Formulation of the Key Issue in the Strategy Development 

The diagnosis of the key issue for the development of strategy is a process of problem formulation involving strategic decisions and decision-making processes, with the aim of identifying and solving the problems underlying the most relevant strategic issues and deciding on possible alternatives of action to be implemented.

The methodology that will be used to identify strategic issues and problems that the company faces is proposed inthe formulation of the key issue, which helps decide how toboth configure and solve the problem (i.e., the development of the strategy) from information and analysis.

The formulation of the key issue focuses the company’s attention only on what is relevant to the survival, prosperity and effectiveness of the company and presents useful recommendations on how to achieve objectives. 

It is vital that the key strategic issue be formulated with agility and focus, if the company wants to survive and develop. A company that fails to address its strategic problems adequately will be unable to mitigate threats oridentify and exploit market opportunities.

The key strategic issue must be clearly related to the strategic problem facing the company; in addition, it must be specific to a particular company or sector. 

The identification of the key issue involves analysis of the problem, which is a process of organizing and presenting information to better define the scope of the problem or narrow its causes, so that solutions can be effectivelydeveloped. It involves aspects such as: identifying what caused the problem, why it continues to exist, how long it has existed, how serious it is, whether it will disappear on its own, when it should be solved, what is internal, and any external factors that contribute to the problem.

Problem analysis requires the construction of a model of aproblem from information gathered and answers to keyquestions. The analysis of the key issue can be developed from a model comprising three dimensions as illustrated in Figure 1.

Description – The problem should be described succinctly, preferably in a single paragraph. The problem itself should be framed as an issue about which the company can do something, on which it can act.

Factors – The factors that make the issue key should be listed. In particular, what is it about mandates, mission, values, internal strengths and weaknesses, and external opportunities and threats that make this issue strategic?

Consequences – The company must declare the consequences of a failure to address the problem. A review of the consequences will inform how strategic or important the various issues are.

Problem analysis describes the scope, variables and factors of the problem constraining the assumptions of cause-and-effect relationships, so that potential solutions can be identified and explored more effectively.

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