Strategic formulation is a combination of three main processes which are as follows:
Performing a situation analysis, self-evaluation and competitor analysis: both internal and external; both micro-environmental and macro-environmental.
Concurrent with this assessment, objectives are set. These objectives should be parallel to a time-line; some are in the short-term and others on the long-term. This involves crafting vision statements (long term view of a possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.
These objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to achieve these objectives.
 Strategy evaluation
Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats (both internal and external) of the entity in question. This may require to take certain precautionary measures or even to change the entire strategy.
In corporate strategy, Johnson and Scholes present a model in which strategic options are evaluated against three key success criteria:
Suitability (would it work?)
Feasibility (can it be made to work?)
Acceptability (will they work it?)
Suitability deals with the overall rationale of the strategy. The key point to consider is whether the strategy would address the key strategic issues underlined by the organisation's strategic position.
Does it make economic sense?
Would the organization obtain economies of scale, economies of scope or experience economy?
Would it be suitable in terms of environment and capabilities?
Tools that can be used to evaluate suitability include:
Ranking strategic options
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