distinguish itself from those its rivals and create competitive advantage. The term ‘Terrain’ is
highly relevant in explaining the concept of strategy more clearly. From a business sense,
terrain refers to markets, segment s and products used to win over customers. The essence of
strategy is to match strengths and distinctive competence with the terrain in such a way that
one’s own business enjoys a competitive advantage over rivals competing in the same terrain.
The basic premises of strategy, as things stand now, is that an adversary can defeat a rival,
even a larger, more powerful one, if it can plan a battle on a favorable terrain to its
capabilities.

Definition:

The determination of the long term goals of an enterprise, and the adoption of the courses of
action and the allocation of resources necessary for carrying out these goals.

- A Chandler

Features of strategy:

1. Strategy is all about winning:

It is about matching the strengths and distinctive competencies of a firm with the
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terrain in such a way that one’ own business enjoys an edge over its rivals.
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2. Strategy offers brand guidelines:

It chalks out possible future, structures various internal and external processes and
puts the firm on the right path in a dynamic world. A strategy does not indicate what
sis to be done in detail; it only provides a general programme of action, outlining the
deployment of resources with a view to improve the chances of achieving selected
objectives.

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3. Strategy is forward looking:

It takes a long range view.

4. Strategy life span is limited:

It is a single use plan. It is designed to fit a specific situation and is ‘used up’ when
the goal is achieved.

5. Strategy is generally a product of top management thinking:

It is believed that only executives at the highest level have the necessary perspective
and information to plan for the organization as a whole.

6. Strategy is dynamic and flexible programme of action:

Changes in the environment bring about changes in strategic planning.

7. Strategy is an inherently creative process:

Once one understands the firm’s current situation and has a view of the future,
improving the firm’s performance requires thinking up new opportunities for creating
and capturing value by leveraging its strategic assets.

Elements/ Prerequisites of Strategy:

1. Goals:
A strategy invariably indicates the long terem goals towards which all efforts are
directed.

2. Scope:
A strategy defines the scope of the firm that is, the kind of products the firm will offer
the markets it will pursue and the broad areas of activity it will undertake. It will, at
the same time, through light on the activities the firm will not undertake.

3. Competitive advantage:
A strategy also contains a clear statement of what competitive advantages the firm
will pursue and sustain. Competitive advantage arises when a firm is able to perform
an activity that is distinct or different from that of its rivals. Firms build competitive
advantage when they take steps that help them gain an edge over their rivals in
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attracting buyers. These steps vary, for example, making the highest quality product,
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offering the best customer service, producing at the lowest cost or focusing resources
on a specific segment or niche of the industry.

4. Logic:
This is the most important element of strategy. The ‘why’ is the logic of the strategy?
To see how logic is the core of a strategy, consider the following expanded version of
a strategy. ‘Our strategy is to dominate the Indian market for inexpensive detergent
powder by being the low cost producer selling through mass market channels. Our

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low price will generate high volumes. This, in turn, will make us high volume, low
cost producer. The economies of scale would help to improve our bottom line even
with a low price.

Types of Strategies:

Formulated Implemented
Strategy Strategy

Realized
Intended Deliberate Strategy Strategy
Strategy

Unrealized Emergent
Strategy Strategy

Mitzberg conception of the type of strategies

Henry Mintzberg suggested that the strategies that are formulated do not get implemented in
the intended way. Rather, implementation faces unforeseen circumstances so that, in practice,
strategists have to plan around the emerging circumstances, dropping some of the parts of the
intended strategy that is the unrealized strategy and some other elements that are the
emergent strategy. Ultimately, what is implemented is realized strategy.
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