HIERARCHY

OF

STRATEGIC INTENTSTRATEGIC INTENT

Ms. Neha Kalra

APJIMTC

� "A strategist’s job is to see the company not as it is . . .but as it

can become."

—John W. Teets, Chairman of Greyhound, Inc

� Strategic Intent

Purpose the organisation strives for

Lays out the framework

Vision

Mission

Business definition

Goals and Objectives

IBM-Importance of vision

During IBM’s profitability decline in the 1990s, the company had a loss of nearly $14 billion. In 1993

IBM announced a loss of $8.1 billion—the largest corporate loss of its time. This loss explains the

decision to replace its CEO at the time with Lou Gerstner in April of 1993. Some of the problems

IBM was facing when Gerstner arrived were:

� Bad Decisions- IBM continued to focus on the mainframe industry and ignored the emerging

personal computer. Executives failed to realize that fast-paced computer industry, and they remained

Bad Decisions- IBM continued to focus on the mainframe industry and ignored the emerging

personal computer. Executives failed to realize that fast-paced computer industry, and they remained

complacent.

� Too Much Arrogance- IBM was considered unbeatable in the 1960s and 1970s. IBM believed that

its name would be enough to sell computers even when it was not positioned correctly in the market.

� Outsourcing to Competitors- IBM panicked when it realize that it was behind in the PC market.

Instead of producing the parts of the computer itself, IBM outsourced production to Microsoft and

Intel. Microsoft and Intel were small companies and could have been purchased by IBM. 25

Executives were unable to correct this horrific mistake.

� Bad Focus- IBM was unable to pick a market in which they wanted to compete.

Customers were becoming more and more fragmented, and IBM wanted to provide

for everyone. However, in trying to accommodate everyone, IBM accommodated no

one.

� High Costs- IBM was recognized as an employer for life. The founder of IBM

engrained that a job with IBM was a life-long job. This idea led to high-costs because

IBM-Contd…..

High Costs- IBM was recognized as an employer for life. The founder of IBM

engrained that a job with IBM was a life-long job. This idea led to high-costs because

employees were never laid off, even in non-profitable times

"The last thing IBM needs right now is a vision. (Before 1993)

What IBM needs most right now is a vision. (March 1993)"

—Louis V. Gerstner Jr., CEO, IBM Corporation

GERSTNER’S TURNAROUND STRATEGY FOR IBM

� Gerstner had the foresight to realize the importance of the mainframe

due to the onslaught of corporate internetworking while competitors

declared the mainframe “dead.”

� Manipulated the competitive direction of the company� Manipulated the competitive direction of the company

� Gerstner knew that internetworking pointed to increased demand for

central processing, big databases, larger storage units, and different

types of servers.

Gerstner succeeded in returning the computer giant to a profitable state.

VISION

� A vision statement is sometimes called a picture of your company in

the future. It is the dream of what you want your company to accomplish.

� Many organizations today develop a vision statement that answers the

question “What do we want to become?”question “What do we want to become?”

� A vision articulates the position that a firm would like to attain in the

distant future. It encapsulates the basic strategic intent.

� “A description of something(an organisation, corporate culture, a

business, a technology, an activity) in the future.”

-Kotter

WHY SHOULD ORGANIZATIONS HAVE A

“VISION”

�Good visions are inspiring and exhilarating.

�Good visions foster long term thinking.

� It creates a common identity and a shared sense of purpose.It creates a common identity and a shared sense of purpose.

�They are competitive, unique and simple.

�Good visions foster risk-taking and experimentation.

�They represent integrity.

VISION STATEMENT EXAMPLESVISION STATEMENT EXAMPLESVISION STATEMENT EXAMPLESVISION STATEMENT EXAMPLES

� General Motors’ vision is to be the world leader in transportation

products and related services. (Good statement)

� Tyson Foods’ vision is to be the world’s first choice for protein

solutions while maximizing shareholder value. (Good statement, unless solutions while maximizing shareholder value. (Good statement, unless

Tyson provides nonprotein products, too specific)

� PepsiCo’s responsibility is to continually improve all aspects of the

world in which we operate -environment, social, economic—creating a

better tomorrow than today. (Statement focuses on the concern of the

company towards the community)

�Dell’s vision is to create a company culture where

environmental excellence is second nature. (Statement

focuses on environmental concern of the company)

�Samsonite’s vision is to provide innovative solutions for the

travelling world. (Statement could have been more indicative travelling world. (Statement could have been more indicative

of the specific product it deals in or its core values or concern

for the society)

�Procter & Gamble’s vision is to be, and be recognized as,

the best consumer products company in the world. (Good

Statement)

VISION STATEMENTS-ELECTRONICS INDUSTRY

Channeling our energies towards the pursuit of customer

value and becoming a highly profitable company.

LG’s vision is to deliver innovative digital products and

services that make our customers’ lives better, easier and

happier through increased functionality and fun.

To create exciting new digital entertainment experiences for

consumers by bringing together cutting-edge products with

latest generation content and services.

MISSIONMISSIONMISSIONMISSION

� Mission is what an organization is and why it exists.

� “Essential purpose of the organization, concerning particularly why it is in

existence, the nature of business(ess) it is in and the customers it seeks to serve

and satisfy”.

-Thompson(1997)-Thompson(1997)

� Mission is the "purpose or reason for the organization's existence".

-Hunger and Wheelen (1999)

� The mission statement articulates the company’s purpose both for those in the

organizations and for the society.

CHARACTERISTICS OF A MISSION STATEMENTCHARACTERISTICS OF A MISSION STATEMENTCHARACTERISTICS OF A MISSION STATEMENTCHARACTERISTICS OF A MISSION STATEMENT

� It should be feasible

� It should be precise

� It should be clear

It should be motivating� It should be motivating

� It should be distinctive

� It should include major components of strategy

� It should indicate how objectives are to be accomplished

NINE COMPONENTS

1. Customers—Who are the firm’s customers?

2. Products or services—What are the firm’s major products or services?

3. Markets—Geographically, where does the firm compete?

4. Technology—Is the firm technologically current?

5. Concern for survival, growth, and profitability—Is the firm committed to growth and financial 5. Concern for survival, growth, and profitability—Is the firm committed to growth and financial

soundness?

6. Philosophy—What are the basic beliefs, values, aspirations, and ethical priorities of the firm?

7. Self-concept—What is the firm’s distinctive competence or major competitive

advantage?

8. Concern for public image—Is the firm responsive to social, community, and

environmental concerns?

9. Concern for employees—Are employees a valuable asset of the firm?

SOME MISSION STATEMENT EXAMPLES

� Dell’s mission is to be the most successful computer company (2) in the world at

delivering the best customer experience in markets we serve (1). In doing so, Dell

will meet customer expectations of highest quality; leading technology (4);

competitive pricing; individual and company accountability (6); best-in-class

service and support (7); flexible customization capability (7); superiorservice and support (7); flexible customization capability (7); superior

corporate citizenship (8); financial stability (5).

� Procter & Gamble will provide branded products and services of superior quality

and value (7) that improve the lives of the world’s (3) consumers. As a result,

consumers (1) will reward us with industry leadership in sales, profit (5), and

value creation, allowing our people (9), our shareholders, and the communities

(8) in which we live and work to prosper.

BUSINESS DEFINITION: DEREK ABELL’S

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Business Definition

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

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achieved. They are concrete and specific in contrast to goals that are

generalised.

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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� Objectives provide the standards for performance appraisal

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

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� Objectives should be measurable and controllable

� Objectives should be challenging

� Different objectives should correlate with each other

� Objectives should be set within constraints

FACTORS FOR OBJECTIVE SETTING

� The forces in the environment

�Realities of enterprise' resources and internal power relationships

� The value system of the top executive

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The value system of the top executive

�Awareness by the management

ISSUES IN OBJECTIVE SETTING

� Specificity

�Multiplicity

� Periodicity

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Periodicity

�Verifiability

�Reality

�Quality