The process has five steps.
Step 1: Establish the Mission & the Vision We discussed mission and vision in Chapter 5 and explain them further in the next section. The mission, you’ll recall, is the organization’s purpose or reason for being, and it is expressed in a mission statement. An organization’s vision is its long-term goal describing what it wants to become, and it is expressed in a vision statement, which describes its long-term direction and strategic intent.
Step 2: Assess the Current Reality The second step is to do a current reality assessment, or organizational assessment—to look at where the organization stands and see what is working and what could be different so as to maximize efficiency and effectiveness in achieving the organization’s mission. 27 Among the tools for assessing Page 164the current reality are SWOT analysis, forecasting, benchmarking, and Porter’s model for industry analysis, all of which we discuss in Section 6.4.
Step 3: Formulate the Grand Strategy The next step is to translate the broad mission and vision statements into a grand strategy, which, after the assessment of the current reality, explains how the organization’s mission is to be accomplished. Three common grand strategies are growth, stability, and defensive, as we’ll describe.
Strategy formulation is the process of choosing among different strategies and altering them to best fit the organization’s needs. Formulating strategy is a time-consuming process both because it is important and because the strategy must be translated into more specific strategic plans, which determine what the organization’s long-term goals should be for the next 1–5 years.
In Section 6.5, we consider the three common grand strategies (growth, stability, and defensive); Porter’s four competitive strategies, single-product strategy versus diversification strategy, and the BCG matrix.
Step 4: Implement the Strategy Putting strategic plans into effect is strategy implementation . Strategic planning isn’t effective, of course, unless it can be translated into lower-level plans. This means that top managers need to check on possible roadblocks within the organization’s structure and culture and see if the right people and control systems are available to execute the plans.28
Step 5: Maintain Strategic Control: The Feedback Loop Strategic control consists of monitoring the execution of strategy and making adjustments, if necessary. To keep strategic plans on track, managers need control systems to monitor progress and take corrective action—early and rapidly—when things start to go awry. Corrective action constitutes a feedback loop in which a problem requires that managers return to an earlier step to rethink policies, redo budgets, or revise personnel arrangements.