Formulation of business strategy is a very complex process. It requires a deep analysis of organizational goals, missions, and objectives to identify the best options among all the alternatives. This blog will provide a broad discussion about the essential steps in business strategy formulation.
Strategy is a set of general directions and techniques to achieve specific goals in a certain period. It is a complex process of identifying the most suitable courses of action to achieve the desired goal. More specifically, it is all about making the best use of organizational resources within the corporate environment to meet particular objectives.
10 Steps in Business Strategy Formulation
There are several approaches to formulate a business strategy. However, each method has its advantages and drawbacks. Here are the ten most important steps in formulating business strategy –
1. Draft an Overview
An overview stands for the summary of the entire document. Sometimes, it is also called the “Executive Summary”. It helps the user/reader to understand the synopsis of the whole document. However, Some of you may become confused to differentiate between the “Overview” and “Company Profile”. Both are not the same. More precisely, an overview is the synopsis of the whole document, and a company profile is a glimpse of the organization.
2. Mission and Vision Statement
A vision statement articulates the current and future objectives of the organization. It expresses the ultimate desire of the company about what they want to achieve.
A mission statement is a single sentence or a paragraph that explains the aims and values of a company. It spells out the summary of the purpose and the existence of the organization.
A mission and vision statement are the most important and inevitable for strategy formulation. All the plans and actions are designed based on the mission and vision.
3. Company Profile
A company profile is a glimpse of the entire company at a glance. This section aims to provide a brief description of the company’s history, status, and strengths. Company name, Address, Date of incorporation, Number of employees, operation areas, products & services, etc., are generally included in the company profile.
4. Set the Strategies
Strategy is a set of specific and well-defined courses of action set to achieve the mission and vision. A strategic paper normally includes two types of strategies, e.g. a) Short-term Strategy and b) Long-term Strategy.
a) Short-term Strategy: Short-term strategy is the course of actions designed to achieve short-term goals, usually for one year.
b) Long-term strategy: Long-term strategy is a set of plans designed to achieve the company’s long-term goals, usually five to ten years, depending on the circumstances.
5. Set alternative Strategies
Companies set alternative strategies in order to survive or cope up with the inevitable changes in the environment. Everything never goes like a straight line. Ups and down come every time. So the best approach to cope up with the changes is to be aware. So, while formulating a business strategy, future uncertainty should be considered. A good business strategy always counts the future change and makes an alternative plan of survival. An alternative strategy is the creative set of actions designed by forecasting the future possibilities to meet the industry demands.
6. Define Action Plans
The action plan is the breakdown of short-term and long-term strategies in a more specific manner. More specifically, The action plan sets down the dates, times, processes, and responsible person for accomplishing each task. This part of business strategy formulation makes the implementation process more manageable.
7. Identify the Challenges
There are some challenges in achieving every goal. A good strategy forecasts future challenges and notes. It enables the organization to make the necessary preparation to meet future unforeseen events. However, foresting future challenges requires keen knowledge and analysis of business trends, customers’ behaviour, technological revelation, inverter’s behaviour, etc.
8. Budget and Resource Allocation
Resource allocation is the distribution of resources for each sector/activity. Resource allocation specifies how much resources will be needed for implementing each strategic decision. It is also a part of the organizational budget.
Strategy implementation is the execution of strategy in the best possible way. It is turning the plan into action. However, Effective implementation depends on how an organization develops, controls, and monitors organizational process, culture, policy, and resources.
10. Evaluating the strategy
Finally, no plan is final. Business strategy changes as time and situation change. The business strategy formulation process should have proper scope to change the strategic plan if required. To do so, the manager should evaluate the performance and modify the strategy if the existing strategy does not work considering the expected outcome.
Business Strategy Formulation has several approaches. However, It depends on the nature of the organization. Here we’ve tried to give light on essential steps of strategy formulation.
- Draft an Overview
- Mission and Vision Statement
- Company Profile
- Set the strategies
- Set alternative Strategies
- Define action plans
- Identify the challenges
- Budget and resource allocation
- Evaluating the strategy
Read some exciting blogs like this.