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Strategy

formulation
By
Zahoor Ul Hassan
14N2-108028

7/24/2008 Strategy formulation


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Learning objectives

 The element of corporate strategy


 The strategy formulation process
 Alliances and acquisitions
 strategy formulation tools and
techniques
 Plan implementation
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Introduction
 The element of corporate strategy
has much important in organization
and the process and the techniques
that are used for its development and
operation.
 An important consideration in the
formulating strategy is the need to
consider alliance and acquisitions.
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The element of corporate
strategy
 The requirement for strategy are well
known and accepted by every
manager.
 What is to be achieved
 What action is to be taken
 When is to be completed
 How it is to be done
 And by whom.
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Cont….

 A strategic plan is often long range


,for several reasons
 It usually involves high levels of
investment.
 Business are much more global than
they used to be
 Technological changes need to be
predicted and intercepted.
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Organizational variances

 Every company needs to develop its


own strategic plan , which will be
different from that of another
company.
 The entrepreneur or birth stage.
 The expansion and consolidation
stage.
 The diversification stage.
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Strategic ownership
 The owner of the strategic plan
is the Chief Executive.
 Every level within the
organization must contribute to
it.
 The task carried out by a few
corporate staff.
 A key aim of corporate strategy
is to improve the overall
capabilities of the company.
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The strategy formulation
process
 The Vision
 The strategy formulation process
,know as a strategy cycle.
 Commence with an assessment of
the future.
 Vision of the future.

 Taking in to account mission.

 Environment of working.
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The Vision

 Four important feature of the Vision.


2. Establish itself as a technology
market leader.
3. Be second into the market place with
a new product.
4. Be a narrow supplier of specialist
product and services.
5. Concentrate into on Home market.
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Action plan
 Vision must be translated into the
strategic action plan
 Define the step to achieve the
organization’s vision
 Method
 As a directive from the top,
 On s top down principle ,
 On the basic of consensus among a
committee of member,
 On a bottom up principle
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Cont…..

 Resources can be levered by several


method
 Prioritizing objective ,so as always
focus on the key task first.
 Using the possible other people
resources.
 Extensive re-use of technology ,
experience and ideas.
 Breaking down specialties with in the
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Cont…..

 Tacking every opportunity to


conserve one’s scarce resources.
 Looking for quick play backs.

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SWOT analysis
 An analysis of the
 Strength
 Weakness
 Opportunities
 Threats (SWOT)
 Considered in the context of the future
position of the company.
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The Opportunities
Triangle
Business
Sector

Market
Customers characteristics
characterist
ics

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Alliance and acquisition
 Alliance ( which includes a merger ) and
acquisition considerations are important
element of any modern corporate
strategy.
 Alliances are more successful if they are
use to enter market in new geographical
areas.
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Reasons for alliances

 Alliances run into the serious


problem in the first two years of their
existence.
 Companies seek those strategic
alliances
 Reasons for forming alliances
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Strong alliances
 Alliances formed between two
partners of equal strength have the
greatest chance of success.
 Many alliances are formed for the
wrong reasons
 Like weak company will choose a
strong partners.
 If one of the partners fails to achieve
its objective than all partners to the
alliance must also fail.
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Forming a joint venture
 Joint venture are the ultimate form of
alliances.
 A separate company is setup
 Each partners to contributes a given
amount of finance,
 Personnel
 Skill
 A joint venture has full autonomy.
 Its management must be autherised
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The need for the
techniques
and tool
 Planning techniques
 Programming techniques
 budgeting techniques
 Advantages
o They ensure that a systematic
thought process is followed in the
analysis of the strategy.
o They ensure that emphasis is places
on facts rather than on hunches
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Conti…..

o They ensure a more detailed analysis of


the problem and so results in better
decision making.
o They provide fall back strategies

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Planning tools and
techniques
 Value analysis
 Market analysis
 Gap analysis
 Financial analysis
 Group decision making.

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Plan implementation
 The final step in the strategy formulation
process ate to define the actions allocate
these within the organization and
measure the results .
 Long term plan
 Mid term plan
 Short term plan
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The goal implementation
Pyramid

Long
Term

Medium
Term
Short Term

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Management by
objective
 This is an established technique
 Implementation of company strategic
plans
 Ensure that management at all levels
with in the organization is committed
to the same goals.
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Monitoring and
measurement
 Progress in the implementation of
the strategic plan needs to be
measured.
 To ensure their continual
effectiveness.
 To measure operational and financial
 To get a balance view of
performance and focus on key areas
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Financial measure
 The key goal of the financial strategy
is to meet shareholder expectations.
 Profit , measure in terms of return on
investment
 Sales growth in terms of turnover.
 Growth in market share.
 Adequate cash flow to fund ongoing
developments.
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Thanks

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