Chap 8

Strategy Formulation and Implementation

Lt Col Tauhidul Islam

BGBM, PBGMS (Bar), psc, G+

Associate Professor
Types of Strategy and
Strategy Formulation
The Strategic Management Process
Identify
•Scan External Strategic
•Environment Factors:
•Opportunities Implement
•Threats Strategy via
Changes in:
Formulate
•Leadership
Strategy:
Evaluate •Culture
•Corporate
Current: Define New •Structure
•Business
•Mission Mission/Goals •HR
•Functional
•Goals •Marketing
•Strategies •Finance
•Prod/dist
•IT&IS
Identify •Etc
Strategic
Scan Internal
Factors:
Environment
•Strengths
•Weaknesses
Strategy Formulation

• Developing long-range plans to effectively manage

environmental opportunities and threats in light of
corporate strengths and weaknesses.
• The design of an approach to achieve the firm's mission.
Thinking Strategically
• To help managers answer questions such as:
• Where is the organization now?
• Where does the organization want to be?
• What changes are among competitors?
• What courses of action will help us achieve
our goals?
• Answers define an overall direction for the
organisation's grand strategy.
Grand Strategy

General plan of action to achieve long-term objectives

1. Growth
2. Stability
3. Retrenchment.
Growth

Can be promoted internally by investing in expansion or

externally by acquiring additional business divisions.
Stability

Remain same size or grow steadily and in a controlled

way
Retrenchment

Forced decline by either shrinking current business

units or selling off or liquidating entire businesses.
Purpose of Strategy

Value Creation = use core competence and synergy

to provide increased benefits received with lower costs
paid.
Purpose of Strategy

• CORE COMPETENCE: something the organization does

especially well in comparison to its competitors

 Superior research and development

 Mastery of a technology
 Superior customer service.
Purpose of Strategy

SYNERGY: when organizational parts interact to produce

a joint effect that is greater than the sum of its parts
acting alone.
Strategy Formulation

• Development of the firm's goals and a specific strategic

plan
• Assessing the external environment and the internal
issues
• Integrating the results into goals and strategy.
Levels of Strategy

 Corporate
 Business
 Functional.
Corporate-Level Strategy

• Acquisition of new businesses

• Additions or divestment of business units, plants, or product lines
• Joint ventures with other companies in new areas.

What business are we in?

Portfolio Strategy

The organizational mix of Strategic Business Units and

product lines to provide synergy and a competitive
advantage.
Business-Level Strategy
• Advertising/marketing
• Direction and extent of R&D
• Product changes
• New product development
• Equipment and facilities
• Expansion or contraction of product lines.

How do we compete?
 Function-Level Strategy
• Production
• Distribution
• Finance.
• Marketing
• HR
• R&D

How do we support business-level

strategy?
Strategic choice

Strategic
Intent

Context

A C
B

Available
Strategic D options
Assessment
Choosing an option (1)

• Region A – unidentified
• Region B – identified, aligned and feasible!
• Region C – identified, aligned but not feasible
• Region D – identified and feasible, but not aligned
Choosing an option (2)

• Three tests
• Does it take us towards where we want to be? (Alignment)
• Do we have, or can we obtain, the resources required to
implement it? (Feasibility)
• Will it win the support of those who need to approve it,
and those who need to implement it? (Acceptability)
Choosing an option(3)

• Number of strategic options is rarely large

• If more than one passes all three tests, necessary to
evaluate “best”
• Evaluate according to tangible (risk, return, CBA) and
intangible (cultural “fit”, matching values and policies)
factors.
Porter’s generic strategies
Basis of competitive advantage
Cost Differentiation

Cost Leadership Differentiation

Broad
Market scope

Narrow Cost Focus Differentiation

Focus
 Further Reading

• Strategic Choice – follow the link!

• Johnson and Scholes chapter 7
• Bennett Chapters 1 and 3
TEXT BOOK(S) : -International Management, culture, strategy and behavior, Fred
Luthans and Jonathan P. Doh

REFERENCE BOOK(S) : - International Management ,Managing Across Borders

and Cultures by Helen Deresky

OTHERS: Online materials ( to be provided )

 Chapter 1
Projects in Contemporary Organizations