A framework for strategy formulation 1.

Strategic profile Identify the firm's current strategy Definition of the business (What business are we in?) extent of product scope and horizontal integration degree of vertical integration geographic coverage Competitive posture (How do we compete?) competitive weapons (e.g. cost, service, features, credit) relative competitive position Self concept (What kind of firm are you?) culture and pervasive atmosphere geographic coverage 2. Environmental analysis Asses the external environment to identify threats and opportunities Political, social and economic dimensions national and international policies (e.g. trade restrictions) traditional government regulation political or social developments economic conditions Market dimension current demand and potential for growth unique requirements of customers distribution constraints/opportunities Product and technological dimension possible product improvements or innovations possible production process improvements or innovations availability of raw materials needed Competitive dimension current and possible competitors evaluation of competitors overall impact of competition 3. Internal Analysis Assess the firm's capabilities and resources to identify strengths and weaknesses

Operational dimension ** industry's critical success requirements strengths and weaknesses in critical functional areas relatedness of operating elements Financial dimension current and future financial strength and flexibility financial resources to strategic requirements Management dimension depth and breath of executive resources executive resources relative to strategic requirements executive development and succession 4. Strategic choice Reconsider the current strategy in light of the environmental and internal analyses Defining the business Do nothing - maintain the status quo Liquidate Specialize Vertically integrate Diversify Go into new geographic markets Implications/observations: Competitive posture Do nothing - maintain the status quo Low cost producer (become) Differentiate (with something new) Focus (on someone new) Implications/observations: Product and technological dimension Do nothing - maintain the status quo Change the culture and performance goals Implications/observations:

5. Evaluating strategy Is it consistent with the environment? Current Future Is it consistent wit our capabilities/resources? Current Future Can it be implemented? Support throughout Top management commitment Other (people skills, reward system etc.)