1. STRATEGIC MANAGEMENT AND BUSINESS POLICY THIRD EDITION Chapter 2 Hierarchy of strategic intent AZHAR KAZMI

2. (c) Dr. Azhar Kazmi 20082 Learning objectives  Explain the concepts of strategic intent, stretch, leverage, and fit  Describe and exemplify the concept of vision  Describe and exemplify the concept of mission  Explain the three dimensions of business definition  Evaluate quality of vision, mission statements, and business definitions  Describe business model and their relationship with strategy  Describe the role and characteristics of objectives  Explain the process of objective setting  Distinguish between well-formulated and badly-stated objectives  Discuss the role of critical success factors in setting objectives

3. (c) Dr. Azhar Kazmi 20083 Strategic intent  Strategic intent is an obsession with an organisation: an obsession by having ambitions that may even be out of proportion to their resources and capabilities. This obsession is to win at all levels of the organisation while sustaining that obsession in the quest for global leadership.

4. (c) Dr. Azhar Kazmi 20084 Concept of stretch, leverage and fit  Stretch is "a misfit between resources and aspirations"  Leverage refers to concentrating, accumulating, complementing, conserving, and recovering resources in such a manner that meagre resource base is stretched to meet the aspirations that an organisation dares to have.  Fit means positioning the firm by matching its organisational resources to its environment. G. Hamel and C. K. Prahalad: "Strategy as Stretch and Leverage" Harvard Business Review, Mar - April 1993, pp. 75 - 84.

5. (c) Dr. Azhar Kazmi 20085 Vision  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.

6. (c) Dr. Azhar Kazmi 20086 Core ideology and envisioned future  The core ideology defines the enduring character of an organisation that remains unchangeable as it passes through the vicissitudes of vectors such as technology, competition or management fads.  The envisioned future too consists of two components: a 10 - to - 30 years audacious goal and vivid description of what it will be like to achieve that goal.

7. (c) Dr. Azhar Kazmi 20087 Mission  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.

8. (c) Dr. Azhar Kazmi 20088 Characteristics of mission statements  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

9. (c) Dr. Azhar Kazmi 20089 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

10. (c) Dr. Azhar Kazmi 200810 Business model  Business model could be defined as “a representation of a firm's underlying core logic and strategic choices for creating and capturing value within a value network.” Shafer, Scott M. & Smith, H. Jeff & Linder, Jane C., 2005. "The power of business models," Business Horizons, Elsevier, vol. 48(3), pages 199-207

11. (c) Dr. Azhar Kazmi 200811 Goals and objectives  Goals denote what an organisation hopes to accomplish in a future period of time. They represent the future state or outcome of effort put in now.  Objectives are the ends that state specifically how the goals shall be achieved. They are concrete and specific in contrast to goals that are generalised.

12. (c) Dr. Azhar Kazmi 200812 Role of objectives  Objectives define the organisation's relationship with its environment  Objectives help an organisation pursue its vision and mission  Objectives provide the basis for strategic decision-making  Objectives provide the standards for performance appraisal

13. (c) Dr. Azhar Kazmi 200813 Characteristics of objectives  Objectives should be understandable  Objectives should be concrete and specific  Objectives should be related to a time frame  Objectives should be measurable and controllable  Objectives should be challenging  Different objectives should correlate with each other  Objectives should be set within constraints

14. (c) Dr. Azhar Kazmi 200814 Issues in objective setting  Specificity  Multiplicity  Periodicity  Verifiability  Reality  Quality

15. (c) Dr. Azhar Kazmi 200815 Factors for objective setting  The forces in the environment  Realities of enterprise' resources and internal power relationships  The value system of the top executive  Awareness by the management

16. (c) Dr. Azhar Kazmi 200816 The balanced scorecard model Financial Perspective Objectives Targets Internal Process Perspective Learning / Innovation Perspective Customer Perspective Objectives Targets Vision & Strategy Objectives Targets How do we look to shareholders? 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.

17. (c) Dr. Azhar Kazmi 200817 Critical success factors and key performance indicators  Critical success factors 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.  Key performance indicators are the metrics or measures in terms of which the critical success factors are evaluated.