Strategy Formulation (IP Unit 3) Research Paper

Strategy Formulation (IP Unit 3) - Research Paper Example The process of strategy formulation just like that for decision-making follows a six steps procedure that must not be followed chronologically but must be integrated conclusively. It is therefore quiet useful to consider strategy formulation as part of strategic management that entails the diagnostic approach, Formulation and implementation. Diagnosis involves performing a situation analysis where the internal environment of the organization is analyzed while implementation is a stage in formulation where the strategies that are considered appropriate for the operations of the company are put to practice, monitoring, and evaluation (Day, 1986). Strategy formulation is a six steps module that is incorporated under three main aspects. The steps entail - first setting the organizational goals and objectives, which must be long-term in nature, the objectives, reiterates the state of being there while a strategy shows us how to reach there. After the objectives are well laid, environmenta l scanning is done which entails the review of both the external and internal environments which range from economic to industrial and in which the organization at stake operates (Day, 1986). The management then sets quantitative targets to be achieved through the set organizational objectives. This is to aid comparison with the long-term customers and realize their input and contribution to the overall missions and visions of the organization. The next step is to aim overall goals with divisional outputs where the contributions made by each department are quantified and consolidated. Then performance analysis if done where the gap between the planned and the desired performance is analyzed. A strategy is then chosen from the alternatives projected, considering the organizational goals, strengths, and actual potential visa vi the external environment, a choice is made. As pointed out earlier by Day (1986), strategy formulation is crafted under three major aspects, which involves; co rporate level strategy, competitive strategy and functional strategy. Corporate level strategy is concerned majorly of the vast decisions around the total organization’s scope and direction so that there are detected changes to be made to realize growth objective for a given firm. Competitive strategy is aimed at making decisions on how the company should compete to remain relevant in its line of business (LOB) or its strategic business units (SBU). Functional strategy on the other hand deals with how each of the available functional areas is likely to carry out its functional activities (Day, 1986). "FIRST-MOVER" THEORY OR "LATE-MOVER" THEORY Our case is the competitive business strategy where the management is faced with the situation of whether to dev elope a completely new brand of a product or simply produce the already existing brand that a competitor in the same industry is involved. This they expect to do through either the, â€Å"first mover theory† or â€Å" late mover theory† (Green & Ryans, 1990). Timing of the market by most firms is a very important aspect of their operation. This can either be early entry into the market or late entries hence the two theories. Furthermore, market entry timing decisions are the bridge between the functional strategy and the corporate business strategy, therefore, when timing and scope decisions are combined there is always a realization of a superior market (Green & Ryans, 1990). First movers into the market are normally likely to benefit from above normal