Transcript Chapter 6

The Strategy Formulation
Process
Chapter 6
Overview
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(c) Macmillan & Tampoe 2001
Importance of Strategy Formulation Process
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Causes strategic Thinking
Mechanism to ease the communication of
ideas
Co-ordinate the efforts of those involved in
the process
Inject structure into the thinking without
rigidity
(c) Macmillan & Tampoe 2001
Characteristics of ‘good’ strategy
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Judged by the results achieved NOT by the
process
Process must match:
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Process must be:
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business needs
Culture
Specific issues of the context
Original
Creative
Easy to implement
(c) Macmillan & Tampoe 2001
Nature of the formulation process
 Can
be both:
 formal
and informal
 simple and complex
 Analytical and qualitative
 Involve many people or just a few
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Strategic Thinking Should
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Consider the enterprise as a whole
Be about the long term and not the immediate
Address the organisations relationship with the
environment and its capabilities and resources
Be based on fact and reality with some
imagination
Have a good understanding of the present
Be able to think imaginatively about the future
(c) Macmillan & Tampoe 2001
The 3 Interlocking aspects of the
Strategy Formulation Process
Strategic
Intent
Strategic
Assessment
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Strategic
Choice
(c) Macmillan & Tampoe 2001
The 3 Aspects of Strategy Formulation
Strategic Intent
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Driver of Strategy Formulation Process
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Provides direction for strategy
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Answers question “Where do we want to go?”
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The 3 Aspects of Strategy Formulation
Strategic Assessment
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Provides relevant knowledge of strategic
context
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Anchors future strategies in reality
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Answers question “Where are we now?”
(c) Macmillan & Tampoe 2001
The 3 Aspects of Strategy Formulation
Strategic Choice
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If no choice - no strategy needed
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The link to action
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Answers question “How to get from where we
are to where we want to be?”
(c) Macmillan & Tampoe 2001
Activities and Results of Process
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Activities
in Process
Results from
Process
Intending
Intent
Assessing
Assessment
Choosing
Choice
(c) Macmillan & Tampoe 2001
Effective strategy formulation processes
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Customer awareness
Supplier relationships
Stakeholder influences
Understanding of competence
Awareness of technological change and innovation
Mix of people involved in process
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Encouragement and understanding of top management
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Communication of results and reaction to feedback
Sound logic and balance to the process
Process design but not over-design
Considered role of external support
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(c) Macmillan & Tampoe 2001
Results from the strategy formulation
process
Goals that are simple, consistent and
long term.
 Profound understanding of the
competitive environment
 Objective appraisal of resources
 Effective implementation
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Source: Robert Grant 1995 “Contemporary Strategy Analysis”
(c) Macmillan & Tampoe 2001