STRATEGIC MANAGEMENT

AND BUSINESS POLICY

THIRD EDITION

Chapter 2
Hierarchy of strategic
intent

AZHAR KAZMI
Learning objectives
 Explain the concepts of strategic intent, stretch, leverage,
and fit
 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
 Distinguish between well-formulated and badly-stated
objectives
 Discuss the role of critical success factors in setting
objectives

(c) Dr. Azhar Kazmi 2008 2

Strategic intent
 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.

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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
 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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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
 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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Abells’ three dimensions for defining a
business of a watch company

Customer functions:
Utility / ornamental

Alternative technologies:
Mechanical / quartz
technology

Customer groups:
children, men or
women

Based on: D.F. Abell: Defining the Business: The Starting Point of Strategic Planning Englewood Cliffs,
N.J. Prentice-Hall, 1980

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Business model
 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.”

Shafer, Scott M. & Smith, H. Jeff & Linder, Jane C., 2005. "The power of business models," Business Horizons,
Elsevier, vol. 48(3), pages 199-207

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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

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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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 The balanced scorecard model
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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Critical success factors and key
performance indicators
 Critical success factors are crucial for
organisational success. 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.
 Key performance indicators are the metrics
or measures in terms of which the critical
success factors are evaluated.

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