Chapter 1 Complete

CHAPTER-1 STRATEGY, STAKEHOLDERS AND MISSION (1)
Chapter 1 – Strategy, Stakeholders and Mission
Definition of Strategy and Elements of Strategic Org Purpose and Stakeholder and Intended and Future Basing
Levels of Strategy: Management and Strategy Stakeholder Emergent Strategies
Business Analysis Expectation • The vision
• Definitions • Hierarchy of goals • Intended Strategy • Milestones
• Levels of Strategy • Strategic Position: and objectives • Defining • Emergent Strategy • Reality
• Levels of Planning Org purpose and • Mission and stakeholders • Mix of intended check
• Elements of Strategic mission Vision • Expectations of and emergent
Management Process Environmental • Relevance of stakeholders strategy
o Strategic position analysis Resources mission statement • Stakeholder • Enforced choice
s
o Strategic choices and capabilities • Goals and mapping
o Strategy analysis objectives • Mendelow’s
implementation • Strategic choices: • Who decided Power Interest
Development and mission and goals Matrix
growth Integration • Stakeholder
(strategic, business influence
unit) Globalization
• Strategy
implementation:
Organizing
Enabling
Managing change
CHAPTER NO. 1
STRATEGY, STAKEHOLDERS AND MISSION
Contents
1 Definition of strategy and levels of strategy
2 Elements of strategic management and business analysis
3 Organizational purpose and strategy
4 Stakeholders and stakeholder expectations
5 Intended and emergent strategies
6 Future-basing
Strategy and Levels of Strategy
Section overview
◼ Definition of strategy
◼ Levels of strategy
◼ Corporate strategy
◼ Business strategy
◼ Functional strategy
◼ A note on levels of planning
1.1 Definition of Strategy
1.1.1. Strategy (Chandler)
Chandler (1962) defined strategy as ‘the determination of the basic long-term goals and the
objectives of an enterprise and the adoption of courses of action and the allocation of resources
necessary for carrying out these goals.’
1.1.2. Strategy (Drucker)

Drucker defined strategy as ‘a pattern of activities that seek to achieve the objectives of the
organization and adapt its scope, resources and operations to environmental changes in the long
term.’
This definition is a bit more complex than the previous one. It contains several elements:
• A strategy consists of organized activities.
• The purpose of these activities (the strategy) is to achieve an objective.
• Strategy is long-term. Formal strategic planning by large companies, for example, might
cover five years or ten years into the future and for some companies even longer.
• The strategic choices that an enterprise makes are strongly influenced by the environment
in which the enterprise exists.
• The environment is continually changing, which means that strategies cannot be rigid and
unchanging.
• Strategies involve an enterprise in doing different things with different resources over
time, as it is forced to adapt to changes in its environment.
1.1.3. Strategy (Johnson, Scholes and Whittington)
Johnson, Scholes and Whittington (‘Exploring Corporate Strategy’) have defined strategy as ‘the
direction and scope of an organization over the long term, which achieves advantage in a
changing environment through its configuration of resources and competencies with the aim of
fulfilling stakeholder expectations.
This definition has some similarities to the definition by Drucker, but it contains two other
aspects of strategic management:
• An enterprise should use its resources and its skills and abilities to achieve a ‘competitive
advantage’ in its business activities. Competitive advantage is achieved by doing
something better (and more successfully) than any competitors can do.
• It is often assumed that the main objective of a company should be to maximize the
wealth of its shareholders. Johnson, Scholes and Whittington state that the objective of an
entity should be to fulfil ‘stakeholder’ expectations.
Example: Business strategy
A company that extracts and supplies oil and natural gas is considering its future business
direction over the next 10 years. It is aware that these resources are in limited supply and that
there is growing public and political concern about the environment.
The company’s board of directors might agree on the following broad strategy:
• The company will continue to extract oil and natural gas but it will also invest heavily in
production of energy from renewable energy sources, such as wind and sea.
The move into energy from renewable sources recognizes the probability that public and
political pressure will grow for restrictions on the use of non-renewable energy sources and for
protection of the global environment.
Change is, therefore, essential for long-term survival.
The strategic plan should also provide for the resources required to achieve the
company’s goals. Important resources for the chosen plan will include exploration rights,
access to pipelines and other methods of transporting energy to users and expertise in wind and
wave power technology.
A decision must be made about how many resources (including money) should be invested in
each business activity.
This will depend partly on the strategic vision of the board of directors and the direction they
think the company should be taking. What proportion of its total energy sources in ten years’
time will come from wind and wave power and to what extent will the company still be relying
on oil and natural gas?
The strategic plan also reflects the values of the board of directors. In this example, the
company has not included nuclear power in its strategic plan.
1.2. Levels of Strategy
It is usual to analyses strategy into a hierarchy of different levels. Johnson, Scholes and
Whittington identify three levels of strategy:
• corporate strategy;
• business strategy; and
• functional strategy.
Corporate
strategy
Business
Strategy
Functional
Strategy
Most academics classify strategies into three levels:
1.2.1. Corporate strategy - what business or businesses the firms should be in? It relates to the
future formula and structure of the company, and affects the rationale of the company and the
business in which it intends to compete.
Example Racal Electronics’ decision to float off Vodafone as a separate company.
Elements of corporate strategy:
1. Deciding purpose of the entity:
a. What is the mission of the entity?
b. What is it trying to achieve?
2. Deciding the scope of the activities of the entity:
a. Range of business (for example a transport company decides to operate in rail
and bus transport but not in air transport)
3. Matching business activities to external environment:
a. Aligning business activities to needs of the customer (McDonalds selling beef
burger in Pakistan but not in Inda)
b. Aligning business activities with available resources
4. Matching purpose of the entity to expectation of stakeholders:
a. Chosen strategy must be able to satisfy the needs of the stakeholders (mainly
owners).
i. Owners’ expectations: In a commercial company the owners are the
shareholders. They want entity to grow financially over time. Corporate
strategy may therefore aim towards profit maximization of shareholders’
wealth. Government is the owner of public companies. Expectations of
government is different from shareholders’ expectations.
ii. Stakeholders’ expectations: “stakeholder” means any individual or
group who has/have strong interest (stake) in an organization’s activities.
Chosen strategy must also satisfy the needs of all the stakeholders such
as employees, customers, suppliers, government, lenders and local
communities
1.2.2 Competitive or business strategy - how each business attempts to achieve its mission within its
chosen area of activity. Here strategy is about which products or services should be developed
and offered to which markets and the extent to which the customer needs are met whilst achieving
the objectives of the organization. A term that is often used in relation to business strategy is
SBU, or strategic business unit. SBU means a unit within the overall corporate entity for which
there is an external market for its goods and services, which is distinct from that of another SBU.
Example: Ford’s Motor Co’s car division – an SBU - launched its Mondeo model, aimed at fleet
car buyers, who had not favored the Sierra, its predecessor.
1.2.3 Operational or functional strategies - how the different functions of the business support the
corporate and business strategies. They are concerned with how the various functions of the
organization contribute to the achievement of strategy. It examines how the different functions of
the business (marketing, production, finance etc.) support the corporate and business strategies.
Such corporate planning at the operational level is means oriented and most activities are
concerned only with the ability to undertake directions.
Example: revising delivery schedules and drivers’ hours to improve customer service or
recruiting a German-speaking salesperson to assist a UK company’s sales drive in Europe.
However, the boundaries between the three categories are very indistinct and much depends upon
the circumstances prevailing and the kind of organization. Overall, corporate planning is
concerned with the scope of an organization’s activities and the matching of these to the
organization’s environment, its resource capabilities and the values and expectations of its
various stakeholders.
1.3 Levels of Planning:
Planning is also a hierarchical activity, linking strategic planning at the top with detailed
operational planning at the bottom. Strategic plans set a framework and guidelines within which
more detailed plans and shorter-term planning decisions, can be made.
R N Anthony identified three levels of planning within an organisation:
1. Strategic planning. This involves identifying the objectives of the entity and plans for
achieving those objectives, mostly over the longer term. Strategic plans include corporate
strategy plans, business strategy plans and functional strategy plans.
2. Tactical planning. These are shorter-term plans for achieving medium- term objectives.
An example of tactical planning is the annual budget. Budgets and other tactical plans
can be seen as steps towards the achievement of longer-term strategic objectives.
3. Operational planning. This is detailed planning of activities, often at a supervisor level
or junior management level, for the achievement of short- term goals and targets. For
example, a supervisor might divide the workload between several employees in order to
complete all the work before the end of the day.
2. Elements of Strategic Management
Section overview
◼ Johnson, Scholes and Whittington – Defining elements of strategic management

◼ Strategic position
◼ Strategic choices
◼ Strategy into action
◼ The scope of business analysis
2.1 Johnsons, Scholes and Whittington – defining elements of strategic management:

Strategic management is concerned with complexity arising out of ambiguous and non-routine
situations with organization-wide rather than operation-specific implications. This is a major
challenge for managers who are used to managing on a day-to-day basis the resources they
control. It can be a particular problem because of the background of managers who may typically
have been trained, perhaps over many years, to undertake operational tasks and to take
operational responsibility. Accountants find that they still tend to see problems in financial terms,
IT managers in IT terms, marketing managers in marketing terms, and so on.
Johnson, Scholes and Whittington state that strategic management consists of three elements:
• Strategic position
• Strategic choices
• Strategy into action.
2.2 The strategic position
Understanding the strategic position is concerned with:
• identifying the impact on strategy of the external environment,

• an organization’s strategic capability (resources and competences) and
• the expectations and purpose
The environment. The organization exists in the context of a complex political, economic, social,
technological, environmental and legal world. This environment changes and is more complex for
some organizations than for others. How this affects the organization could include an
understanding of historical and environmental effects, as well as expected or potential changes in
environmental variables. Many of those variables will give rise to opportunities and others will
exert threats on the organization – or both. A problem that has tobe faced is that the range of
variables is likely to be so great that it may not be possible or realistic to identify and understand
each one. Therefore, it is necessary to distil out of this complexity a view of the key
environmental impacts on the organization. Chapter 2 examines how this might be possible.
Strategic capability of the organization. Strategic capability measures what an entity can achieve?
The assessment of strategic capability involves the analysis of strengths and weaknesses.
Expectation and purpose. Strategic position analysis involves an understanding of:
• Mission statement: A formal statement that iterates the purpose of the entity
• Consideration for shareholders: increasing return on investment, maximizing
shareholders’ wealth etc.
• Consideration for other stakeholder groups: taking responsibility of stakeholder groups
like customers, employees and community.
The purpose of an entity is linked to the expectations that managers, owners and other
stakeholders have about it. Management need to understand how successful the entity has been in
meeting the expectations of its owners and other stakeholder groups. They also need to make
decisions about what the entity should be doing in the future to meet stakeholder expectations
more successfully than in the past.
2.3 Strategic choices
The second element in the Johnson, Scholes and Whittington model is strategic choices. This
involves identifying different possible strategies that the entity might adopt and making a choice
of the preferred strategies from the different alternatives that are available. There are three aspects
to identifying alternative strategies and making strategic choices:
• Corporate level strategies

• Business level strategies
• Development directions and methods
2.3.1 Corporate level strategies: Corporate level strategies are developed at the top-level
management. These strategies are concerned about what the entity should be doing. Corporate
level strategies include decisions regarding:
• What products the firms should be selling?

• Which markets the firm should be targeting?
• How the firm should be expanding their operations at international level?
2.3.2 Business level strategies: These strategies are made at business unit level. These strategies
include choices between cost leadership or differentiation.
2.3.3 Development directions and methods: These strategies are developed at individual product-
market level. The company may decide to grow through:
• Market penetration
• Market development
• Product development
• Diversification
2.4 Strategy into action
The third element in the Johnson, Scholes and Whittington model of strategic management is
‘strategy into action’. This means implementing the chosen strategies. There are three aspects to
strategy implementation:
• Organizing
• Enabling
• Managing change
2.4.1 Organizing: An organization structure must be established that will help the entity to implement
its strategies effectively in order to achieve its strategic targets. ‘Organizing’ means putting into
place a management structure and delegating authority. Individuals should be made responsible
and accountable for different aspects of the chosen strategies. Decision-making processes must be
established.
2.4.2 Enabling: ‘Enabling’ means enabling the entity to achieve success through the effective use of its
resources.
2.4.3 Managing change: Most entities exist in a rapidly changing environment and they need to adapt
and change in order to survive and succeed. Implementing strategy always means having to make
changes. Managing change successfully is therefore an important aspect of strategic management.
Change Management is explained in more details in a later chapter.
3. Organizational purpose and strategy
Section overview
◼ A hierarchy of objectives and plans

◼ Vision and Mission
◼ The relevance and purpose of the mission statement
◼ Goals and objectives
◼ Who decides mission, goals and objectives?
3.1. Hierarchy of vision, mission, goals, objectives and strategies:
In the strategic planning process, goals, objectives and strategies should be decided with the aim
of fulfilling the entity’s purpose. A business entity should have a hierarchy of aims and plans. A
useful way of presenting this is shown below.
3.2. Vision and Mission
3.2.1. Vision: a vision statement represents a desired optimal future state of what the organization wants
to achieve over time. For example:
• Microsoft: “Empower people through great software anytime, anyplace and on any device”
• Avon: “To be the company that best understands and satisfies the product, service and self-
fulfillment needs of women – globally”
3.2.2. Mission: A mission is the purpose of an organization and the reason for its existence. Many
entities give a formal expression to their mission in a mission statement.
‘A mission describes the organization’s basic function in society, in terms of the products and
services it produces for its customers’ (Mintzberg). The mission defines the present state or
purpose of an organization.
A mission statement should be a clear and short statement. Drucker suggested that it should
answer the following fundamental questions:
• What is our business?
• What is our value to the customer?
• What will our business be?
• What should our business be?

Examples of Mission statement
The World Bank
‘Our dream is a world free of poverty
To fight poverty with passion and professionalism for lasting results.
To help poor people help themselves and their environment, by providing resources, sharing
knowledge, building capacity and forging partnerships in the public and private sectors.
To be an excellent institution able to attract, excite and nurture diverse and committed staff with
exceptional skills who know how to listen and learn.’
Commercial entities also often emphasize the ethical aspects of their mission, perhaps as a
method of motivating employees.
Pfizer Corporation (pharmaceuticals)
‘Our mission. We will become the world’s most valued company to patients, customers,
colleagues, investors, business partners and the communities where we work and live.
Our purpose. We dedicate ourselves to humanity’s quest for longer, healthier, happier lives
through innovation in pharmaceutical, consumer and animal health products.’
A mission statement might include some reference to competitive position.

Kodak (imaging products)
The Kodak mission statement starts with statements about the corporation’s values and then
continues as follows:
‘With the above-mentioned values in mind we plan to grow more rapidly than our competitors by
providing customers with the solutions they need to capture, store, process, output and
communicate images – anywhere, any time. We will derive our competitive advantage by
delivering differentiated, cost-effective solutions – including consumables, hardware, software,
systems and services – quickly and with flawless quality. All this is thanks to our energetic,
results-oriented employees with the world-class talent and skills necessary to sustain Kodak as
the world leader in imaging.’
3.3 Relevance and purpose of mission statement

A mission statement can have several different purposes:
• to provide a basis for consistent strategic planning decisions
• to assist with translating broad intentions and purposes into corporate objectives
• to provide a common purpose for all groups and individuals within the organization
• to inspire employees
• to establish goals and ethics for the organization
• to improve the understanding and support for the organization from external stakeholder
groups and the public in general.
3.4 Goals and objectives

3.4.1 Goals: are aims for the entity to achieve, expressed in narrative terms. They are broad intentions.
For example, an entity might have the goal of maximizing the wealth of its shareholders or the
goal of being the world’s leading business entity in one or more markets.
3.4.2 Objectives: are derived from the goals of an entity and are aims expressed in a form that can be
measured and there should be a specific time by which the objectives should be achieved.
The objectives specified by the strategic planners should be SMART:
• Specific/stated clearly
• Measurable
• Agreed
• Realistic
• Time-bound (a time must be set for the achievement of the objective).
Objectives can be:
• Corporate
• Strategic
Example:
Goal Corporate objective(s) Strategic objective(s)
Maximizing shareholders’ wealth Double the share price in • Increase annual
next ten years profit after tax by
125% in next ten
years
• Introduce average of
three new products
each year for next
ten years
• To become market
leader in four new
market segments in
next ten years
Some strategic objectives are more important than others. These strategic objectives become
critical success factors for which firms define key performance indicators.
3.5 Who decides vision, mission, goals and objectives?
When an entity states its mission in a mission statement, the statement is issued by the leaders of
the entity. For a company this is the board of directors.
Similarly, the formal goals and objectives of an entity are stated by its leaders.
However, the decisions by a board of directors about the goals and objectives of an entity are
influenced by the way in which the company is governed and the expectations of other
stakeholders in the company.
4 Stakeholders and stakeholder expectations
Section overview
◼ Definition of stakeholders
◼ The expectations of stakeholders
◼ Stakeholder mapping
◼ Mendelow’s stakeholder power/interest matrix
◼ Stakeholder influence: the cultural context
4.1. Defining stakeholder
The stakeholders in an entity are any individuals, groups of individuals or external organizations
that have an interest (a ‘stake’) in what the entity does or is trying to achieve. Some stakeholders
have much more influence than others over the strategic decision-making of an entity and the
identity of the main stakeholders varies between different entities.
The stakeholders or stakeholder groups for a business entity usually include most of the
following:
• the ordinary shareholders
• the controlling shareholder, if there is one
• other classes of shareholders
• bondholders
• the investment community
• lenders
• suppliers, especially major suppliers
• customers
• the directors
• other senior executive managers
• other managers and employees, or groups of employees
• the government (local or national government)
• pressure groups, such as environmental protection groups and human rights groups
• local communities in which the entity operates
• the general public.
4.2 Expectations of stakeholders
Each stakeholder or stakeholder group has different expectations from a company. They expect to
benefit from their association with the company and the benefits they expect are different.
According to the traditional view of corporate governance, the main stakeholders are the
shareholders of the company, its board of directors and probably also its senior managers. These
stakeholder groups have different rights and duties and they also have different expectations of
what the company should provide for them.
Company law varies between countries, but the rights, duties and expectations of the main
stakeholder groups might be described briefly as follows.
Rights Duties Expectations
Shareholders Right to vote on certain None Share price growth
issues Stable dividends Return on
Other rights are set out investment
in the constitution of the Possibly also an expectation
company of being consulted by the
board on major issues
Directors Right to take decisions in The directors have Personal advancement –
board meetings certain duties in remuneration, status
(extensive powers are law (for example,
given to the board under a legal duty of due
the company’s care and skill)The
constitution) board of directors
has a duty to give
leadership to the
company
Senior managers Employment rights Senior managers Personal advancement –
have a duty to remuneration, status Possibly
carry out their a belief that they should have
delegated tasks, in the power to make key
accordance with strategic Decisions
their contract of
employment
Employees Employment rights as Carry out Fair pay, job security, career
defined by employment delegated tasks as progress, good working
laws defined by job conditions
description and
employment
contract
Customers To be treated fairly and None Good quality products,
ethically ethical communication
Rights Duties Expectations
Suppliers To be treated fairly and To supply the firm Good business relationships,
ethically with the products collaboration with supply
timely chain partners, improvements
in value networks
Communities Pollution free None Employment and economic
environment, ethical prosperity in local areas
business
General public Pollution free None Expect companies to show
environment, ethical concern for the environment,
business reduce pollution, and
develop environmentally
friendly products
4.3 Stakeholder Mapping

A business entity should manage its stakeholders, particularly those with the greatest influence.
As a part of a review of the strategic position of a company, management should identify its
major stakeholder groups, their power and their expectations.
One way of presenting the results of a stakeholder assessment is to prepare a ‘stakeholder map’.
The purpose of stakeholder mapping is to assist the directors of a company (or the governors of a
public sector entity) to obtain an appreciation of which the main stakeholder groups are and what
their real and potential influences are over the entity and the entity’s strategies.
The power/interest matrix is associated with Mendelow and might be referred to as a ‘Mendelow
matrix’.
4.4 Mendelow’s stakeholder power/interest matrix
This matrix compares:
the amount of interest of the stakeholders on a particular issue, for example, on a scale ranging
from ‘not at all interested’ (0) to ‘very interested’ (+10); and
the relative power of the stakeholders, on a scale, for example, from ‘very weak’ (0) to ‘very
powerful’ (+10).
The recommended approach to dealing with the stakeholder group is indicated in each quadrant
of the matrix. The key stakeholders are those who have considerable power or influence, and also
a keen interesting the matter or decision that management is considering.
a) If a stakeholder has very little power and very little interest in a matter, minimal effort is
needed trying to keep the stakeholder informed about the matter or satisfied.
b) If a stakeholder has very little power but a strong interest in a matter, the appropriate way
to deal with them is to keep them informed about what is happening and why. The
stakeholder should be kept informed even if they oppose what the organization is doing.
c) If the power of a stakeholder is strong but the stakeholder has very little interest in the
matter, it is important to keep the stakeholder satisfied. It is essential to avoid any course
of action that will increase the stakeholder’s interest and persuade the stakeholder to
exercise its power.
d) The most significant stakeholders are those with a large amount of power and a high level
of interest in a matter. These stakeholders are key players and it is essential to obtain and
keep their support.
4.5 Stakeholder influence: the cultural context

The power or influence of stakeholders might come from a variety of sources.
Stakeholder Power
Employees Employees might have considerable power when they possess a high level of
skills and it would be difficult to replace them if they left the company.
Communities and The power of communities and the general public could be affected by
the general public government policy, how well organized they are and how much the company’s
activities impact on them and their environment.
Shareholders their control over formal decision-making processes
Senior managers their position in the management hierarchy (although senior managers should
not rely on their formal power alone to exercise influence within the entity)
their influence (through personal qualities)
Government Law and regulations
Customers Bargaining power of customers
Suppliers Control over key resources
5 Intended and Emergent Strategies
Section overview
◼ Intended strategy
◼ Emergent strategy
◼ A mix of intended strategy and emergent strategy
◼ Enforced choice
5.1 Intended strategy
Intended strategy is a strategy that is planned through a formal planning process. The choice of
strategy is a conscious decision by senior management.
The board of directors of a company might approve a formal business plan. For example, the
directors of a company might approve a rolling five-year business plan each year.
It is therefore necessary for managers to understand that:
• intended strategy is a formally approved choice about the strategic direction that the
entity should be taking; and
• this choice was considered valid and appropriate at the time that it was approved.
However, strategy should be flexible.
5.1.1 Strategic intent
Definition: Strategic intent is a high-level statement of how an organization achieves its vision.
Strategic intent embraces the concept of ‘stretch’ meaning that current resources and capabilities
would not be enough to achieve the vision without some form of change.
An intended strategy is also a statement of strategic intent. It indicates the strategic direction that
the entity is taking. Although detailed strategies might change, strategic intent should be
consistent. When new, emergent strategies are adopted, these should also be consistent with the
entity’s strategic intent.
5.2 Emergent strategy

Emergent strategy is new strategy that develops or ‘emerges’ without formal approval being
given in advance. It is the result of reaction to changes in the environment and might be a
response to changes as they occur.
Emergent strategy has been defined as an ‘organization-wide process of incremental adjustment
to environmental states that cannot be discerned or anticipated through the prior analysis of data’
(Boisot 1995).
For example, many companies in the past few years have developed an e- business for selling
their products on the internet. This development for most companies was in response to an
unexpected growth in customer orders or enquiries in their website. An emergent strategy, selling
goods by e-commerce, therefore came into existence without formal planning or formal approval.
It was a natural response to a major environmental change – customer use of the internet.
• Emergent strategy may be developed at different levels within an entity, in response to
events as and when they occur.
• When environmental change or ‘turbulence’ is high, the responsibility for emergent
strategy might have to be decentralized entirely and intended strategy becomes irrelevant
due to the inability of managers at head office to understand the changes that are
happening.
5.3 A mix of intended and emergent strategies
Mintzberg argues that strategy development should be a mixture of intended strategy and
emergent strategy. He commented (1987) that strategy is shaped as much by the capacity of
individuals throughout the entity to respond to or create opportunities, as it is by the strategic
intentions of the senior managers at the top.
Management need to understand that strategic developments can occur in either of these ways –
intended or emergent. However, new strategic developments, both intended and emergent, must
be consistent and fit in with the same strategic objectives.
5.4 Enforced choice
In some cases, management might take the view that they have no real choice of strategy, and that
they are ‘forced’ to adopt a strategy. The reasons for having to select an enforced strategy might
be that:
• a key stakeholder, such as a major shareholder, is insisting on a strategy, or,
• every competitor is doing the same thing.
However, it is probably a sign of weak management that a strategy is considered necessary or
unavoidable. Strategy selection should be positive. Management should be looking for the
strategies that are most likely to achieve the corporate objectives.
6 Future Basing
Section overview
◼ Definition
◼ The vision
◼ Milestones
◼ Reality check
6.1 Definition
Future-basing is a relatively new and alternative methodology that can be used to create a vision
for implementing strategy at any level within an organization. This could range from overall
corporate strategy through to setting personal goals for individuals within a team.
Future-basing involves three phases:
• Firstly, a compelling vision needs to be established whilst ‘based in the future’.
• Secondly, milestone events and dates need to be identified by ‘remembering back’ what you
must have done to get to the future-based vision.
• Reality check - the final stage involves planning and strategizing how to achieve the
milestones through scheduling events and assessing the resources required.
6.2 The vision
Establishing a future-based vision involves picking a date by which time success needs to be
achieved. ‘Success’ needs defining (i.e. what you want to achieve) by describing the vision in a
detailed and structured fashion as if it is already real. This is achieved by pretending the future is
in fact today and ‘telling a story’ in the present tense. The visionary process is most effective
when positive language is used to describe the success.
The future-basing vision should be driven by what someone wants and not be restricted by
preconceptions of what they think is possible.
Example: Achievement
An example of an achievement story within the innovation category might be:
“We have successfully launched our new website with its revolutionary 360 degree 3-D
interactive shop window. It is highly satisfying that the Website has received such great feedback
from customers with a 97% ‘excellent’ rating. We are pleased that over 85% of our new-customer
sales are now generated through the Website with up-time running at 99.8% since launch.
The new website was launched on-time thanks to the superb project manager and great team that
they recruited. Employees felt a sense of ownership and buy-in to the project as everyone was
involved right from the start.”
6.3 Milestones
The second phase is to ‘remember back’ to establish milestones that must have been achieved in
arriving at the vision. For ‘remembering back’ it is sufficient to know that something happened
rather than needing to know how it happened.
Continuing with the previous example:
Achievement Milestone events or actions Date
We successfully launched We subcontracted technical 12 months

our new website development to a specialist ago,
developer in 360 degree 3-D
interactive shop windowing.
It is highly satisfying that the We involved a customer focus 11 months

Website received great group in designing the new ago,
feedback with a 97% excellent interface which comprised a mix of
rating existing and potential customers.
We are pleased that over We ran a highly successful sales 5 months

85% of our new-customer and marketing campaign that ago,
sales are now generated focused on the unique customer
through the Website benefits of the new website.
6.4 Reality check

The reality check stage involves planning and strategizing how to achieve the milestones through
scheduling events and assessing the resources required. This is achieved by returning to ‘real
time’ and asking probing questions about the vision that has been created such as:
• Would we accept the vision without reservation exactly as it has been described?
• What resources would we need and how would we obtain them?
• What could prevent us realizing the vision?
• What action could we take right now to make it happen?
• How would we ‘sell’ the vision to all impacted stakeholders?
QUESTIONS & ANSWERS

1.1 Mission Statement I
East-West Centre of Diabetes (EWCD), a non-profit organization has recently received substantial
donations from a group of overseas Pakistani philanthropists. EWCD has ambitious plans to develop
the institution into an absolutely world-class research and teaching university-cum-hospital in the
country. The Hospital would provide infrastructure facilities and medical care by a team of highly
reputable consultants. It is envisaged to provide treatment for diabetes which is growing at an
alarming rate and adversely affecting the health of a large segment of the population in all age
groups.
The University would also help to produce qualified doctors who would specialise in the treatment of
patients suffering from this highly debilitating disease.
Required
Prepare a Mission Statement for EWCD stating its purpose and identifying its core values. The
Mission Statement should be brief, simple and clearly highlight the important purpose, intent and
aspirations of EWCD.
1.1 Answer
Tutorial Note
Mission Statement is the purpose of existence of an organization. It should highlight the
company’s objectives and goals to provide direction to employees, management and
other stakeholders. It is good if a mission statement is worded clearly and is focused on
achieving a specific purpose. Also a mission statement should be easy to understand for
a diverse range of audience. The answer to the question requires development of a
concise statement highlighting the two service oriented businesses i.e. the Hospital and
University of EWCD. Moreover, their goal to treat diabetes should also be included in
the statement.
For an in-depth reading about understanding the process of developing a mission
statement student should refer to Strategic Management-Concepts and Cases by Fred .
David, Eleventh Edition, (Chapter 2, The Business Mission and Vision, pages 54-71)
Mission Statement
EWCD is committed to the development of human capabilities through the sharing of knowledge
and application through service. It seeks to prepare individuals who would be exemplary doctors
and nurses, through excellence in research and education, all dedicated to provide meaningful
contribution to society in the treatment of diabetes.
1.2 Mission Statement II
a) A low-cost airline FastPlane has published its mission statement on its website: ‘To provide our
customers with safe, good value, point-to-point services. To effect and to offer reliable and
consistent product and fares agreeable to business and leisure markets on a range of European
routes. To achieve this, we will develop our staff and establish long-term relationships with our
key suppliers.’
Required
State the purpose of a mission statement, and suggest how the mission statement of FastPlane
meets this purpose.
b) The Royal Institute of British Cake-makers (RIBC) is a professional association for cake makers
in the UK. Its mission statement is as follows:
‘To advance cake making by demonstrating benefit to society and promoting excellence in the
profession.’ The RIBC was concerned about the lack of understanding amongst the general public
about the benefits of good cake making. It was also concerned that the standards of professional
ability amongst chefs might not be as high as it should be, and that public criticisms of some new
types of cake were possibly justified.
The RIBC identified a number of strategic objectives, consistent with its mission statement.
Required
On the basis of this information, suggest three strategic objectives that the RIBC might have
identified, that are consistent with its mission statement.
1.2 Answer
a)
Purpose of Mission Statement In the FastPlane Mission Statement
To state the purpose of the entity and Providing safe, good value point-to point services, at
the business it is in (and will be in) attractive prices, for business and leisure passengers
within Europe.
To express the values and beliefs of the entity, to Safe, good value, consistent and reliable services
influence the views of key stakeholder groups inside
and outside the firm
To provide a guide for strategic decisions Develop employees Establish good relationships with
suppliers Limit services to Europe Leisure and
business passengers Safety standards
Reliability standards
Mission statements should be re-visited regularly, to make sure that they remain relevant. For example,
FastPlane would need to reconsider its mission statement if it were to consider the possibility of providing
non-air transport services, or to open routes outside Europe.
b) RIBC developed five strategic objectives from its mission statement. You can
check your ideas against them. RIBC strategic objectives are:
i. To demonstrate the benefits of good cake-making, for the economy, community and individuals
ii. To promote and enhance these benefits, in collaboration with industry and partners.
iii. To facilitate the delivery of good cake-making – raising the average through professional training and
development.
iv. To provide high-quality support services to its members, clients, industry associations and the public
v. To develop its own capabilities to deliver these strategies.
vi. These strategic objectives were then used to formulate strategies to achieve the objectives.
1.3 DECISION MAKING PROCESS
(a) Narrate important points that should be considered in the decision making process.
(b) Union Group of Companies has diversified interests in fertilizer, sugar, cement and steel industries.
Each entity operates as a strategic business unit and executives in the individual companies have
powers to take all decisions at the operational level and only limited decisions at the tactical level.
The Group Management Team which monitors and controls the performance of the different strategic
business units has retained for itself the powers to make all strategic decisions.
Required
Describe the distinguishing features of decision making process at Operating, Tactical and Strategic
levels.
1.3 ANSWER
(a) The following important points should be considered when one is involved in the decision
making process:
(i) have a clear perspective of the goals to be achieved.
(ii) develop the timeframe for reaching the final decision.
(iii) analyse the nature of the problem in sufficient detail according to the importance of
the final outcome of the decision.
(iv) examine the various available options.
(v) weigh the possible consequences of selecting any one or combination of actions.
(b) Operational Level Decisions
• decisions are concerned with day-to-day systems and procedures.
• decisions are more structured and are of a routine nature.
• outcomes of decisions are immediate and of short term nature.
• decisions involve fewer risks.
• Tactical Level Decisions
• decisions are concerned with short to medium term objectives.
• decisions are often related with implementation and success of strategic decisions.
• decisions are concerned with overseeing and handling of budgets, personnel,
schedules and resources.
• risks of failure of decisions are moderate.
Strategic Level Decisions
• decisions are concerned with long-term goals and future direction of business.
• decisions are more conceptual and have elements of uncertainty.
• decisions have far-reaching consequences and are therefore of considerable
importance.
• decisions are taken at the highest management and board levels.
1.4 VISION AND MISSION STATEMENTS
(a) What are the distinctive ingredients of Vision and Mission Statements?
(b) It has been observed that certain companies adopt, with minor modifications and changes in
emphasis, the basic ingredients of Vision and Mission Statements of the more successful rival
companies in an attempt to achieve similar results.
Required
Describe the drawbacks of adopting such an approach in formulation of Vision and Mission
Statements.
1.4 ANSWER
(a) Vision and Mission Statements are manifestations of the unique identities of an organization.
They are enduring statements containing:
• business philosophy
• unique purpose
• goals of business
The above are inter-twined with the competitive advantages which distinguishes it and sets it
apart from others.
(b) The drawbacks of adopting Vision and Mission Statements of more successful rival
companies, with certain changes and modifications, are as follows:
(i) Vision and Mission Statement of a firm is inextricably inter-linked with its
management philosophy, purpose of business and distinctive capabilities which
cannot be replicated in their entirety by other firms.
(ii) The imitated version of a Vision and Mission Statement cannot be an enduring or
permanent feature and frequent lapses or deviations in actual performance are
bound to create resentment and suspicion among the internal and external
stakeholders.
1.5 SHORT-TERMISM
(a) Why mission–oriented business strategists do not view the Short-termism approach
favourably?
(b) Give two examples of typical business situations to highlight the defects of pursuing a
policy of short-termism.
1.5 ANSWER
(a) Mission-oriented business strategists do not view the strategy of short-termism outlook
favourably because it ignores the principle that long-term economic maximization of
wealth and pursuit of objectives on a sustainable basis cannot be achieved by maximizing
economic wealth in each of the individual short-term periods.
(b) Examples:
A pharmaceutical company may not incur expensive R&D costs and be satisfied with its
existing line of products which are popular. Although this would result in high profits in
the short-term, the long-term performance would suffer as new and more effective
medicines are introduced in the market by the competitors.
A beverage company may prefer to defer advertising expenditures to reduce the costs and
report high profits. However, in the long-run, the company may lose the efficacy of its
brands and competitive advantage to other more aggressive competitors.
1.6 FINE SUGAR MILLS
Fine Sugar Mills Limited (FSML) owns and operates a sugar cane crushing plant for manufacture
of refined sugar. The affairs of FSML are looked after by a team of professional management and
the company ranks third amongst all the sugar mills in the country in terms of its sales and
profitability. The Company has developed an extensive network of growers spread over a wide
area who deliver cane at the factory site which is then crushed in the minimum possible time to
achieve high rates of sucrose recoveries.
Required
Identify the key stakeholders of FSML and explain briefly why you consider each of these
constituent stakeholders to be of vital importance for the sustainable and long-term profitable
operations of the Company.
1.6 ANSWER
Key stakeholders of FSML and their importance for the sustainable and long-term profitable
operations of the Company are:
(a) Shareholders: The shareholders are the ultimate owners of the Company and it is
important to maximise their wealth through sustained growth in real earnings and
profitable expansion of the business.
(b) Distributors and Customers: The distributors and customers are important as the
Company can operate profitably only if it is able to build long-term relationship with the
distributors and the ultimate customers by offering quality products and value for money.
(c) Cane Growers: The sugar cane farmers are critical stakeholders as the Company has to
build ongoing relationship with them for supply of good quality cane according to the
pre-determined delivery schedules.
(d) Employees: The employees are important as the staff have to be trained and motivated to
enable the Company to maintain and strengthen its reputation as a progressive company
and be able to continue to operate as a profitable entity.
(e) Creditors: The creditors, including the banks, are important stakeholders as substantial
amounts of finances are required by FSML for making payments to the cane growers,
financing of stocks of sugar manufactured during the crushing season, purchase of
components, parts and spares, etc. The creditors are important stakeholders as they have
to provide funds to meet FSML’s requirements.
(f) Government: The government officials at various levels play an effective role for the
smooth operations of FSML for movement of heavy traffic, maintaining law and order
particularly during the crushing season, its role for fair pricing of sugar and ensuring its
availability for the consumers throughout the country.
(g) Community: The neighbouring community has to accept the Company as a socially
responsible and conscientious corporate citizen mindful of its obligations to the
community and its overall welfare.
1.7 FORMAL BUSINESS STRATEGY
Management has to expend considerable efforts in devising business strategies to achieve corporate
objectives and goals effectively.
(a) Why do companies accord importance to the pursuance of a formal Strategic Planning Process?
(b) Explain the different steps which the management has to undertake in the formulation and
implementation of a well-considered business strategy.
1.7 ANSWER
(a) Companies accord importance to the pursuance of a formal Strategic Planning Process to
achieve the following objectives:
(i) A formal Strategic Planning Process helps to identify the opportunities and risks
involved in the company’s business. The company can make well- considered
strategies and adopt measures to seize the opportunities accruing from its internal and
external strengths and also reduce the various business risks.
(ii) A formal Strategic Planning Process enables the company’s top management to be
involved in proactive thinking of the business objectives and taking coordinated
actions relating to deployment of resources to achieve its strategic goals.
(iii) A formal Strategic Planning Process ensures the participation of management and the
staff who are seized with the task of achievement of the business objectives. The staff
at all levels develop an understanding of the productivity-reward relationship in the
strategic plans which increases their motivation and reduces the adverse impact of
resistance to change.
(iv) A formal Strategic Planning Process is essential to create alignment of the company’s
short-term, medium-term and long-term targets for achievement of the company’s
objectives.
(v) A formal Strategic Planning Process is essential for optimum coordination of the
corporate, business and functional strategies for achievement of the Company’s
objectives.
(b) In the formulation of a well-considered Business Strategy, the management conducts an
Appraisal of the company’s internal and external environment. For this purpose SWOT
Analysis may be carried out in order to find ways for (a) exploiting the company’s
strengths to help achieve short-term and long-term objectives and (b) reviewing the
weakness and threats faced by the company from the following standpoints.
The steps in the implementation of a well-considered Business Strategy are:
(i) Organizational Structure: Organization Structure is suitably integrated for
achieving harmony among the various departments and functions and co-
ordination at all levels.
(ii) Human Resources: Human resources with necessary skills and proper motivation
are deployed in appropriate positions for effective implementation of strategy.
(iii) Availability of Financial Resources: Adequate financial resources should be made
available in time for implementation of the strategy.
(iv) Technology: Appropriate technological inputs are made available to support the
performance necessary to achieve the objectives of the strategic plans.
(v) Decision Process: Sound policies and processes are developed to ensure that all
significant decisions are taken on time and in a coordinated manner.
(vi) Monitoring and Control Systems: Appropriate systems are established to ensure
that progress is monitored against the established standards on a continuous basis
and deviations if any are identified for taking timely corrective actions for
implementation of the strategic plans.
1.8 INNOVATIVE STRATEGY
Highly Creative Strategic Planners in progressive organizations have innovative mindsets and do
not merely project past strategies in the future but are continuously engaged in “out of the box”
thinking to explore new opportunities beyond the existing strategy framework.
Required
Identify the distinguishing characteristics of organizations which pursue innovative corporate
strategies.
1.8 ANSWER
The distinguishing characteristics of organizations which pursue innovative corporate strategies
are:
(a) they compete in the market on the basis of their differentiated superior products/services
as compared to the offerings of other companies;
(b) they are continuously searching for new growth platforms for their business and are
several steps ahead of their competitors;
(c) they are able to anticipate threats from competitors and seek to respond with new or
better products/services to sustain their competitive advantage;
(d) they are always making efforts to develop new and innovative products to provide greater
customer value;
(e) they are forward looking visionaries and are continuously searching for means to change
their
(f) strategic direction; they value management cohesiveness at all levels and both the
strategy planners and those
1.9 POWER-INTEREST MATRIX
Required
(a) Describe Mendelow’s power-interest matrix.
(b) Identify factors that may give substantial power to a stakeholder or a group of
stakeholders in an entity, who are either inside or external to the entity.
(c) Suggest how the power-interest matrix may be used by the management of an entity as an
aid to implementing a strategic change.
1.9 ANSWER
(a) The power/interest matrix can be used by an entity to ‘map’:
the relative interest of various stakeholders in the decisions of the entity, and the power of
each of these stakeholder groups to affect the outcome of those decisions.
Power is rated on a scale of 0 to 10 (low to high) on one side of the matrix and interest is
also rated on a scale of 0 to 10 (low to high) on the other side of the matrix.
(b) Sources of the power of individual stakeholders or stakeholder groups include the
following:
Internal stakeholders: sources of power External stakeholders: sources of

power
Position in the management hierarchy Control over key supplies
Control over strategic resources Involvement in the implementation of
the decision
Relevant knowledge/skills Relevant knowledge/skills
Personal influence
Ability to block a proposal (e.g. When the government is a stakeholder:
shareholders may be able to vote down a power to regulate
management proposal)
(c) The matrix may be used when a change is planned. It can be used to identify, for each
stakeholder or stakeholder group, the strength of their interest in the change and their
power to influence its outcome.
Measures can then be taken to satisfy each stakeholder, and reduce the risk of their
opposition to the planned change. In general terms the matrix provides the following
recommendations:
Power Interest Tactic
Low Low Minimal effort required
Low High Keep these stakeholders informed about plans and
developments
High Low Make sure that these stakeholders are kept satisfied
High High Key players: these stakeholders must be given the most
attention and consideration.
Past papers Grid
CFAP (BMS) Module E (BM)

Attempt W-20 W-19 S-19 W-18 S-18 W-17 S-17 W-16 S-16 W-15 S-15 W-14 S-14 W-13 S-13 W-12 S-12
Topic
Ch. 1
Defining Strategy Q9a
Levels of Strategy Q2b

Strategic Planning
Strategic Management Process Q1a Q4 Q2 Q2
Hierarchy of Vision, Mission, Goals

Mission, Vision and their relevance Q3 Q1b Q1a Q3b
Goals and Objectives
Decision of goals and objectives

Defining Stakeholders
Stakeholders’ expectations
Stakeholder mapping
Intended Strategy Q7a

Emergent Strategy Q7c Q1b
Strategic intent/enforced choice
Future basing
Total Qs of CFAP-3 (BMS) during W-2016 to W-2020 = 5

[Q7 (a) & 7 (c) taken as one Q and Q 1(a) & 1 (b) taken as one Q]
PRACTICE QUESTIONS
Q NO. 1
Ansar (Private) Limited (APL) has recently been registered as a private limited company. It is in the process of
developing vision and mission statements. Ms. Shanzeh Ghafoor (Shanzeh), the CEO has advised her team to
formulate the vision and mission statements similar to MEL Limited which is the largest listed company
engaged in the same business.
Required:
(a) List down the various purposes of vision and mission statements. (04)
(b) Explain whether you agree with Shanzeh’s approach of developing mission and vision statements
similar to those of MEL Limited. (03)
(Winter 2018, Q3)
Q NO. 2
Identify the strategies/policies that are being pursued in each of the following cases. Also discuss two risks
associated with each strategy/policy:
(a) Ethnic Wears (EW) is a family owned and managed business. EW has been efficiently using its core
competences i.e. innovation and strong marketing capabilities to sustain competitive advantage. The
owners support well-planned and effectively controlled expansion by utilizing available profits and
core competencies. (04)
(b) Hi-tech Limited is providing software solutions in a hyper-competitive environment where set of
circumstances cannot be predicted with reasonable certainty. The management encourages employees
to respond to the environmental changes by means of creativity whereas formal planning and
approvals have low importance. (04)
(Summer 2018, Q7 (a & c))
Q NO. 3
(a) Best Limited (BL) has been incorporated recently with the objective of establishing the business of
manufacturing and marketing of fast-moving consumer goods. The company realizes that it would
have to compete in a highly challenging business environment. Discuss briefly why it would be
essential for BL to give high degree of importance to the strategic planning process for achievement of
its corporate objectives. (08)
(b) Explain briefly what you understand by the term ‘emergent strategy’. Give examples of four situations
in which an organization may consider adopting an emergent strategy. (06)
(Summer 2017, (Q1)
Q NO. 4
Leading organisations articulate their key objectives through clearly and concisely stated Mission and Vision
statements.
State the distinctive ingredients of ‘Mission’ and ‘Vision’ Statements. (03)
(Winter 2016, Q1(b))
Q NO. 5
Describe briefly the reasons why senior human resource managers have assumed increasingly important roles
and responsibilities in the formulation and implementation of corporate level strategies of leading
organizations. (05)
(Winter 2016, Q2(b))
SOLUTIONS TO PRACTICE QUESTIONS

SOLUTION TO Q NO. 1
ICAP EXAMINER COMMENTS
This question was about vision and mission statements. It consisted of two parts. The overall performance was
satisfactory as 53% of the candidates secured passing marks.
Performance in each part is discussed below:
(a) In this part the candidates were required to list the various purposes of vision and mission statements.
The performance was good as majority of the candidates were able to identify the purposes correctly.
However, some students got confused and discussed the contents instead of the purposes.
(b) In this part the candidates were required to comment on the possibility of developing the vision and
mission statements which were similar to those of the largest listed company involved in the same
business. Performance in this part of the question was not satisfactory. Though almost every student
wrote correctly that mission and vision statement of the other company must not be copied, very few
students were able to justify their answer with proper reasoning.
SOLUTION BY ICAP
(a) The purposes of vision and mission statements are listed below:
• to provide a basis for consistent strategic planning decisions
• to assist with translating broad intentions and purposes into corporate objectives
• to provide a common purpose for all groups and individuals within the organization
• to inspire employees
• to establish goals and ethics for the organization
• to improve the understanding and support for the organization from external stakeholder
groups and the public in general.
(b) Vision and mission statements reflect the unique/distinctive identity of an organization. The
uniqueness can be in terms of business philosophy, purpose of business and capabilities of an
organization. APL is a newly registered private company whereas MEL is a well-established listed
company therefore, it is highly likely that above parameters of unique identity could be different.
Hence, I do not agree with Ms. Shanzeh’s approach of imitating the mission and vision statements of
MEL.
SOLUTION TO Q NO. 2
In this question, three situations were given. The requirement in each case was to identify the strategy/policy
being pursued and two risks associated with such strategies/policies. The performance was very poor. In part
(c) also, various incorrect strategies were identified. Further, the risks were not mentioned with clarity and in
some cases were totally irrelevant.
SOLUTION BY ICAP
(a) EW is pursuing organic growth (internal development) strategy. This strategy might be subject to the
following risks:
▪ There might be a limit to the rate of growth a business entity can achieve with its internal
resources. The entity might not have sufficient resources to meet the growing sales demand.
▪ The entity might be slow in responding to the changing market dynamics and the rival firms
might be able to grow much more quickly by means of mergers, acquisitions and joint
ventures.
(b) High-tech Limited is pursuing emergent strategy. This strategy might be subject to following risks:
▪ The entity may be subject to high risks because of absence of formal planning and approval
process as employees may not be able to make appropriate decisions in all situations.
▪ There might be over reliance on the ability of individuals within the entity to be innovative
and be entrepreneurial.
SOLUTION TO Q NO. 3
General comments:
08.50% candidates secured passing marks in this question.
(a) Common errors:
▪ Too generalized points were given mostly revolving around achievement of high profits and
achievement of other objectives.
▪ Irrelevant things were mentioned like determining the size of business, co-ordination between
the top and mid-level management, achieving targets, etc.
▪ Strategy implementation was discussed rather than strategic planning.
Suggested answer:
It would be essential for Best Limited to give high degree of importance to the strategic planning
process to achieve the following objectives:
(i) It would enable BL to identify, prioritize and grasp opportunities for achieving its objectives.
(ii) It would enable BL to identify business risks in the environment and adopt appropriate
measures to mitigate these risks.
(iii) It would provide a framework for coordination and control of various activities at the
corporate, business and functional levels.
(iv) It would enable BL to make optimum utilization of its financial, human and all other
resources.
(v) It would enable BL to create alignment between long-term, medium-term and shortterm
objectives.
(b) Common errors:
▪ Importance of continuous review of the existing strategy was emphasized which was not
relevant.
▪ While mentioning the situations where the need for emergent strategy arises, incorrect points
were given like change in management, acquisition/merger, etc.
Suggested answer:
Emergent Strategy - Emergent strategy is the revised strategy or a change in strategy which is
developed due to the changes in the business conditions. Emergent strategy is adopted without prior
formal approval. The emergent strategy must be consistent with the organisation’s strategic intent and
objectives.
A firm may adopt an emergent strategy due to various reasons which may include:
(i) to take advantages of new opportunities in the environmental conditions such as discovery of
new natural resources, etc.
(ii) modification in manufacturing processes due to changes in pollution control laws;

(iii) to curtail production due to loss of major markets caused by catastrophes/political changes in
countries which constitute important export markets;
(iv) to counter challenges posed by new competitors;
(v) to manufacture new products to cater to the changes in customer tastes and preferences.
SOLUTION BY ICAP
(a) It would be essential for Best Limited to give high degree of importance to the strategic planning
process to achieve the following objectives:
• It would enable BL to identify, prioritize and grasp opportunities for achieving its objectives
• It would enable BL to identify business risks in the environment and adopt appropriate
measures to mitigate these risks.
• It would provide a framework for coordination and control of various activities at the
corporate, business and functional levels.
• It would enable BL to make optimum utilization of its financial, human and all other
resources.
• It would enable BL to create alignment between long-term, medium-term and short-term
objectives.
(b) Emergent Strategy - Emergent strategy is the revised strategy or a change in strategy which is
developed due to the changes in the business conditions. Emergent strategy is adopted without prior
formal approval. The emergent strategy must be consistent with the organization’s strategic intent and
objectives.
A firm may adopt an emergent strategy due to various reasons which may include:
• to take advantages of new opportunities in the environmental conditions such as discovery of
new natural resources, etc.
• modification in manufacturing processes due to changes in pollution control laws;
• to curtail production due to loss of major markets caused by catastrophes/political changes in
countries which constitute important export markets;
• to counter challenges posed by new competitors;
• to manufacture new products to cater to the changes in customer tastes and preferences.
SOLUTION TO Q NO. 4
Replies to the question regarding ingredients of mission and vision statements were quite satisfactory.
However, many students offered long-winded explanations to this three mark question resulting in inefficient
utilization of valuable time.
SOLUTION BY ICAP
Mission Statement
A mission describes the organization’s basic function in society, in terms of the products and services it
produces for its customers (Mintzberg).
Vision Statement
A vision statement represents a desired optimal future state of what the organization wants to achieve over
time.
SOLUTION TO Q NO. 5
In this part of the question, the candidates were supposed to discuss the reasons for increasing importance of
senior executives of HR in the formulation of corporate level strategies. The overall performance was below
average. Several replies were off-the-mark. A sizeable number of the students were not of aware of the critical
roles that senior HR managers perform at the highest echelons of management in overall management and
development of human resources, i.e. developing cohesive organizational structures according to the
objectives of the business entity, formulating strategies for reward systems and policies for career path
development and succession planning. Many students highlighted basic human resource functions and
responsibilities which are performed by the lower level staff, which were totally irrelevant.
SOLUTION BY ICAP
Senior human resource managers have now assumed increasingly important roles and responsibilities in the
formulation and implementation of corporate level strategies of leading organizations due to the following
reasons:
• Senior Human Resource managers are responsible for management of employees who are the vital
assets of leading organizations and therefore deserve closer attention.
• Senior Human Resource managers are specially trained and possess expertise to develop cohesive
organizational structures to achieve the overall strategic objectives of the company.
• Senior Human Resource managers are responsible for formulating strategies of reward systems and
promotions in the organizations. The perceived fairness and equity in the development of these
policies play a vital role in employee induction, motivation and productivity at all levels.
• Senior Human Resource managers formulate and implement fair and objective policies of career path
and succession planning for employees to ensure that the senior management positions are always
filled-in by competent personnel to achieve the corporate objectives.

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CHAPTER-1 STRATEGY, STAKEHOLDERS AND MISSION (1)

Chapter 1 – Strategy, Stakeholders and Mission

1 Definition of strategy and levels of strategy

2 Elements of strategic management and business analysis

3 Organizational purpose and strategy

4 Stakeholders and stakeholder expectations

5 Intended and emergent strategies

1.1 Definition of Strategy

1.1.1. Strategy (Chandler)

1.1.2. Strategy (Drucker)

Most academics classify strategies into three levels:

◼ Johnson, Scholes and Whittington – Defining elements of strategic management

2.1 Johnsons, Scholes and Whittington – defining elements of strategic management:

Understanding the strategic position is concerned with:

• identifying the impact on strategy of the external environment,

Expectation and purpose. Strategic position analysis involves an understanding of:

2.3 Strategic choices

• Corporate level strategies

• What products the firms should be selling?

◼ A hierarchy of objectives and plans

3.1. Hierarchy of vision, mission, goals, objectives and strategies:

• What should our business be?

A mission statement might include some reference to competitive position.

3.3 Relevance and purpose of mission statement

3.4 Goals and objectives

4.1. Defining stakeholder

4.3 Stakeholder Mapping

4.5 Stakeholder influence: the cultural context

5.2 Emergent strategy

An example of an achievement story within the innovation category might be:

Achievement Milestone events or actions Date

We successfully launched We subcontracted technical 12 months

It is highly satisfying that the We involved a customer focus 11 months

We are pleased that over We ran a highly successful sales 5 months

6.4 Reality check

QUESTIONS & ANSWERS

Internal stakeholders: sources of power External stakeholders: sources of

Past papers Grid

CFAP (BMS) Module E (BM)

Levels of Strategy Q2b

Hierarchy of Vision, Mission, Goals

Decision of goals and objectives

Intended Strategy Q7a

Total Qs of CFAP-3 (BMS) during W-2016 to W-2020 = 5

SOLUTIONS TO PRACTICE QUESTIONS

Performance in each part is discussed below:

(ii) modification in manufacturing processes due to changes in pollution control laws;

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