STRATEGIC MANGEMENT

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What is Strategic Intent?

Vision + Intent

Where we want to get to

How we intend to get there

Strategic Intent• Strategic Intent: A long-term goal that is

ambitious, builds upon and stretches firm’s core competencies, and draws from all levels of the organization.

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The Pyramid of PurposeThe language of Strategic Intent

Decision Criteria

Strategic Intent

Vision Mission

Priorities Objectives Aims

Strategic Initiatives Strategies

(c) Macmillan & Tampoe 2001 5

Inspired guessesof the future

The Strategy Formulation ProcessStrategic Assessment

Strategic Choice

Stakeholder Groups

Strategic Intent

SurvivalProfitGrowthShareholder Value

Unique for thisenterprise

ContextHistory & Culture

Ownership StructureCorporate Values

Leadership

Goals Vision

Influences on Strategic Intent

Strategic Intent of Reliance Industries : Strategic Intent of Reliance Industries Dhirubhai Ambani, promoter of RIL, started a business of exporting rayon, cashew nuts, and spices and importing nylon in 1959 with a meager capital of Rs. 15,000/-. This business grew and he established a synthetic fabric mill in 1966. This mill was upgraded continuously and by 1975, it was rated as one of the best mills in India by a team of World Bank. Afterward, it went for backward integration at successive levels and, today, it has become a petrochemical company and has occupied number one position in Indian Provate sector.

Strategic Intent of Reliance Industries : Strategic Intent of Reliance Industries In 1970s, Dhirubhai Ambani told one of his close colleagues, “do you know who these Tatas and Birlas are? We have to get past them one day. I have inherent desire to become number one industrialist of the country. This intent of Dhirubhai became the strategic intent of RIL. RIL pursued its growth strategy relentlessly. RIL always believed, “If you want to become world-class company, you must have world-class technology and world-class people”. For world-class technology, RIL acquired best-in-class technology. For people mobilization, RIL adopted the approach, “If you are a big fish, small pond will not suit you. Come and join the best-in-class company”. The result is: RIL has a very high percentage of Indian repatriate employees. For mobilizing financial resources, RIL relied on public participation.

Matt H. Evans, matt@exinfm.com

Major Components of theStrategic Plan / Down to Action

Mission

Vision

Goals

Objectives

Measures

Why we exist

What we want to be

Indicators and Monitors of success

Desired level of performance and timelines

Planned Actions to Achieve Objectives

O1 O2

AI1 AI2 AI3

M1 M2 M3

T1 T1 T1

Specific outcomes expressed in measurable terms (NOT activities)

Strategic Plan

Action Plans

Evaluate Progress

Targets

Initiatives

What we must achieve to be successful

Strategic Intent of Indian Oil Corporation :

Strategic Intent of Indian Oil Corporation IOC is the largest Indian company engaged in the business of crude oil refining and offers a variety of products related to oil sector. IOC’s strategic intent consists of the following elements in the order given below: Vision : IOC aims to achieve international standards of excellence in all aspects of energy and diversified business with focus on customer delight through quality products and service. Mission : Maintaining national leadership in oil refining, marketing, and pipeline transportation. Objectives : Focusing on cost, quality, customer care, value addition, and risk management.

• 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

Vision

Vision : Burt Nanus, a well-known expert of organizational vision, has defined vision as “a realistic, credible, and attractive future for an organization.” Oren Harari, another expert on organizational vision, defines vision as “A vision describes a set of ideals and priorities, a picture of the future, a sense of what makes the company special and unique, a core set of principles that the company stands for, and a broad set of compelling criteria that will help define organization success.”

Examples of Vision Descriptors

• Adept

• Aggressive

• Agile

• Aligned

• Assertive

• Available

• Best-in-class

• Challenging

• Clear

• Competent

• Complex

• Compliant

• Conservative

• Coordinated

• Critical

• Direct

• Equal

• Disciplined

• Effective

• Efficient

• Enduring

• Expanding

• Expert

• Fast

• Fast-paced

• Financially-sound

• Focused

• Growth

• Healthy

• Improving

• Incentivized

• Increasing

• Informative

• Innovative

• Leading

• Logical

• Major

• Nimble

• Pioneering

• Protected

• Organized

• Over-Arching

• Quick

• Ready

• Responsive

• Savvy

• Simple

• Solid

• Solvent

• Stable

• State of the Art

• Strong

• Streamlined

• Sufficient

• Strategic

• Sustainable

• Timely

• Value-added

• Vigilant

• Visionary

• World-class

Examples of Vision : Examples of Vision RIL – To achieve global leadership in polymers, fibres and resin businesses through innovative research and technology development in materials, products, and applications through efficient, disciplined, target-oriented, and cost-effective research and development activities. Infosys – To be a globally respected company that provides best of breed software solutions by best-in-class people. Tata Tea – to be India’s foremost tea-based beverage company. Dihe - to provide dynamic learning environment by imparting holistic education to develop outstanding professionals and entrepreneurs who exemplify humanistic values, are socially responsible stewards and create and dissemination practitioner - oriented knowledge that will uplift society.

Role of Vision in Strategy Formulation : Role of Vision in Strategy Formulation Vision provides clue about where the organization is heading for in future. Since various strategies try to ensure that the organization reaches its destination, these should be in accordance with the vision. Vision of an organization tries to place it in a unique position which requires unique actions. These actions are defined by various strategies. Since vision is a source of inspiration to organizational members and encourages them for commitment, they tend to give their full contributions in strategy formulation and implementation.

Developing a vision : Developing a vision Developing a vision is like having a dream to be converted into reality in future. Following steps are relevant for development of a vision: Conducting a vision audit – to assess the current direction and momentum of the organization. Targeting the vision – What are the boundaries and constraints to the vision? What must be the vision accomplish? What critical issues must be addressed in the vision? Setting the vision context – identifying what the organization’s future environment might look like. Developing the future scenarios Generating the alternative visions Choosing the Final Vision

Mission Statement

•Captures the essence of why the organization exists – Who we are, what we do • Explains the basic needs that you fulfill• Expresses the core values of the organization• Should be brief and to the point• Easy to understand• If possible, try to convey the unique nature of your organization and the role it plays that differentiates it from others

Examples: Mission Statements of : Examples: Mission Statements of Infosys: To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large."

Tata Tea: Achieve market and thought leadership for branded tea in India Be recognized as the foremost innovator in tea and tea based beverage solutions Drive long-term profitable growth Co-create enhanced value for all stakeholders Make Tata Tea a great place to work

Examples: Mission Statements of :

DIHE : To provide world-class professional education in the field of management by providing high quality instructions, excellent academic and research environment which will help our young scholars to develop competencies in dealing with global complexity, emerging technologies and changes and social and cultural diversity.

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

NASA

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.

To Make People Happy

Walt Disney

Examples – Good and BadMission Statements

Example : Tata International : Example : Tata International

Vision : To be the “ Leading International Business Company” of the country and “International Arm” of the Tata Group, with a significant overseas reach, presence and linkages, and with focus on facilitating globalization of Tata Group’s core business.

Mission: Promote the Tata Brand Equity internationally. Promote internationally, products and services from the Tata Group, as also from other utility conscious Indian and overseas companies. Source world-class products and services for marketing in India. Promote businesses with strong comparative advantages for the company, and upgrade the company’s strengths in the areas of technology, marketing, and finance. Identify global sources of technology, marketing, and finance and other services to facilitate strategic-alliances, joint ventures, and collaborations of Tata-group, in India and overseas. Be a market driven company and continually strive to stakeholder value and satisfaction through consistent quality in all areas of our operations. Nurture and develop human resources, to enable us to undertake the challenges of leadership and innovation, in our areas of activity.

Components of Mission : Components of Mission Organization’s Self-concept (Identity) It’s role in the industry, change agent or follower Organization’s Philosophy (Creed or ethos) Assumptions, beliefs, values, aspirations etc. Organizational Image External manifestation on the basis of which society and its people create a positive or negative view about the organization Long-term Objectives Survival, growth, profitability, shareholder value Nature of Business Product/service, market segment and technology

• 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.

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.

Developing Goals

Examples of Goals

Reorganize the entire organization for better responsiveness to customersReorganize 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.

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 single comprehensive process that is aligned to our strategic plan.

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

Improve the quality and accuracy of service support information provided to our internal customers.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.Establish a means by which our decision making process is market and customer focus.

Features of Goals andSMART DUMBS – Specific D – Do able M – Measurable U - Understandable A – Attainable M – Manageable R – Relevant B – Beneficial T – Time-bound

Objectives

• 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

Role of Objectives :

Directions for Decision Making .Clear definition of objectives encourages unified planning Objectives work as a motivating force Voluntary coordination is achieved easily if the objectives are clearly specified and mutually agreed upon Performance Standards. Objectives provide standard against which performance of the organization can be measured. Basis for Decentralization Integrating Organization, Group and Individual

Examples of Objectives

Develop a customer intelligence database system to capture and analyze patterns in purchasing behavior across our product line.

Develop a customer intelligence database system to capture and analyze patterns in purchasing behavior across our product line.

Launch at least three value stream pilot projects to kick-off our transformation to a leaner organization.

Launch at least three value stream pilot projects to kick-off our transformation to a leaner organization.

Centralize the procurement process for improvements in enterprise-wide purchasing power. Centralize the procurement process for improvements in enterprise-wide purchasing power.

Consolidate payable processing through a P-Card System over the next two years.Consolidate payable processing through a P-Card System over the next two years.

Monitor and address employee morale issues through an annual employee satisfaction survey across all business functions.

Monitor and address employee morale issues through an annual employee satisfaction survey across all business functions.

Factors affecting Objective Setting :

Forces of environment (external stakeholders) Organization’s Resources (both human and non-human) Internal Power Relationships Value System of Top Executives (Ex. - money-oriented vs. philanthropic) Awareness by Management of the past objectives

Issues in Objective Setting : Issues in Objective Setting Specificity ranges from generalized organizational objectives to specific individual objectives Multiplicity Multiple objectives aimed simultaneously – numbers should match KRAs Periodicity Set for different time periods– long-term, medium-term and short-term) Reality should be based on reality of those factors which affect objective setting Quality good-which provide specific direction for action and tangible basis for performance evaluation vs. bad-which fail to do so)

Areas of Objective Setting : 

Growth Volume IR Social Community Services turnover Rural DevelopmentAssets Family welfare Profit Development of ancillary industries profit margin shareholder value Marketing Market share new productsnew markets customer value Employees Attracting and retaining talent benefits HRD

Change in Objectives : Change in Aspiration level of Top Management Demand for change by Stakeholders Change in Environment Change in Life-cycle of Organization

Goals vs. Objectives

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)

Business Defination

Business Definition : A business definition is a clear-cut statement of the business or a set of businesses, the organization engages in presently or wishes to pursue in future. Then it prescribes the arena in which the organization will play and compete. Business can be defined along three dimensions-product, customer, and technology. However, whatever dimension is chosen for defining business, it must reflect two features: focus and differentiation. • Focus of business may be defined in terms of the kind of functions the business performs rather than the broad spectrum of industry in which the organization operates. Differentiation in business is how an organization differentiates itself from others so that the business concentrates on achieving superior performance in the market.

The context of defining business : 

The context of defining business An organization has to define its business in three contexts: Customer Segment : what is our business is not determined by the producer but by the consumer….by the want the customer satisfies when he buys a product or service Who is the customer? (location, behavior, how to reach) Product : Every organization defines the business it participates in and the product it offers. What does the customer buy? Technology : Technology consists of equipment, machines, tools and other physical aspects , and sets of activities , methods, and processes used for the production and delivery of product. What does the customer consider value?

COMPANY PRODUCTS Business Definition

HUL FMGC To meet everyday needs of people everywhere with branded products.

Kodak India Cameras and Photographic films

A quality oriented Photographic System ,appealing to customers who desires instant Photography.

Modern Foods Bakery Nutritional food for public who desires instant food

Hero Cycles Bicycles Functionally valuable bicycles that common people can afford to buy.

Indian Oil Petro Products To provide various type of safe and cost energy.

EXAMPLES OF BUSINESS DEFINATION

Bharti Airtel

• Largest Private Integrated Telecom Company in India

• 3rd Largest Wireless Operator in the World

• Largest & Fastest Growing Wireless Operator in India

• Largest Telecom Company listed on Indian Stock Exchange

Vision 2020

• To build India's finest business conglomerate by 2020

• Supporting education of underprivileged children through Bharti Foundation

• Strategic Intent:– To create a conglomerate of the future by bringing

about “Big Transformations through Brave Actions.”

Mission

• “ We at Airtel always think in fresh and innovative ways about the needs of our customers and how we want them to feel. We deliver what we promise and go out of our way to delight the customer with a little bit more”

Core Values

• Empowering People - to do their best• Being Flexible - to adapt to the changing

environment and evolving customer needs• Making it Happen - by striving to change the status

quo, innovate and energize new ideas with a strong passion and entrepreneurial spirit

• Openness and transparency - with an innate desire to do good

• Creating Positive Impact – with a desire to create a meaningful difference in society.

Objectives/Goals

• To undertake transformational projects that have a positive impact on the society and contribute to the nation building process.

• To Diversify into new businesses in agriculture, financial services and retail business with world-class partners

• To lay the foundation for building a “conglomerate” of future

Airtel – Strategy

MANTRA : Focus on Core Competencies and Outsource the rest!

Core Competenci

es

Thank you!