Strategic Intent Unit-II

Some sixteen years ago Grey Hamel & C.K. Prahalad at London Business School wrote the concept of “Strategic Intent” referring to context that how western companies operates differently than their Japanese counterparts.

Evolution of concept

The success stories of companies such as Toyota, Canon and Komatsu share an underlying theme: All embraced bold ambitions beyond the limits of existing capabilities and resources. They aimed for global leadership and created the requirements for it. Komatsu wanted to outperform Caterpillar, Canon sought to beat Xerox and Honda wanted to become an automotive pioneer like Ford. The concept of strategic intent holds important lessons for small businesses aiming to grow and succeed.

The strategic intent notion helps managers focus on creating new capabilities to exploit future opportunities. It is more internally focused than the fit notion.“A long term goal that captures employees’ imaginations and clarifies criteria for success.”

strategic intent envisions a desired leadership position and establishes the criterion the organization will use to chart its progress.

Strategic intent captures the essence of winning. Eg: Apolo Program

Intent Synonyms to scorecard

For Coca-Cola, strategic intent has been to put a Coke within “arm’s reach” of every consumer in the

world.

In battles for global leadership, one of the most critical tasks is to lengthen the organization’s attention span. When Caterpillar threatened Komatsu in Japan, for example, Komatsu responded by first improving quality, then driving down costs, then cultivating export markets, and then underwriting new product development.

Strategic intent is stable over time.

shareholder wealth vs global market leadership

But the two goals do not have the same motivational impact.“beat Benz”—the rallying cry at one Japanese auto producer? Strategic intent gives employees the only goal that is worthy of commitment: to unseat the best or remain the best, worldwide.

Strategic intent sets a target that deserves personal effort and commitment.

How traditional strategies (European, US) differs from modern (Japanese).

There are two basic and contrasting models of strategy that are not necessarily mutually exclusive, but have differing foci: 1. The Western model centers on balancing

the fit between current resources and opportunities, while

2. the Asian model leverages available resources to achieve nearly unattainable goals.

3. Like Samsung

Turn strategic intent into reality

Stay Ahead of Your Competition

Two main concepts:

Create a sense of urgency Make stakeholders aware of the worst case scenario. Standing on a “burning bridge.” Komatsu, for example, budgeted on the basis of worst-case exchange rates that overvalued the yen.Personalize changes

Let stakeholders see what the competition is doing better for them (Ford inspired its factory workers with videos of Mazda’s most efficient plant).

Turn strategic intent into reality

Tackle one challenge at a time. Avoid organizational overload and conflicting priorities. Provide employees with the skills they need

to work effectivelyTraining in statistical tools, problem solving, value engineering, and team building,

Establish clear milestones and review mechanisms

To track progress, and ensure that internal recognition and rewards reinforce desired behaviors. The goal is to make the challenge inescapable for everyone in the company.

Build layers of advantages. The wider a company’s portfolio of advantages, the less risk it faces in competitive battles. Lower cost, better scores, higher recognition

(one at a time – all at one time – but in a strategic pattern). The Japanese color television industry illustrates this layering process.

Stay Ahead of Your Competition

By 1967, Japan had become the largest producer of black-and-white television sets. By 1970, it was closing the gap in color televisions. Japanese manufacturers used their competitive advantage—at that time, primarily, low labor costs—to build a base in the private-label business, then moved quickly to establish world-scale plants. This investment gave them additional layers of advantage—quality and reliability—as well as further cost reductions from process improvements. At the same time, they recognized that these cost-based advantages were vulnerable to changes in labor costs, process and product technology, exchange rates, and trade policy. So throughout the 1970s, they also invested heavily in building channels and brands, thus creating another layer of advantage: a global franchise.

Stake out undefended territory (finding loose bricks)Honda identified inexpensive motorcycles as an undefended market share. They used that small entry point to get into the market to dominate the car market.

·Changing the terms of engagement — refuse to accept the leader’s definition of the industry and segments; take advantage of the fact that successful companies are often slow to change ·Compete through collaboration — my

enemy’s enemy is my friend; take advantage of the development efforts of potential rivals

.

Process of Envisioning

Vision

Core ideology• Core purpose• Core values Well conceived

vision

Envisioned future• Long term goal• Vivid description

Vision - big picture idea of what you want to achieve.

Mission - general statement of how you will achieve your vision.

Core Values - how you will behave during the process.

Goals - general statements of mileposts you need to meet to achieve your vision.

Objectives - specific, time-sensitive statements for achieving your goals

Strategies/Action Plans - specific implementation plans of how you will achieve your objectives and goals.

Ag Ventures Alliance (AgVA) is a company that starts value-added businesses. Because of its unique nature, it is important that AgVA create a meaningful mission statement to convey its purpose to it leaders, staff and members.

Vision - A vision statement is a mental picture of what you want to accomplish or achieve. For example, you may want to develop a profitable winery or a successful organic dairy business.

AgVA’s Vision- A vibrant rural economy driven by value-added agriculture.

Mission –AgVA’s Mission - To create and facilitate the

development of value-added agricultural businesses.

Core Values – Provide economically sound business

opportunities for our members. Practice high ethical business standards. Respect and protect the environment. Produce high quality products that are safe

for consumers. Meet the changing needs and desires of

consumers.

A company's mission statement is essentially its statement of purpose. It serves as a guide for all of the company's decision-making. Shareholders, leaders and employees are generally the target of the mission. It should help workers within the organization know what decisions and tasks best align with the mission of the company. A mission statement offers insight into what company leaders view as the primary purpose for being in business. Some companies have profit-motivated missions, while others make customers a focal point. Other firms use a mission to point out more altruistic intentions that ultimately lead to profits.

mission

“ A formal written document that attempts to capture an organization's unique and enduring purpose (defines reason the organization exists and provides basis for developing organizational goals, planning and resource allocation)”

definition

It should help workers within the organization know what decisions and tasks best align with the mission of the company.

A mission statement offers insight into what company leaders view as the primary purpose for being in business.

Other firms use a mission to point out more altruistic intentions that ultimately lead to profits.

Functions of mission

Profile of today; current products, services, customers and philosophy; from the head; statement of distinctiveness; description of essence of firm's purpose

Mission Statement Description

Reflect purpose of firm through: primary customers and markets, principle services or products, geographic focus, core technology focus,

philosophy, economic value focus, firm self-concept, firm desired image, and concern for employees

Attributes of mission statements

1) Fuzzy, non-specific language2) Interchangeable goals or visions that can be adopted by any company if only a few words are changed3) lack of true, prolonged leadership support - in action more than in words4) poor implementation

Why mission statements fail

Wal-Mart: "To give ordinary folk the chance to buy the same thing as rich people."

3M: "To solve unsolved problems innovatively."

Walt Disney: "To make people happy."

Some examples of well-known companies' mission statements:

When creating a mission statement there are a few simple guidelines that can be followed. They must address three questions?

What are the opportunities or needs the organization addresses?

What does the organization do to address those needs? and

What principles and values guide the organization?

WRITING A MISSION STATEMENT

Must be feasible- realistic and achievable. Precise- Manufacturing bicycle Vs Mobility

business Clear & Motivating - Distinctive – from Hamara Bajaj to desh ke

Dhadkan How to achieve

Characters of Mission

Is our mission statement focused on satisfying customer needs rather than being focused on the product?

Does our mission statement tell who our customers are?

Does our mission statement explain what customer needs our company is trying to satisfy?

Does our mission statement explain how our company will serve its customers?

Criteria for Evaluating a Mission Statement

Does our mission statement fit the current market environment?

Is our mission statement based on our core competencies? (A core competency is a company strength.)

Is our mission statement motivating and does it inspire employee commitment?

Is our mission statement realistic?

Is our mission statement specific, short, sharply focused and memorable.

Is our mission statement clear and easily understood?

Does our mission statement say what we want to be remembered for?

A goal is a broad primary outcome. A strategy is the approach you take to

achieve a goal. An objective is a measurable step you take

to achieve a strategy. A tactic is a tool you use in pursuing an

objective associated with a strategy.

Goals, Strategies, Objectives and Tactics (the G’SOT),

Goal: Make our Core PC microprocessors a category leader in sales revenue by year X.

Strategy: Persuade buyers that our Core processors are the best on the market by associating with large, well-established PC manufacturers.

example of G’SOT for Intel’s line of Core processors:

Objective: Retain 70 percent or more of the active worldwide PC microprocessor market, according to Passmark’s CPU benchmark report.

Tactic: Through creative that underlies our messaging, leverage hardware partner brand awareness to include key messages about the Intel Inside program.

Suitable: Does it fit with the vision and mission?

Acceptable: Does it fit with the values of the company and the employees? • Understandable: Is it stated simply and easy to understand?

Flexible: Can it be adapted and changed as needed?

A goal should meet the following criteria:

“Objectives are specific, quantifiable, time-sensitive statements of what is going to be achieved and when it will be achieved. They are milestones along the path of achieving your goals.

Objectives -

Measurable: What will happen and when? Suitable: Does it fit as a measurement for

achieving the goal? Feasible: Is it possible to achieve? Commitment: Are people committed to

achieving the objective? Ownership: Are the people responsible for

achieving the objective included in the objective-setting process?

Objectives should meet the following criteria:

Levels OF STRATEGIESCorporate Strategies

Growth Strategy: -Expansion through current operations

Concentration:- Expansion within an existing business area

Diversification:- Expansion occurs by entering new business areas

Vertical Integration:- Expansion by acquiring existing suppliers or distributors

TYPES OF STRATEGIESGrowth And Diversification Strategies

Retrenchment:- *Changes operations to correct weaknesses * Liquidation: An extreme form of retrenchment wherein the business closes and sells off its assets Restructuring:- Reduces the scale or mix of

operations Downsizing:- Decreases the size of operations Divestiture:- Sells off part of the organization

to focus on core businesses

Restructuring and Retrenchment Strategies

The SEA Directive applies to a wide range of public plans and programs (e.g. on land use, transport, energy, waste, agriculture, etc). The SEA Directive does not refer to policies.

The SEA Directive is in force since 2001 and should have been transposed by July 2004.

Appraising Enviornment

Plans and programmes in the sense of the SEA Directive must be prepared or adopted by an authority (at national, regional or local level) and be required by legislative, regulatory or administrative provisions.

Are prepared for agriculture, forestry, fisheries, energy, industry, transport, waste/ water management, telecommunications, tourism, town & country planning or land use and which set the framework for future development consent of projects listed in the EIA Directive.

OR Have been determined to require an

assessment under the Habitats Directive.

An SEA is mandatory for plans/programmes which are:

SWOT Analysis:- Identifies Organization’s Strengths, Weaknesses, Opportunities, and Threats

Core Competency:- A special strength that gives an organization a competitive advantage

SWOT

Market standing Innovation Productivity Resource levels Profitability Manager performance and development Worker performance and attitude Social responsibility

Key objective areas to be focused

Profitability Growth Market share Social responsibility Employee welfare Product Quality Service

Types of objectives

R&D Diversification Efficiency Financial stability Resource conservation Mgt & labor development`45`

PCS raise following questions:- Should we compete on price or other factors

than price? Should we compete for Market share or for

segment?Hence proter has given a generic competitive strategies based on lower price or differentiation for all size and type of firm.

Porter’s Competitive Strategies

Lower cost strategy: ability of a firm to design, produce and market a comparable product more efficiently than its competitors:

Example: Southwest AirlinesThe airline industry has typically been an industry where profits are hard to come by without charging high ticket prices. Southwest Airlines challenged this concept by marketing itself as a cost leader. Southwest attempts to offer the lowest prices possible by being more efficient than traditional airlines. They minimize the time that their planes spend on the tarmac in order to keep them flying and to keep profits up. They also offer little in the way of additional thrills to customers, but pass the cost savings on to them.

Differentiation Strategy:- ability to provide unique and special value to customer. You can do this by adding these features

1. Practical Differences; Mercedes-Benz2. Eye-Catching Luxury: The Royal Caribbean

cruise line has pursued this strategy with its ship Voyager of the Seas. The company added a huge four-story shopping mall and the largest slot machines in the world to the ship,

3. Marketing to a Demographic: A hair salon that markets itself to a young and trendy urban crowd also serves a fairly narrow niche market. Because less competition exists in these niches, these companies can position themselves as the best ones in their niche.4. Building Overall Image:

Still Porter proposed that companies needs to determine its competitive advantage by knowing its competitive scope.

Aims at broad mas market requires “ aggressive construction of efficient scale facilities”

Attention to layout details helps the store shape shopper's attitude.

Ambience is most power full weapon to attract customers.

They are likely to earn above average returns on investement6.

Cost leadership

Product has unique preposition to attract customers.

Can be in terms of design and services. It generates higher profits than low-cost

leadership strategies.

differentiation

Focus on particular buyer group or geography

7/11, Vishal Mega Mart

Cost focus

Morgan Motor Car,

Differentiation Focus

A management concept which separates companies within the same industry with similar business models and or a similar strategy combination. A strategic group can be from any type of business and depending on the industry, are defined within a dimensional construct. Strategists will often display the market position of each competing company on a two dimensional grid.

Strategic Group

The examination of businesses that function within the same strategic group is called strategic group analysis.

This type of analysis is often discussed in conjunction with market focus. Market focus splits the consumer population into market segments that share characteristics such as education level, income, age and gender. Companies research the general preferences of market segments and then use those preferences to gear products and services toward specific market segments that are served by strategic groups.

strategic group analysis

The goals of strategic group analysis vary depending on several strategic group characteristics, including the size of the market, the diversity of products offered, the geographical proximity of the competing companies, and where the products are sold. For example, a company that serves consumers who value low prices might conduct an analysis to determine where competitors’ products fall on the low-price-versus-quality scale. The results of this group analysis might help the company determine how to price products and set quality control.