Strategic Management


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Strategic Management

  2. 2. What is Strategic Intent?Vision + IntentWhere we want How we intend to get to to get there 2
  3. 3. 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.
  4. 4. The Pyramid of Purpose The language of Strategic Intent Strategic Intent Vision Mission Priorities Aims ObjectivesDecision Criteria Strategic Initiatives Strategies 4
  5. 5. Influences on Strategic IntentStakeholder Groups Inspired guesses Context of the future History & Culture Ownership Structure Corporate Values Strategic Intent Goals Vision Survival Profit Unique for this Growth enterprise Shareholder Value The Strategy Formulation Process Leadership Strategic Assessment Strategic Choice (c) Macmillan & Tampoe 2001 5
  6. 6. Strategic Intent of Reliance Industries :Strategic Intent of Reliance Industries Dhirubhai Ambani,promoter of RIL, started a business of exporting rayon, cashewnuts, and spices and importing nylon in 1959 with a meagercapital of Rs. 15,000/-. This business grew and he established a synthetic fabric millin 1966. This mill was upgraded continuously and by 1975, itwas rated as one of the best mills in India by a team of WorldBank.Afterward, it went for backward integration at successivelevels and, today, it has become a petrochemical company andhas occupied number one position in Indian Provate sector.
  7. 7. Strategic Intent of Reliance Industries :Strategic Intent of Reliance Industries In 1970s, Dhirubhai Ambani told one ofhis close colleagues, “do you know who these Tatas and Birlas are? We haveto get past them one day. I have inherent desire to become number oneindustrialist of the country.This intent of Dhirubhai became the strategic intent of RIL.RIL pursued its growth strategy relentlessly. RIL always believed, “If you wantto become world-class company, you must have world-class technology andworld-class people”. For world-class technology, RIL acquired best-in-class technology. For peoplemobilization, RIL adopted the approach, “If you are a big fish, small pond willnot suit you. Come and join the best-in-class company”. The result is: RIL hasa very high percentage of Indian repatriate employees. For mobilizingfinancial resources, RIL relied on public participation.
  8. 8. Major Components of the Strategic Plan / Down to Action Strategic Plan Action Plans Mission Why we exist Evaluate Progress Vision What we want to be Goals What we must achieve to be successful Objectives O1 Specific outcomes expressed in O2 measurable terms (NOT activities) Initiatives Planned Actions to AI1 AI2 AI3 Achieve Objectives Measures Indicators and M1 M2 M3 Monitors of successTargets T1 T1 T1 Desired level of performance and timelinesMatt H. Evans,
  9. 9. Strategic Intent of Indian Oil Corporation :Strategic Intent of Indian Oil Corporation IOC is the largestIndian company engaged in the business of crude oil refiningand offers a variety of products related to oil sector. IOC’s strategic intent consists of the following elements in theorder given below:Vision : IOC aims to achieve international standards ofexcellence in all aspects of energy and diversified business withfocus 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, valueaddition, and risk management.
  10. 10. Vision• 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
  11. 11. Vision :Burt Nanus, a well-known expert of organizational vision, hasdefined vision as “a realistic, credible, and attractive future for anorganization.”Oren Harari, another expert on organizational vision, defines visionas “A vision describes a set of ideals and priorities, a picture of thefuture, a sense of what makes the company special and unique, acore set of principles that the company stands for, and a broad setof compelling criteria that will help define organization success.”
  12. 12. Examples of Vision Descriptors• Adept • Equal • Informative • Solid• Aggressive • Disciplined • Innovative • Solvent• Agile • Effective • Leading • Stable• Aligned • Efficient • Logical • State of the Art• Assertive • Enduring • Major • Strong• Available • Expanding • Nimble • Streamlined• Best-in-class • Expert • Pioneering • Sufficient• Challenging • Fast • Protected • Strategic• Clear • Fast-paced • Organized • Sustainable• Competent• Complex • Financially-sound • Over-Arching • Timely• Compliant • Focused • Quick • Value-added• Conservative • Growth • Ready • Vigilant• Coordinated • Healthy • Responsive • Visionary• Critical • Improving • Savvy • World-class• Direct • Incentivized • Simple • Increasing
  13. 13. Examples of Vision :Examples of Vision RIL – To achieve global leadership inpolymers, fibres and resin businesses through innovativeresearch and technology development in materials,products, and applications through efficient, disciplined,target-oriented, and cost-effective research anddevelopment activities. Infosys – To be a globallyrespected company that provides best of breed softwaresolutions by best-in-class people. Tata Tea – to be India’sforemost tea-based beverage company. Dihe - to providedynamic learning environment by imparting holisticeducation to develop outstanding professionals andentrepreneurs who exemplify humanistic values, aresocially responsible stewards and create anddissemination practitioner - oriented knowledge that willuplift society.
  14. 14. Role of Vision in Strategy Formulation :Role of Vision in Strategy Formulation Vision provides clueabout where the organization is heading for in future.Since various strategies try to ensure that the organizationreaches its destination, these should be in accordancewith the vision. Vision of an organization tries to place it ina unique position which requires unique actions. Theseactions are defined by various strategies. Since vision is asource of inspiration to organizational members andencourages them for commitment, they tend to give theirfull contributions in strategy formulation andimplementation.
  15. 15. Developing a vision :Developing a vision Developing a vision is like having a dreamto be converted into reality in future. Following steps arerelevant for development of a vision: Conducting a vision audit– to assess the current direction and momentum of theorganization. Targeting the vision – What are the boundariesand constraints to the vision? What must be the visionaccomplish? What critical issues must be addressed in thevision? Setting the vision context – identifying what theorganization’s future environment might look like. Developingthe future scenarios Generating the alternative visionsChoosing the Final Vision
  16. 16. 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
  17. 17. Examples: Mission Statements of :Examples: Mission Statements ofInfosys: To achieve our objectives in an environment offairness, honesty, and courtesy towards our clients,employees, vendors and society at large."Tata Tea: Achieve market and thought leadership forbranded tea in India Be recognized as the foremostinnovator in tea and tea based beverage solutions Drivelong-term profitable growth Co-create enhanced value forall stakeholders Make Tata Tea a great place to work
  18. 18. Examples: Mission Statements of :DIHE : To provide world-class professional education in thefield of management by providing high quality instructions,excellent academic and research environment which willhelp our young scholars to develop competencies in dealingwith global complexity, emerging technologies and changesand social and cultural diversity.
  19. 19. Examples – Good and Bad Mission Statements NASA To Explore the Universe and Does a good job of expressing the core values Search for Life and of the organization. Also conveys unique to Inspire the Next qualities about the organization. Generation of Explorers Walt Disney Too vague and and unclear. Need moreTo Make People Happy descriptive information about what makes the organization special.
  20. 20. Example : Tata International :Example : Tata InternationalVision : To be the “ Leading International Business Company” of thecountry and “International Arm” of the Tata Group, with a significantoverseas reach, presence and linkages, and with focus on facilitatingglobalization of Tata Group’s core business. Mission: Promote the Tata Brand Equity internationally. Promoteinternationally, products and services from the Tata Group, as also fromother utility conscious Indian and overseas companies. Source world-classproducts and services for marketing in India. Promote businesses with strongcomparative advantages for the company, and upgrade the company’sstrengths in the areas of technology, marketing, and finance. Identify globalsources of technology, marketing, and finance and other services to facilitatestrategic-alliances, joint ventures, and collaborations of Tata-group, in Indiaand overseas. Be a market driven company and continually strive tostakeholder value and satisfaction through consistent quality in all areas ofour operations. Nurture and develop human resources, to enable us toundertake the challenges of leadership and innovation, in our areas ofactivity.
  21. 21. Components of Mission :Components of Mission Organization’s Self-concept(Identity) It’s role in the industry, change agent orfollower Organization’s Philosophy (Creed or ethos)Assumptions, beliefs, values, aspirations etc.Organizational Image External manifestation on thebasis of which society and its people create apositive or negative view about the organizationLong-term Objectives Survival, growth, profitability,shareholder value Nature of BusinessProduct/service, market segment and technology
  22. 22. Goals• 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.
  23. 23. Developing 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.
  24. 24. Examples of GoalsReorganize the entire organization for better responsiveness to customersWe will partner with other businesses, industry leaders, and government agencies in order to bettermeet the needs of stakeholders across the entire value stream.Manage our resources with fiscal responsibility and efficiency through a single comprehensive processthat 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.
  25. 25. Features of Goals andSMART DUMBS – Specific D – Do ableM – Measurable U - UnderstandableA – Attainable M – ManageableR – Relevant B – BeneficialT – Time-bound
  26. 26. 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
  27. 27. Role of Objectives : Directions for Decision Making .Clear definition of objectives encourages unifiedplanning Objectives work as a motivating forceVoluntary coordination is achieved easily if theobjectives are clearly specified and mutually agreedupon Performance Standards. Objectives provide standard against whichperformance of the organization can be measured.Basis for Decentralization Integrating Organization,Group and Individual
  28. 28. Examples of ObjectivesDevelop a customer intelligence database system to capture and analyze patterns in purchasingbehavior across our product line.Launch at least three value stream pilot projects to kick-off our transformation to a leanerorganization.Centralize the procurement process for improvements in enterprise-wide purchasing power.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 acrossall business functions.
  29. 29. Factors affecting Objective Setting :Forces of environment (externalstakeholders)Organization’s Resources (both humanand non-human) Internal Power Relationships ValueSystem of Top Executives (Ex. - money-oriented vs. philanthropic) Awareness byManagement of the past objectives
  30. 30. Issues in Objective Setting :Issues in Objective Setting Specificity ranges from generalizedorganizational 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 ofthose factors which affect objective setting Quality good-which providespecific direction for action and tangible basis for performanceevaluation vs. bad-which fail to do so)
  31. 31. Areas of Objective Setting :Growth Volume IR Social Community Servicesturnover Rural DevelopmentAssets Family welfareProfit Development of ancillary industriesprofit marginshareholder value Marketing Market sharenew productsnew marketscustomer value Employees Attracting and retaining talent benefitsHRD
  32. 32. Change in Objectives :Change in Aspiration level of Top ManagementDemand for change by StakeholdersChange in EnvironmentChange in Life-cycle of Organization
  33. 33. Goals vs. Objectives GOALS OBJECTIVESVery short statement, few Longer statement, morewords descriptiveBroad in scope Narrow in scopeDirectly relates to the Mission Indirectly relates to the MissionStatement StatementCovers long time period Covers short time period (such 1(such as 10 years) year budget cycle)
  34. 34. Business Defination
  35. 35. Business Definition :A business definition is a clear-cut statement of thebusiness or a set of businesses, the organization engages inpresently or wishes to pursue in future. Then it prescribesthe arena in which the organization will play and compete. Business can be defined along three dimensions-product,customer, and technology. However, whatever dimension ischosen for defining business, it must reflect two features:focus and differentiation.• Focus of business may be defined in terms of the kind offunctions the business performs rather than the broadspectrum of industry in which the organization operates.Differentiation in business is how an organizationdifferentiates itself from others so that the businessconcentrates on achieving superior performance in themarket.
  36. 36. The context of defining business :The context of defining business An organization has to define its businessin three contexts:Customer Segment : what is our business is not determined by theproducer but by the consumer….by the want the customer satisfies whenhe buys a product or service Who is the customer? (location, behavior,how to reach)Product : Every organization defines the business it participates in and theproduct it offers. What does the customer buy? Technology : Technology consists of equipment, machines, tools andother physical aspects , and sets of activities , methods, and processesused for the production and delivery of product. What does the customerconsider value?
  37. 37. EXAMPLES OF BUSINESS DEFINATIONCOMPANY PRODUCTS Business DefinitionHUL FMGC To meet everyday needs of people everywhere with branded products.Kodak India Cameras and A quality oriented Photographic Photographic films System ,appealing to customers who desires instant Photography.Modern Foods Bakery Nutritional food for public who desires instant foodHero 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.
  38. 38. 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
  39. 39. Vision 2020• To build Indias 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.”
  40. 40. 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”
  41. 41. 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.
  42. 42. 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
  43. 43. Airtel – StrategyMANTRA : Focus on Core Competencies and Outsource the rest! Product Innovation Core Pricing VAS Competencies Marketing and Branding
  44. 44. Thank you!