Formulation of Strategy

Before an organisation starts to make judgements about how it is going to compete, fundamental decisions about the organisation’s overall method of operation and the areas it wishes to serve, must be articulated. A conscious statement of the primary direction and purpose of the organisation must be the key foundation upon which objectives and strategy are based. The rationale behind the company’s existence usually comes in the form of a mission statement and is meant to act as a guiding light to all personnel within the organisation.

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Mission

The mission of the organisation is the unique purpose that distinguishes it from other companies and defines the boundaries of its operations. The mission statement is a proclamation of the organisation’s primary objective that encapsulates its core values. The organisation’s aims and aspirations are the results of a series of influences.

The mission statement ought to characterise the organisation’s principles and priorities and define the broad product, market, and technologies that are core to the business.

Goals and Objectives

The mission statement acts as a guide and leads to the development of a hierarchy of objectives. Objectives are the specific intended outcomes of strategy.

Strategic goals are general aspirations that the organisation needs to achieve but are difficult to measure or put within a specific time scale. Objectives, therefore, are more specific than goals and state what is to be achieved; they are given a quantifiable measure and a specific time scale.

Hierarchy of Objectives

Objectives are not only developed across a range of key areas; they also exist at several levels within an organisation. Objectives cascade down through an organisational structure, effectively forming a hierarchy.

This hierarchy ensures that the objectives that are developed at each level are consistent with the objectives that lie at the level above them. However, there must be strong co-ordination between functional areas, otherwise conflicting actions may be taken as each functional area conducts independent actions in order to fulfill their objectives.