Strategy Formulation

Topics: Strategic management, Strategic planning, Management Pages: 6 (1573 words) Published: March 4, 2014
Strategy Formulation
Objectives:
Define strategy formulation
Define the word strategy and formula and its purpose
Understand the SWOT analysis and its relation to strategy formulation Learn the step by step strategy formulation
Appreciate the importance of strategy formulation

Define strategy formulation
Strategy formulation:
As defined by Andrew M. Pettigrew of United Kingdom, the formation of strategy in organizations is a continuous process. Specific dilemmas within the firm, or in the firm’s environment, may raise the organization members’ consciousness of strategy and allow us, as analysts, to think of strategy formulation as an intentional process built around certain discrete decisions; but strategy is being formed implicitly all time. Choices are made and acted upon in processes involving individuals and subgroupings, at various organizational levels, that develop into the pattern of thinking about the world, evaluating that world, and acting upon that world that we call strategy. Study of the process strategy formulation therefore involves analyses of both discrete and identifiable decision events, together with the connections between successive decisions over time. Strategic planning is a sequential process, with each part building upon the previous one. The initial step in strategy formulation is typically the compilation and dissemination of the vision and mission statement. It specifies the organization’s scope of activities and the market a firm wishes to serve. Follow-on strategy formation 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, short- and long-term objectives are set. These objectives should include completion dates. Implementation plans then detail how the objectives are to be achieved.

The strategy hierarchy
Most corporations have multiple levels of management. Strategic management can occur at corporate, business, functional and operational levels. Corporate strategy answers the questions, "which businesses should we be in?" and "how does being in these businesses create synergy and/or add to the competitive advantage of the corporation as a whole?" Business strategy is the corporate strategy of single firm or a strategic business unit (SBU) in a diversified corporation. Functional strategies are specific to a functional area, such as marketing, product development, human resources, finance, legal, supply-chain and information technology. The emphasis is on short and medium term plans. Functional strategies are derived from and must comply with broader corporate strategies. Defining an operational strategy was encouraged by Peter Drucker. It deals with operational activities such as scheduling criteria.

Define the word strategy and formula and its history

Strategy has been defined by Robert M. Grant as the match an organization makes between its internal resources and skills.. and the opportunities and risks created by its external environment.

Understand the SWOT analysis and its relation to strategy formulation “Strategy formulation and implementation.” by Richard Daft. Prepared by Gregar Donaven E. Valdehueza, MBA (Lourdes College Intructor) S  Strenghts

Positive internal Characteristics that the organization can exploit to achieve its strategic performance goals. W  Weaknesses
Internal characteristics that might inhibit or restrict the organization’s performance. O  Opportunities
Characteristics of external environment that have potential to help the organization achieve or exceed its strategic goals. T  Threats
Characteristics of external environment that may prevent the organization from achieving its strategic goals.

Learn the step by step strategy formulation

1 Understand strategy and its importance: You need a strategy...
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