Strategy Formation or Strategy Formulation both mean the same. It involves doing an analysis of –
To know our present situation where we are now, the Organization must study both the internal (micro) and external (macro) situations. In other words both the strengths and weaknesses (Swot).
“The greatest thing in this world is not so much where we are, but in which direction we are moving” – Oliver Wendell Holmes.
Oliver Wendell Holmes (1809-1894) was an American physician, professor, lecturer, poet and writer. He was considered one of the best writers of the 19th century. Like he says strategy formation means the direction in which the company is moving.
Strategy Formation should indicate the right course of action for attaining the company’s objectives, and thereby succeed in attaining the company’s or organizational objectives.
The Strategy Formation should take into account the environmental conditions, and lead to the fulfillment of company’s vision and objectives.
Based on the above analysis, the objective or goals are formulated. Both short term and long term objectives are formulated. In this the Organization’s `Vision Statement` (long term), and `Mission Statement` (short term) should be the yardstick in formulating the objectives.
The next obvious step is to find the ways and means or the process by which to reach these objectives. The Organization has form a `strategy` and a `plan`, i.e. strategic plan
Paul R Niven, a leading Management Guru and author in Strategy Formation says it should be simple and easy to understand statements among competing alternatives, to make informal decisions and most importantly to align the people in the Organization around a common set of priorities.
Thus `Strategy Formation ` is formulated. From here the Organization moves to the implementation stage next.