Simply stated, a strategy is a guide or a roadmap by which an organization changes from a present state of affairs to a future preferred state. It is basically a framework by which daily decisions are made and a tool with which long-term plans and developments are constructed. A strategy enables an organization to place itself within a specific environment that will enable it to reach its maximum potential, while at the same time monitoring the same environment.
Strategy formulation is vital to the overall well-being of an organization. The following are the benefits of a comprehensive strategy formulation:
Studies show that organizations that use sound strategy formulation and management practices are successful and more profitable than firms that do not have a robust strategy formulation and plan. Strategy formulation enables the organization to engage in forward-looking plans and allows the organization to carefully evaluate its priorities. This gives the organization the ability to change its landscape and its goals.
Strategy formulation provides a discipline within the organization that allows the top management to take a step back and assess its day- to –day operations of the business and to think about the future of the firm. When the senior management constantly re-evaluates its performance in reference to the future goals, it gives the organization a better understanding of what needs to be done to achieve its objectives.
A strategy provides a structure within which all employees of an organization can make everyday decisions and ensure that those decisions are all moving the organization in a single seamless direction. The strategy offers a vision of the future, it confirms the purpose and values of the organization, it ensures objectives are set, identifies the threats and opportunities, it also determines the methods that can be used to leverage strengths and mitigate the weaknesses.
The strategic formulation process forces an organization to establish objectives and enables the organization to measure success. The formulation process enables the organization to determine what is important and critical to the success of the organization. It also forces the organization to set objectives and keeps these measures in place.
Strategy formulation takes an organizational perspective and carefully looks at all the components of the organization and the interrelationship between these units to enable the organization to develop a strategy that is optimal and all inclusive.
Strategy formulation is necessary to any organization that wants to achieve its goals and objectives within the right time frame.