Strategic Formulation

 Strategic formulation is a key component of the strategic management process in organizations. It involves the
development and selection of strategies that will help an organization achieve its long-term goals and objectives.
Strategic formulation typically consists of several components, which together provide a structured
approach to defining an organization's strategic direction.

Components:
1. Mission Statement: The mission statement defines the organization's purpose, its reason for existence, and the
core values that guide its actions. It serves as a foundation for strategic formulation by clarifying what the
organization aims to achieve and the principles it upholds.

2. Vision Statement: The vision statement outlines what the organization aspires to become in the future. It is an
inspirational and aspirational statement that helps guide the development of long-term strategies.

3. Environmental Analysis: This involves assessing the internal and external factors that can influence the
organization's ability to achieve its objectives. Internal factors may include strengths and weaknesses, while
external factors encompass opportunities and threats.

4. Goals and Objectives: Clear and specific goals and objectives are set to provide direction for the organization.
Goals are broader, more qualitative statements of what the organization intends to achieve, while objectives are
specific, measurable, and time-bound targets that align with the goals.

5. Strategy Formulation: This is the heart of the process where the organization identifies and evaluates various
strategic options to achieve its goals. Common approaches include:
a. Corporate-Level Strategy: Decisions about the scope of the organization's activities, such as diversification,
mergers, or strategic alliances.
b. Business-Level Strategy: Decisions related to how a particular business unit or division will compete in its
market. This may involve cost leadership, differentiation, or focus strategies.
c. Functional-Level Strategy: Strategies specific to individual functional areas within the organization, such as
marketing, operations, and human resources.
d. Competitive Strategy: The methods the organization will use to outperform its rivals, which may include
pricing, product differentiation, or innovation strategies.

6. Resource Allocation: Once strategies are identified, the organization needs to allocate its resources, including
financial, human, and physical assets, to support the chosen strategies effectively.

7. Implementation Planning: Developing a detailed plan for how the strategies will be executed. This may include
assigning responsibilities, setting timelines, and establishing performance metrics.

8. Monitoring and Control: The organization should continuously monitor its progress and compare it to the set
objectives. If necessary, adjustments to the strategy may be made to stay on track.

9. Risk Assessment: Identifying and evaluating potential risks and uncertainties associated with the chosen
strategies and developing contingency plans to mitigate them.

 Strategic formulation is an iterative process, and organizations may revisit and revise their strategies periodically
in response to changing internal and external conditions. The goal is to create a road map that guides the
organization toward its desired future state and helps it remain adaptable and competitive.
Strategic Planning
 Strategic planning is a systematic and structured process that organizations use to define their long-term goals
and objectives, and to develop a clear road map for achieving them. It involves setting a direction for the
organization, making decisions on allocating resources, and aligning the organization's activities and
operations to fulfill its mission and vision.

Strategic planning is a cyclical process, and organizations often revisit and revise their strategic plans in
response to changing circumstances or to address new opportunities and challenges. It provides a
framework for making informed decisions, guiding resource allocation, and ensuring that an organization's
actions are aligned with its long-term vision. Effective strategic planning helps organizations adapt to a
dynamic business environment and work toward sustained success.

Structure:
1. Define your vision: Whether it’s for your business as a whole, or a specific initiative, creating a
strategic plan means you’ll need to be aligned on a vision for success.

2. Assess where you are: The next step in creating a strategic plan is to conduct an assessment of where you
stand, in terms of your own initiatives, as well as the greater marketplace. One of the most common ways
to conduct a strategic assessment is SWOT analysis.

3. Determine your priorities and objectives: In order to realize your vision, what will you need to
prioritize, and what specific objectives can you outline to accomplish your goals? Once you’ve defined your
vision and analyzed your current standing, you’ll be well positioned to start outlining and ranking your priorities,
and the specific objectives tied to those priorities.

4. Define tactics and responsibilities: What are the specific steps necessary to accomplish your objectives? Who
will be accountable? This is the stage where individuals or units within your team can get granular about how to
achieve your goals, one step at a time.

5. Manage, measure, and evaluate : Once your plan is set into motion, it’s important to actively manage (and
measure) progress. Before launching your plan, settle on a means to measure success or failure, so that
everyone is aligned on progress and can come together to evaluate your initiative at regular intervals.
Determine an interval at which to come together and go over results — this can take place weekly, monthly, or
quarterly, depending on the nature of the project.

 The beauty of the strategic plan is that it can be applied from the campaign level all the way up to
organizational vision. Using the strategic planning framework, you build buy-in, trust, and transparency by
collaboratively creating a vision for success, and mapping out the steps together on the road to your goals. Also,
in so doing, you build in an ability to adapt effectively on the fly in response to data through measurement and
evaluation, making your plan both flexible and resilient.
Strategy Evaluation and Selection
 Strategy evaluation and selection are critical components of the strategic planning process. Once an
organization has formulated several potential strategies, it needs to evaluate them systematically to determine
which ones are most likely to help achieve its goals.
 Strategy evaluation and selection are critical steps in the strategic planning process. A well-thought-out and
systematic approach to these steps helps organizations choose the most appropriate strategies that have the
greatest potential for success in achieving their long-term goals and objectives.

Process:
1. Fixing benchmark of performance: In order to determine the benchmark performance to be set, it is
essential to discover the special requirements for performing the main task. The organization can use both
quantitative and qualitative criteria for comprehensive assessment of performance. Quantitative criteria
includes determination of net profit, ROI, earning per share, cost of production, rate of employee turnover etc.
2. Measurement of performance: The standard performance is a bench mark with which the actual
performance is to be compared. The reporting and communication system help in measuring the performance.If
appropriate means are available for measuring the performance and if the standards are set in the right manner,
strategy evaluation becomes easier. But various factors such as managers contribution are difficult to measure.
The measurement must be done at right time else evaluation will not meet its purpose. For measuring the
performance, financial statements like - balance sheet, profit and loss account must be prepared on an annual
basis.
3. Analyzing Variance: While measuring the actual performance and comparing it with standard performance
there may be variances which must be analyzed. The strategists must mention the degree of tolerance
limits between which the variance between actual and standard performance may be accepted. The positive deviation
indicates a better performance but it is quite unusual exceeding the target always. The negative deviation is an
issue of concern because it indicates a shortfall in performance.
4. Taking Corrective Action: Once the deviation in performance is identified, it is essential to plan for a
corrective action. If the performance is consistently less than the desired performance, the strategists must
carry a detailed analysis of the factors responsible for such performance. Another rare and drastic corrective
action is reformulating the strategy which requires going back to the process of strategic management,
reframing of plans according to new resource allocation trend and consequent means going to the beginning
point of strategic management process.

 The significance of strategy evaluation lies in its capacity to co-ordinate the task performed by managers,
groups, departments etc, through control of performance. Strategic Evaluation is significant because of various
factors such as - developing inputs for new strategic planning, the urge for feedback, appraisal and reward,
development of the strategic management process, judging the validity of strategic choice etc.
Strategic Implementation
 Strategic implementation, also known as strategy execution, is the process of putting a chosen strategy into
action. It involves translating the organization's strategic plans and objectives into specific actions and initiatives.
Effective implementation is crucial for the successful realization of an organization's strategic goals.
 Strategic implementation is an ongoing process that requires careful planning, commitment, and continuous
monitoring. Successful execution of a strategy is a dynamic and adaptive endeavor that ensures the organization
remains on track to achieve its long-term goals and objectives.

Features:
1. Integrated Process: Strategy implementation is a holistic and integrated process. It implies that different
activities that constitute strategy implementation are interdependent. For instance, an organization's
promotional strategy's activities are interrelated and have to be executed in accordance with each other.

2. Action Oriented: A strategy should be actionable. It can be made actionable via various management
processes, including planning and organizing. The management is not just responsible for formulating a plan but
also for converting the plan into action.

3. Varied Skills: It suggests that strategy implementation concerns wide-ranging skills. Vast knowledge, abilities,
positive attitude, and organizational skills are required to implement a strategy. Proficiency in these skills help
in allocating resources, crafting policies, and devising structures.

4. Wide Involvement: Strategy implementation demands the participation of all the components of a system. It
includes the top, middle, and lower level management. The top management has to maintain transparency an
clarity while communicating the strategy to be implemented. The middle management must further regulate the
norms and ensure no miscommunication happens.

5. Wide Scope: It covers a range of administrative and managerial activities. For instance, to implement a
marketing strategy, you must prepare a marketing budget, conduct market research, develop a promotional
plan, conduct test marketing, launch the product, and collect customers' feedback.

Strategy Implementation Challenges