Steps in Strategy Formulation Process
The strategy formulation process is the correct action in choosing the achievement of organizational objectives and goals. Hence, it is a process of attaining the organizational vision because both goals and objectives are present in the organization’s vision. This process consists of 6 major steps. It is really easy for an organization to follow these steps for the formulation of a strategy.
Step 1 – Strategy Formulation Process
Defining Organization’s Objectives:
When it comes to setting an organization’s strategy, the main factor is to set the long-term objectives. Set those objectives that are achievable and feasible. It is a state of “where we are” to “where we want to be”. In setting an organization’s strategy, you exploit all your resources to achieve the organization’s objectives. While setting organizational objectives, you must analyze those factors that influence the selection of objectives. Once the factors that influence the selection of objectives and real objectives have been identified, you can easily make strategic decisions.
Step 2 – Strategy Formulation Process
Assessing the Organizational Environment:
In the strategy formulation, the next step is to identify the industrial and economic environment of an organization in which it is operating. It includes the assessment of its competitiveness in the relevant market. It is necessary to conduct a quantitative and qualitative analysis of the organization’s offerings or products. The analysis is imperative for attaining competitive success. You can easily discover the market conditions and your internal business factors like strengths and weaknesses. After identifying strengths and weaknesses, the organization must analyze competitors’ actions and moves to create opportunities and minimize threats.
Step 3 – Strategy Formulation Process
Defining Quantitative Targets:
It is very crucial to set quantitative targets in the organizational objectives. The main purpose of this step is to compare organizational objectives with long-term customers. As a result, an organization can check the progress made by any department, product, or zone.
Step 4 – Strategy Formulation Process
After setting quantitative targets, an organization must analyze the progress made by any department within the organization. Then the organization can identify them as the strategic planning is completed for each sub-unit. This step involves analyzing macroeconomic trends.
Step 5 – Strategy Formulation Process
To assess the gap between strategic and chosen performance, an organization must conduct a performance analysis. It needs a complete evaluation of the company’s past and present state along with future conditions. It is very helpful for seeing the company’s future in the long run.
Step 6 – Strategy Formulation Process
Choice of Strategy:
This is the final step in the strategy formulation process. The best line of action is chosen, bearing in mind organizational strengths, goals, opportunities, and limitations.
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