STRATEGY FORMATION PROCESS IS FUNDAMENTALLY A POTENTIAL ACTIVITY Babak Mahmood, Muhammad Usman Liaqat, Hafiza Khadija Fatima Department of Business Administration, G.C University Faisalabad, 38000, Pakistan. Abstract: The present study was carried out to check the influence of political process in organizations, find the importance of end with relation to means, satisfaction level of strategy makers in developing strategies while following strategy formation process. A sample of 100 respondents selected randomly from Sargodha Road, Sheikhopora Road, Khurian Wala and Yarn Market, almost 100% male of marketing department of Faisalabad Textile Industries. The research revealed some drastic facts that may help in future decision making. Mainly we concluded that strategy formation is very important & somewhere extremely important for organization to utilize it. Because the strategy formation process leads towards the correct decision, so from this point of view it plays a vital role in decision making. The strategy formation model explains the strategy making process by focusing on organizational politics and organizational resources which influence the strategy formation process. Analytical and technical skills are required mainly for developing effective strategies which would lead to right decision making while political behavior is critical one in strategy formation. If decision makers have these skills, they can develop strong strategies. Strategist has to work with a coordinated manner in formulating strategies. One of the most important point which makes strong impact in strategy formation is the lack of strategic vision. If strategic vision is not clear than it is too much difficult to make a strategy. A purposeful questionnaire was designed to search up to conclusions. Strategy formation is very much related with means-ends relationship to achieve strategic goals. Strategy formation is fundamentally very much potential and necessary activity which leads an organization towards achieving its strategic goals. Key words: Strategy Formation, Political Behavior, Decisions, Coordination, Strategic Vision, Means-Ends Relationship. Introduction: Strategy formation processes are organizational activities that systematically discusses mission and goals, explore the competitive environment, analyze strategic alternatives, and coordinate actions of implementation across entire organization (Anderson, 2004). Strategy formation is the ability of an organization to cope with problems by following an approach which leads them to achieve its strategic goals. Our study investigates the strategy formation process by considering the political processes that include political behavior, which might helps an organization to achieve its strategic goals. This paper enlightens some of the recent studies which will help the strategic decision makers in developing effective strategies for their organizations. The study also investigates role of organizational politics in the strategy formation process which leads decision makers to utilize these processes in the better way for their organization. In every organization, political behavior plays a vital role as for as politics is concerned. Political behavior in organizations are the activities that are not required as part of one’s formal role in the organization but to influence, or attempt to influence, the distribution of advantages and disadvantages within organization (Farrell and Petersen, 1982). According to Aristotle, politics stems from a diversity of interests. These diversified interest that exist in the organization by individuals as well as by the group influence the strategy formation process. Consistence with Aristotle’s conceptualization, it is a given that, within the organization, all employees bring their own interests, wants, desires, and needs to the workplace. Organizational politics arises when people think differently and want to act differently. Modern organizations can utilize the political processes in positive manner by following democratic approaches. The success of organization depends on strategy formation processes in which political processes also helps the strategy makers to cope up with problems and resolve the issues by following rational process, which is also a political process. This research is conducted to find the following things in organizations. 1. To check the influence of political process in organizations. 2. To find the importance of ends with relation to means. 3. To evaluate satisfaction level of strategy makers in developing strategies while following strategy formation process. 4 D’s Strategy Formation Model The strategy formation consists of 4 elements which can help the strategist while formulating strategies. These four elements are Define, Divide, Decide, Develop and two other elements which make their influence in the process, i.e. Organizational Politics, Organizational Resources. The first element “Define” means that strategist has to define the objectives, goals and vision of the company for whom he is going to develop strategy (Porter, 1996). Strategist can develop good strategy if he is fully aware of the strategic vision and goals of the organization. The second element “Divide” means that strategist has to prioritize the problems, issue for developing effective strategies. When problems and issues are properly divided then it’s been easy for strategy maker to formulate effective strategies. The third element “Decide” means that strategist must try to give grade to different factors according to the finances required for developing and implementing the strategy. Strategy with less resources and more productive would be given weight-age over the more resource related strategy with low productivity from organizational point of view. The factor of time is also been considered in this stage. The fourth element, “Develop” means that strategist has to formulate the strategy while considering all the three elements of strategy formation process and develop the strategy which fit according to the circumstances and culture of the organization. Organizational Politics Define Divide Strategy Formation Model Decide Develop Organizational Resources 4 D’s Strategy Formation Model The above model of strategy formation depicts the two aspects of organization i.e. organizational politics and organizational resource with relation to strategy making. Organizational politics also plays vital role in strategy formation process. In the above model it shows that, Define and divide elements are being influenced by political behavior. The arrow signs show that there is direct relationship between these two stages. Strategist try to indulge in political behavior while developing strategies in these two stages, because there are positive as well as negative activities takes place in these two stages (Denison, 1984). The second important point which makes strong influence on other two elements of strategy formation process is organizational resources. Organizational resources have direct relationship with decide and develop stage. Strategist makes their efforts to acquire resources for implementing strategies which will bring them more incentives and power in the organization as for as organizational strategies are concerned (Gupta and Jenkins, 1996). On the other hand, triangle of organizational politics (Decide & Develop) and organizational resources (Define, Divide) depicts the influence on these elements are indirect. Review of Literature: Cyert and March said that when managers within the organization influence the strategic direction, differences in experience, motivation, and self-interest expose decision outcomes to the diverse preferences of the decision makers and satisfying can become more prevalent than rational analyses and optimization. According to Narayanan and Fahay strategy may emerge through political process where strategic issues are formed around coalitions among managers in the organization that develop shared cognitions. Dutton says that strategic issues can gain formal recognition as managers continue to promote their ideas to top management until they become part of the organization’s formal strategy. Denison said that managers can influence strategy as they push their opinions, views, perspectives, and ideas through the organization’s strategic decision processes. Anthony, Hofer and Schendel said that strategic planning constitutes a systematic approach to management where strategy is formulated on the basis of comprehensive analyses of the organization’s competitive environment. According to Schendel and Hofer, strategic management paradigm incorporates a series of logical steps in the planning process; for example, mission statement, long-term goals environmental analyses, strategy formulation, implementation, and control. Porter says that strategic planning represents the organization’s analytical thinking activities intended to consider various competitive and organizational insights and rationality determine how the overall organization should be positioned strategically. According to Amason and Denison, decision processes cause more market views and organizational perspectives to be considered in strategic decisions, which should lead to better decision outcomes. Floyd, Wooldridge and Mintzberg say that managers in market oriented functions are found to be more engaged in the strategy formation process. Burgoyne and Jackson say that politics within the management and organizational literature remains a relatively neglected and somewhat marginal field. Scott and Mayer said that, a particular form of rationality is thus introduced into organizations, defining means-ends relationship and standardizing systems of control……that create ways of organizing and organizational change. Institutionalization operates at various levels, from the interpersonal to the supranational, such that the wider social and cultural and ideological, political and organizational’. Janis and Mann said, as part of their approach to vigilant decision-making, that such resistance may be enhanced by promoting multiple advocacy. They refer to studies showing that conflicts and disagreements among members of a decision making group, can have a constructive effect on the quality of the group’s search for and analysis of alternatives. Ashforth and R.T. Lee said that when people perceive politics as a threat rather than as an opportunity, they often respond with defensive behaviors- reactive and protective behaviors to avoid action blame or change. And defensive behaviors are often associated with negative feelings toward the job and work environment. In the short run, employees may find that defensiveness protects their self interest. But in long run, it wears them down. According to J.Pfeffer, one of the reasons many of us like to work for and with people who are powerful is that they are generally more pleasant, not because it is their native disposition, but because the reputation and reality of being powerful permits them more discretion and more ability to delegate to others. The effective manager accepts the political nature of organizations. By assessing behavior in a political framework, you can make better predict the actions of others and use this information to formulate political strategies that will gain advantages for you and your work unit. According to N.Gupta and G.D. Jenkins Jr, people who are good at playing politics can be expected to get higher performance evaluations and hence, larger salary increases and more promotions than the politically naïve or inept. The political astute are also likely to exhibit higher job satisfaction. For employees with modest political skills or who are willing to play the politics game, the perception of organizational politics is generally related to lower job satisfaction and self reported performance, increased anxiety and higher turnover. Materials and Methods: A questionnaire was developed to collect accurate information from the 50 respondents. The information collected on this questionnaire was used to observe the satisfaction level of respondents about strategy making decisions, political behavior effect on strategy formation process and to check the means-end relationship. The questionnaire was prepared by using a nominal, interval scale. We collected data 20 from Sargodha Road, 60 from Sheikhupura Road and Khurianwala and 20 from yarn market of Faisalabad. The data was tabulated and statistically analyzed through percentages, mode and graphs Results and Discussions: Table # 1: Frequency distribution and percentage of the respondents answer regarding political behavior help for good strategy making. Scale of Agreeness: Frequency Percentage 1. Strongly Agree 08 08 2. Agree 18 18 3. Not Agree 24 24 4. Disagree 34 34 5. Strongly Disagree 16 16 Total 100 100% Mode= 17 (Disagree), Where Mode = the most frequent value in the data. Table 1 shows that 34% strategist disagree political behavior help in strategy making. There are 8% who strongly agree that political behavior helps in strategy making. 18% respondents agree that with the role of political behavior in strategy making decisions. 16% respondents strongly disagree that political behavior does not help in strategy making. These results showed that political processes emerge and help where strategic issue exist are closely matched with (Narayanan and Fahay, 1982). Table # 2 Frequency distribution of the respondents answer with regards to opinion taken for strategy related decision. Strategy decisions: Frequency %age By yourself 64 64 Top management 28 28 Employees 08 08 Others - 00 Total 100 100% Mode= 32 (By yourself), Where Mode = the most frequent value in the data. Table 2 shows the opinion taken by strategist in strategy related decisions. The respondents who gave answer that they make strategies by own self without getting help of anybody are 64%. Respondents who take opinion from top management and from employees are 28% and 8% respectively. While there are no other people to whom strategist take opinion regarding strategy related decisions. The results are related that has been observed and studied by (Denison, 1984). Table 3: Frequency distribution and percentage of the respondents in order to check the satisfaction level regarding strategy making decisions. Scale of Satisfaction Frequency %age Extremely Satisfied 28 28 Mostly Satisfied 52 52 Not Satisfied 20 20 Mostly Dissatisfied - 00 Badly Dissatisfied - 00 Total 100 100% Mode= 26 (Mostly Satisfied), Where Mode = the most frequent value in the data. Table 3 shows that 28% respondents extremely satisfied with their strategy making decisions. There are 52% respondents who are mostly satisfied with there strategic decisions. 20% respondents were not satisfied with the decision taken by them. These results are closely matched with (Burgelman, 1983). Hº= There is positive relationship between means and ends with respect to strategy making decisions. HA = There is no positive relationship between means and ends with respect to strategy making decisions. Category Much To some No at all Total Extent Ends 56 32 12 100 Means 36 40 24 100 Total 92 72 36 200 To check the hypotheses we use the following formula of chi square 2 (o–e) Xcal = ∑ ------------- e O = Observed values e = Expected values (o-e)² (o-e)²/e (10)² = 100 100/46 = 2.17 (-10) ² = 100 100/46 = 2.17 (-4)² = 16 16/36 = 0.44 (4)² = 16 16/36 = 0.44 (-6)² = 36 36/18 = 2.0 (6)² = 36 36/18 = 2.0 9.22 Xcal = 9.22 d.f = ( r – 1 ) ( c – 1 )= ( 2 – 1 ) ( 3 – 1 ) = 2 Level of significance = .05 Xtab = 5.99 Xcal > Xtab Since the calculated value of X² = 9.22 falls in the critical region, so we reject our null hypothesis and conclude that; there is no positive relationship of means-end relationship with respect to strategy making decisions. So, an alternative hypothesis is accepted. The means-ends relationship and standardizing systems of control that creates ways of organizing and organizational change. Organizational culture, political, ideological, cultural factors having strong impact on means-ends relationship. Institutionalization operates at various levels, from the interpersonal to the supranational (Scott and Meyer,1994). The organizational culture differs from one organization to another one. This shows different approaches to be utilized while developing strategies for organizations. The mean-ends relationship can be possible in small organization where resources are scarce to meet them with ends (Floyd and Woooldridge, 1992). These relationship always depends upon the situation and organizational culture which influence the decision making process. Main Findings: This research shows that strategists are very much satisfied with their abilities to solve the problems facing by the organization. Decision makers follow the strategy formation process while developing strategies but some of them make their strategies by informal way in medium and small sized organizations by considering the problem and issues faced by organization (Floyd, Wooldridge and Mintzberg, 1992). Different types of skills like analytical skills, political behavior and technical skills are very necessary for the top level management for strategy making. The strategy formation model explains the importance of organizational politics and organizational resources in formulating strategies. Our research shows, strategist mostly disagree that political behavior help in strategy formation. Most of strategist believe that political behavior don’t take part in strategy formation process. There are other factors like mental abilities, technical skill, analytical skills which help in developing strategies. But it was observed that political behavior works unconsciously because every one in the organization works to achieve its own objective that lies in the organization (Narayanan and Fahay, 1982). When the question regarding do you gathered opinion for strategy making decision, it was observed that strategist make their strategies by concentrating on their own abilities. There are some who also get help from top management as well as from employees where some critical decision has to be taken. The strategists are satisfied with the strategy making decision taken by them (Dutton, 1995). This shows their strong confidence and their abilities to make strategies. The departmental interest also put influence in strategy making decisions. This shows that strategy makers are mostly concerned with their own department and responsibilities, thus depict their specific political behavior. Our study showed that there is no positive relationship of means and ends with respect to strategy making decisions. Strategic has been very much concern with the ends to be achieved. But means plays very important role, because if there are proper resources then it’s very easy and helpful for strategist in strategic making decisions. Conclusion: Our findings show that organizational politics, political behaviors and organizational resources play a very important role in strategy formation process. Organizational politics is going to happened in every organizational, employees seek to get knowledge and work for achieving their own interests which lies in their organization. The political behavior are thought to be having some negative approach in our environment, that is the reason strategist don’t take it into positive manner (Ashforth and Lee, 1990). The strategy formation model gives us an approach that how they can formulate strategies by following four elements and taking into account the other two elements of organizational politics and organizational resources while developing strategies. The study shows that analytical skill, technical knowledge helps the strategy makers in formulating strategies. But it was observed that political behavior works unconsciously because every one in the organization works to achieve its own objective that lies in the organization. The role of politics in the organization is very much common phenomenon. Political behavior can work well if it is to be considered by the employees as a positive thing. On the other hand, organization can utilized it by focusing on the employees benefits with respect to getting higher benefits. It is necessary for decision makers to hire those people in the organization who are capable of having these skills and who can forecast the future need of the organization in the globally changed business world. If strategy makers have different types of management skills, it will be easy for them to integrate different strategies into same strategically decision process. Strategist should have to work closely with other departments while formulating strategies because, there is dire need of coordination among different departments in the competitive environment where only that company can perform well who is having coordinated approach starting from the strategy making towards its implementation. One of the important factors in the strategy formation process is to having a clear strategic vision of the organization. If anyone has not clear vision, he might never able to formulate in developing right strategies. There are possibilities of some clashes between employees while working on different projects in the workplaces. When there is proper coordination between decision makers and strategists and they will closely work with employees then it will be very much beneficial for the organization. The resources of organization would be fully utilized in the proper manner with effectively and efficiently. Strategy formation process greatly helps the management to work by making coordination among different areas such as from strategy making to towards its implementation. The management can develop and implement the strategies at proper and right time by utilizing their resources in right way in order to get success in field of marketing in the textile industry of Faisalabad. References: 1. Anderson, (2004). “Integrating decentralized strategy making and strategy planning processes in dynamic environment”, Journal of Management Studies. 2. 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