The Stages of Corporate Strategy Formulation

IPCC Paper 7B: Strategic Management

Chapter 4 Part-1

CA. Deepak S Mulchandani, Indore

Learning Objectives 1 •Stages of Corporate Strategy formulation

2 •Vision and Mission

3 •Objectives

4 •Crafting of strategy

5 •Implementation and execution

6 •Monitoring ,evaluation and controlling

Why Planning , when future is uncertain…?

Stage 1 •Developing a

Strategic Vision

Stage 2 •Setting

Objectives

Stage 3 •Crafting a

Strategy to Achieve the Objectives & Vision

Stage 4 • Implementing

& Executing the Strategy

Stage 5 •Monitoring

Developments, Evaluating performance and Making Corrective Adjustments

C o r p o r a t e S t r a t e g y F o r m u l a t i o n ! S t a g e s

Stage I : Developing a Strategic Vision

• Firstly, A Company must determine what directional path the company should take~!

• Secondly, What changes in the company’s Product – Market – Customer – Technology – Focus would improve its current market position and its Future Prospect...!

Mission & Strategic Intents

What is Mission?

The Role of the organization as seen by management is expressed in terms of Mission or Strategic Intent…

Importance? This is important because external stakeholders and managers in the organization need

to be clear about what the organization is seeking to achieve and, in broad terms, how it expects to do so.

Strategic Vision & Intent – Illustrated

Voice Courtesy : Moser Baer

Stage II : Setting Objectives-What are they

Corporate objectives flow from the mission and growth ambition of the corporation.

The managerial purpose of setting objectives is to convert the strategic vision into specific performance targets results and outcomes the management wants to achieve

The objective provides the basis for it major decisions of the firm and says the organizational performance to be realised at each level

Then use these objectives as yardsticks for tracking the company's progress and performance.

Objectives- How they should be and why they should be there

Characteristics of Objectives

Quantitative

Measurable

Realistic

Understandable

Challenging

Hierarchical

Obtainable

Congruent among organizational units

B e n e f i t s o f O b j e c t i v e s

P r o v i d e D i r e c t i o n

A l l o w S y n e r g y

A i d i n e v a l u a t i o n

E s t a b l i s h p r i o r i t i e s

R e d u c e u n c e r t a i n t y

M i n i m i z e c o n f l i c t s

S t i m u l a t e e x e r t i o n

Vision , Mission , Objective

Illustrated

Vision, Mission, Objective –Illustrated for a student Term Perspective

(I.e. the actual reason ,logic ) Catch phrase to remember

Vision To be a successful professional and have a good respected life

What I want ….!

Mission To achieve my vision I have decided to become a chartered accountant in my life

How will I get ….what I want

Objective My objective is to clear CA-IPCC exams in first attempt

What actually I have to do for what I want …!

Objectives Illustrated in a corporate scenario

Example : Kurkure set an objective for increasing its sales during festival times . A s sweets were preferred during festive days .The major player in the market was Cadbury Celebrations

T h e B a la n c e d Sc o r e c a r d Ap p r o a c h

Setting a combination of strategic and financial objectives

Tracking the achievement of such objectives

To deliver better financial results from operations is the achievement of strategic objectives that improve its

competitiveness and market strength.

Stage III : Crafting a Strategy to achieve the objectives and Vision

Stage III : Crafting a Strategy to achieve the objectives and Vision

A company's strategy is at full power only when its many pieces

are united.

Ideally, the pieces and layers of a company's strategy should fit

together like a jigsaw puzzle.

STRATEGIC DECISION

Organizational Strengths & Weaknesses

Competitor Strength & Weakness

Market Needs, Attractiveness and

Key Success

In making strategic decisions, inputs from a variety of assessments are relevant. However, The core of any strategic decision should be based on three types of assessments.

Stage IV : Implementing & Executing the Strategy

Stage IV : Implementing & Executing the Strategy

Managing strategy implementation and execution is an operations-oriented activity aimed at shaping the performance of core business activities in a strategy-supportive manner.

To convert strategic plans into actions and results, a manager must be able to perform following:

Motivate People

Build and Strengthen Core Competencies and capabilities

Direct Organizational Change

Stage V : Monitoring developments, evaluating performance and making corrective adjustments

• The fifth stage is the trigger point for deciding whether to continue or change the company's vision, objectives, strategy, and/or strategy-execution methods.

• A company's vision, objectives, strategy, and approach to strategy execution are never final. Managing strategy is an ongoing process, not an every now and then task.

• A company's direction, objectives, and strategy have to be revisited anytime external or internal conditions warrant.

• It is to be expected that a company will modify its strategic vision, direction, objectives, and strategy over time.

• Proficient strategy execution is always the product of much organizational learning. It is achieved unevenly – coming quickly in some areas and proving nettlesome and problematic in others.

Lesson Summary- Strategy Formulation Process

Forming of a vision Mission and strategic intent

Setting of objectives

Crafting of strategy

Implementing and executing it

Monitoring ,evaluating and making necessary adjustment wherever necessary

Thank You

End of Chapter-4 Part-1 of 3

Strategic Planning By

CA. Deepak S Mulchandani, Indore

Email: deepak.mulchandani@gmail.com