FORMULATION

STEPS IN STRATEGIC
FORMULATION
 SETTING
ORGANIZATIONAL
OBJECTIVES
Evaluating the
Organizational
Environment
Setting Quantitative Targets
Aiming in context with the
divisional plans
Performance Analysis
Choosing Strategy
Strategy Formulation vs. Strategy
Implementation
 Strategy Formulation Strategy Implementation

Strategy formulation includes

planning and decision-making Strategy implementation involves all
involved in developing those means related to executing the
organization’s strategic goals and strategic plans.
plans.

In short, strategy formulation

In short, strategy implementation
is placing the Forces before the
is managing forces during the action.
action.

Strategy formulation is Strategic implementation is mainly

an Entrepreneurial Activity based an Administrative Task based on
on strategic decision-making. strategic and operational decisions.

Strategy formulation emphasizes Strategy implementation emphasizes

on effectiveness. on efficiency.
 Strategy Formulation Strategy Implementation

Strategy formulation is a rational Strategy implementation is

process. basically an operational process.

Strategy formulation requires Strategy implementation requires

co-ordination among few co-ordination among many
individuals. individuals.

Strategy formulation requires a Strategy implementation requires

great deal of initiative and specific motivational and
logical skills. leadership traits.

Strategic formulation precedes Strategy implementation follows

Strategy Implementation. Strategy Formulation.
 Identifying opportunities and
threats from the external
environment as they impact on
organizations
•Define the Strategic Objectives
Strategic objectives must be
communicated with all employees and
stakeholders in order to ensure success.
•Define the Competitive Strategy
It requires an organization to determine
where it fits into the marketplace.
Industry and Competitive
Analysis
Industry

Strengths and
Competition
Weaknesses
Competitive Advantage
Responding to change
Internal Environment
Unique Competencies
Innovative Capabilities
Basic Types of Competitive
Advantage
SWOT ANALYSIS
 Analyzing the internal
environment and establishing
long-range objectives
Global Strategy
International Multinational
strategy strategy

Global
strategy
Importance of Global Strategy
Benefits of Global Strategy
Economies of scope:
Economies of scale:
Global brand recognition:
Global customer satisfaction:
Lowest labour and other input costs:
Recovery of research and development (R&D)
costs and other development costs across the
maximum number of countries
Emergence of new markets: means greater sales
from essentially the same products.
Costs of a global strategy
Lack of sensitivity to local demand:
Transport and logistics costs:
Economies of scale benefits may be
difficult to obtain in practice:
Communications costs will be higher
Management coordination costs:
Barriers to trade:
Other costs imposed by national
governments to protect their home
industries