Introduction to Business Policy & Strategy

Strategic Intent
 Strategic Intent

 Strategic intent is the overall

direction of a organization's
strategy. It is often an aspirational
target that is difficult or perhaps
impossible to achieve.
 Strategic intent serves to
inspire, motivate and provide clear
direction to stakeholders such as
employees, investors and
customers. The following are
common elements of strategic
intent.
 Vision
• A enduring picture of what the firm wants to be and, in broad
terms, what it wants to ultimately achieve.
• Stretches and challenges people and evokes emotions and dreams.
 Effective vision statements are:
 Developed by a host of people from across the organization.
 Clearly tied to external and internal environmental conditions.
 Consistent with strategic leaders’ decisions and actions.

1–3 Refer text book

 Key Elements of a Strategic Vision
 Delineates management’s aspirations for the business
 Provides a panoramic view of “where we are going” ,
Charts a strategic path
 Is distinctive and specific to a particular organization
 Avoids use of generic language that is dull and boring and that
could apply to most any company

 Captures the emotions of employees and steers them in a

common direction
Shared Vision –
 Is challenging and a bit beyond a company’s
 Creates commonality of interests
immediate reach
 Provides opportunity & challenge
 Reduce daily monotony

1–4
Role of a Strategic Vision
 A well-conceived and well-communicated vision functions as a
valuable managerial tool to
 Give the organization a sense of direction, mold
organizational identity, and create a committed enterprise
 Inform company personnel and other stakeholders what
management wants its business to look like and “where we
are going”
 Spur company personnel to action

 Provide managers with a reference point to

 Make strategic decisions
 Translate the vision into hard-edged objectives
and strategies
 Prepare the company for the future

1–5 Refer text book

1–6
Vision to Mission

Clear Business
Vision

Comprehensive
Mission Statement

Ch 2 -7
Mission
• Specifies the business or businesses in which the firm
intends to compete and the customers it intends to serve.
• Is more concrete than the firm’s vision.
• Is more effective when it fosters strong ethical standards.
• Above-average returns are the fruits of the firm’s efforts to
achieve its vision and mission.

1–8 Refer text book

Mission Statements

“What is our business?”

• Enduring statement of purpose
• Distinguishes one firm from another
• Declares the firm’s reason for being

Also referred to as:

• Creed/faith statement
• Statement of purpose
• Statement of philosophy
• Statement of business principles Ch 2 -9
Characteristics of a Mission Statement

 Identifies the boundaries of the current

business and highlights
 Present products and services
 Types of customers served
 Geographic coverage
 Conveys
 Who we are,
 What we do, and
 Why we are here
Key Elements of a Mission Statement
 Three factors need to be identified for completeness

 Customer needs being met

What is being satisfied
 Customer groups or markets being served
Who is being satisfied
 What the organization does (in terms of business approaches,
technologies used, and activities performed) to satisfy the
target needs of the target customer groups
How customer needs are satisfied
 Products or
Services Markets
Customers

Mission Technology
Employees Components

Survival,
Growth,
Public Profits
Image
Self-Concept Philosophy

Copyright © 2009 Pearson Education, Inc. Ch 2 -12

Publishing as Prentice Hall
Strategic Vision vs. Mission
 A strategic vision concerns a firm’s
future business path - “where
we are going”
 Markets to be pursued
 Future product/market/
customer/technology focus
 Kind of company management is
trying to create
 The mission statement of a firm
focuses on its present business
purpose - “who we are and what we
do”
 Current product and service offerings
 Customer needs being served
 Technological
and business
capabilities

1–13 Refer text book

1–14 Refer text book
Vision
 To be the most admired Integrated Power and Energy
Company delivering sustainable value to all stakeholders

Mission
 We will become the most admired Company delivering sustainable
value by:
− Being the supplier and partner of choice
− Achieving excellence in safety, operations and project management
− Focusing on the culture of sustainability
− Ensuring growth and delivering value to the stakeholders
− Caring for the community
Definition of Business
 ‘What is our Business?’
 The establishment of an organization’s purpose is very much
important. Unless and until there is clarity of purpose, the firm will
not be able to develop clear objectives and strategies.
 The organization’s purpose starts with defining its present and
potential customers. It answers questions like:
A. Who is the customer?
B. What does he buy?
C. What does customer look for when he / she buys the
products (value)?
Ch 2 -16
Definition of Business
 Answers to these questions also indicate the nature and
quality of the product, process or technology, market
environment and / or competitiveness.
 The definitions of business should be based on four major
factors;

Ch 2 -17
Ch 2 -18
Business Model
 The term business model has become more popular after
1990s with the development of internet.
 It is used to express number of ideas. Ideas those create
some value to the customers.
 Business model can be defined as ‘a representation of a
firm’s underlying core logic and strategic choices for
creating and capturing value within a value network’.

Ch 2 -19
Goals & Objectives

 Objectives are the end results of a planned activity.

 They are stated in quantifiable terms. Objectives are stated
differently at various levels of management.
 Objectives play a very important role in enhancing the
efficiency and effectiveness of an organization.

Ch 2 -21
Types of objectives
 Profit Objective
 Marketing Objective
 Productivity Objective
 Product Objective
 Social Objective
 Financial Objective
 Human resources objective

Ch 2 -22
Goals
 Goals are an intermediate result which is expected to be
achieved by a certain span of time.
 It provides the basis for judging the performance of the
organization.

 Goals may be classified into two categories:

 Financial goals: They are related to the return on investment
or growth in revenues
 Strategic goals: They focus on the achievement of the
competitive advantage in the industry

Ch 2 -23
Introduction to Business Policy & Strategy

Stakeholders
 Stakeholders
 Individuals and groups who can affect, and are affected by, the strategic outcomes
achieved and who have enforceable claims on a firm’s performance.
 Claims on the firm’s performance are enforced by the stakeholder’s ability to withhold
participation essential to the firm’s survival.
 The more critical and valued a stakeholder’s participation, the greater a firm’s
dependency on it.
 Managers must find ways to either accommodate or insulate the organization from the
demands of stakeholders controlling critical resources.

1–25
Why Consider Stakeholders?

 Stakeholders are key to the success of company

 If their claims are not considered, stakeholders withdraw
support
 Stakeholders are in an exchange relationship with the
company, therefore the company would not function as well if
they lost the support
FIGURE 1.4 The Three Stakeholder Groups

1–27 Refer text book

Stakeholders
Capital Market Capital Market Stakeholders
Stakeholders Shareholders
Major suppliers of capital
• Banks
• Private lenders
• Venture capitalists

1–28 Refer text book

Capital Market Stakeholders
 Shareholders and lenders expect the firm to preserve
and enhance the wealth they have entrusted to it.
 Want the return on their investment (and, hence, their
wealth) to be maximized.
 Expect returns to be commensurate with the degree of risk
to the shareholder.(i.e. high risk – high return, low risk – low
return)
 Management must balance the interests of
shareholders and lenders with its concerns for the
firm’s future competitive ability.

1–29 Refer text book

Stakeholders (cont’d)
Capital Market
Stakeholders

Product Market Stakeholders

Product Market
Stakeholders • Customers
• Suppliers
• Host communities

• Unions

1–30 Refer text book

Product Market Stakeholders
 Customers
 Demand reliable products at low prices
 Suppliers
 Seek loyal customers willing to pay highest sustainable
prices for goods and services
 Host communities
 Want companies willing to be long-term employers and
providers of tax revenues while minimizing demands on
public support services
 Union officials
 Want secure jobs and desirable working conditions
1–31 Refer text book
Stakeholders (cont’d)
Capital Market
Stakeholders

Product Market
Stakeholders

Organizational Organizational Stakeholders

Stakeholders • Employees
• Managers
• Non-managers

1–32 Refer text book

Organizational Stakeholders
 Employees/Managers
 Expect a dynamic, stimulating and rewarding work
environment.
 Are satisfied by a company that is growing and actively
developing their skills.

1–33