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The macro-environmental analysis includes political, economic, social, and technological factors and sometimes is referred to as a PEST analysis.
The strategy should be translated into specific policies for functional areas such as: In addition to developing functional policies, the implementation phase involves identifying the required resources and putting into place the necessary organizational changes.
Once implemented, the results of the strategy need to be measured and evaluated, with changes made as required to keep the plan on track.
Porter's 5 forces include barriers to entry, customers, suppliers, substitute products, and rivalry among competing firms.
The internal analysis considers the situation within the firm itself, such as: A situation analysis can generate a large amount of information, much of which is not particularly relevant to strategy formulation.
The strategic planning process outlined above is only one approach to strategic management. A drawback of this top-down approach is that it may not be responsive enough for rapidly changing competitive environments.
In times of change, some of the more successful strategies emerge informally from lower levels of the organization, where managers are closer to customers on a day-to-day basis.
In the strategy formulation process, the mission statement sets the mood of where the company should go.
Objectives are concrete goals that the organization seeks to reach, for example, an earnings growth target.
Once a clear picture of the firm and its environment is in hand, specific strategic alternatives can be developed.
While different firms have different alternatives depending on their situation, there also exist generic strategies that can be applied across a wide range of firms.