Unit 2: Strategy

Formulation and Defining

Vision
COURSE: STRATEGIC MANAGEMENT
INSTRUCTOR: GEORGETTE L. QUIÑONES
Objectives

After studying this unit, you will be able to:

u Discuss various aspects of strategy formulation
u Explain the relevance business vision
INTRODUCTION
Strategy Formulation

u Strategy formulation is the process of determining appropriate courses of

action for achieving organizational objectives and thereby accomplishing
organizational purpose
Strategy Formulation

u Strategy formulation is vital to the well-being of a company or organization

u It produces a clear set of recommendations, with supporting justification,
that revise as necessary the mission and objectives of the organization,
and supply the strategies for accomplishing them
u In formulation, we are trying to modify the current objectives and
strategies in ways to make the organization more successful
u This includes trying to create "sustainable" competitive advantages –
although most competitive advantages are eroded steadily by the efforts
of competitors
u A good recommendation should be: effective in solving the stated
problem(s), practical (can be implemented in this situation, with the
resources available), feasible within a reasonable time frame, cost-
effective, not overly disruptive, and acceptable to key "stakeholders" in
the organization
u It is important to consider "fits" between resources plus competencies with
opportunities, and also fits between risks and expectations
There are four primary steps in this
phase:

1. Reviewing the current key objectives and strategies of the organization,

which usually would have been identified and evaluated as part of the
diagnosis
2. Identifying a rich range of strategic alternatives to address the three levels
of strategy formulation outlined below, including but not limited to dealing
with the critical issues
3. Doing a balanced evaluation of advantages and disadvantages of the
alternatives relative to their feasibility plus expected effects on the issues
and contributions to the success of the organization
4. Deciding on the alternatives that should be implemented or
recommended
2.1 ASPECTS OF
STRATEGY
FORMULATION
1. Corporate Level Strategy
2. Competitive Strategy
3. Functional Strategy
2.2 BUSINESS
VISION
u The first task in the process of strategic management is to formulate the
organization's vision and mission statements
u These statements define the organizational purpose of a firm
u Together with objectives, they form a “hierarchy of goals”
Hierarchy of Goals

Vision

Mission

Goals

Objectives

Plans
u A clear vision helps in developing a mission statement, which in turn
facilitates setting of objectives of the firm after analyzing external and
internal environment
u Though vision, mission and objectives together reflect the “strategic intent”
of the firm, they have their distinctive characteristics and play important
roles in strategic management
Vision

u Vision can be defined as “a mental image of a possible and desirable

future state of the organization”
u It is “a vividly descriptive image of what a company wants to become in
future”
u Vision represents top management’s aspirations about the company’s
direction and focus
u Every organization needs to develop a vision of the future
u A clearly articulated vision molds organizational identity, stimulates
managers in a positive way and prepares the company for the future
Vision

According to Collins and Porras, a well-conceived vision consists of two major

components:
1. Core ideology
2. Envisioned future
Vision

u Core ideology is based on the enduring values of the organization (“what

we stand for and why we exists”), which remain unaffected by
environmental changes
u Envisioned future consists of a long-term goal (what we aspire to become,
to achieve, to create”) which demands significant change and progress
2.2 NATURE OF
VISION
CHARACTERISTICS
OF VISION
STATEMENTS
FORMULATING A
VISION
STATEMENT