We are going to discuss the Steps in the Strategy Formulation Process. Let’s start with some basics of the Strategy Formulation.
Concept of Strategy Formulation
Strategy formulation is the process of choosing the best possible strategy out of several other strategic options.
“Strategy formulation is designed to guide executives in defining the business their company is in‚ the aims it seeks‚ and the means it will use to accomplish these aims. Strategy formation combines a future-oriented perspective with concern for a firm’s internal and external environment in developing its competitive plan of the action.” (Pearce and Robinson)
Process of Strategy formulation
Following steps are involved in the strategy formulation process
Evaluate current performance result
In the process of strategy formulation, it is essential to evaluate the concerned firm’s current performance in terms of profit and loss situation and return on investment. It is also required to appraise the current mission, objectives, strategies, and policies adopted by the firm.
Review corporate governance
This includes the appraisal of the performance of the BODs, CEOs and other top-level managers. It is also essential to examine the organizational vision, mission, objectives culture and management practices as successful drives for governing the corporation.
Scan and assesses the internal corporate environment
It is also essential to assess organizational competencies, skills, abilities, and resources in order to cope with external changes. These are the determining factors to enhance organizational strength and minimize weaknesses and to fit a firm with external challenges and opportunities.
Scan and assesses the external environment
This is related to the examination of external factors that are posing threats as well as opportunities. The firm’s market shares and growth depend largely on external opportunities and threats.
Analyze strategic factors
Strategic factors are external and internal elements determining the future of a firm. At this stage of the strategy formulation process, it is essential to pinpoint the problem areas and issues relating to getting competitive advantages. Problems and issues are analyzed in the SWOT form. The SWOT variables are important for the effective implementation of the strategy.
Generate, evaluate, and select the basic strategic options
This is relative to the identification of the strategic options upon which a new strategy may be built. At this stage, one or more of the strategic option is selected for implementation.
FAQ Related To Steps in Strategy Formulation Process
What is strategy formulation?
Strategy formulation is designed to guide executives in defining the business their company is in‚ the aims it seeks‚ and the means it will use to accomplish these aims.
What is strategy formulation process?
Strategy formulation process is the step by step action for choosing the best possible strategy out of several other strategic options.
What are the steps of strategy formulation?
The steps of strategy formulation are:
1. Evaluate current performance result
2. Review corporate governance
3. Scan and assesses the internal corporate environment
4. Scan and assesses the external environment
5. Analyze strategic factors
6. Analyze strategic factors
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As I said Strategy Formulation is like a warrior which can break or make your Company
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Suman(Kul Prasad) Pandit is a graduate from Tribhuvan University, Nepal with four-year experience in corporate and start-up sectors in Nepal. Being a responsible & sustainable business enthusiast he is dedicated to business education to solve problems in entrepreneurship and business growth.