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  1. 1. Strategic Inputs Chapter 2 The External The Strategic Environment Strategic Intent Strategic Mission Management Chapter 3 The Internal Environment Process Strategy Formulation Strategy Implementation Chapter 5 Chapter 11 Chapter 4 Chapter 6 Chapter 10 Competitive Rivalry Organizational Strategic Actions Business-Level Corporate- Corporate and Competitive Structure and Strategy Level Strategy Governance Dynamics Controls Chapter 7 Chapter 8 Chapter 9 Chapter 12 Acquisition and International Cooperative Strategic Restructuring Strategy Strategy Leadership Strategies Strategic Outcomes Strategic Competitiveness Above-Average Returns 1 Feedback
  2. 2. Strategic Leadership  Strategic leadership involves: – the ability to anticipate, envision, maintain flexibility and empower others to create strategic change – multi-functional work that involves working through others – consideration of the entire enterprise rather than just a sub-unit – a managerial frame of reference 2
  3. 3. Strategic Leadership and the Strategic Management Process Effective Strategic Leadership shapes the formulation of Strategic Intent Strategic Mission and influence Successful Strategic Actions 3
  4. 4. Strategic Leadership and the Strategic Management Process Successful Strategic Actions Formulation Implementation of Strategies of Strategies yields Strategic Competitiveness Above-Average Returns 4
  5. 5. Factors Affecting Managerial Discretion External Environment External Environment • Industry structure • Rate of market growth • Number and type of competitors • Nature and degree of political/legal constraints • Degree to which products can be differentiated 5
  6. 6. Factors Affecting Managerial Discretion External Environment Characteristics of the Organization • Size Characteristics of the Organization • Age • Culture • Availability of resources • Patterns of interaction among employees 6
  7. 7. Factors Affecting Managerial Discretion External Environment Characteristics of the Manager • Tolerance for ambiguity Characteristics of the Organization • Commitment to the firm and its desired strategic Characteristics of the outcomes Manager • Interpersonal skills • Aspiration level • Degree of self-confidence Managerial Discretion 7
  8. 8. Top Management Teams  The top management team is composed of key managers who are responsible for – formulating and – implementing – the organization’s strategies  A heterogeneous top management team with varied expertise and knowledge can draw on multiple perspectives when evaluating alternative strategies and building consensus 8
  9. 9. Top Management Teams  A top management team must also be able to function effectively as a team in order to implement strategies – a heterogeneous team makes this more difficult – a heterogeneous team, however, is associated positively with innovation and strategic change 9
  10. 10. Strategic Leadership  Chief executive officers can gain so much power that they are virtually independent of oversight by the board of directors  This is especially true when the CEO is also chairman of the board of directors  CEOs of long tenure can also wield substantial power  The most effective forms of governance share power and influence among the CEO and board of directors 10
  11. 11. Exercise of Effective Strategic Leadership Determining Establishing strategic Exploiting and balanced direction maintaining organizational core controls competencies Effective Strategic Leadership Emphasizing Developing ethical Sustaining human practice an effective capital organizational culture 11
  12. 12. Exploiting and Maintaining Core Competencies  Core competencies are resources and capabilities that serve as a source of competitive advantage for a firm over its rivals  Strategic leaders must verify that the firm’s competencies are emphasized in strategy implementation efforts 12
  13. 13. Developing Human Capital  Human capital refers to the knowledge and skills of the firm’s entire workforce  Employees are viewed as a capital resource that requires investment  No strategy can be effective unless the firm is able to develop and retain good people to carry it out  The effective development and management of the firm’s human capital may be the primary determinant of a firm’s ability to formulate and implement strategies successfully 13
  14. 14. Emphasizing Ethical Practices  To properly influence employee judgment and behavior, ethical practices must shape the firm’s decision-making process and be an integral part of an organization’s culture  Leaders set the tone for creating an environment of mutual respect, honesty and ethical practices among employees 14
  15. 15. The Eight Components of Implementing Strategy Allocating Resources Building a Establishing Strategy- Capable Supportive Policies Organization Strategy Instituting Best Exercising Implementer’s Practices for Strategic Action Continuous Leadership Agenda Improvement Shaping Corporate Installing Support Culture to Fit Systems to Carry Strategy Tying Rewards out Strategic Roles to Achievement of Key Strategic Targets 15