Unit 4 Strategic Intent

UNIT 4: STRATEGIC INTENT

UNIT STRUCTURE
4.1 Learning Objectives
4.2 Introduction
4.3 Concept of strategic intent, stretch, leverage and fit
4.3.1 Strategic Intent
4.3.2 Strategy as Stretch
4.3.3 Stretch
4.3.4 Leverage
4.3.5 Fit
4.4 Concept of Vision
4.4.1 The advantages / benefits of Vision
4.5 Defining Mission
4.5.1 Characteristics of Mission statement
4.6 Definition of Business
4.6.1 Dimensions of business definition
4.7 Business Models and their relationship with strategy
4.8 Let Us sum Up
4.9 Further Reading
4.10 Answers to check your Progress
4.11 Model Questions

4.1 LEARNING OBJECTIVES

After going through this unit, you will be able to:

• Explain the basic concept like strategic intent, vision, mission and
business definition.
• describe the relevance of these concepts from the organization point of
view.
• explain how these concepts’ clarity makes the organization a successful
entity.

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4.2 INTRODUCTION
The vision of a company’s long term goals and objectives is referred to as
the strategic intent. It is the cornerstone of strategic architecture. Strategic
intent involves a significant stretch for the organization as the existing skills,
capabilities and resources are not considered sufficient for the task. In this
unit we will discuss briefly about Concept of strategic intent, Concept of
Vision, Defining Vision, Benefits of having Vision, Definition of Business
and Business Models and their relationship with strategy.

4.3 CONCEPT OF STRATEGIC INTENT, STRETCH,

LEVERAGE AND FIT

These strategic concepts are used to formulate, to lead, and to realize the
ambitious enterprise performance. The concepts may be used to improve
productivity. The intention is to have greater performance than that have at
present. This can be achieved with the present knowledge and available
resources at the disposal of the company.
The credit of development of the concept Strategic Intent goes to Hamel
and Prahalad. Hamel and Prahalad (1994) conceptualize strategy
formulation in terms of core competencies and in terms of resource stretch
and leverage.

4.3.1 Strategic Intent

Strategic intent as defined by Hamel and Prahalad is used to

define and to communicate a sense of direction. The direction is about
the longer-term strategic position that the leaders of the organization
wishes to achieve through its processes of objective setting and
strategy formulation. Strategic intent comprises a sense of direction, a
sense of discovering that will help in identifying opportunities to meet
new challenges and a sense of destiny – that will create inspiration
and commitment on the part of managers, employees, and the
stakeholders. If a particular objective of a company becomes extremely

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focused and directed towards a specific target, then it is said that

company is showing a strategic intent.

In short strategic intent refers to the purposes for which the

organization strives for. These could be in the form of vision, mission
statement.

4.3.2 Strategy as Stretch

According to Hamel and Prahalad the strategic intent goes

beyond the conventional model. It is not just restricted to matching
internal competence and resources with company objectives. Strategic
intent indicates ‘stretch’ it means stretching of the present resources
and capabilities to achieve the desired goals. The concept of strategic
intent involves the use of resource stretch. It means that the enterprise
will not be able to achieve strategic intent with the present management
and use of resources and with the current operating capabilities of
the enterprise. The resources and capability may be inadequate to
meet the requirements of strategic intent. Hence for strategic intent
both will need “stretching”. Stretching is essential in order to meet the
needs specified by strategic intent.
The stretch is essential as there is gap between the knowledge,
resources and competence currently available to the enterprise. The
degree of stretch that is required by the organization is defined by the
strategic intent and the challenges the enterprise may face in achieving
strategic intent. The gap between what enterprise wishes to achieve
and what is the present performance and resource capabilities needs
to be analysed.

4.3.3 Stretch

The gap between resources and aspirations is stretch. Stretch

is misfit between the resources and aspirations. In order to meet the
demands of the intent there is need to stretch present resources and

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capabilities which may be at the present position are likely to be

inadequate to meet the requirements of strategic intent. They need
stretching.
Hamel and Prahalad comment that ‘we believe that it is essential
for top management to set an aspiration that creates, by design, a
chasm between ambition and resources ... managers must create a
misfit between resources and ambitions. Medium term challenges
should demand more of the organization than what it currently believes
is possible’ (p. 146).
Strategic intent is the strategy of challenging competitor and
overtaking the market leader. Eg. Cummins Vs Caterpillar; Jio Vs
Vodaphone; Titan Vs HMT. Strategic intent is clear about the end
results which a firm wishes to attain but it is flexible as regards to
means and there is scope for creativity and improvisation. Dhirubhai
Ambani of the Reliance Group is credited with having strategic intent
of being global leader by being the lowest cost producer of polyester
products.

4.3.4 Leverage
Hamel and Prahalad also added the concept of leverage.
Leverage refers to concentrating, accumulating, complementing,
conserving and recovering resources in such a way that the meager
resource base is stretched in such a way that the organization will be
able to meet its aspirations.

4.3.5 Fit
The concept of stretch is diametrically opposite of idea of ‘fit’. In
fit, company try to match its resources with its current environment.
Firms use SWOT techniques to assess organizational capabilities
with environmental opportunities. It helps to understand what the
company can achieve with its resources within the given environmental
factors.

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LET US KNOW

HOW APPLE USED STRATEGIC INTENT TO

DOMINATE ITS MARKETS
Apple is the best example of using a Strategic Intent to guide it to
market leadership. In 1996, they were just a 4% market share player
in the PC business. In 2000, Steve Jobs came back as CEO and
set the intent for Apple Computer to become great by being “the
hub of your digital life”. He saw the future trends involving the internet,
the computing power available in one pc and the new digital forms
of media that were emerging for use by individuals – and Jobs
wanted an Apple computer to be at the epicenter of everyone’s digital
universe. Following this intent, the company first focused on
updating the iMac platform, but following that, iTunes and then iPods
hit the market to transform personal digital music and the iPhone
came later to allow mobile computing access on one device, and
the rest is history.
Apple had to create many new competencies over the last 15 years
in order to achieve this intent – hardware design, software,
touchscreens, etc. The result of this obsession to win at achieving
their strategic intent is that now they’re the world’s most valuable
company and brand by 2X!

Accessed through: http://www.bobvintonconsulting.com/

blogs/how-apple-used-strategic-intent-to-dominate-its-markets-2/

4.4 CONCEPT OF VISION

When the firm expresses its aspirations as strategic intent should give
tangible results. Those results will be the realization of firm’s vision. Vision
indicates the ultimate purpose of being here. For instance some companies
may want to become world leader in next 10 years. Therefore vision
articulates the position which a firm would like to attain in the long run. It is
the dream of the organization.
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Sometimes vision and mission are used synonymously. But there is different
between the two. Mission is concerned with the present and the vision is
more concerned with the future. The mission statement answers the
questions what is our business? The vision statement gives the answers
to this question. The answer may be “what do we want to be?” Vision
statements charter the strategic path. It is powerful motivator to action.
Often it is the action from which the vision is derived. Eg. Walt Disney
wanted to make people happy.
Vision statement must be communicated to the members of the
organization. They are the one who are going to help in bringing our dream
to reality. Communication of vision to everyone is essential in order to achieve
orgnisation’s long term direction. The stakeholder will create confidence in
their mind about the clarity of the purpose of the firm and knows where the
company wants to progress.
Vision conveys the basic purpose. It creates a vivid image in the mind of
the employees, shareholders and others. It instills positivity among the
members. When the vision is clearly stated it indicates its direction in which
the organization is heading. It creates enthusiasm among the employees.
According to Peter Senge, “ A vision provides shared pictures of the future
that foster genuine commitment and enrollment rather than compliance”
Accodring to Miller and Dess, Vision simply as the “Category of intentions
that are broad, all inclusive and forward thinking”.

4.4.1 The Advantages / Benefits of Vision

 Good vision are inspiring and exhilarating

 It clarifies the path where organization wants to proceeds.
 It helps the organization to prepare for future.
 It clearly indicates top management views about the firm’s
long range direction.
 It directs in decision making process.
 It provides base for lower level managers to set departmental
mission and objectives.
 It creates common identity and a shared sense of purpose.

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 Good vision foster risk taking.

For availing these advantages the vision should act as an
organizational charter of core values and principles. There should be
determination of what makes us unique. A vision statement should
not be only a ‘high concept’ statement or an advertising slogan.
For Example:

International Business Machines Corporation (IBM) has a vision

statement and mission statement strongly associated with the
organization and its brand. A firm’s corporate vision statement sets
the desired future state of the business to guide strategic direction.
IBM’s corporate vision is “to be the world’s most successful and
important information technology company. Successful in helping out
customers apply technology to solve their problems. Successful in
introducing this extraordinary technology to new customers. Important,
because we will continue to be the basic resource of much of what is
invested in this industry.” This vision statement depicts IBM’s
developmental path as it maintains its position as one of the top players
in the global market. IBM’s vision statement marks the importance of
leadership of the business in the information technology industry.

4.5 DEFINING MISSION

Clarifying the mission statement and defining the business is the starting
point of business planning. Organization defines the basic reason for their
existence in terms of a mission statement. Mission statement defines the
role of the organization in the society. It describes the organization reasons
for being. For some companies the mission statement may be in the form
of very long statement or may be a just paragraph. Mission statement
includes a statement on organizational philosophy and purpose. It indicates
the fundamental purpose of the organization. The mission statement also
includes the firm’s philosophy about how it does business and treats its
employees. Some experts are of the opinion that mission statement
describes what the organization is now and a vision statement highlights
on what the organization like to be in the near future.
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According to Thompson (1997) mission is the “Essential purpose of the

organization, concentrating particularly why it is in existence, the nature of
the businesses it is in and customers it seeks to serve and satisfy”
In small organization the owner / founder establishes the mission of the
enterprise. In some companies CEO frames the mission statement.
However in the large organization a group of top managers is involved in
the process of framing mission statement.

4.5.1 Characteristics of Mission Statement

Mission statement indicates the strategic thinking of the
organization on its stakeholders namely shareholders, employees,
customers, suppliers and the environment. It should answer the
following questions:
1. What are the values, beliefs of the organization?
2. What is major competitive advantage of the company?
3. Who are the company’s customers?
4. Are employees a valuable asset for the organization?
Mission statement framed should have following characteristics:
 It should clearly indicate the organizational purpose and
outlook.
 It should have customer orientation
 It should also highlights on social objectives
1. Clarity :The mission statement should be clearly stated so
that it leads to effective action. The dream must be presented in a
positive way.

2. Realistic: It should be realistic and achievable.

3. Broad: The mission statement should be presented as the

grand design of the firm’s future.

4. Specific: Mission should be specific. It describes the scope

within which the organization has to function.

5. Dynamic: The mission statement should be dynamic to

balance between narrow and broad ways of doing things. It should
bring balance between present requirements and future expectations.
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6. Vision: The mission statement is the expansion of the

vision of the company.

Example of Mission Statement:

IBM’s Mission Statement

IBM’s mission is “to lead in the creation, development and

manufacture of the industry’s most advanced information technologies,
including computer systems, software, networking systems, storage
devices and microelectronics. And our worldwide network of IBM
solutions and services professionals translates these advanced
technologies into business value for our customers. We translate
these advanced technologies into value for our customers through
our professional solutions, services and consulting businesses
worldwide.”

The mission statement indicates what the business of IBM is. It

detailed out company’s aims and its activities on how to fulfill these
aims. It also highlights on :

• To be the leader in the IT sector with most advanced

technologies.

• Delivering better value to the customers.

• Providing professional solutions to the clients worldwide.

In nutshell the corporate mission statement highlights IBM’s

leadership in the information technology industry. IBM’s corporate
mission statement is very specific in providing bases for business
processes. Mission statement is closely linked to the company’s
corporate vision statement.

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CHECK YOUR PROGRESS

Q1. Define Strategic intent.

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Q2. State two advantages of vision.
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4.6 DEFINITION OF BUSINESS

Understanding business is vital to defining it and answering the question
‘What is our Business?’ The ideas generated while defining Business enable
the framing of the mission and vision statement. The organizational purpose
defines the activities that the organization performs or intends to perform
and the kind of organization that it is or intends to be. The establishment of
an organization’s purpose is very much important. Unless and until there is
clarity of purpose, the firm will not be able to develop clear objectives and
strategies.
A good business definition or purpose includes a statement of products,
markets, functions and objectives.
According to Peter Drucker “To know what a business is, we have to start
with its purpose. Its purpose must be outside of the business itself….. There
is only on definition of business purpose; to create a customer”.
Business purpose of P&G:
“We will provide products of superior quality and value that improves the
lives of the world’s consumers”.
The organization’s purpose starts with defining its present and potential
customers. It answers questions like:
A. Who is the customer?
B. What does he buy?

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C. What does customer look for when he / she buys the products
(value).
Answers to these questions also indicate the nature and quality of the
product, process or technology, market environment and / or
competitiveness.
Many companies and managers are not clear about the exact nature of
their business, nor are they always aware of the significance of this. The
definitions of business should be based on four major factors;

Business definition of :
Hindustan Uniliver: To meet everyday needs of Indian people everywhere
with branded products.

4.6.1 Dimensions of Business Definition

Based on D. F. Abell, Defining the Business:The Strategic Point of Strategic Planning

Understanding definition of business is the alternative way of studying
mission. Defining business is very vital. For example, Film producers

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wrongly perceive their business as producing films but their actual business
is to entertain viewers.
The mobile handset when introduced, the basic purpose was to provide
just a means of communication but now with the change of technology it
has become an important gazette for the users for multipurpose.
Derek Abell in a path breaking analysis, suggest defining a business along
the three dimensions of customer groups, customer functions and
alternatives technologies.

Dimensions Relate to
Customer Groups Could be individual customer or industrial users.
Customer Functions Finding time, recording time, e.g. Using watch as a
fashionable accessory and as a gift item.
Alternative Own production unit, Franchised Outlet or Undertaking
Technologies distribution agency.

This kind of clarification helps in defining business explicitly. A clear definition

is useful for strategic management in many ways. It helps in deciding
objectives, alternative strategies, functional policy etc.

Like strategy, business can be defined at the corporate or SBU levels. When
a firm operates in one area only then its definition might be comparatively
simple than those firms who operates at many level and areas. At the
corporate level, the business definition will concern itself with the wider
meaning of customer groups, customer functions and alternative
technologies. The significance of Abell’s approach to defining business lies
in it being marketing- and customers oriented approach rather than a product
oriented approach.

4.7 BUSINESS MODELS AND THEIR RELATIONSHIP

WITH STRATEGY
In short, strategic intent refers to the purposes for which the organization
strives for. These could be in the form of vision, mission statement. At the
business level it can be expressed in the form of business definition or
business model. When it is expressed in the precise terms it becomes
objectives or goals. Here, strategic intent lays down the framework within
which firms would operate. It provides directions to achieve the goals.
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In order to be successful in the market organization need to find out Critical

Success Factors (CSFs). CSFs are strategic of key factors. CSFs can be
found out by asking simple question like What do we need to do in order be
successful? Key factors are based on practical logic. These factors can
be the result of long run experience which leads to development of intuition,
judgment for use in strategic decision making.

Brainstorming can be used through which critical factors can be found out.
CSFs are used to pinpoint key results areas, determining objectives in those
areas.

Product / industry CSFs

Maruti Low cost with better quality

Courier Service Speedy service, reliability and price.

The term business model has become more popular after 1990s with the
development of internet. It is used to express number of ideas. Ideas those
create some value to the customers. Big giants like Wal-Mart, Google as a
search engine, Amazon as a option for online buying have become
successful only because of their business model.
Now, people are techno-savvy and they don’t have time to read physical
papers, so news papers have come with E-newspaper concept. They are
able to offer this facility free of cost to the reader because they earn revenue
through online advertisement.
Business model can 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 and others)
There is intimate relationship between business models and strategy of an
organization. Strategies are combinations different action plans to achieve
desired goals and business model can be used to do analysis of these
strategies choices and appropriate selection of a particular strategy.
Companies operating in same industry may have different business models.

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There is difference in the business model used by TCs, Infosys and Wipro.
Strategies doesn’t specify how to earn money but business model does
that perfectly.

The vision, mission, business definition and business models are helpful in
determining the basic philosophy that organization might opt in long run.

CHECK YOUR PROGRESS

Q1. State the dimensions of business definition.

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Q2. Define business model.
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4.8 LET US SUM UP

In this unit we have discussed the following:

• Strategic intent comprises a sense of direction, a sense of
discovering that will help in identifying opportunities to meet new
challenges and a sense of destiny – that will create inspiration and
commitment on the part of managers, employees, and the
stakeholders.
• Strategic intent indicates ‘stretch’ it means stretching of the present
resources and capabilities to achieve the desired goals. The concept
of strategic intent involves the use of resource stretch.
• Vision conveys the basic purpose. It creates a vivid image in the
mind of the employees, shareholders and others. It instills positivity
among the members. When the vision is clearly stated it indicates
its direction in which the organization is heading. It creates
enthusiasm among the employees.
• Business can be defined under three dimensions of customer groups,
customer functions and alternatives technologies.
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• Business model can be defined as ‘a representation of a firm’s

underlying core logic and strategic choices for creating and capturing
value within a value network’.

4.9 FURTHER READING

1. Cherunilam Francis (2015), Business Policy and Strategic

Management, Himalaya Publication House , New Delhi
2. C Appa Rao, B Parvathiswara Rao, K Sivaramakrishna (2008);
Strategic Management and Business Policy, Excel Books, Nerw Delhi
3. Tandon A (2010); Business Policy and Strategic Management; Anmol
Publications Pvt.Ltd.
4. Rao Subba P();Business Policy and Strategic Management: Text
and Cases; Himalaya Publication House , New Delhi

4.10 ANSWERS TO CHECK YOUR

PROGRESS

Ans. to Q. 1: Strategic intent as defined by Hamel and Prahalad is

used to define and to communicate a sense of direction.
Ans. to Q. 2: Good vision are inspiring and exhilarating. It clarifies the path
where organization wants to proceeds.
Ans. to Q. 3: Customer group, customer function, alternative
technologies.
Ans. to Q.4: Business model can be defined as ‘a representation of a
firm’s underlying core logic and strategic choices for creating
and capturing value within a value network’.

4.11 MODEL QUESTIONS

Q1: Discuss the concept of vision. Also state its advantages.

Q2: Define mission and state its characteristics.
Q3: Discuss the major factors which define business.
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