STRATEGIC MANAGEMENT
Course Leader: Berihun Muchie (PhD)
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CHAPTER TWO
PART I
Strategic Leadership
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Strategic Leadership
● Strategic leadership involves:
o The ability to anticipate, envision, maintain flexibility and empower
others to create strategic change
o Multi-functional work that involves working through others
o Consideration of the entire enterprise rather than just a sub-unit
o A managerial frame of reference
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Strategic Leadership
● Strategic leadership is….
A. Consideration of a sub unit
B. Consideration of the entire enterprise
C. Leading a given department
D. Consideration of a given function
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Strategic Leadership and the Strategic
Management Process
Effective Strategic
Leadership
shapes the formulation of
and
Strategic Intent Strategic Mission
influence
Successful Strategic
Actions
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Strategic Leadership and the Strategic
Management Process
Successful Strategic
Actions
Formulation of Implementation of
Strategies Strategies
yields
Strategic
Competitiveness
Above-Average
Returns
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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
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Factors Affecting Managerial Discretion
External Environment Characteristics of the Organization
● Size
● Age
Characteristics of the
● Culture
Organization
● Availability of resources
● Patterns of interaction among employees
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Factors Affecting Managerial Discretion
External Environment Characteristics of the Manager
● Tolerance for ambiguity
● Commitment to the firm and its desired
Characteristics of the strategic outcomes
Organization ● Interpersonal skills
● Aspiration level
Managerial Discretion
● Degree of self-confidence
Characteristics of the
Manager
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Top Management Teams
● The top management team is composed of key managers who are
responsible for
o Formulating and
o Implementing
o 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
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CEO and Top Management Team Power
● Board of directors is an important governance mechanism for monitoring
a firm’s strategic direction
● Higher performance is normally expected when the board is more directly
involved in shaping a firm’s strategic direction
● Chief executive officers can gain so much power that they are virtually
independent of oversight by the board of directors
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CEO and Top Management Team Power
● 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
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QUESTION TIME
Which one of the following is not true?
A. Higher performance is normally expected when the board is
more directly involved in shaping a firm’s strategic direction
B. Chief executive officers can gain so much power that they
are virtually near to board of directors
CREDITS: This presentation template was created by
C. CEOs of long tenure can also wield substantial power
Slidesgo, including icons by Flaticon, infographics &
D. The top management team
images is composed of key managers
by Freepik
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Managerial Labor Market
● The internal labor market is comprised of the career path alternatives
available to a firm’s managers
● Selecting internal candidates for management positions helps to build on
valuable firm-specific knowledge
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Managerial Labor Market
● The external labor market includes the collection of career opportunities
for managers outside their firm
● Selecting an outsider often brings fresh insights and may energize the
firm with innovative new ideas
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Managerial Labor Market
Managerial labor market:
CEO Succession
Internal CEO External CEO
Succession Succession
Ambiguous:
Homogeneous possible change in
Stable strategy
top management
team and strategy
Top management
Team Composition
Stable strategy Strategic
Heterogeneous with innovation change
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QUESTION TIME
Which combination can bring total strategic
change?
a. Homogenes top management team composition and external manager
recruitment
b. Homogenes top management team composition and internal manager
recruitment
CREDITS: This presentation template was created by
c. Slidesgo,
Heterogeneous top management team composition and external
including icons by Flaticon, infographics &
manager recruitment
images by Freepik
d. Heterogeneous top management team composition and external manager
recruitment
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DISCUSSION POINT
- Discuss the different sources of managerial labour
management… ?
(Please discuss your thoughts on the LMS discussion board)
CREDITS: This presentation template was created by
Slidesgo, including icons by Flaticon, infographics &
images by Freepik
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End of Chapter 2: Session I
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THANK YOU!
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