Sheraz hassan

Mba 1.5 2nd

Roll no F-016 -019
Subject Strategic Management Final Assignment
Strategy Formulation
Definition: Strategy Formulation is an analytical process of selection of the best suitable course
of action to meet the organizational objectives and vision. It is one of the steps of the strategic
management process. The strategic plan allows an organization to examine its resources,
provides a financial plan and establishes the most appropriate action plan for increasing profits.

It is examined through SWOT analysis. SWOT is an acronym for strength, weakness,

opportunity and threat. The strategic plan should be informed to all the employees so that they
know the company’s objectives, mission and vision. It provides direction and focus to the
employees.

 Steps of Strategy Formulation

The steps of strategy formulation include the following:

1. Establishing Organizational Objectives: This involves establishing long-term goals of
an organization. Strategic decisions can be taken once the organizational objectives are
determined.
2. Analysis of Organizational Environment: This involves SWOT analysis, meaning
identifying the company’s strengths and weaknesses and keeping vigilance over competitors’
actions to understand opportunities and threats.

Strengths and weaknesses are internal factors which the company has control over. Opportunities
and threats, on the other hand, are external factors over which the company has no control. A
successful organization builds on its strengths, overcomes its weakness, identifies new
opportunities and protects against external threats.

3. Forming quantitative goals: Defining targets so as to meet the company’s short-term

and long-term objectives. Example, 30% increase in revenue this year of a company.
4. Objectives in context with divisional plans: This involves setting up targets for every
department so that they work in coherence with the organization as a whole.
5. Performance Analysis: This is done to estimate the degree of variation between the
actual and the standard performance of an organization.
6. Selection of Strategy: This is the final step of strategy formulation. It involves
evaluation of the alternatives and selection of the best strategy amongst them to be the strategy of
the organization.

Strategy formulation process is an integral part of strategic management, as it helps in framing

effective strategies for the organization, to survive and grow in the dynamic business
environment.

Levels of strategy formulation

 There are three levels of strategy formulation used in an organization:

 Corporate level strategy: This level outlines what you want to achieve: growth,
stability, acquisition or retrenchment. It focuses on what business you are going to enter the
market.

 Business level strategy: This level answers the question of how you are going to
compete. It plays a role in those organization which have smaller units of business and each is
considered as the strategic business unit (SBU).

 Functional level strategy: This level concentrates on how an organization is going to

grow. It defines daily actions including allocation of resources to deliver corporate and
business level strategies.

Hence, all organisations have competitors, and it is the strategy that enables one business to
become more successful and established than the other.
 External environmental assessment

External Assessment

Assessing the external environment in which the agency operates is the next critical step. The
external environment includes everything that impacts the agency for better or for worse from
outside the walls of the organization.

For every agency there are unique forces and trends that are related to things such as:

 changes in the political climate

 social or economic issues for a particular group of clients
 changes in technology
 changes in adult education
 changes within the local community

These kinds of outside factors play a significant role in the agency’s planning and decisions for
the future, so information-gathering about these issues is necessary. You need to think through
how you are going to respond to these external opportunities and threats. Are there key
opportunities your agency needs to pursue either right away or in the near future? Are there
threats that your agency needs to address and take action on? Opportunities tend to vanish but
threats rarely go away of their own accord.

Coming back to the SWOT analysis introduced earlier (where you analyze organizational
strengths, weaknesses and opportunities and threats), we now look at the external factors
(opportunities and threats). These represent the opportunities and threats that exist beyond the
walls of the agency that have an effect on the agency’s success.

Opportunities are positive in nature. They are those chances that come our way, or doors that
open up, that can lead to new ventures and possibilities for the agency. An example might be a
new business or industry opening up in your community which could result in your literacy
agency starting up a new training program.
Threats are negative in nature. They are any external events or factors that have a detrimental
affect on an agency’s success. An example of this might be another organization or business that
opens and offers similar programming to that of your agency.

Conditions and events that happen in the world around the agency create the positive and
negative forces that influence the agency’s decision-making. Agencies need to be conscious of
the trends that are taking shape and be discerning in reading the signs if they are to make the best
decisions on how to respond to the external environment.

The reason behind all this information-gathering is to become well enough informed so that your
agency can make decisions for the future that will result in a positive contribution towards its
mission and its local community. You want to become aware of the important external factors
both positive and negative that you must take into account when looking for opportunities for
moving forward.

What you are looking for when collecting data on the agency’s external environment?

Specifically, agencies want to be able to predict with some degree of accuracy what they can
expect with regard to things like:

 The changing landscape of literacy

 Changing government priorities in adult education
 New development and emerging needs in the local community
 Literacy learners: who they are, where they come from and what they need
 Ministry of Training, Colleges and Universities: internal restructuring and changing role
with literacy agencies
 Changing roles and responsibilities within Employment Ontario
 New initiatives in other provincial government ministries and in the federal and
municipal government
 Current and potential sources of funding
 New relationships and opportunities with other streams and sectors
 Opportunities for other external partnerships
 New developments with your competitors, including both competitive and collaborative
forces
 What skills are available in your area? What skills are employers looking for?
 Changes in education levels and high school drop out rates in your community
 Other educational opportunities in your area

To conduct their external assessment, agencies will want to examine the following areas with
respect to three basic questions:

 What is happening in this area?

 What are the inherent opportunities here?
 What are the threats?

Collecting external information

With the above three key questions in mind, you can begin to gather information related to the
external environment. There are a number of ways of doing this.

 Check out the Trends, Opportunities and Priorities (TOP) report prepared by your Local
Training and Adjustment Board for your town or city.
See www.localboards.on.ca/top.htm for more information.
 Have informal conversations with local business people and people on the city council.
 Look for signs of new development and investigate. For example, what new
developments are occurring in your community? Will these developments result in new staff
being needed or a new type of training? If yes, for what kind of positions?
 Stay in the loop and watch for announcements and information coming from the Ministry
of Training, Colleges and Universities (www.edu.gov.on.ca/eng/tcu) or other areas of
government. Be sure to regularly check both print and web-based resources. For example, the
Employment Ontario Partners Gateway atwww.tcu.gov.on.ca/eng/eopg/ is an excellent source
of information for literacy agencies about developments with Employment Ontario.
 Connect with literacy practitioners in other communities to see what’s happening in their
areas and to get their “take” on new developments in the literacy field.
 Contact your sectoral, regional and umbrella literacy networks for information.
 For information on external trends facing literacy, check out Community Literacy of
Ontario’s website at: www.nald.ca/clo.
 Stay informed about government initiatives – check ministry websites, talk to your MPP
and MP, look for bulletins, news releases and newspaper articles.
 Take advantage of Literacy Services Planning meeting opportunities and get your
question on the agenda for discussion.
 Regularly check the websites of external organizations such as your local elementary and
secondary school boards as well as the websites of your potential partners and competitors.
 Attend community social service, education or job fairs to keep abreast of changes and
opportunities in your community.
 Hold a focus group with key external stakeholders asking for their feedback on trends and
issues or send them a print or electronic survey.
 Ask internal stakeholders for their perspective on external issues. Often staff, students,
volunteers and board members are an excellent source of information on these topics!

Sample questions

Here are some sample questions that you might want to ask when gathering external data on the
threats and opportunities facing your agency. They can be used as questions for focus groups, for
one-to-one interviews, for large group brainstorming and discussion or for developing a survey
or written questionnaire.

1. What are some of the key trends and forces occurring in our external environment? In our
community?
2. Which of these trends and forces are most likely to influence our agency’s future either
positively or negatively?
3. What strengths can our agency bring to these changes/challenges?
4. What steps can our agency take now in order to be in a strong position when the time
comes?
5. What are the three most important external opportunities facing our agency?
6. What are three possible external threats to our agency’s success?
7. What opportunities and threats can you see in the future that are associated with our
current and future partnerships?
8. What more could our agency do to increase its revenue and develop funder relationships?
9. What competitors have a negative impact on the success of our agency and what can we
do to minimize those effects and maximize our potential?
10.  What competitors are most closely aligned with our agency goals and values and how
can we encourage collaborative work between us?

Once you have gathered information on the opportunities and threats facing your literacy agency,
collate, organize, and summarize the information concisely in writing and combine it with the
other assessment information on your mission, mandates, and values and your organizational
strengths and weaknesses.

Organizing and documenting your work throughout the strategic planning process is very
important. The first time through it will seem very time-consuming; however, doing a thorough
job as you go along will save time in the end.

Combining all of this data gives you a comprehensive picture of your mission, values and
mandates as well as the internal and external environments of your agency. This information is
necessary in order for you to see where your agency’s strengths, weaknesses, opportunities and
threats lie. Knowing this, you will be properly equipped to make good decisions about what your
agency can do and should do in the future.

You are now through the most time-consuming stage of Assessment and you are ready to move
on to Step 2, Evaluation.

Questions and Activities for Reflection

1. Who are the key stakeholders and organizations that you need to connect with to assess
your external environment?
2. What is likely to be the best way to gather information on the external environment in
your agency (i.e. review of websites, informal conversations, focus groups, surveys, etc.)?
3. Who in your circle of family, friends and co-workers might have connections and
knowledge of the external stakeholder groups you need to link with?
4. How might you connect with your colleagues from other literacy agencies locally or
around the province to share strategies and ideas on the external literacy environment?