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Strategy

The document outlines the six main steps in the strategy formulation process: 1. Setting the organization's objectives and analyzing factors that influence strategic decisions. 2. Evaluating the organizational environment including competitive position and conducting a review of the organization's products. 3. Setting quantitative targets for some organizational objectives to evaluate departmental contributions. 4. Aiming divisional plans in context of macroeconomic trends and identifying contributions of departments. 5. Performing a performance analysis to identify gaps between actual performance and long-term aspirations. 6. Choosing the best course of action after considering goals, strengths, potential, limitations, and opportunities.

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178 views4 pages

Strategy

The document outlines the six main steps in the strategy formulation process: 1. Setting the organization's objectives and analyzing factors that influence strategic decisions. 2. Evaluating the organizational environment including competitive position and conducting a review of the organization's products. 3. Setting quantitative targets for some organizational objectives to evaluate departmental contributions. 4. Aiming divisional plans in context of macroeconomic trends and identifying contributions of departments. 5. Performing a performance analysis to identify gaps between actual performance and long-term aspirations. 6. Choosing the best course of action after considering goals, strengths, potential, limitations, and opportunities.

Uploaded by

Shiranara Barcelo
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Steps in Strategy Formulation Process

Strategy formulation refers to the process of choosing the most appropriate course of action for the
realization of organizational goals and objectives and thereby achieving the organizational vision. The
process of strategy formulation basically involves six main steps. Though these steps do not follow
a rigid chronological order, however they are very rational and can be easily followed in this order.

1. Setting Organizations’ objectives - The key component of any strategy statement is to set the
long-term objectives of the organization. It is known that strategy is generally a medium for
realization of organizational objectives. Objectives stress the state of being there whereas
Strategy stresses upon the process of reaching there. Strategy includes both the fixation of
objectives as well the medium to be used to realize those objectives. Thus, strategy is a wider
term which believes in the manner of deployment of resources so as to achieve the objectives.

While fixing the organizational objectives, it is essential that the factors which influence the
selection of objectives must be analyzed before the selection of objectives. Once the objectives
and the factors influencing strategic decisions have been determined, it is easy to take strategic
decisions.

2. Evaluating the Organizational Environment - The next step is to evaluate the general
economic and industrial environment in which the organization operates. This includes a review
of the organizations competitive position. It is essential to conduct a qualitative and quantitative
review of an organizations existing product line. The purpose of such a review is to make sure
that the factors important for competitive success in the market can be discovered so that the
management can identify their own strengths and weaknesses as well as their competitors’
strengths and weaknesses.

After identifying its strengths and weaknesses, an organization must keep a track of competitors’
moves and actions so as to discover probable opportunities of threats to its market or supply
sources.

3. Setting Quantitative Targets - In this step, an organization must practically fix the quantitative
target values for some of the organizational objectives. The idea behind this is to compare with
long term customers, so as to evaluate the contribution that might be made by various product
zones or operating departments.
4. Aiming in context with the divisional plans - In this step, the contributions made by each
department or division or product category within the organization is identified and accordingly
strategic planning is done for each sub-unit. This requires a careful analysis of macroeconomic
trends.
5. Performance Analysis - Performance analysis includes discovering and analyzing the gap
between the planned or desired performance. A critical evaluation of the organizations past
performance, present condition and the desired future conditions must be done by the
organization. This critical evaluation identifies the degree of gap that persists between the actual
reality and the long-term aspirations of the organization. An attempt is made by the organization
to estimate its probable future condition if the current trends persist.
6. Choice of Strategy - This is the ultimate step in Strategy Formulation. The best course of action
is actually chosen after considering organizational goals, organizational strengths, potential and
limitations as well as the external opportunities.
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The article is Written By “Prachi Juneja” and Reviewed By Management


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Strategic Management

 Strategic Management - Introduction


 Strategy - Definition and Features
 Components of a Strategy Statement
 Vision & Mission Statements
 Strategic Management Process
 Environmental Scanning
 Strategy Formulation
 Strategy Implementation
 Strategy Formulation vs Implementation
 Strategy Evaluation
 Strategic Decisions
 Benefits of Strategic Management
 Business Policy
 BCG Matrix
 SWOT Analysis
 SWOT Analysis of Google
 SWOT Analysis of Starbucks
 SWOT Analysis of Blackberry
 Personal SWOT Analysis
 SWOT Analysis of Amazon
 SWOT Analysis of IKEA
 SWOT Analysis of Nike
 SWOT Analysis of Microsoft
 SWOT Analysis of China Mobile
 Competitor Analysis
 What is Competitive Advantage ?
 Human, Social, and Intellectual Capital as a Means of Competitive Advantage
 Porter’s Five Forces Model
 Blue Ocean Strategy and its Implications for Businesses
 Overfished Ocean Strategy: How to Drive Growth and Attain Profitability
 Porters Five Forces Analysis of the Airlines Industry in the United States
 Porters Five Forces Analysis of Samsung
 Porters Five Forces Analysis of Virgin Atlantic
 Porters Five Forces Analysis of China Mobile
 Strategic Leadership
 Some Pitfalls to be Avoided
 Corporate Governance
 Business Ethics
 Social Responsibilities of Managers
 Core Competencies
 Core Competency Theory of Strategy
 Ansoff Matrix
 Routes to Strategic Growth
 Diversification as a Viable Corporate Strategy
 5 Configurations of Strategic Management
 Role of Planning, Plans and Planners
 Reasons for Avoiding Strategic Planning
 Strategic Management for the Millennials
 Strategizing for the Future
 PESTLE Analysis of the Global Aviation Industry
 PESTLE Analysis of Starbucks
 PESTLE Analysis of Samsung
 SWOT Analysis of Unilever
 Business Strategies to Beat the Downturn
 Analysis of Amazon’s Corporate Strategy
 How Amazon Can Improve its Corporate Strategy
 Cutting Costs Strategically
 Actualizing Business as Usual Strategies for Mission Critical Organizations and Functions
 Why Indian Firms Must Strive for Strategic Autonomy in Their Geoeconomic Strategies

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