MODULE 5

STRATEGIC
FORMULATION :
Its Vision, Mission,
Objectives &
Strategies
Process of Strategy Making - Strategy Executing
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1. Developing :
1. a strategic vision companys long term direction
2. a mission statement describe companys purpose
3. set of core values guidance to pursuit vision & mission
2. Setting objectives to measure companys
performance & tracking its progress
3. Crafting a strategy - to advance company
along the path which mgmt has charted &
achieving its objectives
4. Executing the chosen strategy efficiently &
effectively

05_Strategy Formulation
The Strategy Making, Strategy
Executing Process
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Developing a Crafting a Monitoring

strategy to developments,
strategic Executing
Setting achieve evaluating
vision, objectives & the performance, &
mission, & objectives initiating
companys strategy corrective
core values vision adjustments

Revise as needed in light of the

companys actual performance,
changing conditions, new
opportunities, & new ideas

05_Strategy Formulation
 STAGE 1
4

D EV ELO PI N G A STR ATEGY

V I SI O N , MI SSI ON STAT EMEN T,
& A SE T OF C OR E VA LU ES

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Developing a Strategic Vision (SV)
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Strategic vision describes where we are going

managements aspirations for the company & the course
and direction charted to achieve them
A clearly articulated strategic vision communicates
managements aspiration to stakeholders & help steer the
energies of company personnel in a common direction
Well visualized visions are distinctive & specific to a
particular organization
For a strategic vision to function as a mgmt tool, it must
convey top mgmt want the business look like & provide
mgrs at all levels w/ a reference point in making strategic
decision & preparing the co. future.

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Communicating the Strategic Vision (SV)
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SV is valuable as long as it is communicated

effectively down to the line of lower level mgrs &
employees
Executives must provide rationale for new strategic
vision & co. direction to mobilize support for the
vision & winning commitment to needed actions
Expressing the Essence of the Vision in a Slogan
A Sound, Well Communicated SV Matters
It crystallized senior executives own views about the firms long term
direction
It reduces the risk of rudderless decision making
its a tool to win support of members
Provide inspiration for low level mgrs in setting dept. objectives
It helps organ. Prepare the future
05_Strategy Formulation
 Developing a Company Mission
Statement
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Mission statement describes the

enterprises present business & purpose
who we are, what we do & why we are here.
Co. mission statement
Identifies companys product/ services
Specifies buyer needs that the co. seeks to satisfy &
the customer groups/ market it serves
Gives co. its own identity

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Linking the Vision and Mission w/
Company Values
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A companys values are the beliefs, traits, &

behavioral norms that company personnel are
expected to display in conducting the
companys business & pursuing its strategic
vision & mission
It relates to such fair treatment, honor &
integrity, ethical behavior, innovativeness,
teamwork, social reponsibility

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 STAGE 2
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SETTING
OBJECTIVES

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Definition
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Objectives are an organizations

performance targets the specific results
mgmt wants to achieve
Well stated objectives must be specific,
measureable or quantifiable, and challenging
and must contain a deadline for achievement,
the reason are:
Focus organizational attention & align actions
throughout the organization
They serve as yardstick for tracking a companys
performance & progress
They motivate employees to expend greater effort &
perform
05_Strategy Formulation at high level
The Imperative of Setting
Stretch Objectives
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Stretch objectives set performance high

enough to stretch an organization to perform
at its full potential & deliver the best possible
results
A company exhibits strategic intent when it
relentlessly pursues an ambitious strategic
objective, concentrating the full force of its
resources an competitive actions on achieving
that objective

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What Kind of Objectives to Set
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Financial objectives relate to the financial

performance targets management has
established for the organization to achieve
Strategic objectives relate to the outcomes
that indicate a company is strengthening its
market standing, competitive position, and
future business prospect

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The Need for Balanced Approach to
Objective Setting
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A stronger market standing and greater

competitive vitality esp. when accompanied by
competitive advantage is what enables a
company to improve its financial performance
Companys past or future financial performance
is not a reliable indicator of its future prospect
Balanced scorecard is a method for combining
the use of both strategic and financial objectives,
tracking their achievement, and giving mgmt a
more complete and balanced view of how well an
organization is performing

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Setting Objective for Every
Organizational Level
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Objective setting is a top-down process that

must extend to the lowest organizational
levels.
Each organizational unit must take care to set
performance targets that support rather
than conflict w/ or go against the
achievement of companywide strategic &
financial objectives

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 STAGE 3
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CRAFTING A
STRATEGY

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Strategy Making Involves Managers a All
Organizational Levels
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Ultimate responsibility for leading the strategy

making, strategy executing process rests w/ the
CEO.
However, strategy is the product f more than
just the CEOs work. It is rarely that only high-
level managers do.
Crafting & executing strategy is a collaborative
team effort in which every company manager
plays a strategy-making role ranging from
minor to major for the area they heads.

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A Companys Strategy Making Hierarchy
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Corporate strategy establishes an overall

game plan for managing a set of businesses in
a diversified multi-business company

Business strategy is concerned w/

strengthening the companys market position
and building competitive advantage in a
single-business company or in a single
business unit of a diversified multi-business
corp.
How to improve performance/gain a competitive adv.
In particular line of business
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A Companys Strategy Making Hierarchy
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Functional-area strategies concern the

approaches employed in managing particular
function within a business like R&D, finance,
etc
It gives details of a companys business strategy

Operating strategies concern the relatively

narrow approaches for managing key
operating units and specific operating
activities w/ strategic significance

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Uniting the Strategy Making Hierarchy
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The pieces of a companys strategy up and

down the strategy hierarchy should be
cohesive and mutually reinforcing

Anything less than unified collection of

strategies weakens the overall strategy and is
likely to impair company performance

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A Strategic Plan
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A Strategic Vision + Mission + Objectives

+ Strategy = A STRATEGIC PLAN

A companys strategic plan lays out its future

direction, business purpose, performance
targets, and strategy

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STAGE 4 : Executing the Strategy
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The process include aspects of :

Creating a strategy-supporting structure

Staffing the organization to obtain needed skills &

expertise
Developing & strengthening strategy-supporting
resources & capabilities
Allocating ample resources to the activities critical to
strategic success
Ensuring policies & procedure facilitate effective
strategy execution
Organizing work effort along the line of best practice

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STAGE 4 : Executing the Strategy
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The process
Installing information & operating systems enables
company personnel to perform essential activities
Motivating people & tying rewards directly to the
achievement of performance objectives
Creating a company culture conducive to successful
strategy execution
Exerting the internal leadership needed to propel
implementation forward

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STAGE 5 : Evaluate Performance &
Initiate Corrective Adjustments
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Monitoring new external developments,

evaluating the companys progress, & making
corrective adjustments is the trigger point
for deciding whether to continue or change
the companys vision & mission, objectives,
strategy, &/or strategy execution methods

05_Strategy Formulation