STRATEGY FORMULATION

3RD CHAPTER
 CHAPTER OUTLINE

Define strategy formulation

Vision statement
Mission statement
Organizational goals
Organizational objectives
Intended and realized strategies
 STRATEGY FORMULATION

Assessing the environment, development of

strategies and selection of strategy
Involves the development of strategies and
formulation of policies to achieve organizational
goals and objectives.
Attention must be given to both external strategies
and internal capabilities.
How the organization can adapt the unpredictable
environment and uncertain future with both factors.
FUNDAMENTAL ELEMENTS OF STRATEGY

 Strategy generally seen as a plan or direction-setting

framework that address key question such as:
 What business are we in?.
 What do we aspire to become?.
 What course of action, as well as resources and capabilities, are
needed to achieve our goals and objectives?.
 Answering these questions requires a sound
understanding of an organization’s SWOT analysis.
 Strategy is the scope and direction of organisation
activities over the long term within a changing
environment.
 Strategic decisions influence the long-term direction of
the firm.
FUNDAMENTAL ELEMENTS OS STRATEGY

 Strategy is affected by:

 Environmental forces and resource availability.
 Beliefs, values and expectations of key stakeholders who are those
in positions of power within and around the company.
 Strategic decisions affects:
 Capacity to identify and develop resource capability for future
initiatives.
 Ability to take advantage of present and future opportunities.
 Operational decisions and actions at operational level.
 VISION

 All strategists, whether engaged in implicit or explicit strategic

thinking, have a vision.
 In the business world, strategic thinking has its most visible
manifestation in the vision of the organization, written or
unwritten.
 The vision of an organization defines what that organization
is. It is at the core of the organization’s identity, representing
the reason why the organization exists.
 It is closely linked with what the organization can do,
reflecting its resources, capabilities and competencies.
 The vision is an expression of the dynamic of the organization,
where it has come from and where it is going to in the future.
 VISION

The existence of a clear vision is a precondition for

the formulation of a good strategy
2 parts to the vision:
1. The paradigm:
a) defined as ‘the core set of beliefs and assumptions which
fashion an organisation’s view of itself and its environment’
(Johnson and Scholes, 1993).
b) Closely related to the corporate culture.
2. An explicit core purpose or strategic intent or
aspiration.
 VISION

 Vision also incorporates the strategic thinking particular to

the organization.
 It includes an envisioned future, which also has two parts:
a) Long-term, challenging goals for the next 10–30 years.
b) A vivid description of what it will be like to achieve those goals,
necessary to enthuse the implementers.
 These have been described as BHAGs – big, hairy, audacious
goals. Usually they should have a 50–70% chance of success.
 They might take a number of different forms:
 specific quantitative targets
 a common enemy to be defeated or outcompeted
 a role model to be emulated in some important respect
 some internal transformation to be achieved
 VISION

The vision may be expressed in writing, or left

unwritten and expressed only verbally at relevant
times.
Even if the vision is left unwritten it is not left
unsaid.
It is internalized. This may occur through meetings
and face-to-face contact.
Some leaders are superb at expressing a vision
verbally, without any resort to the written word.
 VISION STATEMENT

 “What do we want to become”

 Catalysing Vision 2020 through 1Malaysia, People First,
Performance Now

 Effective vision statements are:

 Developed by a host of people from across the organization.
 Clearly tied to external and internal environmental conditions.
 Consistent with strategic leaders’ decisions and actions.

 Attributes of Vision
 Short.
 Preferably one sentence – not too long.
 Get many inputs from all managers.

 Purpose of Vision
 Provides strong foundation to develop mission.
 Must be developed first and foremost before the mission as shown
 VISION STATEMENT

According to Moore (1995), managers must look

upward toward securing more effective policy
mandates, building support and legitimacy for
agency initiatives, outward to the accomplishment of
public purposes, and downward to the competent
operation of their agencies.
Moore also recommends specific, concrete changes
in the practices of individual public managers: how
they envision what is valuable to produce, how they
deliver services and fulfill obligations to clients, and
how they engage their political overseers.
1Malaysia
People First,
Performance Now!
 VISION STATEMENT

The following are among the expected outcomes

(Bryson, 2004) derived from vision statement:
 To provide suitable guidance and motivation by having the
following attributes (see next slide)
 The vision statement should be widely circulated among

organizational members and other key stakeholders after

appropriate consultations, reviews and sign-offs
 The vision should be used to inform major and minor

organizational decisions and actions

 Attributes of vision statement

Basic philosophy, core values and cultural

features

Basic strategies

Mission 1Malaysia, People First, Performance Now Goals

Performance criteria Important decision making rules

Ethical standards expected of all

employees
VISION STATEMENT OF THE ROYAL HOSPITALS
OF BELFAST, NORTHERN IRELAND

“The aim is to offer guidance and inspiration to all staff

in the Royal Hospitals and enable and empower all of
us to work within a framework of innovation and
ingenuity. We will also share this vision with our
patients and all those who have an interest in the
future of the Royal”
Source: (Bryson, 2004)
 MISSION STATEMENT

 A written mission statement may articulate the organization’s vision.

 Not all have mission statements.
 In a large number of cases it may be there as a form of tokenism, without
real meaning.
 Sometimes the statement is so bland as to have no specific meaning.
 A minority of organizations have it for external consumption by key
stakeholder groups outside the enterprise, although in many ways it is an
ideal mechanism for such a role.
 It is intended to alert the stakeholders as to what is being done in their
interests and persuade them to acquiesce in organization policies.
 The mission can be constructed to appeal to the broadest stakeholder
constituency.
 There may be an indication of the focus of the organization, that is, what is
produced, how it is produced and where it is sold.
 MISSION STATEMENT

 Mission statement reveals what an organization wants to be

and whom it wants to serve

Mission statement also referred to as:

 Creed statement (statement of belief)
 Statement of purpose
 Statement of philosophy
 Statement of business principles

Purpose of Mission Statements

 Enduring statement of purpose
 Distinguishes one firm from another
 Declares the firm’s reason for being
Mission statement
reveals what an
organization wants to be
and whom it wants to
serve
Purpose of Mission Statements
 Attributes of mission statement

Define what the organization is

Stated clearly – understood by all Distinguishes firm from all others

Ministry of Women, Family and Community Development

Define what it aspires to be Limited to exclude some ventures

Broad enough to allow for growth

 Products or
Services Markets
Customers

9 Technology
Employees Mission Statement
Components

Survival,
Growth,
Public Profits
Image
Self-Concept Philosophy
 The mission components of organization

 Customers: Who are the firms customers?

 Products or service s: What are the firms major products?
 Market s: Geographically, where does the firm compete?
 Technology: Is the firm technologically current?
 Concern for survival, growth, and profitability: Is the firm
committed to growth and financial soundness?
 Philosophy: What are the basic beliefs, values, aspirations, and
ethical priorities of the firm?
 Self -concept: What is the firms distinctive competence or major
competitive advantage?
 Concern for public image: Is the firm responsive to social,
community, and environmental concerns?
 Concern for employee s:Are employees a valuable asset of the firm?
 To establish UiTM as a premier
university of outstanding scholarship
and academic excellence capable of
providing leadership to Bumiputeras’s
Clear Business dynamic involvement in all professional
Vision fields of world-class standards in order
to produce globally competitive
graduates of sound ethical standing.

Comprehensive
Mission Statement
To enhance the knowledge and expertise
of Bumiputeras in all fields of study through
professional programmes, research work
and community service based on moral
values and professional ethics.
 Motto
 “Endeavour, Religious, Dignified”
 Vision
 To establish UiTM as a premier university of outstanding scholarship and
academic excellence capable of providing leadership to Bumiputeras’s dynamic
involvement in all professional fields of world-class standards in order to
produce globally competitive graduates of sound ethical standing.
 Mission
 To enhance the knowledge and expertise of Bumiputeras in all fields of study
through professional programmes, research work and community service based
on moral values and professional ethics.
 Philosophy
 Every individual has the ability to attain excellence through the transfer of
knowledge and assimilation of moral values so as to become professional
graduates capable of developing knowledge, self, society and nation.
 ORGANIZATIONAL GOALS

Goal formulation should increase the awareness of

the stakeholders with respect to the changes that
may be taking place within organization
According to Hill & Jones (2004), a goal is a desired
future state or objective that a company attempts to
realize
The purpose of goals is to specify what must be done
to attain its vision and mission
CHARACTERISTIC ORGANIZATIONAL
GOALS
 ORGANIZATIONAL OBJECTIVES

 Provide direction
 Aid in evaluation

 Create synergy

 Focus coordination

 Basis for planning, motivating, and controlling

 Reveal priorities
Objectives
 To provide maximum opportunities for bumiputeras to pursue
professionally-recognised programmes of study in science,
technology, industry, business, arts and humanities.
 To provide quality and innovative programmes of study relevant to
current market needs and customer demands, and in line with
policies of national development.
 To establish a human resource development programme as a tool for
the assimilation of a value system within the university community.
 To ensure that UiTM graduates are adequately prepared to join the
local as well as the global workforce.
 To establish UiTM as a centre of excellence that is accountable for
the effective and efficient management of its human resources,
finances and assets in order to achieve its educational objectives,
while playing its role as a catalyst in community development.
The Vision, Mission, Goals and Objectives of Ministry
of Women, Family and Community Development
MINTZBERG’S INTENDED AND REALIZED STRATEGY

Intended Deliberate Realized

strategy strategy strategy

UNREALIZED EMERGENT
STRATEGY STRATEGY
 MINTZBERG’S INTENDED AND REALIZED STRATEGY

Intended strategy:
 Strategy as conceived by the top management team
 The result of a formal and structured planning process
 The result of a process of negotiation, bargaining, and compromise,
involving many individuals and groups within the organization
Deliberate strategy:
 Precise and articulated intentions must exist in a concrete level of
detail
 Seeing organizations as collective action, intention must be common
knowledge to virtually all the actors in the organization.
 These collective intentions must have been realized exactly as
intended - (also meaning that no external forces could have
interfered with them)
 MINTZBERG’S INTENDED AND REALIZED STRATEGY

Emergent strategy:
 The decisions that emerge from the complex processes in which
individual managers interpret the intended strategy and adapt to
changing external circumstances
 A sense of purposeful direction
 Implies that an organization is learning what works in practice
 A pattern of action that develops over time in an organization in the
absence of a specific mission and goals, or despite a mission and
goals
Realized strategy:
 A combination of both deliberate, rational planning, and more
spontaneous or opportunistic thinking
 The actual strategy that is implemented
 Thus, the realized strategy is a consequence of deliberate strategy
and emerging factors
 MINTZBERG’S INTENDED AND REALIZED STRATEGY

Emergent strategies as a pattern in a stream of actions

(Mintzberg and Waters 1985).
Deliberate strategies are strategies where intentions that
existed previously were realized (Mintzberg 1987).
Deliberate and emergent strategies are independent of
each other as intended strategies might go unrealized
while emergent strategies appear without preconception.
Realized strategies are at the end the result of intended
and emergent strategies and Mintzberg suggests that
only 10–30 percent of intended strategies is realized
Types of strategy (Graetz et al, 2006)