Integration of Organization Strategy with Projects:
Analyze and Formuslate Strategies to Reach Objectives

Formulating strategy answers the question of what needs to be done to reach objectives. Strategy formulation includes determining and evaluating alternatives that support the organization's objectives and selecting the best alternative. The first step is a realistic evaluation of the past and current position of the enterprise. This step typically includes an analysis of "who are the customers" and "what are their needs as they (the customers) see them."

The next step is an assessment of the internal and external environments. What are the internal strengths and weaknesses of the enterprise? Examples of internal strengths or weaknesses could be core competencies, such as technology, product quality, management talent, low debt, and dealer networks. Managers can alter the strengths and weaknesses. Opportunities and threats usually represent external forces for change such as technology, industry structure, and competition. Competitive benchmarking tools are sometimes used here to assess current and future directions. Opportunities and threats are the flip sides of each other. That is, a threat can be perceived as an opportunity, or vice versa. Examples of perceived external threats could be a slowing of the economy, a maturing life cycle, exchange rates, or government regulation. Typical opportunities are increasing demand, emerging markets, and demographics. Managers or individual firms have limited opportunities to influence such external environmental factors; however, in recent years notable exceptions have been new technologies (laser scanning, computers) and alliances (the Toshiba/Time-Warner and Sony/Philips DVD standards for the DVD industry). The keys are to attempt to forecast fundamental industry changes and stay in a proactive mode rather than a reactive one. This assessment of the external and internal environments is known as the SWOT analysis (strengths, weaknesses, opportunities, and threats).

From this analysis, critical issues and a portfolio of strategic alternatives are identified. These alternatives are compared with the current portfolio and available resources; strategies are then selected that should support the basic mission and objectives of the organization. Critical analysis of the strategies includes asking questions:

• Does the strategy take advantage of our core competencies?



• Does the strategy exploit our competitive advantage?



• Does the strategy maximize meeting customers' needs?



• Does the strategy fit within our acceptable risk range?

Strategy formulation ends with cascading objectives or tasks assigned to lower divisions, departments, or individuals. Strategy formulation is a relatively straightforward process when compared with planning how strategies will be implemented. A rule of thumb for management effort in formulating strategy might range around 20 percent, while determining how strategy will be implemented might consume 80 percent of management's effort.