Unit - 2_Strategic Management (18MBA25)_Formulation & Intent

Strategic Formulation
and
Strategic Intent
MBA Programme – BIET, DavangereProf. Vijay K S
Unit - 2

Strategic Management
18MBA25
As Per the VTU Syllabus
Unit - 2

“Saving people money so they can live better.”
“build, move, power, and cure the world.”
Why do you Exist _________________

Mission Statement
“reason for being.” “What is our business?”
what an organization wants to be and whom it wants to serve
Also called a creed (Faith) statement, a statement of purpose, a
statement of philosophy, a statement of beliefs,
statement of business principles
Wal-Mart : “Saving people money so they can live better.”
GE: “build, move, power, and cure the world.”
Why do you Exist _________________

Mission Statement – Key Elements
Customer needs –
What is being satisfied
Customer groups –
Who is being satisfied
Technologies/Resources/Business approaches used --and
activities performed –
How customer needs are satisfied

Vision
“reason” for being in business
Should significantly stretch the resources and capabilities of
the farm
Should inspire people
Should unite people

Vision – Components
 Core ideology
 Core Values - timeless guiding principles
 Core Purpose - reason for being
 Envisioned future
 Big Hairy Audacious Goals (BHAG) - clearly articulated goals
 Vivid description - a graphic description of what success and the
future will be like
 Recognition of service to stakeholders
 Owners/creditors
 Employees
 Customers

Walt Disney
• Core Values
• No Cynicism
• Nurturing of “Wholesome American Values”
• Creativity, Dreams, and Imagination
• Fanatical Attention to consistency and details
• Preservation and control of the Disney magic
• Core Purpose
• To make people happy

Vision – Should Not be
A “high concept” statement, motto or literature or an
advertising slogan
A strategy or plan and a view from the top
A history of our proud past
A “soft” business issue
Passionless

Vision
Wal-Mart Vision
To become the worldwide leader in retailing
GE
We bring good things to life
South West Airline
To become the world’s most loved, most flown, and most profitable airline

South West Airlines
Connect People to what’s important in their lives through
friendly, reliable, and low-cost air travel.
To become the world’s most loved, most flown, and most
profitable airline.
dedication to the highest quality of Customer Service
delivered with a sense of warmth, friendliness, individual
pride, and Company Spirit.

South West Airlines
Connect People to what’s important in their lives through
friendly, reliable, and low-cost air travel. Purpose
To become the world’s most loved, most flown, and most
profitable airline. Vision
dedication to the highest quality of Customer Service
delivered with a sense of warmth, friendliness, individual
pride, and Company Spirit. Mission

Any Guess
to inspire and nurture the human spirit – one person, one cup
and one neighbourhood at a time.
Starbucks is committed to a role of environmental leadership
in all facets of our business

Vision V/S Mission
Vision Statement
Wal-Mart Vision
“To become the worldwide leader
in retailing”
GE
We bring good things to life
Mission Statement
Wal-Mart Vision
“Saving people money so they can live
better.”
GE
“build, move, power, and cure the
world.”

Vision V/S Mission
• A mission statement focuses
on current Business activities -
- “Who we are and what We
do”
 Current product and service
offerings
 Customer needs being served
 Technological and business
capabilities
• A Strategic Vision concerns a firm’s
Future business path -- “Where we
are going”
 Markets to be pursued
 Future technology-product-customer
focus
 Kind of company that management is
trying to create

represent a managerial commitment to achieve
specified results in a specified period, of time. They clearly
spell out the quantity and quality of performance to be
achieved, the time period, the process and the person who is
responsible for the achievement of the same.
Objectives

Setting the Objectives
Converts strategic vision and mission into specific
performance targets
Creates yardsticks to track performance
Pushes firm to be inventive and focused on results
Helps prevent complacency

Outcomes focused
on improving Financial
Performance
Outcomes focused on
improving Long-term
Competitive Business Position
Financial Objectives Strategic Objectives
$

Financial Objectives
• 9 to 11 percent growth in earnings per
share
• 4 to 6 percent organic revenue growth
• more than 20 percent return on invested
capital
• 100 percent free cash flow conversion
(Free Cash Flow
= Operating cash flow – capital expenditure)
Strategic Objectives
• expand 3M’s relevance to customers and
presence in the marketplace;
• gain market share and accelerate
penetration;
• invest in innovation;
• achieve regional self-sufficiency;
• build high-performing and diverse global
talent;
• and drive consistent and superior
operational excellence
Financial Performance
Competitive Business
Position

• An x percent of increase in annual
revenues.
• Annual increase in after-tax profit of x
percent.
• Annual increase in earnings per share of x
percent.
• Annual dividend increases of x percent.
• Profit margins of x percent.
• Winning an x percent of market share.
• Achieving lower overall costs than rivals.
• Overtaking key competitors on product
performance or quality or customer
service.
• Deriving x percent of revenues from the
sale of new products introduced within the
past five years.
Position

• An x percent return on capital employed
(ROCE) or return on shareholders equity
investment (ROE).
• Increased shareholder value-in the form of
an upward-trending stock price.
• Bond and credit ratings of x.
• Internal cash flows of x dollars to fund new
capital investment.
• Having broader or deeper technological
capabilities than rivals.
• Having a wider product line than rivals.
• Having a better-know or more powerful
brand name than rivals.
• Having stronger national or global sales and
distribution capabilities than rivals.
• Consistently getting new or improved
products to market ahead of rivals.
Position

Which type of Objective is more important
–
Strategic or Financial?

Emphasis on financial performance may assume
priority over strategic performance when company’s
Financial performance is dismal and
Survival is threatened
Otherwise, management is advised to put more emphasis on
achieving strategic objectives
Balanced scorecard approach for measuring
company performance requires both –
Financial objectives
Strategic objectives

Balanced Scorecard Approach –
Strategic and Financial Objectives

Balance Score Card Financial
Perspective
Internal
Process
Perspective
Learning &
Growth
Perspective
Customer
Perspective
Vision &
Strategy
How do we look to Shareholders?
What must we excel at?
How can we sustain our ability to change and improve?
How do customers see us?

Balance Score Card

Objectives Measures FY-2018 FY-2019 FY-2020 Initiatives
Financial
Customer
Internal
Learning and
Growth

Balance Score Card Financial Perspective
Financial
perspective
Financial
results
(Quat/year)
Cash flow
Return on
investment
Return on
capital
employed

Balance Score Card
“Number One in
delivering Value to
Customers”.
Time
Quality
Service
Cost
Customers Perspective

Balance Score Card Internal process perspective
Internal process
perspective
Process
alignment
Process
bottlenecks
Process
automation
No of
activates
per
function

Balance Score Card Learning & Growth Perspective
Learning
& Growth
perspective
Training &
learning
opportunitie
s
Employee
Turnover
Job
satisfaction
Is there the
correct level
of expertise
for the job ?

Balance Score Card Advantages
•It is used to align the business activities to vision and strategy
•It improves Internal & External communications
•It is used to monitor organizations performance
•It provides management with comprehensive picture of operations
•It provides strategic feed back
•It improves decisions & better solutions

Balance Score Card Disadvantages
•It Doesn’t provide Recommendations
•It is not fully Efficient
•It takes time
•It is High Implementation of cost
•It can show low profit

Can you put the following in an order
Goals
Strategy
Objectives
Tactics

•A goal is a broad primary outcome.
•A strategy is the approach you take to achieve a goal.
•An objective is a measurable step you take to achieve a
strategy.
•A tactic is a tool you use in pursuing an objective associated
with a strategy.

vision: If it's smart and connected, it's best with Intel.
Mission: Utilize the power of Moore's Law to bring smart, connected
devices to every person on earth.
Goal: Make our Core PC microprocessors a category leader in sales revenue by year X.
Objective: Retain 70 percent or more of the active worldwide PC microprocessor market,
according to Passmark's CPU benchmark report.
Tactic: Through creative that underlies our messaging, leverage hardware partner brand
awareness to include key messages about the Intel Inside program.
Strategy: Persuade buyers that our Core processors are the best on the
market by associating with large, well-established PC manufacturers.

STRATEGIC FIT
MODEL
Strategic Mindsets
STRATEGIC INTENT
MODEL
Strategic thinking is driven by the
match between current capabilities
and existing opportunities
Searching for sustainable advantages
Finding protected niches
Strategic thinking is driven by bridging gap
between today’s reality and tomorrow’s
vision
Finding ways to leverage resources
Outpacing competitors in building new
advantages
Making new industry rules

Ambitious and
Compelling
Dream
Emotional and
Intellectual
Energy
Journey to the
Future

Strategic Intent

Hierarchy of strategic intent
Plans
Objectives
Mission
Goals
Vision
More Integrative Fewest in Number
More Specific Greater in Number

Characteristics of Strategic Intent
Essence of
Winning
Stable over
Time
Within “arm’s reach “ of every
consumer in the world
Increased quality, reduced costs,
cultivated export markets and
then developed a new product

Personal effort
and
Commitment
Enormous
Creativity
Enormous amount of creativity and
Innovation in terms of their
products
Trust on the technology and
accuracy

What Is Strategic Plan
Vision + Mission + Objectives + Strategy = Strategic Plan

Strategic Plan is Not a…..
A prediction for the future
A smooth, predictable, linear process
A substitute for judgment of leadership

Merging the
strategic Vision,
Objectives and
Strategy into
Strategic Plan
How Do we do this?

Merging the
strategic Vision,
Objectives and
Strategy into
Strategic Plan
We need to achieve unity ….
Vision + Mission + Objectives + Strategy
= Strategic Plan
Percolating

Unit - 2_Strategic Management (18MBA25)_Formulation & Intent

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Unit - 2_Strategic Management (18MBA25)_Formulation & Intent

Similar to Unit - 2_Strategic Management (18MBA25)_Formulation & Intent (20)

More from Vijay K S

More from Vijay K S (10)

Recently uploaded

Recently uploaded (20)

Unit - 2_Strategic Management (18MBA25)_Formulation & Intent