STRATEGIC MANAGEMENT & LEADERSHIP

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Theory, Application, Skill Development By RAJ VIJAYASIRI
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Learning Outcomes
• LO 1: Understand the relationship between strategic management and leadership
– Explain the link between strategic management and leadership

– Analyze the impact of management and leadership styles on strategic decisions
– Evaluate how leadership styles can be adapted to different situations

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• LO 2: Be able to apply management and leadership theory to support organizational direction
– Review the impact that selected theories of management and leadership have on organizational strategy – Create a leadership strategy that supports organizational direction

Copyright (c) 2007 by Thomson South-Western. All rights reserved.

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• LO 3: Be able to assess leadership requirements
– Use appropriate methods to review current leadership requirements

– Plan for the development of future situations requiring leadership

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• LO 4: Be able to plan the development of leadership skills
– Plan the development of leadership skills for a specific requirement

– Report on the usefulness of methods used to plan the development of leadership skills

Copyright (c) 2007 by Thomson South-Western. All rights reserved.

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LEADERSHIP

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Who Is a Leader?

What is Leadership?
• No universal definition • Leadership is complex and thus hard to define • Many different definitions

Why Leadership is Important
• • • • For crisis situations For organizational performance For employee job satisfaction For successful management

Why Leadership is Important (cont.)
• “--- the performance of the managerial leadership determines the success or failure of the organization.” Peter

Drucker

• Poor leadership leads to failure, and good leadership to success.

Textbook’s Definition of Leadership Leadership is the influencing process of leaders and followers to achieve organizational objectives through change

A Manager’s Job Includes
• Planning • Organizing • Leading
– Thus, leadership is part of every manager’s job

• Controlling

• Manager = formal title and authority • Leader = person (manager or nonmanager) with influence • Follower = person influenced by a leader

Are All Leaders Managers?

Influence
• Is the process of a leader communicating ideas, gaining acceptance of them, and motivating followers to support and implement the ideas through change • It is the essence of leadership

Influence (cont.)
• Managers may influence through coercion • Leaders influence by gaining followers’ commitment and enthusiasm

Effective Leaders
• Know when to lead, when to follow • Influence followers to support organizational interests • Provide direction

Effective Leaders (cont.)
• Set challenging objectives and lead the charge to achieve them • Influence change for continual improvement • Enjoy working with people

Key Elements of Leadership
Influence Leaders– Followers Change Organizational Objectives People

Leadership

Managerial Roles
Interpersonal Informational
Decisional
1. Figurehead 2. Leader 3. Liaison
4. Monitor 5. Disseminator 6. Spokesperson 7. Entrepreneur 8. Disturbance handler 9. Resource allocator 10. Negotiator

Figurehead Role
• Represent the organization in legal, social, ceremonial, or symbolic activities. • Generally considered a top management function • However, leaders throughout organization can perform this role • Includes:
– – – – Signing official documents Entertaining clients and official visitors Speaking engagements (formal and informal) Presiding at meetings and ceremonies

Leader Role
• Pervades all managerial behavior • Influences how leaders perform other roles • Includes:
– Hiring and training – Giving instructions and coaching – Evaluating performance

Liaison Role
• Interacting with people outside the organizational unit • Includes:

– Networking – Developing relationships – Gaining information and favors – Serving on committees – Attending professional meetings – Keeping in touch with other people and organizations

Monitor Role
• Gathers information • Analyzes the information to discover problems and opportunities • Includes:
– Reading memos, reports, and publications – Talking to others – Attending meetings – Observing competitors

Disseminator Role
• Sends information to others • Information passed via:
Oral means
– Telephone or voice mail – One-on-one discussions – Meetings

Written media

– E-mail – Printed documents – Handwritten notes

Spokesperson Role
• Provides information to people outside the organizational unit • Examples:

– Meeting with the boss to discuss unit’s performance – Presenting budget needs to the financial officer – Answering correspondence – Reporting to the government

Entrepreneur Role
• Innovative • Initiation of improvements • Examples:

– Developing new or improved products/services – Developing new ways to process products/services – Purchasing new equipment

• Takes corrective action during crisis or conflict • Involves reactions to unexpected events • Leaders typically give this role priority • Examples
– – – – A union goes on strike Equipment breakdown Needed material not arriving on time Tight schedules

Disturbance-Handler Role

Resource-Allocator Role
• Involves scheduling, requesting authorization, and budgeting activities • Examples:

– Deciding what is done now, later, or not at all – Setting priorities and time management – Allocating raises, overtime, and bonuses – Scheduling employee, equipment, and material use

Negotiator Role
• Represents organizational unit in transactions without set boundaries • Examples:

– Setting pay and benefits for a new professional employee or manager – Reaching agreement on a labor union contract – Contracting with customers or suppliers

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Levels Of Leadership Analysis Individual

Individual Level
• Focuses on the individual leader and the relationship with individual followers • Called the “dyadic process” • Reciprocal influence

Group Level
• Focuses on the individual leader and the collective group of followers • Called the “group process” • An important part is meetings • How leader contributes to group effectiveness

Organizational Level
• Focuses on how the top management influences organizational performance • Called the “organizational process” • Deals with organizational adaptability and transformation

STRATEGIC MANAGEMENT & LEADERSHIP:
Theory, Application, Skill Development

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Strategic Leadership
• A person’s ability to anticipate, envision, maintain flexibility, think strategically, and work with others to initiate changes that will create a viable future for the organization • Ensures that the strategic management process is successfully carried out and yield the desired results
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Four Responsibilities of Strategic Leadership
• Conceptualize the organization’s vision, mission, and core values • Oversee the formulation of objectives, strategies, policies, and structures that translate vision, mission, and core values into decisions • Create an environment and culture for organizational learning and mutual exchange between individuals and groups • Serve as steward and role model for the rest
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Strategic Management
The set of decisions and actions used to formulate and implement specific strategies that will achieve a competitively superior fit between the organization and its environment, so as to achieve organizational goals
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Upper Management
• Most important supporter of strategic management and leadership • Usually held responsible for the organization’s current performance • Also responsible for creating conditions to ensure the organization’s survival

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Strategic Decision Blunders
• When decision makers rush to judgment • When decision makers use too much intuition and too little rational analysis • When decision makers use failure-prone practices • When decision makers engage in or condone unethical conduct • When decision makers allocate time and money unwisely
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Strategic Management Framework
Analyze internal environment Vision/Mission Strategic Goals Formulate Strategy Feedback Implement Strategy Evaluate Strategy Strategic Competitiveness and Above-Average Returns
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Analyze external environment

Feedback

The Strategic Leadership/ Management Process
• Internal to focus on
– – – – – – – – – – Market position Financial position Capabilities Core competencies Culture Structure Strengths Weaknesses Opportunities Threats

Analyze the Environment

• Use SWOT analysis

• External to identify and interpret emerging trends before they become evident to others • Strategies quickly become outdated and ineffective • Use SWOT analysis
– – – – Strengths Weaknesses Opportunities Threats

Copyright (c) 2007 by Thomson South-Western. All rights reserved.

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The Strategic Leadership/ Management Process (cont.)

Develop a strategic vision
An ambitious view of the future that everyone in the organization can believe in and that is not readily attainable, yet offers a future that is better in important ways than what now exists

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• Answers the question, “What does the organization want to or aspire to become?” • Lays the foundation for development of a mission statement
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The Strategic Leadership/ Management Process (cont.) Write a meaningful vision statement

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• Facilitates decision making • Helps determine what is good, bad, trivial, or important • Inspires followers by making them feel important • Links the present to the past • Gives meaning to work by explaining why something is done • Establishes a standard of excellence
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The Strategic Leadership/ Management Process (cont.) Clear Strategic Vision

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Inspiring Vision Statements

• Coca-Cola – “People, Planet, Portfolio, Partners and Profit – the five Ps” • Nike: “To crush the enemy” • American Express: To be the world’s most respected service brand” • Komatsu: Encircle Caterpillar”

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VISIONS OF SL COMPANIES
• John Keels: Building businesses that are leaders in the region

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• An enduring statement of purpose that distinguishes one organization from other similar enterprises. • Defines the core purpose and reasons for organizational existence • Should be both broad and precise • Not easy • Must change as organization changes
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The Strategic Leadership/ Management Process (cont.) Write a meaningful mission statement

– Can take months and years

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The Strategic Leadership/ Management Process (cont.)
• Strategy is an integrated, overarching concept of how an organization will achieve its objectives • Represents decisions for exploiting environmental opportunities • Use SWOT analysis • Must reflect core mission and objectives of the organization

Formulate Strategy

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Examples of Missions • 3M: “To solve unsolved problems innovatively” • US Army: To be all that you can be” • Ford: “Quality job one” • Motorola: “Applying the technology to benefit the public”

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Mission Statement Examples- JOHN DEERE
• John Deere has prospered through a long standing partnership with the world’s most productive farmers. Today John Deere is a global company with several equipment operations and complementary service businesses. These businesses are closely interrelated, providing the company with significant growth opportunities and other synergistic benefits;
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Mission Statement Examples- PepsiCo
• PepsiCo’s Mission is to increase the value of our shareholders investment . We do this through sales growth, cost controls and wise investment resources. We believe our commercial success depends upon offering quality and value to our consumers and customers ; providing products that are safe, wholesome, economically efficient and environmentally sound: and providing a fair return to our investors, whilst adhering to the highest standards of integrity.

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The Strategic Leadership/ Management Process (cont.)
Create Corporate-Level Objectives
• Desired outcomes that an organization seeks to achieve for stakeholders • Include both financial and strategic objectives • Help everyone to focus in same direction • Targets against which performance is compared
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The Strategic Leadership/ Management Process (cont.)
SMART Corporate-Level Objectives

Specific Measurable Achievable Results-Based Time-Specific
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The Strategic Leadership/ Management Process (cont.)
Formulate Strategy that: • Enhances value to customers • Creates synergistic opportunities
– Ratio of benefits to cost

• Builds on company core competencies
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– Whole is greater than the sum of the parts

– Those items that the organization performs extremely well in comparison to competitors
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5 Elements of Good Strategy Development
• Arena: Where the organization will focus its resources • Vehicles: How the organization will get there • Differentiators: How the organization will stand out in the marketplace • Staging: What the speed and sequence of moves will be • Economic logic: How the organization will obtain its returns
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The Strategic Leadership/ Management Process (cont.) Implement Strategy
• Most difficult part of strategic management
– Also the most important

• Without appropriate implementation, the best of strategies can fail
– Must be integrated and coordinated – Must overcome resistance to change
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The Strategic Leadership/ Management Process (cont.)
Evaluate Strategy • To determine the effectiveness of strategic choices • Three fundamental activities:

– Review internal and external factors – Measure performance against objectives – Corrective action

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