Strategy formulation

Strategy formulation is the development of long range plans for the effective management of environmental opportunities and threats in light of corporate strengths and weaknesses. It includes defining the corporate mission, specifying achievable objectives, developing strategies and setting policy guidelines. It begins with situational analysis. The simplest way is to analyze through is SWOT analysis. This is the method to analyze the strengths and weakness in order to utilize the threat and to overcome the threat. SWOT is the acronym for Strength, Weakness, Opportunities and Threats. The TOWS matrix illustrates how the external opportunities and threats facing a particular corporation can be matched with that company’s internal strengths and weaknesses to result in four sets of possible strategic alternatives.

An organization’s mission is the purpose or the reason for the organization existence. A well conceived mission statement defines the fundamental, unique purpose that sets a company apart from other firms of its type and identifies the scope of the company's operation in terms of the products offered and markets served. A mission statement may be defined narrowly or broadly in scope. A broadly defined mission statement keeps the company from restricting itself to one field or product line, but it fails to clearly identify what it makes or which product/market it plans to emphasize. A narrow mission very clearly states the organizations primary business, but it may limit the scope of the firm's activities in terms of product or service offered, the technology used and the market served.

Objectives are the end result of planned activity. They state what is to be accomplished by when and should be quantified if possible. The achievement of corporate objective should result in the fulfillment of a corporate mission. In contrast to an objective, a goal is an open ended statement of what one wants to accomplish with no quantification of what is to be achieved and no time criterion for completion. The areas in which a company might establish its goals and objective are profitability, growth, shareholder's wealth, utilization of resources etc.

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