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Strategic formulation is a process that is undertaken by most organizations in-order to achieve its goals. Strategic formulation helps an organization to compete with others in the market. It also helps the organization to adapt to future changes that may occur. Organizations that do not have strategies are always outmaneuvered by other organizations. There are six steps that involved when formulating strategies. The first step is setting up of goals. The second step is weighing up the environment. The third step entails setting up of quantitative targets. The fourth step involves departmental planning and lastly, the fifth step is analyzing the performance of the organization (Henry, 1993).
Categories of Strategic Formulation
There are five categories involved while formulating strategies. Directional strategies involve making a plan on how the business will expand, maximizing profits and increased and lastly how to meet set objectives and goals. Directional strategies may also lead to stability in the organization. In acute care hospitals, the hospital can set an outpatient pharmacy sells drugs to patients who have been prescribed certain drugs. These may increase profits for the hospital as it sheds its focus on current clients and new clients (Henry, 1993).
The second group is adaptive strategies. The question here is how the organization adapts to new strategies? After the organization has come up with directional strategies and other strategies, it comes up with adaptive strategies that will help in adapting to the market. When setting up a new pharmacy, the hospital may for example think of how it will adapt to the new idea. Will it be able to attract new customers, will it make profit, what happens when patients do not buy from our pharmacy? Those are some of the questions which are answered when coming up with adaptive strategies (Ricky, 2010).
The third strategy is market entry. This involves delivering services and goods to a target market. It also involves distributing the goods and services. The hospital will for example, decide on which drugs to sell in the pharmacy and at where to get the drugs from. The fourth category is competitive strategies. These involves coming up with strategies that help in competing with other organizations and how to dominate in the competition. The hospital may for example come up with strategies like selling drugs at an affordable price for all and it may also decide on selling drugs on credit to royal clients. The fifth and last category is implementation strategies. This involves implementing the strategies that the organization has come up with. The hospital will come up with implementation strategies such as where to set up the pharmacy, who to use as the pharmacist e.t.c. (Ricky, 2010).
These strategies are formulated in that order since it is rational and easy to come up with the next strategies. Each strategy leads to the other e.g. after market entry strategies, a company then strategies on how to be competitive in the target market. Also, none of the formulated strategies is more effective than the other. This is because each strategy builds the other strategy e.g. the hospital cannot be competitive if it has not come up with market entry strategies. Also, it cannot execute strategies without first coming up with strategies (Michael, 1993).
Strategic formulation is vital to a company. Companies that lack or fail to formulate strategies are highly likely to flop and hence be outmaneuvered by other organizations. Strategic formulation also leads to the success of the organization. An organization is able to adapt to future changes that may occur. Organizations that do not formulate strategies lack vision and direction.