STRATEGY FORMULATION:

BUSINESS STRATEGY

Prepared by:
Wilma G. Nonato, CHP,Ph.D.
 A FRAMEWORK FOR EXAMINING
BUSINESS STRATEGY

Strategy Formulation, often referred to as strategic

planning or long-range planning, is concerned with
developing a corporation’s mission, objectives,
strategies, and policies. It begins with situation
analysis: the process of finding a strategic fit between
external opportunities and internal strengths while
working around external threats and internal
weaknesses.
STRATEGIC DECISION-MAKING PROCESS
MISSION AND OBJECTIVES

One of the first steps in good strategy design should be crafting the mission
statement for the organization.

A well-crafted mission statement has five common elements:

1. It must be short so that every employee can remember the statement.
2. The design must be simple so that everyone in the company can
understand what the senior leadership team desires.
3. It has to provide direction to the activities of company employees.
4. The statement should enable employees knowing exactly what the
company does and what it does not do.
5. The statement should be measurable so that the company can visibly
see progress.
BUSINESS STRATEGIES

Business strategy focuses on improving the

competitive position of a company’s or
business unit’s products or services within the
specific industry or market segment that the
company or business unit serves.
The 6 Key Elements Needed to Devise
Good Business Strategies

Leadership vision
Culture
Strategic Marketing Plan
Management
Systems
Resources
Michael Porter's Generic Strategies

Photo source: https://www.mindtools.com/pages/article/newSTR_82.htm

Image source: https://skytraxratings.com/philippine-airlines-certified-as-a-4-star-airline Image source: https://www.manilatimes.net/2021/12/21/entertainment-lifestyle/life-times/cebu-
pacific-prepares-for-travel-recovery-with-a330neo-delivery/1826756
PORTER’S COMPETITIVE STRATEGIES

■■ Cost leadership is the ability of a company or a business unit

to design, produce, and market a comparable product or
service more efficiently than its competitors.

Photo source: https://mktoolboxsuite.com/cost-leadership-examples/

Image source: https://www.amazon.com/BIC-Round-Ballpoint-Medium-60-Count/dp/B001Q4HUNO
■■ Differentiation is the ability of a company to provide
unique and superior value to the buyer. This may include
areas such as product quality, special features, or after sale
service.

Photo source: https://asiatimes.com/2020/03/emirates-to-ground-fleet-amid-covid-19-

Photo source: https://mktoolboxsuite.com/differentiation-strategy-examples/
outbreak/
 ■■ Focus is the ability of a company to provide unique and
superior value to a particular buyer group, segment of the
market line, or geographic market.

Photo source: https://slice.seriouseats.com/2012/10/a-pizza-my-mind-i-hate-papa-murphys- photo source: https://www.naturesbasket.co.in/Products/Diet-Coke---Coca-

take-n-bake.html Cola/6863_0_0_0
Image source:
https://www.peakpx.com/en/search?q=rolls+royce+logo Image source: https://www.watchesofswitzerland.com/c/Brands/Omega Image source: https://www.tbvsc.com/la-vallee-village/en/brands/prada
Image source: https://www.retailtouchpoints.com/features/retail-movers-and-shakers/claire-s-stores-names-party-city-president-as-new-ceo
STRATEGIC ALLIANCES

A strategic alliance is a
long-term cooperative
arrangement between
two or more independent
firms or business units that
engage in business
activities for mutual
economic gain. Photo source: https://cio-wiki.org/wiki/Strategic_Alliance
 Photo source:
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e=SP
Image source:: https://www.miamilakesautomall.com/chevy-blog/chevrolet-invites-the-magic-in-as-they-team-up-with-disney-world/
Image source: https://eu.louisvuitton.com/eng-e1/articles/louis-vuitton-bmw-i-partner-to-create-luggage-of-the-future
Companies or business units may form a
strategic alliance for a number of reasons,
including:
1.To obtain or learn new capabilities
2.To obtain access to specific markets
3.To reduce financial risk
4.To reduce political risk
Continuum of Strategic Alliances
 Mutual Service Consortia. A mutual service consortium is a
partnership of similar companies in similar industries that
pool their resources to gain a benefit that is too expensive
to develop alone, such as access to advanced technology.

Photo source: https://ophtek.com/ibm-ships-malware- Photo source:

infected-usb-drives-mistake/ Photo source: https://www.forbes.com/companies/siemens/?s
https://ie.dynabook.com/press/releases/e-generation/ h=7f81e421f654
Joint Venture. A joint venture is a “cooperative
business activity, formed by two or more separate
organizations for strategic purposes, that creates an
independent business entity and allocates ownership,
operational responsibilities, and financial risks and
rewards to each member, while preserving their
separate identity/autonomy.”
 Photo source: https://www.tonyrobbins.com/business/what-is-a-joint-venture/
Photo source: https://www.verusglobal.com/project/joint-venture-success/
Licensing Arrangements. A licensing arrangement is an
agreement in which the licensing firm grants rights to
another firm in another country or market to produce
and/or sell a product.

Photo source: https://www.mysmartchoice.org/yum-brand-is-going-to-invest-100-million-to-fight-inequality/

Source: https://www.nestleusa.com/media/pressreleases/nestle-starbucks-close-agreement-perpetual-global-license-consumer-packaged-goods-foodservice
Value-Chain Partnerships. A value-chain
partnership is a strong and close alliance in
which one company or unit forms a long-
term arrangement with a key supplier or
distributor for mutual advantage.
REFERENCES:

Wheelen, T.L., Hunger, J.D., Hoffman, A.N., & Bamford, C.E. (2018). Strategic
management and business policy globalization, innovation and
sustainability. Pearson Education Limited.

International Institute for Management Development.(2021).

What is business strategy?
https://www.imd.org/imd-reflections/reflection-page/business-strategy/