‘Strategy is a course of action for achieving an organization’s purpose’. The process by which a realized strategy is formed is called ‘strategy formation’.  The process of strategy formation encompasses both formulation and action.

The process of strategic reasoning can be divided into four general categories of activities:

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1. Identifying – Refers to all activities contributing to a better understanding of what should be viewed as problematic

2. Diagnosing – (1) external assessment; the activity of investigating the structure and dynamics of the environment surrounding the organization (2) an internal assessment; the activity of investigating the capabilities and functioning of the organization.

3. Conceiving – Refers to all activities that contribute to determining which course of action should be pursued.

4. Realizing – Refers to all the practical actions performed by the organization (bob de Wit, 2010).

Siemens has been able to apply these categories through implementation her project which is called “Top Plus Program”. This project sought to improve business excellence by focusing on productivity, innovation and growth. This project will be discussed in detail in the term “Strategic Change”.

Getting people within an organization to exhibit strategic behaviour necessitates the exchange of information and ideas, decision-making procedures, communication channels, the allocation of resources and the coordination of actions. Roles in the strategy formation process can vary as tasks and responsibilities are divided in alternative ways:

– Top vs. middle vs. bottom roles; Usually some activities will be divided among members of the top management team, while other activities will be pushed further down to divisional managers, business unit managers, department managers, and sometimes even people even further down the hierarchy.

– Line vs. staff roles; managers are responsible for the realization of strategic options pertaining to the primary process of the organization. However, many organizations do have staff members involved in the strategy formation process (bob de Wit, 2010).

The employees in Siemens engage with a company in the process of forming a strategy, which applies to each person in the company from managing board members to trainees. This process let the company benefit from all experiences to improve the performance of the company.

There are more than 140.000 employees in Siemens company who have shares in it, and for this reason, they are more responsible and more related to (Siemens AG, 2014). Yet, not all activities need to be carried out by members of the organization but can be ‘outsourced’ to outsiders.

In organizing the strategy formation process, must formalize the assignment of activities to the various potential process participants should be. The added benefit of formalization is that it gives top management more control over the organization, as all major changes must be part of approved plans and the implementation of plans is checked (bob de Wit, 2010).