Chapter 2

Hierarchy of strategic intent

Compiled and prepared by

Dr. S. C. SIVA SUNDARAM ANUSHAN
 Learning objectives
 Explain the concepts of strategic intent
 Describe and exemplify the concept of vision
 Describe and exemplify the concept of mission
 Explain the three dimensions of business definition
 Evaluate quality of vision, mission statements, and business
definitions
 Describe business model and their relationship with strategy
 Describe the role and characteristics of objectives
 Explain the process of objective setting
 Discuss the role of critical success factors in setting objectives
 Describe Strategy
 Describe Tactics
 Describe Policy
 Programmes
 Procedure
 Rule

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Strategic intent
Strategic intent refers to the purposes the
organisation strives for. These purposes are expressed in
terms of Hierarchy. At the corporate level it is the Vision
and mission of the whole corporate. At the business level
it is expressed in the definition of the business, and the
business model. When expressed precisely at operational
level they are the goals and objectives.
Strategic intent is an obsession with an organisation: an
obsession by having ambitions that may even be out of
proportion to their resources and capabilities. This
obsession is to win at all levels of the organisation while
sustaining that obsession in the quest for global
leadership. According to C.K. Prahalad, Strategic Intent
strategic intent envisions a desired leadership position and
establishes the criterion the organization will use to chart
its progress. At the same time, strategic intent is more
than simply unfettered ambition.
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Hierarchy of Strategic intent
Vision
Large scope Mission Long range
Goals
Objectives
Strategy Medium range
Medium scope
Tactics
Policy
Programmes
Short range
Procedures
Small scope
Rules
Actions Present period 4
 Concept of stretch, leverage and fit

 Stretch is "a misfit between resources and

aspirations"
 Leverage refers to concentrating, accumulating,
complementing, conserving, and recovering
resources in such a manner that meagre resource
base is stretched to meet the aspirations that an
organisation dares to have.
 Fit means positioning the firm by matching its
organisational resources to its environment.
G. Hamel and C. K. Prahalad: "Strategy as Stretch and Leverage" Harvard Business Review, Mar - April 1993, pp. 75 - 84.

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Vision
 Vision statement provides direction and inspiration
for organizational goal setting. Vision is where you see
your self at end of horizon OR milestone rein. It is
a single statement dream OR aspiration. Typically a
vision has flavors of 'Being Most admired', 'Among
top league', 'Being known for innovation', 'being
largest and greatest' and so on. Vision is long-term
statement and typically generic & grand. Therefore a
vision statement does not change unless company is
getting into a totally different kind of business. Vision
is a dream/aspiration, fine-tuned to reality.

(c) Dr. Azhar Kazmi 2008 6

Vision-Definition
 Kotter (1990) defines it as a "description of something
(an organization, a corporate culture, a business, a
technology, an activity) in the future".
 El-Namaki (1992) considers it as a "mental perception
of the kind of environment an individual, or an
organization, aspires to create within a broad time
horizon and the underlying conditions for the
actualization of this perception".
 Miller and Dess (1996) view it simply as the "category
of intentions that are broad, all-inclusive, and forward
thinking".
J. Kotter, A Force for Change: How Leadership Differs from Management (London: Free Press, 1990); M. S. S.
El-Namaki, "Creating a corporate vision" Long Range Planning, Vol. 25, No. 6, (1992), pp. 25 – 29; A. Miller and
G. G. Dess, Strategic Management (2nd. ed.) (New York: McGraw-Hill, 1996), p. 6.

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Features of a good vision statement:
1. Easy to read and understand.
2. Compact and Crisp to leave something to people’s
imagination.
3. Should give destination and not road-map.
4. Is meaningful and not too open ended and far-fetched.
5. Excite people and make m get goose-bumps.
6. Provides a motivating force, even in hard times.
7. Is perceived as achievable and at same time is
challenging and compelling , stretching us beyond
what is comfortable.
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 Two Components of vision statements
 External vision defines outcomes that company wants to achieve. Sony’s
vision in 1950s was that “Fifty years from now, our brand name will be as
well known as any on earth.” General Electric’s vision in 1980s was “To
become number one or number two in every market we serve.”
 Second component is an internal vision of change. GE said it would
“revolutionize company to have speed and agility of small enterprise.”
Sony said it would “create innovative products that become pervasive
around world.”
Some examples of Vision Statement
1. Southwest Airlines: To make air travel cheaper and more convenient
than auto travel.
2. HSBC Bank: To be world’s local bank.
3. Wal-Mart: Worldwide leader in retail.
4. Walt Disney Corporation: To make people happy
5. JK Tyre: To be amongst the most admired companies in India,
committed to excellence
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Core ideology and envisioned future
The core ideology defines the enduring character of an
organisation that remains unchangeable as it passes
through the vicissitudes of vectors such as technology,
competition or management fads.
The envisioned future too consists of two components:
 a 10 - to - 30 years audacious goal and
 vivid description of what it will be like to achieve that
goal.

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Mission
 Mission of an organization is purpose for which
organization is.
 Mission is again a single statement, and carries
statement in verb.
 Mission in one way is road to achieve vision.
For example, for a luxury products company,
vision could be 'To be among most admired luxury
brands in world' and mission could be 'To add style to
lives'

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Mission
 Thompson (1997) defines mission as the
"essential purpose of the organization,
concerning particularly why it is in
existence, the nature of the business(es) it is
in, and the customers it seeks to serve and
satisfy".
 Hunger and Wheelen (1999) say that
mission is the "purpose or reason for the
organization's existence".
J. L. Thompson: Strategic Management: Awareness and Change, (3rd ed.) (London: International
Thomson Business Press) 1997, p.6; J. D. Hunger & T. L. Wheelen: Strategic Management, (Reading,
Mass.: Addison Wesley Longman), 1999, p. 10.

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Characteristics of mission statements
 It should be feasible
 It should be precise
 It should be clear
 It should be motivating
 It should be distinctive
 It should include major components of strategy
 It should indicate how objectives are to be
accomplished

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Components of a Mission
Statement:
♦ Customers – who are the firm’s customers?
♦ Product or services – what are the firm’s major products or
services?
♦ Markets – Geographically, where does the firm compete?
♦ Technology – Is the firm technologically current?
♦ Concern for survival, growth and profitability – I s the firm
committed to growth and financial soundness?
♦ Philosophy – what are the basic beliefs, values, aspirations
and ethical priorities of the firm?
♦ Self Concept – what is the firm’s distinctive competence or
major competitive advantage?
♦ Concern for Public Image – Is the firm responsive to social,
community, and environmental concerns?
♦ Concern for employees – Are the employees a valuable
asset of the firm
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 Process of developing a mission Statement:
 Many cases the MS drawn up by CEO and BOD or a committee
constituted for those purpose. Engaging consultants for drawing up of
mission is not uncommon.
 Many companies hold Brainstorming session of seniors executives
to develop mission statement.
 Soliciting employees views is also common.
Different methods for preparing the mission statement
1. Consultative – Participative route (Apple Industries):
♦ Meeting amongst Sr. management team for evolves the vision statement
and after.
♦ Calling suggestions from employees
2. Mission – workshop (Mahindra and Mahindra):
♦ With in the organization at two levels - members of the corporate
planners / planning groups
♦ And members of the business level members where corporate planning
groups act as facilitators.
3. Series of Discussion ( Satyam Computers)
♦ With joint venture companies
♦ Overseas clients
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 Examples of mission statements
IBM
 Dedication to every clients success
 Innovation that matters – for our company and the world
 Trust and responsibility in all relationships
Pepsico
As one of the largest food and beverage companies in the world, our mission is
to provide consumers around the world with delicious, affordable,
convenient and complementary foods and beverages from wholesome
breakfasts to healthy and fun daytime snacks and beverages to evening
treats. We are committed to investing in our people, our company and the
communities where we operate to help position the company for long-term,
sustainable growth.
JKTyre
 Be a Customer Obsessed Company - Customer First 24x7
 No.1 Tyre Brand in India
 Most profitable Tyre Company in India
 Motivated and Committed team for excellence in performance
 Be a Green Company
 Deliver Enhanced Value to all stakeholders
 Enhance global presence through Acquisition / JV / Strategic Partnerships
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 Difference between Vision and Mission

Vision Mission
• A dream of an entrepreneur / Promoter • Essential purpose of the organization
• An ultimate goal or destiny • Concerning particularly why it is
• A guide map for distance future inexistence
• A mantra that inspiring and • The nature of the business (es) it is in,
exhilarating the entire organization • The customers it seeks to serve and
satisfy - Thompson 1997
While the essence of vision is a forward-looking view of what an organization
wishes to becomes, mission is what an organization is and why it’s exists.

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 Definition of Business
 Mission and vision statement can use the ideas
generated through the process of understanding and
defining business.
 Understanding Business is vital for defining a business
and answering questions like ‘what is our business?’,
‘what will it be?’ and ‘what it should be?’
 Business can be defined in terms of marketing
orientation and Production orientation.

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Marketing oriented Abells’ three dimensions for defining a business
of a watch company

Production oriented definitions are based on

1. Process technology,
2. Cost efficiency and
3. Raw material sources
Levels of defining a business
1. Corporate level-TATA
2. Business level- Voltas 19
Definition of Product/service
concept
 The definition of Product/service affects vision and
mission statements.
 A product/service concept is the manner in which a
company assesses the user’s perception of its product
or service.
 ITC Badrachalam recognises paper as a product not as
a commodity. This is why it contacts customers
directly rather than through the whole sale agents.
 NIIT viewed itself as aservice providing organisation
seking knowledge transfer rather than a computer
training institution.
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Business model
 A business model expresses how an organisation makes
money. Business model could be defined as “a representation
of a firm's underlying core logic and strategic choices for
creating and capturing value within a value network.”
 TCS uses afixed price, fixed time model where clent payments
are based on time based milestones
 Infosys and Wipro have a time and material business model,
where clents pay on an ongoing basis depending on the
amount of work done rather than the time elapsed.
The Vision, Mission, Business definition,
definition of product/service concept and business
model determine the basic philosophy the
organisation adapts in the long run.
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Goals and objectives
 Goals denote what an organisation hopes to
accomplish in a future period of time. They represent
the future state or outcome of effort put in now.
 Objectives are the ends that state specifically how the
goals shall be achieved. They are concrete and specific
in contrast to goals that are generalised.

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Role of objectives
 Objectives define the organisation's relationship with
its environment
 Objectives help an organisation pursue its vision and
mission
 Objectives provide the basis for strategic decision-
making
 Objectives provide the standards for performance
appraisal

(c) Dr. Azhar Kazmi 2008 23

Characteristics of objectives
 Objectives should be understandable
 Objectives should be concrete and specific
 Objectives should be related to a time frame
 Objectives should be measurable and controllable
 Objectives should be challenging
 Different objectives should correlate with each other
 Objectives should be set within constraints

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Issues in objective setting
 Specificity
 Multiplicity
 Periodicity
 Verifiability
 Reality
 Quality

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Factors for objective setting
 The forces in the environment
 Realities of enterprise' resources and internal power
relationships
 The value system of the top executive
 Awareness by the management

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 Balanced scorecard model
 A performance management system developed by Robert. S Kaplan,
and David Norton of Harvard Business School is called balanced
scorecard.
 It seeks to do away with undue emphasis on short term Financial
objectives and seeks to improve organisational performance by focussing
attention on meaasuring a wide range of non-finacial, operqtional
objectives.
Balanced scorecard model requires evaluation of organisational
performance from four different perspectives.
1.Financial perspective;(revenues, earnings, ROI, and cash flows)
2. Customers’ perspective;(quality goods, effective delivery, and overall
customer satisfaction)
3.Internal Process perspective; (productivity indices, quality measures
and efficiency)and
4. Learning and growth perspective(morale, knowledge,employee
turnover, use of best practice,, share of revenue from new products and
employee suggestions).

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 The balanced scorecard model for
objective setting
How do we look to shareholders?

Financial Perspective
Objectives Targets

Customer Perspective Internal Process Perspective

Vision & Strategy
Objectives Targets Objectives Targets

Learning / Innovation Perspective

Objectives Targets
Based on R.S. Kaplan & D.P. Norton: The Strategy-focused orientation: How Balanced Scorecard
Companies Thrive in the New Business Environment Boston: Harvard Business School Publishing, 2000
and R.S. Kaplan & D. P. Norton: The Balanced Scorecard: Translating Strategies into Action Boston:
Harvard Business School Press, 1996.
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Typical strategy map

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 Critical success factors and key performance
indicators
 Critical success factors are crucial for organisational success.
They answer the question of what do we need in order to be
successful in a context. When strategists consciously look for
such factors and take them into consideration for strategic
management, they are likely to be more successful, putting in
relatively less efforts. CSFs need key performance indicators to
be measured. Examples of CSF are manufacturing Quality, Cost
efficiency, Sophisticated retailing, flexible product mix, product
image, and customer loyalty.
 Key performance indicators are the metrics or measures in
terms of which the critical success factors are evaluated.
Examples (KPI)
1. % of profit contributed to the community
2. Reduce product rejection rate
3. Number of repeat customers
4. Number of voluntary resignations
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 Strategy
 Strategies are the means by which long-term objectives
will be achieved.
 "A strategy is a unified, comprehensive, and integrated
plan that relates the strategic advantages of the firm to
the challenges of the environment. It is designed to
ensure that the basic objectives of the enterprise are
achieved through proper execution by the organization"
(William F. Glueck, and Lawrence R. Jauch).
 The role of strategy is to identify the general approaches
that the organization utilize to achieve its organizational
objectives. Therefore, the choice of strategy is so central
to the study and understanding of strategic
management.
 Strategies are the means by which long-term objectives
will be achieved.
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 Tactics
 In contrast, tactics are specific actions the organization might undertake in carrying its strategy.
 Difference between tactics and strategy
 i) Strategy determines the major plans to be undertaken while tactics is means by which
previously determined plans are executed.
 ii) The basic goal of strategy according to military science is to break the will of army, deprive
enemy of means to fight, occupy his territory, destroy or obtain control of his resources or make
him surrender. Goal of tactics is to achieve success in a given action and this forms one part of a
group of related military action.
 iii) Tactics decisions can be delegated to all levels of an organization while strategic decisions
cannot be delegated too low in organization. Authority is not delegated below levels than those
which possess perspective required for taking decisions effectively.
 iv) Strategy is formulated in both a continuous as well as irregular manner. decisions are taken
on basis of opportunities, new ideas etc. Tactics is determined on a periodic basis by various o r g
a n i z a t i ons . A fixed time table may be made for following tactics.
 v) Strategy has a long term perspective and occasionally it may have a short term duration. Thus,
time horizon in terms of strategy is flexible but in case of tactics, it is short run and definite.
 vi) decisions taken as part of strategy formulation and implementation have a high element of
uncertainty and are taken under conditions of partial ignorance. In contrast tactical decisions
are more certain as y work upon framework set by strategy. So evaluation of strategy is difficult
than evaluation of tactics.
 vii) Since an attempt is made i n strategy to relate organization with its environment,
requirement of information is more than that required in tactics. Tactics use information
available internally in an organization.
 viii) formulation of strategy is affected considerably by personal values of person involved in
process but same is not thr case in tactics implementation.
 Strategies are most important factor of orgaliization because they decide future course of action
for organization as a whole. On or hand tactics are of less importance because y are concerned
with specific part of organization.
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Policy

 Policies are the means by which objectives will be

achieved. "Policies are guide to action. They include
how resources are to be allocated and how tasks
assigned to the organization might be
accomplished ... (William F. Glueck, and Lawrence R.
Jauch "Policies include procedures, rules,
programs, and budgets established to support
efforts to achieve stated objectives. Therefore, policies
become important management tools for
implemention.

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 Budgets Budgets are estimates of revenue and expenditure for
a period of time
 Programmes A programme is a single use comprehensive plan
laying down the principle steps for accomplishing g a specific
objective and sets an approximate time limit for each stage.
Programmes provide the sequence of activities in a proper
order which are designed to implement polices. Programmes
are the instruments for coordination.
 Procedure
In general terms, a procedure can be defined as " A series
of functions or steps performed to accomplish a specific task
or undertaking." Strategies, programmes, policies, budgets
etc. need to be supplemented with detailed specifications i.e.
how they are to operate or would operate. A procedure is a
precise means of making a step by step guide to action that
operates within a policy framework. Most companies have
hundreds of procedures like selection, promotion, transfer
etc. They are essential for smooth operation of the business
activities.
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Rules
A rule is principle to which an action or a procedure
conforms or is intended to conform. It is a standard or
a norm to be followed in the conduct of a business in a
particular situation. It is more rigid and demands a
specific action with respect to particular situation. It
does not mention any kind of time estimate or
sequence as in the case of procedures. It is much more
specific than a policy. It allows no liberty or leniency
and does not tolerate much deviation. Rules have to be
strictly followed and lion compliance may entail
penalty or punishment. For example, "NO Smoking" is
a rule which has to be adhered to, by all the levels of
management.

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