CHAPTER 4:

Strategic Leadership
Strategic Leadership
Strategic Leadership involves the ability to
anticipate, envision, maintain flexibility, and
empower others to creates strategic change.
An effective strategic leadership shapes the
formulation of strategic intent and corporate
mission which influences the strategic
actions heading to achieve competitiveness
and above average returns.
Strategic Leadership
Decision making is a process of selecting among
the alternative courses of action for the purpose
of achieving the stated objective or goal that will
create value for stakeholders.
To be an effective one, a leader possesses
characteristics such as tolerance for ambiguity,
commitment to the firm, good interpersonal
skills, high level if aspiration, and self-confidence.
Strategic Leadership
Factors that may lead to failure in decision
making because of the presence of these
conditions:
1. Certainty – A situation in which a manager can make
an accurate decision because the outcome of every
choice is known.
2. Risk – A situation in which the manager is able to
estimate the likelihood of outcomes that result from
the choice of particular alternative.
Strategic Leadership
3. Uncertainty – Limited information prevents estimation
of outcome probabilities for alternatives associated with
the problem and may force managers to rely on intuition.
4. Ambiguity – A situation wherein the objective to be
achieved or the problem to be solved is unclear, such
that, alternatives are difficult to define because
information about the anticipated outcomes is
unavailable.
Functional Strategy
Fitness & Alignment
Functional or operational strategies should
be aligned with or supportive of the
corporate strategies.
 The Most Common Types of
Functional Management Areas:
Management Operations
This function ensures that general management is
organized, especially in the delivery of goods and
services.
Operations influences the implementation of
strategies in various ways:
1. Product and Service Design – should reflect the efforts
of the many functions of the organization to achieve a
match between financial resources, operations
capabilities, supply chain capabilities, and consumer
needs, wants, and demands.
Management Operations
2. Cost – a key variable that affects pricing decisions and
profits.
3. Location – important with regard to cost and
convenience for customers.
4. Quality – refers to materials, workmanship, design and
service.
5. Quick response – can be a source of competitive edge
by quickly bringing new or improved products or services
to the market or delivering existing products to the
customer after they are ordered.
Management Operations
6. Flexibility – the ability to respond to changes.
7. Inventory Management – can be a competitive
advantage if supplies of goods are effectively matched
with the demand.
8. Supply Chain Management – involves coordinating
internal and external operations to achieve timely and
cost effective delivery of goods throughout the system.
9. Service Management – involves after sales activities
that customers may perceive as value added such as
delivery, set-up, warranty, and technical support.
Marketing and Sales
Marketing is about creating demand and
managing profitable customer relationships.
Customer Relationship Management (CRM) is the
overall process of building and maintaining
profitable customer relationships by delivering
superior customer value and satisfaction.
Finance and Accounting
It is important to plan for financial contingencies
and be able to adapt to situation where
uncertainties and risks may occur.
Without access to money, plans cannot be put
into action.
Finance and Accounting
Based on the analysis of the revenue and cost,
problem may arise that management must
implement measures to lower its burn rate or
negative cash flow given the following situations:
1. Total revenue and total cost are significantly less. This
means that the existing assets are not totally producing
the desired or expected outputs. Asset reduction strategy
can be used in this kind of situation.
Finance and Accounting
2. Total revenue is lower than the total cost. This means
that the existing assets are less producing income. Asset
maximization-revenue boosting strategy can be used in
this situation.
3. Total revenue is slightly lower than the total cost. This
means that the existing assets are producing income but
not enough to cover the costs incurred. Asset reduction
cum maximization-revenue boosting strategy can be
used in this situation.
Finance and Accounting
4. Total revenue is the same as the total cost. This means
that the existing assets are producing income enough to
cover the cost incurred. Asset maximization-revenue
boosting cum cost-cutting strategy can be used in this
situation.
Research and
Development/Engineering
Research and Development is about investing for
the future given today’s knowledge-based world
economy.
R&D’s plays a vital cog to keep pace with modern
trends and customer demands so that in the long
run the business will sustain its operations.
Research and
Development/Engineering
Maintaining R&D program is costly and risky for
the firm.
Firms that have not institutionalized R&D would
opt to form strategic alliances, acquire business
ventures, or establish networks in order to explot
the innovations of others while sustain
competitiveness.
Management Information
System (MIS)
Management Information System is an organized
combination of people, hardware, communication
networks, and data sources that collect, transform,
and distribute information to support managerial
functions.
An MIS helps decision making by providing timely,
relevant, and accurate information to managers.
Management Information
System (MIS)
Management information is an important input for
the efficient performance of various managerial
functions at different organizational levels.
Decision-making is the core management and
aims at selecting the best alternative to achieve an
objective. The decisions may be strategic, tactical,
or technical.
Human Resources
The right people with the right skills and
competencies are valuable employees who will
spell a big difference in achieving successful
strategies.
In finding the right people, the base qualifications
would include: knowledge, attitude, and
potential.
Human Resources
A good rule to follow in recruitment: “When in
doubt, do not hire.”
Implementing strategic human resource
management entails a huge investment; but in
the long run, it will certainly redound to the
benefit and interest of the organization.
Overcoming Barriers to
Change
Management is constantly tested because of
strategies developed in the light of environmental
change; it is essential to develop an
organizational climate conducive to change.
Management should understand that resistance
at the onset exists because stakeholders are not
aware of what will happen.
Overcoming Barriers to
Change
Clear communication is a key to rolling out
strategy and change, thereby gaining
extraordinary commitment from the
stakeholders.
Overcoming Barriers to
Change
In order to systematically roll out strategy and
manage change, it is better to identify the
common mistakes and the corresponding
solutions:
1. No performance focus – First, align the skills with
specific business results. Second, ensure that key
performance indicators are specific as possible.
2. Lack of a winning strategy – Ensure that
resources and leadership are in place to give a
reasonable chance in creating a winning strategy.
Overcoming Barriers to
Change
3. Failure to engage co-champions – Co-champions
will always have a compelling value proposition.
4. Over-reliance on structure and systems – The
structural and systems changes are easy to track
but would not guarantee behavioral support or skills
development and resource allocation.
5. Leaders’ resistance to change – Any attempt to
change the course of an organization will fail if top
management will not adopt the changes
themselves.