Strategic intent is an aspirational plan which is helpful to achieve the vision of the organization. It inspires winning: winning of customers, winning against competitors, winning over the broader market. It focuses on firm’s taking initiatives to change the strategy of the firm that will lead to competitive advantage. Whatever the case, strategic intent turns strategy from a “fit” exercise to a “stretch” exercise. Example: An intent retailer does not think about how to match a competitor’s operation, but to create even a better operation. The specific features of strategic intent can be easily explained with the help of hierarchy or pyramid of the organization from the top-bottom. Example: “Toyota motors” use quality circle (QC) and Just In Time (JIT) to get competitive advantage. Example: When “Honda” entered the motorcycle market competitors thought there was no threat as it did not imitate Harley Davidson or Yamaha. But it chose to start with products that were internationally different. Then by carving out new, white space it developed a customer base & strong brand image. The strategic intent of Reliance is to being a global leader of the lowest cost producer of polyester products by focusing on vertical integration & operational effectiveness. strategic pyramid or hierarchy of strategy can be broadly categorized in the following manner. Corporate level Business level Functional level Corporate level strategy is a comprehensive plan which is developed by the top management for the company as a whole whether the firm is a small one product or large multinational corporation. on a continuous basis. In a large multinational company corporate strategy is also about managing various product lines & business units for value maximization. For example: corporate headquarters must play the role of “organizational parent” in that it must deal with various product & business unit as “children”. Even though each product line or business unit has its own competitors & it has to obtain its own competitive advantage in the market. The cooperation among different units as a whole succeed the “family”. Corporation’s directional Strategy is composed of three general orientations towards growth such as: Growth strategy expands the company’s activities. Stability strategies make no change to company’s current activities. Retrenchment strategies reduce the company’s level of activities. Growth strategy is widely pursued by the corporations or industries those are designed to achieve growth in sales, profit & assets. It can be achieved by both concentration & diversification. Concentration within one product line or industry & diversification into other product line & industries. It can use investing for new product or new market development internally or through mergers, acquisitions or strategic alliances. Concentration strategies are very sensible as they try to compete successfully only within single industry. Examples: McDonald’s, Starbucks

1. STRATEGIC INTENT &
HIERARCHY/LEVELS OF
STRATEGY
BY: Dr. Debajani Palai

2. STRATEGIC INTENT
 Strategic intent is an aspirational plan which is helpful to achieve the
vision of the organization.
 It inspires winning: winning of customers, winning against competitors,
winning over the broader market.
 It focuses on firm’s taking initiatives to change the strategy of the firm
that will lead to competitive advantage.
 Whatever the case, strategic intent turns strategy from a “fit” exercise to
a “stretch” exercise.
 Example: An intent retailer does not think about how to match a
competitor’s operation, but to create even a better operation.

3. EXAMPLES OF SI
 The specific features of strategic intent can be easily explained with the
help of hierarchy or pyramid of the organization from the top-bottom.
 Example: “Toyota motors” use quality circle (QC) and Just In Time (JIT) to
get competitive advantage.
 Example: When “Honda” entered the motorcycle market competitors
thought there was no threat as it did not imitate Harley Davidson or
Yamaha. But it chose to start with products that were internationally
different. Then by carving out new, white space it developed a customer
base & strong brand image.
 The strategic intent of Reliance is to being a global leader of the lowest
cost producer of polyester products by focusing on vertical integration &
operational effectiveness.

4. HIERARCHY OF STRATEGY
 strategic pyramid or hierarchy of strategy can be broadly categorized
in the following manner.
 Corporate level
 Business level
 Functional level

5. CLS
 Corporate level strategy is a comprehensive plan which is developed by
the top management for the company as a whole whether the firm is a
small one product or large multinational corporation. on a continuous
basis.
 In a large multinational company corporate strategy is also about
managing various product lines & business units for value maximization.
 For example: corporate headquarters must play the role of “organizational
parent” in that it must deal with various product & business unit as
“children”. Even though each product line or business unit has its own
competitors & it has to obtain its own competitive advantage in the
market. The cooperation among different units as a whole succeed the
“family”.

6. CLS CONT…
 It is concerned with the selection of business in which the company should compete
and develop synergy by sharing & coordinating staff & resources across business
units.
 It can be defined as the continuous process of making entrepreneurial decisions
systematically by forecasting future possibilities with environmental scanning &
keeping the company’s eye open.
 It is long-term by nature & designed with an objective to gain competitive
advantage over other market participants while delivering both on customer/client
& other stakeholder promises.
 The purpose of it is to identify new areas of investment & marketing by formulating
the organization’s vision, mission, goal & objective along with action plans to
achieve the objectives.
 EG: Growth strategy, Stability & Retrenchment.

7. FOCUS: RCM2
 Corporate level strategy is concerned with: reach, competitive contact, managing activities
with business interrelationship & management practices.
 Reach: The CLS focuses on achieving the overall goals of the organization and in which
business the corporation should be involved itself. It reaches the ways by which the
corporate achieves its goals and objectives & visionary towards the development.
 Competitive Contact: The CLS identifies its competitors & prepares strategies to beat
them. EG: Fair & Handsome
 Managing Activities & Business Interrelationship: It seeks to develop synergies by sharing
& coordinating staff & other resources across business units, investing financial resources,
technical-know-how can be shared with the help of interrelationship.
 Managing Practices: It decides how business units to be governed with proper plans &
policies. It focuses on both direct corporate innervation is required or less autonomous
Government is preferred .

8. CORPORATION’S DIRECTIONAL
STRATEGY CONT…
 Corporation’s directional strategy decides its orientation towards growth by asking
three basic questions.
 Should we expand, cut back, or continue our operations unchanged?
 Should we concentrate our activities within our current industry or should we
diversify into other business?
 If we want to grow & expand, should we do so through internal development or
through external acquisitions, mergers or joint venture?
 The directional strategy is composed of three general orientations towards growth
such as: Growth strategy expands the company’s activities.
 Stability strategies make no change to company’s current activities.
 Retrenchment strategies reduce the company’s level of activities.

9. GROWTH STRATEGIES-CONCENTRATION &
INTEGRATION & M-A, S-A, J-V
 Growth strategy is widely pursued by the corporations or industries
those are designed to achieve growth in sales, profit & assets.
 It can be achieved by both concentration & diversification.
 Concentration within one product line or industry & diversification into
other product line & industries.
 It can use investing for new product or new market development
internally or through mergers, acquisitions or strategic alliances.

10. CONCENTRATION
 Concentration strategies are very sensible as they try to compete
successfully only within single industry.
 Examples: McDonald’s, Starbucks & Subway are three firms that have
relied heavily on concentration strategies to become dominant players.
 Concentration strategies can be of three types: Market Penetration,
Market Development & Product Development.

11. GROWTH STRATEGY: CONCENTRATION:
MARKET PENETRATION
 Market Penetration involves trying to gain additional share of a firm’s
existing markets by using existing products.
 Firms take the weapon of advertisement to attract “new customers”
with existing markets.
 Examples: Nike shoes attracts new customers with the ad of presenting
as famous athletic shoes from other rivals like Adidas.
 McDonald’s has perused market penetration by using Spanish-language
website which is written its slogan “I’m lovin’ it”.

12. CONCENTRATION-MARKET
DEVELOPMENT STRATEGY
 Market development involves taking existing products & trying to sell
them in “new markets”.
 The best way to reach in the new market can be trough the retail
channels.
 For example’ Starbucks has stepped beyond selling coffee beans only in
its stores & now sell beans in grocery stores. This enables Starbucks to
reach consumers that do not visit its coffeehouse.
 Entering new geographic area is another way to market development

13. CONCENTRATION-PRODUCT
DEVELOPMENT
 Product development involves creating new products to serve in existing
market.
 For example, in1940s Disney expanded its offerings within the film business
by going beyond cartoons & creating movies featuring real actors.
 Similarly, McDonald’s has gradually moved more and more of its menu
toward healthy items to appeal to customers who are concerned about
nutrition.
 The soft drink industry like: Coca-Cola & Pepsi regularly introduce new
varieties- such as: Coke Zero & Pepsi Cherry Vanilla in an attempt to take
market share from each other & from their smaller rivals.

14. GROWTH: INTEGRATION
 The growth strategy can be achieved by Integration. Integration can be
horizontal & vertical.
 Horizontal Integration is the degree to which a firm operates in
multiple geographic locations at a time and increases the range of
product & services offering to the current customers.

15. HORIZONTAL INTEGRATION
 Rather than rely on their own efforts, some firms try to expand their
presence in an industry by merger & acquisition. This strategic move is
known as Horizontal Integration.
 An acquisition takes pace when one company purchases another. The
acquired company is smaller than the firm that purchases it.
 Example: Disney was much bigger than the Miramax & Pixar when it joined
with these firms in 1993 & 2006, respectively, thus these two horizontal
integration moves are considered to be acquisition.
 A merger joins two companies into one. Mergers typically involve similarly
sized companies.
 Example: Exxon & Mobil in 1999

16. VERTICAL INTEGRATION
 Vertical Integration is a logical strategy for a corporation or business unit
with a strong competitive position in a highly attractive industry.
 It can be of two types:
 Backward Integration: It is possible by taking over a function previously
provided by the supplier. It acts to minimize resource acquisition costs &
insufficient operations.
 Foreword Integration: It can be possible by taking over a function
previously provided by the distributor.
 The organization is benefited to gain more control over quality & product
distribution through forward integration.

17. MERGER
 Merger: is a transaction involving two or more corporations in which stock
is exchanged.
 It usually occurs between firms of somewhat similar size & are usually
friendly. The resulting firm is likely to have a name derived from its
composite firms. EG: Hero Honda
 It is a strategic process where two or more companies mutually form a new
single legal venture.
 Examples: In 1998 Exxon & Mobil have merged as they were already first &
second largest oil produces in the United States.
 In 2016 the Kraft Heinz Company has got its name from the merger of H.J.
Heinz Co & Kraft Food Groups

18. ACQUISITION
 Acquisition: is the acquire or purchase of a company that is completely absorbed as
an operating subsidiary or division of the acquiring corporation.
 It occurs between firms of different sizes & can be either friendly or hostile.
 Hostile acquisitions are often called takeovers.
 Examples: In 2014, Verizon acquires Vodafone’s 45% stake in a deal that it
completely owns Verizon Wireless venture. Verizon Wireless first came to the market
jointly by Verizon Communication & Vodafone.
 In 2000, Pfizer acquired Warner Lambert which is the example of hostile acquisition.
Both are pharmaceutical drug industries. The acquisition placed the company on the
second largest drug company in United States.
 Google acquired Android in 2005. The acquisition gave google the tools it needed
too compete in a market dominated by Microsoft & Apple.
 Disney acquired Pixar in 2006

19. STRATEGIC ALLIANCE
 Strategic Alliance is a partnership of two or more corporations or business units to
achieve strategically significant objectives that are mutually beneficial.
 It is an agreement between two parties for the mutual benefit of both by expanding
new market, new product line & develop an edge over a competitor.
 It is an arrangement between two companies to undertake a mutually beneficial
project which each retains its independence.
 Example: the deal between Starbucks & Barnes & Noble. The Starbucks brews the
coffee. Barnes & Noble stocks the books. Both companies are benefited while
sharing the cost and resources.
 Spotify & Uber, Master Card & Apple Pay, Chevrolet & Disney, Vodafone India &
ICICI Bank are some other examples of strategic alliance.

20. JOINT VENTURE (JV)
 Strategic alliance is less complex & less binding than a joint venture, in which two businesses pool
resources to create a separate business entity.
 JV is a business arrangement in which two or more companies combine resources on a project or
service. The length of the agreement & what resources it will include will vary.
 It is helpful for the companies who need to expand resources with minimum capital.
 Examples: Vodafone & Telefonica agreed to share their mobile network.
 BMW & Toyota co-operate on research into hydrogen fuel cells & ultra lightweight materials.
 Google & NASA have developed Google Earth.
 To develop bioelectric medicine Verily, the life sciences unit of Alphabet Inc. entered into JV agreement
with the British Pharmaceutical company GlaxoSmithKline.

21. CORPORATE STRATEGY: STABILITY
STRATEGY
 The corporation may choose Stability Strategy over growth strategy by continuing its
current activities without any significant change in direction.
 It offers the same product/service to the customers without introducing any new product
& its main object is to maintain the current market share of the company.
 It can be appropriate for a successful corporation operating in a reasonably predictable
environment & if it is satisfied with the current market position & market share.
 It can be very successful in short run , but can be dangerous if followed in long run.
 Example: Dell follows the stability strategy after having strong growth in E-Retailing. The
company is operating its business in more than 95 countries & approximately 6000
employees are working for the company with a total sale of 2 billion dollars. Therefore,
the company has slowed down its operation in order to restructure & be ready for
growth.

22. STABILITY STRATEGY: TYPES
 Different types of Stability Strategies are: no change strategy, profit strategy, pause
strategy, sustainable growth strategy & modest growth strategy.
 No change strategy focus that continuing the work or strategy without introducing
new segment.
 Profit strategy states to maintain the existing profit level in the volatile environment
which is very challenging.
 Pause strategy is that when a company has had a rapid growth and now it wants to
have some rest before implementing the growth again.
 Sustainable growth strategy can be used when the external environment is
unpredictable & unfavorable.
 Modest growth strategy is required when a business wants to achieve the same
target that it had in last year.

23. CORPORATE STRATEGY: RETRENCHMENT
STRATEGY
 Retrenchment strategy is a corporate-level strategy that involves
reducing the size & scope of the company’s operation.
 It aims to improve the financial position of the organization by cost
cutting & streamlining its operations by focusing on the core business
activities.
 The company reduces its workforce, close some of its unprofitable
stores & divests some of its non-core assets.
 Example: A retail company with multiple stores in different locations
may choose to close some of its unprofitable stores & focus on the
ones that generates profit.

24. TYPES OF RETRENCHMENT
 Retrenchment strategies can be of different types such as: turnaround, divestment,
liquidation & captive.
 Turnaround Strategy is used when a company is experiencing financial difficulties & needs
to make significant changes to its operations in order to return to profitability. It may
involve restructuring the company, reducing costs & selling non-core assets.
 Divestment Strategy involves selling off a department or division or a section of the
department or any asset which are not profitable for the organization in order to focus on
core competency of the company. This helps the company to improve its overall
performance by reducing complexity.
 Liquidation strategy entails selling off its resource & ceasing all commercial operations
together which is the most painful for any organization.
 Captive company strategy is used when a company depends on another company for its
survival. In the weak situation if the company does not opt for turn around strategy it
looks for a biggest client or an angel who helps it.

25. BLS
 SBU: The corporations are responsible for creating value through their
business. They do so by managing their portfolio of business, ensuring
that the businesses are successful over long-term by developing
Business Units & focusing on the compatibility of those.
 The SBU can be a division, product line or the profit center which is
planned independently from other business units of the industry.
 At the business unit level the main challenge is to develop & sustain a
competitive advantage for the goods & services that are produced

26. PHASES OF BLS & GENERIC STRATEGIES
 At business level the strategy formulation phase deals with:
 Positioning the business against rivals.
 Anticipating changes in demand & adjusting the strategy to
accommodate them.
 Influencing the nature of competition through strategic actions such as:
vertical integration & through political action: lobbying.
 Michael Porter identifies three generic strategies: cost leadership,
differentiation & focus.

27. COST LEADERSHIP: BLS
 Cost leadership is the strategy of low cost of production by using
economies of scale.
 A low cost producer can be a market leader by focusing on bulk
purchase of raw materials, developed technology etc.
 If a firm achieves low cost leadership and sustains then it will be an
above average performer in its industry, provided it can command its
price at or near the industry average.

28. DIFFERENTIATION: BLS
 In a Differentiation strategy a firm seeks to be unique in its industry
along some dimensions that are widely valued by buyers.
 It selects one or more attributes that many buyers in an industry
perceive as important & uniquely positions itself to meet those needs.
 It is rewarded for its uniqueness with a premium price.

29. FOCUS: BLS
 The generic strategy of Focus rests on choice of a narrow competitive
scope within an industry.
 The focuser selects a segment or group of segment in the industry &
tailors its strategy to serve them & exclusion of others.
 It can be of two types: cost focus & differentiation focus
 In cost focus a firm seeks a cost advantage in its target segment, while
in differentiation focus a firm seeks differentiation in its target segment

30. FLS
 Functional level strategies are made for operating functions.
 The strategic issues at the functional level are related to business processes & value chain.
 Functional level strategies in marketing, finance, operations, HR & R&D involve the development &
coordination of resources through which business level strategies can be executed efficiently &
effectively.
 Functional units of an organization are involved higher level strategies by providing input into the
business unit level & corporate level strategy, such as providing information on resources &
capabilities on which the higher level strategies can be based.
 Once the higher-level strategy is developed, the functional units translate it into discrete action-plans
that each department or division must accomplish for the strategy to succeed.
 Operational strategies are set at departmental level & set periodic short-term targets for
accomplishment of corporate-business & functional level in terms oof resources, process & people.