Competitive Strategy Formation process steps

Strategy Formation Process:

In general, the strategy formation process is straight forward. The process brings all key factors for consideration before the strategy is formed. Participation of all strategy formation stakeholder of the organization brings the internal and external reality, strength, weakness, opportunities and threats into the process. All organization exists for a purpose. The core objective of any profit organization is to create value to customer and generate profit to the share holder or the owner of the organization. The value dynamics is applicable to all profit organization. The value to the customer is generated by providing a product or service.

The steps involved in the competitive strategy formation are listed below.

  • Identify the stakeholders need to be involved in the strategy formation.
  • Provide an overview of the strategy formation process to the stakeholders
  • Formalize the stakeholder’s consensus on the purpose of the organization, the core business functions and value proposition to drives value to the customer and profit/loss to the share holders or owners of the organization.
  • Identify the key differentiators in the market segment and perform a feasibility assessment to its value
  • Formation of the vision, mission, goals and core value of the organization to illustrate the key differentiators in the market segment.
  • Identify the key words in the vision & mission statements with respect to finance, customer, process and people.
  • Create a strategy map. Strategy map is a representation of the strategy. Strategy map has four perspectives. They are finance, customer, process and people (or learning and growth)
    1. Review four perspectives of the strategy map and its alignment. Choose learning & growth or people perspective based on the organization.
    2. Identify the strategic objectives for each perspective and emphasis on the identified key words from the vision and mission statement.
    3. Describe each strategic objective by a vivid statement
  • Identify the key performance measures for each objective.
    1. Assess the feasibility and availability of metrics for the key performance measures.
    2. Refine the key performance measure if the metrics are not available with in the organization and unrealistic to generate the metrics.
  • Create the targets for each performance measures
    1. Set the target for the long term
    2. Incrementally assign the targets into different duration. (per year or per quarter)
  • Identify the initiatives to meet the targets for each duration
    1. Theme is a group of the related initiates in duration.
    2. Identify a theme owner
    3. Identify a owner for each initiative
  • Create the balanced score card
  • Communicate the strategy to the organization and align the organization to the strategy
  • Identify the program management office to track all the initiatives
  • Track the status of the initiatives and fine tune the initiates based on the progress
  • The core challenge in the strategy formation is to identify the differentiators. Even when an organization has a differentiator in the respective market segment, implementation of the strategy is critical for the organization success. Execution of the strategy contains two major parts. One is to identify the projects or initiatives and second part is to align the whole organization towards the strategy.


    5 thoughts on “Competitive Strategy Formation process steps

    1. Pingback: Financial Md » Competitive Strategy Formation process steps

    2. A company’s true value is largely determined by its long-term performance potential as shaped by management’s decisions made today. These decisions guide the translation of the company’s mission, its purpose for existing, into the products and services it provides and hopefully the market wants.

      Strategic planning is an iterative, ongoing process consisting of:

      Analysis: assessment of the internal and external factors effecting the organization’s ability to achieve its mission

      Alternative Development: detailed assessment of the costs, benefits, and risks associated with strategic alternatives including both major, ongoing and newly proposed activities

      Alternative Selection: identification of the current portfolio components and proposed activities that will be pursued and the timeframe for execution

      Resource Projections: aggregation of the personnel, financial, physical, and technological needs including an assessment of the ability to acquire these resources within the needed timeframe

      Plan Development: final validation of the organization’s mission and compilation and approval of its long-range and annual business plans

      Execution of these iterative processes takes place throughout the year with a frequency dictated by the pace of market change.

      We at StrategyDriven ( believe in the power of effective planning coupled with execution. Our website is dedicated to providing executives and managers with the strategic planning and tactical execution best practice tools and techniques needed to create organizational alignment and accountability to acheive superior results.

      I hope you and your readers will visit the StrategyDriven website at

      All the Best,
      Nathan Ives
      Principal Contributor and
      co-Host, StrategyDriven Podcast

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