The specific path of action chosen by the firm to achieve its objectives is referred to as its strategy. Any strategy has the following components
- Product / Market Scope: The specific products / markets in which the firm operates
- Growth Vector: "AS-IS" & "To-Be" targets the firm wants to make for ensuring it's growth
- Competitive Advantage: The specific attributes of firm's product that gives the firm competitive advantage
- Distinctive Competence: The specific organizational strength of a firm that help the firm in achieving its objectives
- Synergy: The integrated effect of all the product/ market scope offerings of firm
Process of Strategy Formulation
Strategy is concerned with choosing, from the various alternatives open to it, that path which will best help the firm achieve its objectives.
Methods to formulate Strategies:
(1) External-Internal Analysis: Look from Outside-In approach and identify firms's strengths and weaknesses
(2) Generate Strategy alternatives:
Choice of Strategy alternative: Once we generate strategy alternatives, the firm has to evaluate the best alternative on the backdrop of firm's aspiration, internal strengths and weaknesses.