1. Choose a CEO of a prominent firm that you believe exemplifies the positive aspects of strategic leadership. What actions does this CEO take that demonstrate effective strategic leadership? What are the effects of those actions on the firms performance?2. Select a CEO of a prominent firm that you believe does not exemplify the positive aspects of strategic leadership. What actions did this CEO take that are inconsistent with effective strategic leadership? How have those ineffective actions affected the firms performance?3. Select an organization that has a unique organizational culture. What characteristics of that culture make it unique? Has the culture had a significant effect on the organizations performance? If so, what is that effect?
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Chapter 12
Strategic Leadership
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Strategic Leadership and Style
Strategic leadership requires the ability to:
anticipate and envision.
maintain flexibility.
empower others to create strategic change through
selecting and implementing a firms strategies as
necessary.
Strategic leadership is:
multi-functional work involving working through others.
consideration of the entire enterprise rather than just a
sub-unit.
a managerial frame of reference.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
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122
Strategic Leadership (contd)
Effective strategic leaders:
manage the firms operations effectively.
sustain a high performance over time.
make better decisions than their competitors.
make candid, courageous, pragmatic decisions.
understand how their decisions affect the internal
systems in use by the firm.
solicit feedback from peers, superiors and employees
about their decisions and visions.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
123
The Role of Top-Level Managers
Managers often use their discretion when
making strategic decisions and implementing
strategies.
Factors affecting the amount of decision-making
discretion
External environmental sources
Characteristics of the organization
Characteristics of the manager
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
124
Factors Affecting Managerial Discretion
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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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
125
Factors Affecting Managerial Discretion
External
Environment
Characteristics
of the Organization
Size
Age
Culture
Availability of resources
Patterns of interaction among
employees
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
126
Factors Affecting Managerial Discretion
External
Environment
Characteristics
of the Organization
Characteristics
of the Organization
Tolerance for ambiguity
Commitment to the firm and its
desired strategic outcomes
Interpersonal skills
Aspiration level
Degree of self-confidence
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
127
Factors Affecting Managerial Discretion
External
Environment
Characteristics
of the Organization
Characteristics
of the Organization
Managerial
Discretion
The degree of latitude for action
when making strategic decisions,
especially those concerned with
effective implementation of
strategies.
How managers exercise
discretion when determining
appropriate strategic actions is
critical to the firms success.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
128
Factors Affecting Managerial Discretion
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
129
Top Management Teams
Composed of the key managers who are
responsible for selecting and implementing the
firms strategies.
A heterogeneous top management team:
has varied expertise and knowledge.
can draw on multiple perspectives.
will evaluate alternative strategies.
builds consensus.
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1210
Top Management Teams, Firm Performance,
and Strategic Change
Heterogeneous top management teams:
have difficulty functioning effectively as a team.
require effective management of the team to
facilitate the process of decision making, but
are associated positively with innovation and
strategic change.
may force the team or members to think outside
of the box and be more creative.
have greater capacity to provide effective
strategic leadership in formulating strategy.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1211
CEO and Top Management Team Power
Higher performance is achieved when board of
directors are more directly involved in shaping
strategic direction.
A powerful CEO may:
appoint sympathetic outside board members.
have inside board members who report to the CEO.
have significant control over the boards actions.
may also hold the position of chairman of the board
(CEO duality).
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1212
CEO and Top Management Power
Duality often relates to poor performance and
slow response to change.
CEOs of long tenure can also wield substantial power.
CEOs can gain so much power that they are virtually
independent of oversight by the board of directors.
The most effective forms of governance share
power and influence among the CEO and board
of directors.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1213
Managerial Succession
Organizations select managers and strategic
leaders from two types of managerial labor
markets
Internal managerial labor market
Advancement opportunities related to managerial
positions within a firm.
External managerial labor market
Career opportunities for managers in organizations
other than the one for which they currently work.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1214
Managerial Labor Markets
Advantages of internal managerial labor market
include:
experience with the firm and industry environment.
familiarity with company products, markets,
technologies, and operating procedures.
lower turnover among existing personnel.
Advantages of the external managerial labor
market include:
long-tenured insiders may be stale in the saddle
outsiders may bring fresh perspectives.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1215
Effects of CEO Succession and Top
Management Team Composition on Strategy
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1216
Exercise of Effective Strategic Leadership
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1217
Key Strategic Leadership Actions:
Determining Strategic Direction
Determining strategic direction involves
developing a long-term vision of the firms
strategic intent.
Five to ten years into the future
Philosophy with goals
The image and character the firm seeks
Ideal long-term vision has two parts
Core ideology
Envisioned future
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1218
Effectively Managing the Resource Portfolio:
Exploiting and Maintaining Core Competencies
Core competencies
Resources and capabilities of a firm that serve as a
source of competitive advantage over its rivals.
Leadership must verify that the firms competencies
are emphasized in strategy implementation efforts.
Firms must continuously develop or even change
their core competencies to stay ahead of competitors.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1219
Effectively Managing the Resource Portfolio:
Developing Human Capital and Social Capital
Human capital
The knowledge and skills of the firms entire
workforce are a capital resource that requires
investment in training and development.
Social capital
Relationships inside and outside the firm that help it
accomplish tasks and create value for customers and
shareholders.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1220
Sustaining an Effective
Organizational Culture
Organizational Culture
The complex set of ideologies, symbols and core
values shared through the firm, that influences the
way business is conducted.
Entrepreneurial Mind-set (Orientation)
Personal characteristics that encourage or discourage
entrepreneurial opportunities.
Autonomy
Proactiveness
Innovativeness
Risk taking
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1221
Sustaining an Effective
Organizational Culture (contd)
Changing a firms organizational culture is more
difficult than maintaining it.
Effective strategic leaders recognize when change in
culture is needed.
Shaping and reinforcing culture requires:
effective communication
problem solving skills
selection of the right people
effective performance appraisals
appropriate reward systems
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1222
Emphasizing Ethical Practices
Effectiveness of processes used to implement
the firms strategies increases when based on
ethical practices.
Ethical practices create social capital and
goodwill for the firm.
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1223
Emphasizing Ethical Practices (contd)
Actions that develop an ethical organizational
culture include:
establishing and communicating specific goals to
describe the firms ethical standards.
continuously revising and updating the code of
conduct.
disseminating the code of conduct to all stakeholders
to inform them of the firms ethical standards and
practices.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1224
Emphasizing Ethical Practices (contd)
Actions that develop an ethical organizational
culture include:
developing and implementing methods and
procedures to use in achieving the firms ethical
standards.
creating and using explicit reward systems that
recognize acts of courage.
creating a work environment in which all people are
treated with dignity.
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1225
Establishing Balanced
Organizational Controls
Controls
Formal, information-based procedures used by
managers to maintain or alter patterns in
organizational activities.
Controls help strategic leaders to:
build credibility
demonstrate the value of strategies to the firms
stakeholders
promote and support strategic change
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1226
Establishing Balanced
Organizational Controls (contd)
The Balanced Scorecard
A framework used to verify that the firm has
established both strategic and financial controls to
assess its performance.
Prevents overemphasis of financial controls at the
expense of strategic controls
Four perspectives of the balanced scorecard
Financial
Internal business processes
Learning and growth
Customer
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1227
Establishing Balanced
Organizational Controls (contd)
© 2017 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1228
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