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The Strategy Formulation Process

The Strategy Formulation Process. Chapter 6 Overview. 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.

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The Strategy Formulation Process

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  1. The Strategy Formulation Process Chapter 6 Overview (c) Macmillan & Tampoe 2001

  2. 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 & Tampoe 2001

  3. Characteristics of ‘good’ strategy • Judged by the results achieved NOT by the process • Process must match: • business needs • Culture • Specific issues of the context • Process must be: • Original • Creative • Easy to implement (c) Macmillan & Tampoe 2001

  4. 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 & Tampoe 2001

  5. 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 & Tampoe 2001

  6. The 3 Interlocking aspects of the Strategy Formulation Process Strategic Intent Strategic Assessment Strategic Choice (c) Macmillan & Tampoe 2001

  7. The 3 Aspects of Strategy FormulationStrategic Intent • Driver of Strategy Formulation Process • Provides direction for strategy • Answers question “Where do we want to go?” (c) Macmillan & Tampoe 2001

  8. 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 & Tampoe 2001

  9. 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 & Tampoe 2001

  10. Activities and Results of Process Activities in Process Intending Assessing Choosing Results from Process Intent Assessment Choice (c) Macmillan & Tampoe 2001

  11. 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 (c) Macmillan & Tampoe 2001

  12. 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 Source: Robert Grant 1995 “Contemporary Strategy Analysis” (c) Macmillan & Tampoe 2001

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