Strategic Management

1. FORMULATING STRATEGIES
CHAPTER 3
Girlie D. Dagaman
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2. FACTORS IN FORMULATING STRATEGIES
Behavioral Aspects includes
the following:
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3. DECISION MAKING
• is not an easy task.
• Arriving at a decision is
also critical in the strategy
formulation.
• Decision Makers may not
only use the logical and
analytical side but also the
intuition and experience to
make decisions.
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4. “ A cornerstone of strategy formulation is determining what
customers really want and need - not just what do you think
they want and need.”
-Stettinius et.al (2005)
• Knowing the Sources of firm's strength covering but not
limited to materials, man power, methods, machine,
management style, money and others. - create the
competitive advantage and thus, can be the basis of the
crafting strategy.
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5. Elements of the Formulation Stage
1. Developing a strategic vision and mision
 This is about defining the business.
“Begin with the end in mind” - by: Stephen Covey - It is a
good to start to think strategically about the firm's future
makeup and to form a vision of the organization in the
next three to five years.
Realistic and Attainable- A corporate vision concretely
describes how a company sees itself in the future.
Basically answers the question, “What do we want to
become?”11/16/2019 5

6. “ Be careful how you think; your life is shaped by your
thoughts...”
Proverbs 4:23
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7. Step in Strategic Planning to Visualize what the
Organization want to be.
1. Setting Corporate Vision creates dreams
2. It inspires People
3. It provides Focus
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8. Task to Accomplish that would help accomplish the
realization of the vision
1. Inject a sense of purpose into the firm's activities
2. Provide a long-term direction
3. Give the firm a strong identity
4. Decide - “who we are,what we do and where we are
headed to?”
“ The most pathetic person in the world is someone who
has sight, but has no vision.”
By: Helen Keller
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9. Top Management
• Normally emanates the strategic
vision. they give directions based on
their overview of the firm's situation.
• They are the best position to
describe what is going on with the
firm and where the firm is headed.
• They are charged to evaluate the
current position by identifying the
opportunities trends and even
competition.
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10. STRATEGIC VISION
A good strategic vision statement should be specific, time-
bound and distinct to organization.
A vision is a dream but it will always remain as a dream
without time frame.
A strategic vision is better stated in present tense to
connote that every action performed today is a step
towards realizing the vision. - Hence, the words “to be” or
“will be” should be deleted and changed to “is” or “are”.
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11. STRATEGIC VISION
The vision must contain simple but powerful words and
that should inspire and challenge every member of the
organization.
Examples: Instead of saying:
“ To be Known as a world-class organization,”
It would be better to state:
“We ARE a world-class organization.”
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12. Factors to be Considered when there is intention to
revise to corporate vision
Time - from the planning stage
up to the evaluation stage, time
is of the essence. Stretegies
should be timely, therefore a
significant gap between stages
could dratically effect the
formulation of strategies and
outcome of strategic planning.
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13. Factors to be Considered when there is intention to
revise to corporate vision
Cost - Cost is often the cause
of setbacks. The question, “Is it
still worth it?” usually points
back wether the strategy to be
implemented can still be
implemented,and if there still
funds to make it happen.
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14. Factors to be Considered when there is intention to
revise to corporate vision
 Company's Performance - To look the
performance of the organization would
mean to see the growth of the company
from its formation to present. Given the
innovation in the different functional
areas of the organization as it
progresses, it is important to find out if
there is a significant increase in
revenue/profit. If there is a desire of a
decision-makers of the organization to
make the organization grow,then there
is a need to revisit the vision.11/16/2019 14

15. Factors to be Considered when there is intention to
revise to corporate vision
Workforce Competencies- Still on
the subject of growth, this time, the
focus is on the anticipated increase
in competency of workers and the
development of their different
expertise. The vision of the
company would also determine the
possibility of going up the
corporate ladder.
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16. Mission Statement
Provides more details about organizational goals and
describes the scope of the mission.
Answers the questions, “What is our bussiness?” and
“Why do we Exist?”
“Enduring statements of purpose that distinguish one
business from other similar firms.”
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17. Mission Statement
 The statement of purpose or strategic intent defines the
business as to who is being served or satisfied
-->CUSTOMER
as to what is being satisfied
-->CUSTOMER NEEDS
and as to how these needs are being satisfied -
->DISTINCTIVE COMPETENCIES
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18. Mission Statement
 The Mission statement should last 100 years, whereas
goals and strategies can be changed many times within
the 100years. This is according to Collins and
Porras(1994)
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19. Benefits of Writing Down the Strategic Intent:
1. It compels management and employees to have sense
of direction and purpose.
2. It drives strategic decision making and resource of
allocations
3. It obliges the seeking of significant performance
improvements to attain objectives
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20. Effective Visioning
When decision makers start by creatively stating the
desired outcome, which will be dictated by the
distribution of resources and supported by organizational
and managerial capabilities accordingly.
Starts with utilizing the available resources and
capabilities offered by each function/division within the
organization to achieve predictable results.
Arises out of the need for a business to operate in more
global and market-oriented environment.
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21. Elements of the Formulation Stage
2. Setting Measurable Objectives
Objective
What one hopes to accomplish
Clear statement of the exact means of measuring whether
the goal has been achieved
For an Objective to have relevance, it must be SMART
(Specific, Measurable, Attainable and Realistic)
And it must be COW (Communicated, Owned and
Written)
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22. Elements of the Formulation Stage
3. Determining Strategic Posture
Refers to the development of a long-term vision of a firm's
strategic purpose.
It is important not to lose sight of the strengths of the
organization when making changes required by a new
strategic direction.
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23. Guide Questions in forming strategic direction
a. What business are we now?
b. What business do we want to be in?
c. What will our customer want in the future?
d. What are the expectations of our stakeholders?
e. Who will be our future competitors?Suppliers?Partners?
f. What should our competitive scope be?
g. How will technology impact our industry?
h. What environmental scenarios are possible?
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24. Elements of the Formulation Stage
4. Establishing Policies
Policy
the general guides that provides clear, concise and
straight to the point directions for people within the
organization.
It also provides guide on how resources should be
properly allocated and the task innate in order to
accomplish the objectives
Means to achieve the objectives and how procedures are
formed.11/16/2019 24

25. Updated policies and quality standards ensure that
processes, procedures and deliverables must consistently
meet the needs of the business.
The deviation of the policy metes a sanction. It is
imperative that realistic policies should be clearly
communicated to employees at all levels so they can
perform according to the expected standards of quality.
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26. While policies are well entrenched into the system of the
organization, changes are expected and necessary.
Policies should be ammended or revised as necessary or
as circumstances warrant.
Example: When the current policy may no longer attuned
to the times as evidenced by dwindling organizational
performance. This can be manifested in the decreasing
stakeholder's wealth and income.
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27. Elements of the Formulation Stage
5. Implementing rules and procedures
Rules
Describe how a specific action is to be performed to
ensure that management and employees fulfill their roles
toward meeting company expectations.
Procedures
Precise series of steps to be used in achieving specific
task.
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28. Elements of the Formulation Stage
6. Matching Resources and capabilities
Strategies are formulated through matching a firm's
resources and capabilities with opportunities and risks
that arise in the external environment.
It is through this process of matching that determines
attractiveness of the industry and the firm's competitive
advantage.
Industry attractiveness derives ultimately from the
ownership or resources.
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29. A firms competitive advantage is based on the
development of resources available to the firm.
Resources are tangible assets (land, equipment, cash,
building, and others), Intangible assets (brand name,
patents, copyrights, goodwill), and capabilities (research
and development process,managerial competencies, and
fast and accurate logistics process).
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30. Bench Marking
Is a strategy that objectively assesses tha firm's
capabilities vis-a-vis its competitors.
Bench Marking Process
1.Identify areas to bench mark and the metrics
2.Determine and contact industry partners
3.Gather Data
4.Analyze
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31. TOOLS in Formulation
 The strategy framework can be done by the way of
matching the organizations internal resources and skills
and competencies from the opportunities and risk brought
about by its external factors.
Various literature provide that matching phase of strategy
formulation framework compromise of Five TOOLS.
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