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http://www.egyankosh.ac.in/bitstream/123456789/35333/1/Unit-3.pdf

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Strategic Framework UNIT 3 STRATEGIC FRAMEWORK ObjectivesAfter studying this unit, you should be able to:l understand the meaning of intent and vision;l understand the issues related to core values and core purpose;l know the concept of mission and its characteristics;l appreciate the process of formulating mission statements;l discuss the characteristics, need and issues with respect to objectives; andl distinguish the concepts of vision and mission, objectives and goals, intent andvision etc.

Structure3.1 Introduction3.2 Strategic Intent3.3 Vision3.4 Core Values and Core Purpose3.5 Mission3.6 Business Definition3.7 Objectives and Goals3.8 Summary3.9 Key Words3.10 Self Assessment Questions3.11 References and Further Readings

3.1 INTRODUCTIONStrategies are involved in the formulation, implementation and evaluation of process.The hierarchy of strategic intent lays the foundation for strategic management process.

The process of establishing the hierarchy of strategic intent is very complex. In thishierarchy, the vision, mission, business definition and objectives are established.Formulation of strategies is possible only when strategic intent is clearly set up. Thisstep is mostly philosophical in nature. It will have long term impact on theorganization.

3.2 STRATEGIC INTENTThe foundation for the strategic management is laid by the hierarchy of strategicintent. The concept of strategic intent makes clear WHAT AN ORGANISATIONSTANDS FOR , Harvard Business Review, 1989 described the concept in its infancy.Hamed and Prahalad coined the term strategic intent. A few aspects about strategicintent are as follows:l It is an obession with an organization.

l This obession may even be out of proportion to their resources and capabilities.32Introduction to StrategicManagement

l It envisions a derived leadership position and establishes the criterion, theorganization will use to chart its progress.l It involves the following:l Creating and Communicating a visionl Designing a mission statementl Defining the business



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l Setting objectivesVision serves the purpose of stating what an organization wishes to achieve in thelong run.Mission relates an organization to society.Business explains the business of an organization in terms of customer needs,customer groups and alternative technologies.

Objectives state what is to be achieved in a given time period.l The strategic intent concept also encompasses an active management process thatincludes focussing the organization’s attention on the essence of winning.l The concept of stretch and leverage is relevant in this context.Stretch is a misfit between resources and aspirations.Leverage concentrates, accumulates, conserves and recovers resources so that ameagre resource base can be stretched. Leverage reduces the stretch and focussesmainly on efficient utilization of resources.l The strategic fit matches organizational resources and environment. Thispositions the firm by assessing organizational capabilities and environmentalopportunities.l Under fit, the strategic intent would seem to be more realistic.l It is hierarchy of intentions ranging from a board vision through mission andpurpose down to specific objectives.

3.3 VISIONIt is at the top in the hierarchy of strategic intent. It is what the firm would ultimatelylike to become. A few definitions are as follows:Kotter “description of something (an organization, corporate culture, a business, atechnology, an activity) in the future. The definition itself is comprehensive and statesclearly the futuristic position.Miller and Dess defined vision as the “category of intentions that are broad, allinclusive and forward thinking”The definition lays stress on the following:l broad and all inclusive intentions;l vision is forward thinking process.

A few important aspects regarding vision are as follows:l It is more of a dream than articulated idea.l It is an aspiration of organization. Organization has to strive and exert toachieve it.l It is powerful motivator to action.l Vision articulates the position of an organization which it may attain in distantfuture.33

Envisioning Strategic Framework

This is the process of creating vision. It is a difficult and complex task. A wellconceived vision must have:l Core Ideologyl

Envisioned FutureCore Ideology will remain unchanged. It has the enduring character. It consists of core values and core purpose. Core values are essential tenets of an organization. Core purpose is related to the reasoning of the existence of an organization.Envisioned Future will basically deal with following:l The long term objectives of the organization.l Clear description of articulated future.

Advantages of having a VisionA few benefits accruing to an organization having a vision are as follows:

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l They foster experimentation.l Vision promotes long term thinking.l Visions foster risk taking.l They can be used for the benefit of people.l They make organizations competitive, original and unique.l Good vision represent integrity.

l They are inspiring and motivating to people working in an organization.Appendix 1 gives an example of vision and mission of Reliance Technology Centre soas to develop an understanding of the concept of vision in the corporate world.Activity 11. What is envisioning?........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................2. What is strategic intent? Discuss the concept giving an example from thecorporate world.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................3. Explain the concept of leverage stretch and fit.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................34Introduction to Strategic

Management 3.4 CORE VALUES AND CORE PURPOSEInitial reference of these two terms were given in section 3.3. These concepts are veryimportant in the process of envisioning. Collins and Porras have developed this

concept for better philosophical perspective. As has already been discussed, a wellconceived vision consists of core ideology and envisioned future. Core ideology restson core values and core purpose.Core Values are the essential and enduring tenets of an organization. They may be beliefs of top management regarding employees welfare, costumer’s interest andshareholder’s wealth. The beliefs may have economic orientation or social orientation.Evidences clearly indicate that the core values of Tata’s are different from core valuesof Birla’s or Reliance. The entire organization structure revolves around the philosophy coming out of core values.Core Purpose is the reason for existence of the organization. Its reasoning needs to be spelt.A few characteristics of core purpose are as follows:i) It is the overall reason for the existence of organization.ii) It is why of an organization.iii) This mainly addresses to the issue which organization desires to achieveinternally.iv) It is the broad philosophical long term rationale.v) It is the linkage of organization with its own people.Activity 21. What is core purpose? How is it different from core value?..............................................................................................................................................................................................................................................................................................................................................................................

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..........................................................................................................................2. Give examples of two companies with respect to core purpose and core values.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

3.5 MISSIONThe mission statements stage the role that organization plays in society. It is one of the popular philosophical issue which is being looked into business managers since lasttwo decades.

DefinitionA few definitions of mission are as follows:Hynger and Wheelen “ purpose or reason for the organization’s existence.David F. Harvey states “ A mission provides the basis of awareness of a sense of purpose, the competitive environment, degree to which the firm’s mission fits itscapabilities and the opportunities which the government offers.35

Thompson states mission as the “ essential purpose of the organization, concerning Strategic Framework

particularly why it is in existence, the nature of the business it is in, and the customersit seeks to serve and satisfy.The above definition reveals the following:i) It is the essential purpose of organization.ii) It answers “ why the organization is in existence”.iii) It is the basis of awareness of a sense of purpose.iv) It fits its capabilities and the opportunities which government offers.NatureA few points regarding nature of mission statement are as follows:l It gives social reasoning. It specifies the role which the organization plays insociety. It is the basic reason for existence.l It is philosophical and visionary and relates to top management values. It haslong term perspective.l It legitimises societal existence.l It has stylistic objectives. It reflects corporate philosophy, identity, character andimage of organization.

CharacteristicsIn order to be effective, a mission statement should posses the following characteristics.i) A mission statement should be realistic and achievable. Impossible statementsdo not motivate people. Aims should be developed in such a way so that may become feasible.ii) It should neither be too broad nor be too narrow. If it is broad, it will becomemeaningless. A narrower mission statement restricts the activities of organization. The mission statement should be precise.iii) A mission statement should not be ambiguous. It must be clear for action.

Highly philosophical statements do not give clarity.iv) A mission statement should be distinct. If it is not distinct, it will not have anyimpact. Copied mission statements do not create any impression.v) It should have societal linkage. Linking the organization to society will buildlong term perspective in a better way.vi) It should not be static. To cope up with ever changing environment, dynamicaspects be looked into.vii) It should be motivating for members of the organization and of society. Theemployees of the organization may enthuse themselves with mission statement.

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viii) The mission statement should indicate the process of accomplishing objectives.The clues to achieve the mission will be guiding force.

Examples of Mission StatementA few examples of mission statement (academically not accepted) are as follows:l India Today “ The complete new magazine”.l Bajaj Auto, “Value for Money for Years”.

l HCL, “ To be a world class Competitor”.l HMT, “Timekeepers of the Nation”.36Introduction to StrategicManagement

Some experts argue that these are the publicity slogans. They are not missionstatements. A few other examples are as follows:Ranbaxy Industries “To become a research based international PharmaceuticalsCompany”.Eicher Consultancy “To make India an economic power in the lifetime, about 10 to 15years, of its founding senior managers.”

Formulation of Mission StatementsThe mission statements are formulated from the following sources:

i) National Priorities projected in plan documents and industrial policy statements.ii) Corporate philosophy as developed over the years.iii) Major strategists have vision to develop mission statements.iv) The services of consultants may be hired.

Mission vs PurposeThe term purpose was used by some strategists. At some places, it was used assynonymous to mission. A few major points of distinction are as follows:i) Mission is the societal reasoning while the purpose is the overall reason.ii) Mission is external reasoning and relates to external environment. Purpose isinternal reasoning and relates to internal environment.iii) Mission is for outsiders while purpose is for its own employees.Activity 3

1. Distinguish between Mission and Purpose...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................2. Explain the essentials of Mission statement...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................3. Formulate Mission statements of any two organizations of your choice.

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Strategic Framework 3.6 BUSINESS DEFINITIONIt explains the business of an organization in terms of customer needs, customer groups and alternative technologies.

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Oerik Abell suggests defining business along the three dimension of customer groups. Customer functions and alternative technologies. They are developed asfollows:i) Customer groups are created according to the identity of the customers.ii) Customer functions are based on provision of goods/services to customers.iii) Alternative Technologies describe the manner in which a particular function can

be performed for a customer.For a watch making business, these dimensions may be outlined as follows:l Customer groups are individual customers, commercial organizations, sportsorganizations, educational institutions etc.l Customer functions are record time, finding time, alarm service etc. It may be agift item also.l Alternative technologies are manual, mechanical and automatic.A clear business definition is helpful in identifying several strategic choices.The choices regarding various customer groups, various customer functions andalternative technologies give the strategists various strategic alternatives. Thediversification, mergers and turnaround depend upon the business definition.Customer oriented approach of business makes the organization competitive.On the same lines, product/ service concept could also give strategic alternativesfrom a different angle. Business can be defined at the corporate or SBU levels.At the corporate level, it will concern itself with the wider meaning of customer groups, customer functions and alternative technologies. If strategic alternatives arelinked through a business definition, it results in considerable amount of synergicadvantage.

3.7 OBJECTIVES AND GOALSObjectives refer to the ultimate end results which are to be accomplished by theoverall plan over a specified period of time. The vision, mission and businessdefinition determine the business philosophy to be adopted in the long run. The goalsand objectives are set to achieve them.

Meaningl Objectives are openended attributes denoting a future state or out come and are

stated in general terms.l When the objectives are stated in specific terms, they become goals to beattained.l In strategic management, sometimes, a different viewpoint is taken.l Goals denote a broad category of financial and non-financial issues that a firmsets for itself.l Objectives are the ends that state specifically how the goals shall be achieved.l It is to be noted that objectives are the manifestation of goals whether specifically stated or not.38Introduction to StrategicManagement

Difference between objectives and goals

The points of difference between the two are as follows:l The goals are broad while objectives are specific.l The goals are set for a relatively longer period of time.l Goals are more influenced by external environment.l Goals are not quantified while objectives are quantified.Broadly, it is more convenient to use one term rather than both. The difference between the two is simply a matter of degree and it may vary widely.

Need for Establishing ObjectivesThe following points specifically emphasize the need for establishing objectives:

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l Objectives provide yardstick to measure performance of a department or SBUor organization.l Objectives serve as a motivating force. All people work to achieve theobjectives.l Objectives help the organization to pursue its vision and mission. Long term perspective is translated in short-term goals.

l Objectives define the relationship of organization with internal and externalenvironment.l Objectives provide a basis for decision-making. All decisions taken at all levelsof management are oriented towards accomplishment of objectives.

What Objectives should be set?According to Peter Druker, objectives should be set in the area of market standing,innovation productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude and publicresponsibility. Researchers have identified the following areas for setting objectives:Profit Objective: It is the most important objective for any business enterprise. Inorder to earn a profit, an enterprise has to set multiple objectives in key result areassuch as market share, new product development, quality of service etc. Ackoff callsthem performance objectives.Marketing Objective may be expressed as: “to increase market share to 20 percentwithin five years” or “to increase total sales by 10 percent annually”. They are relatedto a functional area.Productivity Objective may be expressed in terms of ratio of input to output. Thisobjective may also be stated in terms of cost per unit of production.Product Objective may be expressed in terms of product development, productdiversification, branding etc.Social Objective may be described in terms of social orientation. It may be tree plantation or provision of drinking water or development of parks or setting up of community centers.Financial Objective relates to cash flow, debt equity ratio, working capital, newissues, stock exchange operations, collection periods, debt instruments etc. For

example a company may state to decrease the collection period to 30 days by the endof this year.39

Human resource Objective may be described in terms of absenteeism, turnover, Strategic Framework

number of grievances, strikes and lockouts etc. An example may be “to reduceabsenteeism to less then 10 percent by the end of six months”.

Characteristics of ObjectivesThe following are the characteristics of corporate objectives:i) They form a hierarchy. It begins with broad statement of vision and mission andends with key specific goals. These objectives are made achievable at the lower level.ii) It is impossible to identify even one major objective that could cover all possible relationships and needs. Organizational problems and relationshipcover a multiplicity of variables and cannot be integrated into one objectives.They may be economic objectives, social objectives, political objectives etc.Hence, multiplicity of objectives forces the strategists to balance thosediverse interests.iii) A specific time horizon must be laid for effective objectives. This timeframehelps the strategists to fix targets.iv) Objectives must be within reach and is also challenging for the employees.If objectives set are beyond the reach of managers, they will adopt adefeatist attitude. Attainable objectives act as a motivator in the

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organization.v) Objectives should be understandable. Clarity and simple language should be thehallmarks. Vague and ambiguous objectives may lead to wrong course of action.vi) Objectives must be concrete. For that they need to be quantified.Measurable objectives help the strategists to monitor the performance in a better way.

vii) There are many constrants internal as well as external which have to beconsidered in objective setting. As different objectives compete for scarceresources, objectives should be set within constraints.

Process of Setting ObjectivesGlueck identifies four factors that should be considered for objective setting. Thesefactors are: the forces in the environment, realities of an enterprise’s resources andinternal power relations, the value system of top executives and awareness by themanagement of the past objectives. They are briefly narrated below:i) Environmental forces, both internal and external, may influence the interests of various stake holders. Further, these forces are dynamic by nature. Henceobjective setting must consider their influence on its process.ii) As objectives should be realistic, the efforts be made to set the objectives in sucha way so that objectives may become attainable. For that, existing resources of enterprise and internal power structure be examined carefully.iii) The values of the top management influence the choice of objectives. A philanthropic attitude may lead to setting of socially oriented objectives whileeconomic orientation of top management may force them to go for profitabilityobjective.iv) Past is important for strategic reasons. Organizations cannot deviate much fromthe past. Unnecessary deviations will bring problems relating to resistance tochange. Management must understand the past so that it may integrate itsobjectives in an effective way.40Introduction to StrategicManagement

Activity 41. For a company of your choice, apply the concept of business definition...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................2. Select any organization of your choice. You formulate vision, businessdefinition, mission, objectives, core purpose and core values.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

..........................................................................................................................3.8 SUMMARYStrategic intent refers to the purpose for which the organization strives for. It is the philosophical framework of strategic management process. The hierarchy of strategicintent covers the vision and mission, business definition and the goals and objectives.Stretch is misfit between resources and aspirations. Leverage stretches the meagreresource base to meet the aspirations. The fit positions the firm by matching itsorganizational resources to its environment. Vision constitutes future aspirations. Thisarticulates the position that a firm would like to attain in the distant future.

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Mission is the social reasoning of organization. It has external orientation. Itlegitimizes social existence.Business definition explains the business of an organization in terms of customer needs, customer groups and alternative technologies goal denote a broad category of issues which a firm sets for itself. Objectives are the ends that state specifically howthe goals shall be achieved. Overall this unit tries to give a view of strategic intent as a

whole.3.9 KEY WORDSBusiness Definition : It explains the business of an organization in terms of customer needs, customer groups and alternativetechnologies.Core Purpose : It is the reason for organization’s existence.Core Values : It is the essential and enduring character of organization.Goals : A broad category of financial and non financial issues thata firm sets for itself.Mission : It is the social reasoning of organization. It linksorganization to society.Objectives : What is to be achieved in a given time period. They are the

manifestation of goals.Strategic Intent : It makes clear what an organization stands for.Vision : What an organization wishes to achieve in the long run.41

Strategic Framework 3.10 SELF ASSESSMENT QUESTIONS1) What is strategic intent? Discuss the concept of leverage, stretch and fit withrespect to business organization.2) What is mission? How is it different from purpose? Discuss the essentials of amission statement.3) Stage five mission statements of big companies in India and review themcritically.4) Explain the three dimensions of a business definition. Illustrate.5) What are objectives? How are they set? State the characteristics of objectives.

6) How will you set objectives for a large organization? Assume imaginary details.7) Explain the following:a) Core Value b) Core Purposec) Leverage8) Visit two companies of your choice and collect the details regarding hierarchy of strategic intent.

3.11 REFERENCES AND FURTHER READINGSDrucker, P.F. (1974). “Management Task Responsibilities and Practices”, Harper &Row, New York.Ghosh, P.K. (1996). “ Business Policy Strategic planning and Management ”, SultanChand & Sons, New Delhi.

Glueck, W.F. and Iavch L.R. (1984). “ Business Ploicy and Strategic Management ”Mc graw Hill, New York.Kazmi, Azhar (2002). “ Business Policy and Strategic Management ”, Tata McgrawHill Publishing Co, Ltd., New Delhi.Miller A. and Den G. G. (1996). “Strategic Management ” Mcgraw hill, New York.Prasad, L.M. (2002). “ Business Policy: Strategic Management ”, Sultan Chand &Sons, New Delhi.Shrivastava, R.M. (1995). “Corporate Strategic Management ”, Pragati Prakashan,Meerut.

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Tompson, J.L. (1997). “Strategic Management: Awareness and Change”,International Thompson Business Press, London.42Introduction to StrategicManagement

Appendix 1

RELIANCE TECHNOLOGY CENTREReliance Industries Limited is the largest private sector in India and is thesecond largest manufacturer of polyster in the world. Reliance TechnologyCentre was set up in 1997 and presently is engaged in manufacturing PEThomo and co-polymer fibres. The following is the vision and mission of thecompany.VISIONl To establish a centre of excellence for research and development in PET homoand copolymer fibres and resins through disciplined, motivated and time boundexecution of projects;l To create an environment conducive to intellectual growth, efficient flow of information and accountability in order to achieve a productive and sustained

phase of research activities;l To closely interact with the business group companies and technical for short,medium and long-term quality and process issues;l To thrive to become a catalyst to the growth of company’s polyster business;l To leverage synergy between Reliance’s PET, polymers and fibre intermediate business;l To create, maintain and pursue strategic research alliance for top end researchactivities.

MISSIONTo achieve ‘Global leadership in polymers, fibres and resin businesses’. Source: www.ril.com

Link2

http://books.google.co.in/books?

id=7bbTVYIXstMC&pg=PA63&lpg=PA63&dq=what+is+stretch,leverage+and+fit+in+strategic

+management&source=bl&ots=JrgulOXSHt&sig=MXL_1Ouuzn4NszlvHg6fSQfsi1g&hl=en&s

a=X&ei=YK03T-X0DIzprQf44OzVBQ&ved=0CD8Q6AEwBA#v=onepage&q=what%20is

%20stretch%2Cleverage%20and%20fit%20in%20strategic%20management&f=false

link 3

http://www.scribd.com/doc/7076997/SCDL-PGDBA-Finance-Sem-2-Strategic-

Management

Explain Strategic intent, stretch leverage & Fit.

http://www.ril.com/

http://www.scribd.com/doc/7076997/SCDL-PGDBA-Finance-Sem-2-Strategic-Management


http://www.ril.com/



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Introduction: for an effective strategic intent one has to develop effective strategy, rather than

focusing at the resourcefulness of Competition & their pace at which they are building

competencies one has to focus on existing position.

11

Strategic Intent is something more than the unfettered ambition. It’s not a softtarget. According to Prahlad & Gray1)It forsee’s a desired leadership position and establishes the criteria theorganization will chart it’s progress.

2)It Captures the essence of winning & is stable over time.

3)It requires personal effort, Commitment and bit of luck to achieve the target.

4)The Important thing that a company asks for is not “How Well Next Year be

different”? But they ask, “ What must we do differently next year to getcloser to our strategic intent?”5)Most companies look at change and innovations in isolation

6)Innovations come from everywhere & top Management role is to add value toit.7)Strategic intent leaves room for creativity, innovation & top Managementdirects it.8)There must be a balance between resources as a Constrain Vs Resource as

leverage so as to reduce risk. Former is done through building a balanced portfolio of cash

generating and cash consuming business and in the latter a well balanced and sufficiently

broad portfolio/ collection of advantages is assured.

9)It implies a seryable stretch for an organization.10)Since the current capabilities & resources are not------- it will forceinventiveness and the management will keep on involving challenges andthey give time to digest one challenge before launching another.11)One important parameter is reciprocal responsibility - Which means equalblame & credit for both operating levels & top management.12)Companies with good strategic intent know the importance of documenting

failure but instead of blame fixing and nailing people they are more interested in the

management reasons and the orthodoxy, that may have led to future.

Stretch: To Achieve strategic intent one has to stretch forward and has to look at the

resourcefulness instead of looking at resources. One has to make use of Innovation and

resources. Stretch leads to leverage.

Leverage: Refers to concentrating on the resources to achieve strategic intent,accumulating, learning, experiences & Competencies in a manner to meet the aspirations

by stretching the scarce resource that an organizational resource to the environment.

Instead of allotting the competitors blindly & taking their head companies mustleverage the resources.

Fit: Strategic fit is the traditional way of looking at strategy. Strategic fit is conservative

and seems to be more realistic but u may not be aware of the potential. Under stretch &

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leverage Strategic extent could be impossible, idealistic but under fit strategic something

far beyond possibilities and look at the potential possibilities.

Conclusion.12

Thus Strategic intent is what the organization strives for e.g. Canon wanted to beat Xerox.

It’s an obsession to an organization & it is to win at all levels of the organization, sustaining

that obsession is in quest for global leadership.

2) Lack of capabilities for the development of new product, which is potentiallyrisky for a company during the time of crisis.OPPORTUNITY: can be accomplished and can help to consolidate and strengthen theorganization. It’s a favorable condition for an organization in its environment.E.g. Due to better GDP growth a company provides increase in demand for the products/services. It helps in strengthening its position.

THREATS: when the opportunities are not utilized properly it can cause problem to the to the

organization which causes threat. It is unfavorable condition for the organization. It causes

risk/damage to an organization.

E.g. Due to opening up of economy, the emergence of multinational companies, which are

stronger and has good resources, offers stiff competition to the existing companies in an industry.

CONCLUSION

An understanding of both internal and external environment in terms of opportunities, threat,

strength, weaknesses important for existence, growth and profitability of an organization. A

systematic approach and understanding the environment is SWOT analysis all about.

Environment to be studied

1) Events: Is some specific occurrence that takes place in different environmental sectors. E.g.

Bilateral agreement between 2 countries in which the company is operating and facing

competition from local companies.

2) Trends: is the way the environment is shaping up. They are he course of action along which events

take place like global warming, nuclear families etc.

3) Issues: are the current concerns that arise in response to events and trends.E.g. Pollution Control, Business ethics after scams.

4) Expectations: are the demands made by interested groups in light of their concern. Like corporate

governance, greater transparency, stricted auditing norms.17

Q9. What are the core competencies and organization capabilities?CORE COMPENTENCIES:1)An organization with its resources and the capacity of converting the

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resources in to outputs and the behaviour of there (i.e. capability and resources) develops certain

strength and weakness, which their combined lead to synergistic effects.

2)Synergy – Total (is greater) sum of the parts. In terms of organizationalcompetencies it manifest themselves in advantages over competition.3)Competencies develop over a period of time.

4)It’s a fine art of competing with its rivals over a period of time and it usesthese competencies to exceed well. The capability of using thesecompetencies to exceed well turns them into core competence.5)Core competencies have joined greater currency and popularity as per C.K Prahaled and Gary Hamel. It’s a portfolio of products/services/different business.6)In short run competencies for a company is derived from the price performance and in longer run it’s the ability to build at lower cost andspeedily than others.7)A diversified company is like a large tree. What are not easily visible andapparent – are the core products and leaves, flowers, fruits are the end product.8)Root is akin to “Core Competence”.9)Core competence is communication, collective learning and co-ordination of diverse production skills and deep involvement and commitment to work anddelivery of value across all levels and functions.10)Core competencies are the glue that binds existing business and guidemarket entries instead of market attractiveness.11)Core competencies can be identified by conducting 3 tests i.e provides potential access to wide variety of markets and significant contributions tothe benefit of the end product difficult for competitors to imitate.12)Building competencies are not sharing costs by SBU’ (or) out pending rivalson R and D

13)By not building competencies in emerging markets you may lose the chanceof competing in existing markets.It’s important to maintain the competencies even it not active in the market.ORGANISATIONAL CAPABILITY: -181)It’s the inherent capacity of an organization to use its strengths andovercome weakness to exploit opportunities and face threats in the externalenvironment.2)It’s comparable & it’s very difficult to measure the capability of anorganization.3)Strategist would like to know what capacity exist within the organization &what potentials should be developed so that opportunities can be exploited &how it can face threats.4)Organisational capability includes Financial, Marketing, Operations,Personnel, and Information Management & General Management.Financial Capability:1)Source of Funds – How well the company can raise funds, their cost &availability.2)Management & use of funds – how optimally it utilizes the funds where andhow they are used.

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3)Factor governing marketing capability are the from P’s i.e. Product, PricePlace & Promotion related factors how it generates systematically.4)Factors influencing personal capability are R & D System, production &Control Systems.5)Factors leading to personal Capability are industrial & personnel relations,organizational & employees Characteristics.6)Factors that lead to information management capability are integrative,systematic & supportive factors.The retrieval, usage, Acquisition, processing, synthesis, transmission &dissemination of information.General Management methods & Techniques.To carry at the organizational study internal analysis tools can be used asmentioned below.

1)Value Chair Analysis

2)Qualitative & Quantitative analysis both financial non financial.

3)Comparative analysis, bench marking, industrial norms.

4)Comprehensive Analysis using new tools Balance score card/key factor

making.Conclusion: These are the factors that influence them

Link 4

http://jargondarbar.blogspot.in/2007/11/stretch-leverage-and-fit-of.htmlStretch, Leverage and Fit

To achieve Strategic Intent – you need to Stretch. As of today there is a misfit

between resources and aspirations. So instead of looking at resources, you will look

at resourcefulness. To achieve you will stretch and make innovative use of your

resources.

This leads to Leveraging your resources. Leverage refers to concentrating your

resources to your strategic intent, accumulating learning, experiences and

competencies, in a manner that a scarce resource base can be stretched to meet

the aspirations that an organizational resources to its environment.

The strategic fit is the traditional way of looking at strategy. Using techniques

such as SWOT analysis, which are used to assess organizational capabilities and

environmental opportunities, Strategy is taken as a compromise between what the

environment has got to offer in terms of opportunities and the counteroffer that the

organization makes in the form of its capabilities.

Under fit, the strategic intent is conservative and seems to be more realistic, but

you may not be aware of the potential; under stretch and leverage it could be

improbable, even idealistic, but then you look at something far beyond present

possibilities and look at the potential possibilities.

Link 5

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] http://www.slideshare.net/myslideshare/external-environment

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