Steps in strategy formulation: While making a strategy for an organization, the below mentioned process has to be followed:-

1. Clarifying the objectives and values of the organization: a strategy is related with the mission and values of the organization. The mission of an organization can be described as the purpose for which the organization has been established. In this way, it is necessary that the mission of the organization should be clearly defined and at the same time, it should also be communicated to all the members of the organization. All the decisions have to be taken by the managers keeping in view the objectives of the organization and in the same way; strategies are also required to be created for achieving these objectives. The objectives of an organization provide the guidelines that can be used while making the strategies for the organization at different levels. In the same way, the values followed by an organization also help in creating the most appropriate strategies for the organization. For example, while creating strategies for the organization, the managers should keep in mind the likely customers of the organization and also the types of needs that are going to be satisfied by the organization.

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Generally, the below mentioned types of strategies are used by the organizations.

1. Stability strategy: this type of strategy is used by an organization in cases where the organization is satisfied with the current situation and therefore it does not want to move away from such a position. Consequently, in such a case, the organization goes for the stability strategy. However a stability strategy can prove to be effective when the environment of the organization is also stable. In most of the cases, this type of strategy is used by the organizations. The reason is that it is the least risky course of action. For example, the stability strategy will be adopted by an organization if it is satisfied by dealing with the same product or service, providing its services to the same group of consumers and maintaining the same market share. Sometimes, the organization is not adventurous enough to try new strategies and change its situation. However, the stability strategy can be adopted successfully by the organizations from a mature industry that has a static technology. But as a result of adopting the stability strategy, the managers may become complacent. In the same way, whenever a change arises in such an organization, the managers find it difficult to deal with such changes.

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A strategy can be described as an action plan that provides a direction that has to be adopted by the organization in order to achieve its objectives. In this way, strategy is a decision-making choice and it involves the consideration of the strengths and weaknesses of the organization and also the external environment that has an impact on the organization. While in the past, strategy was mainly used by the military but now, it has become an integral part of the business organizations also. In case of business organization, a platform is required to consider the plans and policies that have been adopted by the competitors and then the plans of the organization have to be modified in such a way so that the superiority of the products or the services of the organization can be established. At the same time, strategy also helps in deciding the objectives of the organization as well as the way in which the resources of the organization have to be deployed in order to achieve these objectives.

In this way, strategy is related with deciding the long-term goals of the organization and also the adoption of a course of action and allocating the resources that are required to achieve these goals. Therefore a strategy is a broad plan that can be used to take the company to the position where it wants to be in future from the place where it is at present.

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Policies can be described as the guidelines that have to be used in the day-to-day functioning of the organization. However, the policies do not provide instant answers regarding all the problems that are being faced by the managers. In this way, there are certain limitations that are present in case of policies.

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There is a difference between the objectives and the policies of an organization. In this part, an attempt has been made to compare the objectives and the policies of the organization. For example, there is a difference between the meaning of objectives and policies. While the objectives can be described as the goals that have to be achieved by the organization, on the other hand, policies can be described as the tools that are used for achieving the objectives of the organization. In the same way, another difference that is present between objectives and policies is related with their need for the organization. While objectives can be described as the foundations of the organization and therefore, any organization without an objective is directionless as it will not be aware of the goals that have to be achieved by it and the direction in which it needs to go. On the other hand, policies provide the means that can be used by the organization to achieve these goals. In this way, while policies are essential for achieving the goals of the organization but they are not indispensable.

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