Formulating Strategies

Strategic management, IFE matrix, SWOT analysis

Formulating Strategies

Strategy analysis and choice seeks to determine alternative courses of action that could best enable the firm to achieve its mission and objectives. It largely involves making subjective decisions based on objective information. Strategies are derived from the firm’s vision, mission, objectives and outcome of the firm’s external environment and internal environment assessment.

The Process of generating and selecting strategies:

Strategists never consider all feasible alternatives that could benefit the firm, because there are an infinite number of possible actions and an infinite number of ways to implement those strategies. Therefore, a manageable set of the most attractive strategies must be developed. The advantages, disadvantages, trade-offs, costs and benefits of these strategies should be determined.

Identifying and evaluating alternative strategies should involve many of the managers and employees who earlier assembled the organizational vision and mission statement, performed external environment assessment, and conducted internal environment assessment. The firm should try to involve representatives from every department and division. This involvement provides the firm with the best opportunity to gain an understanding of what the firm is doing and why, and to become committed to helping form accomplish its objectives. Creativity should always be encouraged in the thought process.

All strategies as recommended by the participants needs to be recorded and need to be ranked in order of attractiveness. This will result in a prioritized list of best strategies that reflects the collective wisdom of the group.

Strategy Formulation Framework

Strategy formulation technique can be depicted into a three stage decision making framework as shown below. The tools presented in this framework are applicable to all sizes and types of organizations and can help strategists to identify, evaluate and select strategies....
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