By Prof Ajit Deva MBA Dept RNSIT

Module 2 Strategy Formulation

Developing a Strategic Vision Involves thinking strategically aboutFirm’s future business plansWhere to “go”

Tasks IncludeCreating a roadmap of the futureDeciding future business position to stake

outProviding long-term directionGiving firm a strong identity

Developing a Strategic Vision

Charts a company’s future strategic course

Defines the business makeup for 5 years (or

more)

Specifies future technology- product-

customer focus

Indicates capabilities to be developed

Requires managers to exercise foresight

Characteristics of

How to creatively prepare a company for the future

How to keep the company responsive to

Evolving customer needs

Competitive pressures

New technologies

New market opportunities

Growing or shrinking opportunities

Entrepreneurial Challenges in Forming a Strategic Vision

Mission Vs. Strategic Vision A mission statement

focuses on current business activities –“who we are and what we do”• Current product and

service offerings• Customer needs

being served• Technological and

business capabilities

A strategic vision concerns a firm’s future business path –“where we are going”• Markets to be pursued• Future technology-

product-customer focus• Kind of company that

management is trying to create

Characteristics of a Mission Statement

Defines current business activitiesHighlights boundaries of current businessConveys

Who we are, What we do, and Where we are nowCompany specific, not generic – so as to give a

company its own identityA company’s mission is not to make a profit!

The real mission is always – “What will we do to make a profit?”

Characteristics of a Mission Statement

Strategy Formulation

Strategy formulation refers to the process

of choosing the most appropriate course of

action for the realization of organizational

goals and objectives and thereby achieving

the organizational vision

Steps involved in Strategy Formulation

1. Setting Organizations’ objectives.

2. Evaluating the Organizational

Environment

3. Setting Quantitative Targets

4. Aiming in context with the divisional plans

5. Performance Analysis

6. Choice of Strategy

Strategic Objective

A broadly defined objective that an organization must achieve to make its strategy succeed.

Financial Objective Goals related to returns that a firm will

strive to accomplish during the period covered by its Financial Plan.

Balanced Score Card

The Balanced scorecard is a strategic planning

and management system that is used

extensively in business, industry, government,

and non profit organizations worldwide to align

business activities to the vision and strategy of

the organization, improve internal and external

communications, and monitor organization

performance against strategic goals.

Company Philosophy

Company Philosophy is nothing but the way we do things in the company.Vision

Values Customer Focus Development of People Entrepreneurship Quality Teamwork

Company Philosophy Measures

Customer Focus Supplier Focus People Focus Internal Focus

Tools Kaizen Mistake Proofing Suggestion System Target cost system

Company Philosophy

Concepts Marketing Concepts Quality first Recurrence prevention Speak with data Upstream Management

Principles Elimination of waste People empowerment and involvement

The hierarchy of strategic Intent

The hierarchy of Strategic Intent

Strategic Intent refers to the purposes the

organization strives for. It is the leveraging of a

firm’s internal resources, capabilities and core

competencies to accomplish the firm’s vision,

mission and objectives in a competitive

environment. It is all about winning competitive

battles and gaining leadership position by

putting organizational resources to best use.

The hierarchy of Strategic Intent

The process of establishing the hierarchy of

strategic intent is very complex.

In this hierarchy, the vision, mission, business

definition and objectives are established.

Establishing the hierarchy of the strategic intent

is the first step in the strategic management

process

Strategic intent is an obsession with winning.

Merging the Strategic Vision Objectives and

Strategy Strategy Formulation

Determination of mission and objectives

SWOT analysis

Strategic Alternatives

Evaluation and Choice

Implementation

Evaluation and Control

The hierarchy of Strategic Intent

Creating and communicating a vision

Designing a mission statement

Defining the business

Setting objectives