Strategic Formulation & Implementation

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PREAMBL

E strategy formulation and mode of implementation


For the success of any organization or institution,

must play a crucial role in the beginning or during


the setting up of the organization. Without planning
one cannot succeed and the founders/leaders of the
organization must be able to have formulated a
mission, vision and goal for the organization and
then work out a strategic plan to meet them.
This discourse is aimed at dissecting and analyzing
the process of formulation and execution of strategy
in modern organizations.
VARIOUS DEFINITIONS OF
STRATEGY
Strategy is the determination of the basic long-term
goals and objectives of an enterprise, and the
adoption of courses of action and the allocation of
resources necessary for carrying out those goals
(Alfred D. Chandler – 1962)
Chandler subscribed to the view that strategy is as
much about defining goals and objectives as it is
about providing the means of achieving them.
VARIOUS DEFINITIONS OF
STRATEGY
A pattern of decisions which represent the unity,
coherence and internal consistency of a company’s
strategic decisions that position a company in its
environment and give the firm its identity, its power to
mobilize its strengths, and its likelihood of success in
the marketplace (Kenneth Andrews – 1987)
Andrews distinguished between corporate strategy,
which is the lead strategy, and business strategy, a
secondary though, aspect of corporate strategy
VARIOUS DEFINITIONS OF
STRATEGY
It’s a company’s game plan

For managers, it means their large-scale, future oriented


plans for interacting with the competitive environment
to achieve company objectives.
CHARACTERISTICS OF GOOD
STRATEGY
⚫Judged by the results achieved NOT by the
process
⚫Process must match:
⚫ business needs
⚫ Culture
⚫ Specific issues of the context
⚫Process must be:
⚫ Original
⚫ Creative
⚫ Easy to implement
DEFINITION OF STRATEGIC
MANAGEMENT
This is the set of decisions and
actions that result in the
formulation and implementation
of plans designed to achieve a
company’s set objectives.
CRITICAL TASKS OF STRATEGIC
MANAGEMENT (9)
1. Formulate the company’s mission, including broad statements about purpose, philosophy
and goals
2. Conduct an analysis that reflects the company’s internal conditions and capabilities
3. Assess the company’s external environment, including both the competitive and the general
contextual factors
4. Analyze the company’s options by matching its resources with the external environment
5. Identify the most desirable options by evaluating each option in light of the company’s
mission.
6. Select a set of long-term objectives and grand strategies that will achieve the most desirable
options
7. Develop annual objectives and short term strategies that are compatible with the selected set
of long term objectives and grand strategies
8. Implement the strategic choices by means of budgeted resource allocations in which the
matching of tasks, people, structures, technologies and reward systems are emphasized
9. Evaluate the success of the strategic process as an input for the future decision making
STRATEGY FORMULATION
Define overall purpose of
the organisation

Review results & make


appropiate changes to
subsequent Set fundamental goals for
aims/goals the organisation

Implement decisions through


management structure
Establish mechanisms to facilitate
decision-making (including means
for assessing internal resources
Provide support facilities to and external environment)
underpin product-market
decisions

Agree and promulgate major


product-market and other key
objectives
STRATEGY FORMULATION
Strategy formulation can take place at more than one level
in an organization, this is of course dependent on its size
and shape.
Corporate Level
⚫ Covering the whole business network, or group
of businesses
⚫ It is the definition of the business – its purpose, its
overall growth, profit objectives and its survival.
⚫ Focus on this level is on effectiveness, which requires
attention to the components of scope (domain) and
resourcing.
STRATEGY FORMULATION
Activities involved:
⚫ Building a portfolio of business units
⚫ Finding synergies among the business units and
converting them into the organisation’s competitive
advantage
⚫ Allocating resources between and among business
units
⚫ Reviewing, revising and unifying business unit’s
strategic proposals
STRATEGY FORMULATION
Business Unit
⚫ Covering the principal, or strategic, business units
which comprise the organization
⚫ The priority here is competitiveness and attainment
of profit and growth objectives.
⚫ Focus on this level is both on effectiveness &
efficiency
⚫ Key components are competitive advantage
and resourcing.
STRATEGY FORMULATION
Activities involved:
⚫ Devising approaches aimed at gaining competitive
advantage
⚫ Responding appropriately to changes in external
conditions
⚫ Addressing company-specific issues and
problems
⚫ Reviewing, revising and unifying functional strategic
plans
STRATEGY FORMULATION
Functional:
⚫ The basic operating level which may be
product service-based, geographic or specialist
⚫ The priority here is on products and market
segments, and the attainment of budget targets.
⚫ Prime focus here is on efficiency
⚫ Key components are developing synergy
and resourcing.
STRATEGY FORMULATION
Activities involved:
⚫ Set objectives to support business strategy in
key functional areas such as R & D,
manufacturing, marketing, sales, personnel etc
⚫ Reviewing, revising and unifying strategy-related
moves by operating managers
⚫ Crafting specific approaches to support functional
and business strategy
⚫ Making provisions for attaining basic unit/department
objectives.
STRATEGY FORMULATION
A company organized on unitary lines would normally
formulate strategy at the corporate and business
unit level.

Corporate strategy should cover a period of 3 – 5 years.


STRATEGY FORMULATION
Corporate Level Business Level Functional Level

Priority Priority Priority


•Define purpose/Mission •Compete successfully • Product-market
•Set overall growth/profit •Growth/Profit objectives development
objectives •Effectiveness & •Efficient use of
•Ensure survival efficiency resources
•Effectiveness •Achieve budget
targets
Components Components
•Scope/domain •Competitive
•Resource deployments advantage Components
•Resource •Synergy
deployments •Resource
deployments
EFFECTIVE STRATEGY
FORMULATION PROCESS SHOULD
RESULT IN:
⚫ Customer awareness
⚫ Supplier relationships
⚫ Stakeholder influences
⚫ Understanding of competence
⚫ Awareness of technological change and innovation
⚫ Mix of people involved in process
⚫ Encouragement and understanding of top management
⚫ Communication of results and reaction to feedback
⚫ Sound logic and balance to the process
⚫ Process design but not over-design
⚫ Considered role of external support

(c) Macmillan & Tampoe


IMPORTANCE OF STRATEGY
FORMULATION PROCESS
⚫ Causes strategic Thinking
⚫ Mechanism to ease the communication of ideas
⚫ Co-ordinate the efforts of those involved in the process
⚫ Inject structure into the thinking without rigidity
CRITERIA TO ENSURE SUCCESS OF
STRATEGY FORMULATION PROCESS
⚫ There must be a ‘goodness of fit’ between external
and internal factors
⚫ The strategy must create a sustainable advantage
⚫The strategy raises performance.
(Thompson and Strickland)
RESULTS FROM STRATEGY
FORMULATION
⚫ Goals that are simple, consistent and long
term.
⚫ Profound understanding of the competitive
environment
⚫ Objective appraisal of resources
⚫ Effective implementation

Source: Robert Grant 1995 “Contemporary Strategy Analysis”


STRATEGY IMPLEMENTATION
The model in the next slide shows the major forces that
are required to move an organisation’s chosen strategy
on from being an idea, or intention-in-embryo (still
unformed), to becoming a living creature that can
make its presence felt throughout every part of the
organization.
STRATEGY IMPLEMENTATION
Strategic choice (the
strategy)

Organisational
structure Financial &
(framework) Managerial physical resources
authority & power (resources)
(leadership)

Personnel skills &


Organisational & development
individual (resources)
values (culture)

Strategy implementation
ENERGY FORMS AVAILABLE TO THE
ORGANISATION IN PURSUIT OF STRATEGY
The organization structure, which provides a framework
within which decisions can be formulated, considered and
implemented.
The management, which facilitate decisions, motivates
employees, promotes the organisation’s culture, reviews results
and makes appropriate changes
Organisational and individual values, which drive the
pursuit of goals and objectives, explicitly and implicitly
The organisation’s personnel, who carry out the strategy, and
deal with the changes that may occur during its
implementation.
The organisation’s financial and physical assets which can
be deployed to achieve optimum synergy (i.e. where the
combined effect exceeds the sum of their parts).
CONCLUSION
These forces represent the internal energy, or potential ,
of the organization, which is available to implement
its chosen strategy in pursuit of its goal to serve
customers, if in the market place, or members of the
community if in the public arena.
REFERENCES
Sources:
Strategic Management – G. A. Cole
Strategice Management – Formulation, Implementation & control – John A.
Pearce II, Richard B. Robinson, Jr., Amita Mital
Contemporary Strategy Analysis - Robert Grant 1995
Macmillan & Tampoe 2001
The WWW

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