Chapter 1

Two Perspectives of Leadership
Romantic view
Leader is the key force in organization’s success
External control perspective
Focus is on external factors that affect an organization’s success
Leaders can make a difference
Must be aware of opportunities and threats faced in external environment
Must have thorough understanding of the firm’s resources and capabilities

Analysis
Strategic goals (vision, mission, strategic objectives)
Internal and external environment of the firm
Strategic decisions
What industries should we compete in?
How should we compete in those industries?
Actions
Allocate necessary resources
Design the organization to bring intended strategies to reality
Strategic Management

Strategic Management
Strategic management is the study of why some firms outperform others
How to compete in order to create competitive advantages in the marketplace
How to create competitive advantages in the market place
Unique and valuable
Difficult for competitors to copy or substitute

Key Attributes
Key Attributes of strategic management:
Directs the organization toward overall goals and objectives
Includes multiple stakeholders in decision making
Needs to incorporate short-term and long-term perspectives
Recognizes trade-offs between efficiency and effectiveness

Strategic Analysis
Starting point in the strategic management process
Precedes effective formulation and implementation of strategies

Strategic Analysis (cont.)
Clear goals and objectives permit effective allocation of resources
Hierarchy of goals
Vision
Mission
Strategic objectives
Analyzing external environments
Managers must scan the environment and analyze competitors
General environment
Industry environment

Frameworks for analyzing a firm’s internal environment
Strengths
Weaknesses
Analyzing strengths can uncover potential sources of competitive advantage

Intellectual assets are drivers of
Competitive advantage
Wealth creation
Networks and relationships among
Employees
Customers
Suppliers
Alliance partners

Strategy Formulation
Business level strategy:
Successful firms develop bases for competitive advantage
Cost leadership
Differentiation
Focusing on narrow or industry-wide market segments
Sustainability
Industry life cycle

Strategy Formulation (cont.)
Corporate-level strategy addresses:
Firm’s portfolio or group of businesses
What business should we be in?
How can we create synergies among the businesses?
Diversification
Related
Unrelated

Strategy Formulation (cont.)
International Strategy
Appropriate entry strategies for foreign markets
Sustain competitive advantage in global markets
Effective strategies for entrepreneurial initiatives

Strategy Implementation
Informational control
Monitor and scan the environment
Respond effectively to threats and opportunities
Behavioral control
Effective corporate governance
Interests of managers and owners of the firm
Organizational structure and design

Strategy Implementation (cont.)
Organizational boundaries
Flexible
Permeable
Strategic Alliances
Develop organization that is committed to
Excellence
Ethical behavior

Strategy Implementation (cont.)
Learning organization responsive to
Rapid and unpredictable change
Corporate entrepreneurship and innovation
New opportunities
Enhance innovative capacity
Autonomous entrepreneurial behavior
Product champions

Corporate Governance and Stakeholder Management
Corporate governance: the relationship among various participants in determining the direction and performance of corporations
Shareholders
Management (led by the CEO)
Board of Directors

Corporate Governance and Stakeholder Management (cont.)
Board of Directors
Elected representatives of the owners
Ensure interests and motives of management are aligned with those of the owners
Effective and engaged Board of Directors
Shareholder activism
Proper managerial rewards and incentives

Example: New Rules for Directors
In light of numerous corporate scandals, the role and rules for board of directors are being redefined. Few areas of focus :
Numbers Knowledge
Strategy Focus
Time & Understanding
Watchdog
Source: Tipsheet, Business Week, January 22, 2007

Stakeholder Management
Two views of stakeholder management
Zero sum
Stakeholders compete for attention and resources of the organization
Gain of one is a loss to the other
Symbiosis
Stakeholders are dependent upon each other
Mutual benefits

Social Responsibility
Social responsibility: the expectation that businesses or individuals will strive to improve the overall welfare of society
Managers must take active steps to make society better
Socially responsible behavior changes over time
Triple bottom line

Example: Social Responsibility
Starbucks Coffee Company
Corporate social responsibility is embedded throughout the organization.
The following are some of the commitments they have made to be socially responsible:
Commitment to origins
Helping protect the environment
Starbucks in your community
Commitment to partners
Source: www.starbucks.com

Strategic Management Perspective
Integrative view of the organization
Assess how functional areas and activities “fit together” to achieve goals and objectives
All managers and employees must take and integrative, strategic perspective of issues facing the organization

Enhancing Employee Involvement
Have significant profit and loss responsibility
Local Line Leaders

Champion and guide ideas
Create a learning infrastructure
Establish a domain for taking action
Executive Leaders Local Line Leaders

Have little positional power and formal authority
Generate their power through the conviction and clarity of their ideas
Executive Leaders Local Line Leaders Internal Networkers

Coherence in Strategic Direction
Company vision
Massively inspiring
Overarching
Long-term
Driven by and evokes passion
Fundamental statement of the organization’s
Values
Aspiration
Goals
Company vision Hierarchy of Goals

Mission statements
Purpose of the company
Basis of competition and competitive advantages
More specific than vision
Focused on the means by which the firm will compete
Company vision Mission statements Hierarchy of Goals

Operationalize the mission statement
Provide guidance on how the organization can fulfill or move toward the “higher goals”
More specific
Cover a more well-defined time frame
Company vision Mission statements Strategic objectives Hierarchy of Goals

Measurable
Specific
Appropriate
Realistic
Timely
Challenging
Resolve conflicts that arise
Yardstick for rewards and incentives
Company vision Mission statements Strategic objectives Hierarchy of Goals

Chapter 1

by Jack78

Accessibility

Categories

Upload Details

Usage Rights

Statistics

Chapter 1 Presentation Transcript