Formulating Strategies--Generating, Evaluating, and Selecting Strategies

The final stage of a firm's strategy formulation process consists of generating and selecting among competing strategies in order to pursue their long-term objectives. Strategies are best formulated in conjunction with the previous steps of objective setting and internal and external analysis. Further, a firm can generate many strategies as a starting point for critically evaluating and ultimately selecting those that hold out highest promise of achieving strategic goals. To illustrate, a large, project-based firm developed as a long-term objective, the goal of continuous market penetration into the lucrative oil drilling platform construction business. One key drawback in realizing this objective was the location of their fabrication yard (on the west coast of Finland ), which made their delivery process more expensive than competitors, particularly when competing for contracts in the Gulf of Mexico. While considering a number of alternatives, including moving their operations to Houston, the firm eventually settled on a strategy of partnering with other, U.S.-based firms to take advantage of their geographical proximity while maintaining their own competitive advantage in engineering and product innovation.