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Strategic Management-2

Strategic intent
The purposes the organization strives for. Lays down the framework within which the firm would operate, adopt a pre determined direction and achieve their goals An hierarchy of intentions ranging from vision, mission, business definition, specific objectives and goals

Stretch, Leverage and Fit

Strategic intent usually incorporates stretch targets, which force companies to compete in innovative ways Most leading global companies started with ambitions that were far bigger than their resources and capabilities. But they created an obsession with winning at ail levels of the organization and sustained that obsession for decades Strategic intent does not start with constraints

The strategist's goal is not to find a niche within the existing industry space but to create new space that is uniquely suited to the company's own strengths - space that is off the map Almost every strategic management theory and nearly every corporate planning system is premised on a strategy hierarchy in which corporate goals guide business unit strategies and business unit strategies guide functional tactics

The goal of the strategy hierarchy is to ensure consistency up and down the organization. But this consistency is better derived from a clearly articulated strategic intent than from inflexibly applied top-down plans. Gary Hamel and Prahlad added the concepts of stretch and leverage to strategy intent Stretch is a misfit between resources and aspirations Leverage is getting the maximum form available resources Fit means positioning the firm by matching resources to the environment

The idea of stretch is diametrically opposed to the idea of fit. Under fit strategic intent would seem to be more realistic; under stretch and leverage it is idealistic

Strategic intent: by Gary Hamel and CK Prahlad, HBR,July-Aug 2005

The purpose of existence of an organization It should be feasible and achievable. Eg: NASAs mission (1960s) put a man on the moon Precise but not too narrow (product or feature specific) Should be clear Should be motivating Should be distinctive

Communicating the mission statement is as important as defining it. A mission statement , once formulated and communicated should serve an organisation for many years

Vision is to be dreamt of before it is articulated It is a powerful motivator to action Future aspirations the lead to inspiration to be the best in ones field of activity Eg: Make people happy-Walt Disney A self reliant India in steel Jamshetji Tata Affordable cars for the masses- Henry Ford

Business model
Levels at which the business could be defined: Corporate, SBU What is the product/ service? What is the business model? A representation of a firms underlying core logic and strategic choices for creating and capturing value Business models have an intimate relationship with strategy Firms in the same industry can rely of different business models as a matter of strategic choice Business models answer the key question: how do we make money?

Goals and objectives

What an organization hopes to achieve in a future period of time Should be : i) Understandable ii) Concrete and specific iii) Related to a time frame iv) Measurable and controllable v) Challenging vi) Should be consistent amongst each other