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. Strategy formulation is a part of a strategic management process that comprises of environmental analysis, formulation, implementation and evaluation and control. Strategic management is an ongoing process to develop and revise future-oriented strategies that allow an organization to achieve its objectives, considering its capabilities, constraints, and the environment in which it operates. 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. Evaluating the Organizational Environment
Environmental analysis involves performing an analysis of the internal environment of the organization including identification and evaluation of current mission, strategic objectives, strategies and results as well as major strengths and weaknesses. It also analyzes the organization's external environment, including major opportunities and threats; and identifying the major critical issues, which are a small set, typically two to five, of major problems, threats, weaknesses, and/or opportunities that require particularly high priority attention by management. 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. Once strategists have assessed and forecasted present and future SWOT, determined core competencies and strategic capabilities, and determined and prioritized strategic objectives, they proceed to formulate strategy. Corporate strategy aims at determining the choice of direction for the firm as a while irrespective of the size of business. Strategies tell how the firm will get to where it wants to be. The following three aspects or levels of strategy formulation, each with a different focus, need to be dealt with in the formulation phase of strategic management.
i. Corporate Level Strategy
ii. Business Level Strategy: This involves deciding how the company will compete within each line of business or strategic business unit (SBU). iii. Functional Strategy: These more localized and shorter-horizon strategies deal with how each functional area and unit will carry out its functional activities to be effective and maximize resource productivity.
CORPORATE LEVEL STRATEGIES
Corporate level strategy is concerned with broad decisions about the total organization's scope and direction. Basically, we consider what changes should be made in...