Strategy Formulation vs Strategy Implementation
The primary difference between Strategy Formulation and Strategy Implementation is that the former is concerned with thinking and planning. The Role of Leadership in Strategy Formulation and Implementation The study reveals that leadership serves as a link between the soul and. In the United States, the practice of strategic planning has become . right strategy content is crucial; and making the links to implementation is.
As strategic business units, they are operational as stand-alone businesses, which means that competition is bound to arise. In this level, strategy formulation is geared towards coming up with competitive strategies between and among the lines of businesses or SBUs of the organization.
Functional Level Strategy Compared to the other two levels, the functional level has a shorter outlook.Why Do We Need the AFI Strategy Framework? Analysis, Formulation, Implementation
Within each line of business or SBU, there are functional units with their own specific tasks and sets of activities. Strategies at this level are required, primarily addressing how these activities and tasks will be carried out effectively and efficiently. You want your business to grow and be a force to reckon with in the industry. Naturally, you also want to be ahead of the competition, beating them soundly and putting as much distance as you can between you. First, you have to come up with winning strategies, which you will then implement to come out on top.
Your strategy formulation should roughly follow these steps: Define the organization and its environment The first step requires you to take a look at the organization. The points of interest are: Target market — This is the domain that the business hopes to dominate, so there is a need for the organization to clearly identify and define the particular group that it will target.
Customers — They are the end users of the products and services that the company offers. How do they perceive value? Are you able to meet that perception? How do they make their purchasing decisions? Why do they purchase your products or services? Offerings — These are the products or services that you are selling to the customers. Do they offer value to the customers, and does that value meet their perceived value? How does the price point affect its value, if at all?
What are the end benefits that these products and services have that convince customers to buy them? Adaptation to changes and challenges — Business environments are, at best, unstable in the sense that changes are expected and even anticipated. Anticipation will spur the company to come up with strategies to be able to adapt quickly and effectively. Therefore, the organization has to identify the potential challenges that are expected to arise.
The most common examples are the introduction of new technologies and equipment, and updates in systems.
The Relation between Strategy Formulation and Strategy Implementation | stapelholm.info
Define the strategic mission Organizations are forward-looking, and they want to achieve something as they move the business along. The strategic mission will provide a clear picture of that long-range outlook, providing an overview of what the business wants to achieve. This will serve as a definitive and clear guide for the organization and its members as they carry out the tasks indicated in the plan.
A strong strategic mission should have all, if not most, of the following: An indication of a long-range perspective. The business is looking at the long term, not just one, three or five years down the road.
It has to be clear on that front. Core values of the organization. The mission must include the values that are upheld and highly esteemed by the organization. These values will largely dictate how you are going to go about the process of achieving the goals of the organization. Nature of the business. Briefly, include a description of the core activities or main line of business of the organization. Is it in commercial retail, healthcare services, or automobile manufacturing?
Current position of the organization in the market. Is the organization currently holding the leader position in the market? Are there special characteristics or features that clearly distinguish the organization from the rest? These should also be noted in the strategic mission. Vision of the organization. This is a statement of what and where the organization wants to be in the future, on its own and in the market. Here are some tips that may help you when crafting your Strategic Mission statement.
Start by taking a look at the main operations and offerings of the business and how they go about them.
Strategy Formulation (Read Only If You Want To Outcompete Competition)
Consider also the end users or recipients of the output of these operations. That means you have to be objective in looking at the current state of affairs in the organization and the industry it belongs to.
Present your drafts to other members of the information for critiquing. You may be able to get more pointers from their feedback, since they are likely to be more objective when evaluating the mission statement.
The Relation Between Strategy Formulation And Strategy Implemenation
Get pointers from other companies. In fact, it would be a great idea to take a look at the mission statements of your competitors, considering how you are pretty much in the same position and, probably, with a similar vision.
You might end up making dozens of draft mission statements and scrapping all of them. Keep revising and improving until you have a draft of a mission statement that you are fully satisfied with, and that captures and reflects the organizations long-range perspective perfectly.
Take a look at the following example of a well-written strategic mission of New Leaf Papermanufacturer and distributor of printing and office papers using environment-friendly virgin-fiber products. It is one of the largest and leading paper companies in the United States today.
We supply paper with the greatest environmental benefit while meeting the business needs of our customers. Our goal is to inspire — through our success — a fundamental shift toward sustainability in the paper industry. Define and set the strategic objectives Strategic objectives represent what the organization must achieve in order for it to become competitive — or to remain competitive — and ensure sustainability of the business over the long term.
They come in the form of specific responses or aims of the organization to address issues regarding competitiveness, long-term sustainability and other business advantages. If the strategic mission will serve as a directional guide for where the business wants to be, the strategic objectives will serve as a directional guide on how the business will make use of its resources and carry out key functions and activities.
In essence, defining the strategic objectives involves identifying performance targets that the members of the organization will aim for, and these targets are clearly geared towards the attainment of the goals.
Difference Between Strategy Formulation and Strategy Implementation
When setting strategic objectives, keep the following in mind: They should be specific and easy to understand by everyone, especially the members of the organization.
They should be aligned with the strategic mission of the organization. They should be communicated to all employees and other members of the organization, and every effort must be made to ensure that they fully understand the objectives, as well as their individual and collective roles in achieving these targets.
Or it could be something like how New Leaf Paper set out to develop a new market for environmentally sustainable papers, and pioneer that market by introducing innovative environmental paper products. Define the competitive strategy The next step in strategy formulation is where the organization will start identifying and coming up with its long-term plan to gain advantage — and maintain it — over the competition.
This is known as the competitive advantage, and the plan is referred to as the competitive strategy.
There are three factors at play when determining the Competitive Strategy of the organization. The industry that the organization belongs to This involves taking a look at the industry or the marketplace and its various aspects.
Logic would dictate that the overall competitive strategy of a business in the South American hotel industry will have differences with that of a firm in the larger European hotel industry. The size of the market comes with several implications. For example, larger markets generally have more players, which means more competitors. It also often means higher amounts of investment and resource allocations by the company since they have a larger area to cover.
This requires looking into past market growth, how the market is currently moving along, and any potential growth in the future.
- The Relation between Strategy Formulation and Strategy Implementation
- Strategy Formulation vs Strategy Implementation
- Steps to Strategy Formulation (Read Only If You Want To Outcompete Competitors)
Many industrial and market analysts conduct these types of studies from time to time, providing businesses with their inputs and thoughts on the future of the market, which these businesses will then use in its strategic management processes. By being reactive the firm tends to lose sight of the long-term direction.
It is people who can make the firm pro-active or allow it to simply rest on past laurels. Explicit communication of Goals: Generally, every firm shall have a goal and this must be communicated to all the employees. Everyone should work towards reaching the goal. BHEL had the objectives of becoming a leader in its chosen area of heavy electrical.
Stimulation of critical thinking: Managers often depend on their personal views and experiences to solve problems make decisions. The assumptions on which they make decisions can lead to successes if they appropriate to the environment in which the firm operates. However series problems can arise if the assumptions are no longer valid. The strategic HRM process can help a firm critically examine its assumptions and determine whether the decisions that follow from those assumptions need modification or need to be held back.
To strategies means to think critically. Analytical thinking helps an individual question established practices shed shibboleths, search for alternatives and arrive at rightly courses of action. By being part of strategic management process, HR manager can contribute to the critical thinking process of employees. Productivity as an HR based strategy: The more productive an organization, the better is its competitive advantage. Perhaps none of the resources used for productivity in organizations are as critical as human resources.
Many of the HR functions contribute to productivity. Pay, appraisal system, training, selection and job design are HR activities that directly contribute to productivity. Quality and service are HR-based strategy: Quality van come from people, and realizing this firms are spending vast sum of money on quality training. Since the early s, firms have recognized the value of W. Demines 14 principles have served as the foundation for many quality improvement initiatives, first in Japan and later in other parts the globe.