TOPIC 2
STRATEGY FORMULATION
1
Feb 10, 2025
2 Introduction
A strategy is an administrative course of action
designed to achieve success in the face of difficulties.
Strategy Formulation is an analytical process of
selection of the best suitable course of action to meet
the organizational objectives.
Strategic plan allows an organization to examine its
resources, provides a financial plan and establishes
the most appropriate action plan
Feb 10, 2025
3 Introduction
Strategy formulation is the process of using available
knowledge to document the intended direction of a
business and the actionable steps to reach the
organizational objectives
Formulating an effective strategy can allow your
organization to share a clear vision, and track
performance with measurable key performance
indicators (KPIs).
Feb 10, 2025
4 Introduction
KPIs are business metrics used to track and analyze
factors deemed crucial to the success of an
organization.
Effective KPIs focus on the business processes and
functions that senior management sees as most
important for measuring progress toward meeting
strategic goals and performance targets.
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5 Introduction
For example, one of the KPI for a public company will
be its stock price, while a KPI for a privately held
startup may be the number of new customers added
each quarter.
What will be a KPI for your mission?
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6 QUIZ
Write on your note:
Why do you live?
What is your utmost desire in your life?
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7 Recall the strategic management
process
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8 Strategic intent
Is the term used to describe the aspirational plans,
main purpose or intended direction needed to reach
the desired future.
It provides a roadmap of where you want to go and
how to get there
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9 VISION MISSION OBJECTIVES
People don’t buy what you do, they buy why you do it.
This is why organizations create mission and vision
statements
These statements unify the organization and keep
everyone focused on what really matters – because if
you get these things right, the profits will follow.
Effective mission and vision statements will unify the
focus of an organization – for the organization and
their target audience.
Feb 10, 2025
10 what if you’re just starting a
business?
You can use mission and vision statements to gain
clarity and ensure that you consistently make
decisions in line with your ultimate goals.
These statements also help you develop a stronger
brand that differentiates you from the competition.
Feb 10, 2025
11 Vision
A vision statement is a short description of an
organization’s aspirations and the wider impact it aims
to create.
It should be a guiding beacon to everyone within the
organization and something which underpins internal
decision-making and determines the intended
direction of the organization.
Big picture of what you want to achieve. It provides a
destination for the organization.
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12 Vision
“To be Earth’s most customer-centric company, where
customers can find and discover anything they might
want to buy online.”
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13 Vision
To become a centre of excellence that offers value
added training, research and public services"
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14 Vision
A Leading Regional Provider of Quality and
Affordable Electric Power”
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15 Mission
A mission statement is a short summary of an
organization’s core purpose, focus, and aims. This
usually includes a brief description of what the
organization does and its key objectives.
General statement of how you will achieve the vision.
This is a guiding light of how to get to the destination.
Mission statement questions look like:
What do we do?
Whom do we serve?
How do we serve them? Feb 10, 2025
16 Mission
We strive to offer our customers the lowest possible
prices, the best available selection, and the utmost
convenience.
The mission statement sums up the three things that
have made them loved by millions: low prices, a huge
selection, and incredible convenience.
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17 Mission
To provide comprehensive, gender sensitive and
quality education to a broad segment of the
population through teaching, research, and public
services in the fields of education, health and allied
sciences, natural sciences, earth sciences,
information and communication technologies,
business, humanities and social sciences.
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18 Mission
To organize the world's information and make it
universally accessible and useful".
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19 Mission
To deliver electricity in a most effective,
competitive and sustainable manner”
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20 Goals
a general statement of what you want to achieve.
More specifically, a goal is a milestone(s) in the
process of implementing a strategy. Examples of
business goals are:
Capture a bigger market share
Improve employee training
Increase efficiency
Increase profit margin
Provide better customer service
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21 Goals
Be sure the goals are focused on the important
aspects of implementing the strategy.
Be careful not to set too many goals or you may run
the risk of losing focus.
Also, design your goals so that they don’t contradict
and interfere with each other.
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22 Goals
A goal should meet the following criteria:
Understandable: Is it stated simply and easy to
understand?
Suitable: Does it assist in implementing a strategy of
how the mission will achieve the vision?
Acceptable: Does it fit with the values of the
organization and its members/employees?
Flexible: Can it be adapted and changed as needed?
Feb 10, 2025
23 Objectives
An objective turns a goal’s general statement of
what is to be accomplished into a specific,
quantifiable, time-sensitive statement of what is
going to be achieved and when it will be achieved.
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24 Objectives
Examples of SMART business objectives are:
Earn at least a 20 percent after-tax rate of return on
our investment during the next fiscal year
Increase market share by 10 percent over the next
three years.
Lower operating costs by 15 percent over the next
two years through improvement in the efficiency of
the manufacturing process.
Reduce the call-back time of customer inquiries and
questions to no more than four hours. Feb 10, 2025
25 Assignment
Assignment: think of a business unit of your choice
and state the
Vision
Mission
Goals
Objectives
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26 Strategic formulation steps
Framing of mission statement
Analysis of internal & external environment
Generation of alternative strategies
Evaluation of strategies
Choosing the most important strategy
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27 Environmental Analysis
The purpose of environmental analysis is to enable the
firm to turn change to its advantage by being proactive.
Characteristics of the environment are;
It is unique to every organization.
It is constantly changing.
One level is controllable while the other is not.
It is a source of Opportunities, Threats, Strengths &
Weaknesses.
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28 Environmental Analysis
Environmental analysis can be divided into two major steps;
Defining; determining the relevant environmental forces.
Scanning & forecasting; collecting information concerning the
defined environment.
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29 Environmental Analysis
Environmental forces may be;
External: forces which resides outside the business, but has its
influence over the functioning of the business.
Micro component of environment: those which are very close
and direct effect factors.
Suppliers
Customers
Competitors
Marketing intermediaries
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30 Environmental Analysis
Macro component of environment: those which are away from
the company but gives indirect effects on organizational
functioning
Political
Economic
Social – Cultural
Technological
Environmental
Legal
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31 Environmental Analysis
Environmental forces may be;
Internal: forces which resides within the business, and has its
influence over the functioning of the business. They are easily
adjustable and controllable.
Mission and objectives
Plans and policies
Human resources
Physical resources
Financial resources
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32 Environmental Analysis
Scanning
Enables a business firm to identity S – W – O – T
Helps formulate effective strategies
Allows flexibility
Survival and growth of the business
Facilitates organization of resources
Read on: spying, scenario, QUEST, gathering verbal
information, spying and forecasting
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33 Environmental Analysis
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34 Assignment
Scan the environment from which the business will
operate
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35
Feb 10, 2025