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The Strategy Formulation

Process
Chapter 6
Overview

(c) Macmillan & Tampoe 2001

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
(c) Macmillan & Ta

Characteristics of good strategy

Judged by the results achieved NOT by the


process
Process must match:

Process must be:

business needs
Culture
Specific issues of the context
Original
Creative
Easy to implement

(c) Macmillan & Ta

Nature of the formulation process


Can

be both:

formal

and informal
simple and complex
Analytical and qualitative
Involve many people or just a few

(c) Macmillan & Ta

Strategic Thinking Should

Consider the enterprise as a whole


Be about the long term and not the immediate
Address the organisations relationship with the
environment and its capabilities and resources
Be based on fact and reality with some
imagination
Have a good understanding of the present
Be able to think imaginatively about the future
(c) Macmillan & Ta

The 3 Interlocking aspects of the


Strategy Formulation Process
Strategic
Intent

Strategic
Assessment

Strategic
Choice

(c) Macmillan & Ta

The 3 Aspects of Strategy Formulation


Strategic Intent

Driver of Strategy Formulation Process

Provides direction for strategy

Answers question Where do we want to go?

(c) Macmillan & Ta

The 3 Aspects of Strategy Formulation


Strategic Assessment

Provides relevant knowledge of strategic


context

Anchors future strategies in reality

Answers question Where are we now?

(c) Macmillan & Ta

The 3 Aspects of Strategy Formulation


Strategic Choice

If no choice - no strategy needed

The link to action

Answers question How to get from where we


are to where we want to be?

(c) Macmillan & Ta

Activities and Results of Process

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Activities
in Process

Results from
Process

Intending

Intent

Assessing

Assessment

Choosing

Choice
(c) Macmillan & Ta

Effective strategy formulation processes

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

11

(c) Macmillan & Ta

Results from the strategy formulation


process
Goals that are simple, consistent and
long term.
Profound understanding of the
competitive environment
Objective appraisal of resources
Effective implementation

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Source: Robert Grant 1995 Contemporary Strategy Analysis

(c) Macmillan & Ta