STRATEGIC LEADERSHIP: MANAGING THE STRATEGY-MAKING PROCESS.

Process for Competitive Advantage.

Strategic Leadership: Is managing the strategy- making process to increase the performance of a
company, thus increasing the value of the enterprise to its owners, its shareholders.

Maximizing shareholders value is the ultimate goal of profit-making companies.

These is because:

1. Shareholders provides the company with the risk capital for managers to buy the resources
needed to produce and sell goods and services.
2. Shareholders are the legal owners of a company and there shares.

Shareholders value: These are returns that shareholders earn from purchasing shares in a
company.

The returns come from two (2) sources:

a. Capital appreciation in a value of a company’s shares.

b. Dividend payment.

Return of Investment Capital( ROIC)

Efficiently and effectively use of the Capital at their disposal to produce goods and services that
satisfy customer needs so as to make positive return on Invested capital.

The Profit growth is measured by the increase in net profit overtime.

To maximize shareholders value managers must formulate and implement strategies that enable
their company to outperform and implement strategies that enable their company to out perform
their rivals that give it a competitive advantage.

Sustained competitive Advantage: a company can sustain competitive advantage only when its
strategies enable it to maintain above-average profitability for a number of years and thus able to
gain its market share from its rivals.

A business model: this is managers conception of how the set of strategies teir companies pursue
should mesh together into a congruent whole so as the company gains a competitive advantage,
and achieve superior profitability and profit growth.

A business model is composed of the totality of how a company will:

1. Select its customers.

2. Define and differentiate its product offerings.
3. Create value for its customers.
4. Acquire and keep its customers.
5. Produce goods and services.
6. Deliver those goods and services to the market.
7. Organize activity within the company.
8. Configure its resources.
9. Achieve and sustain high level of profitability.
 10. Growth business overtime.
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Strategic Managers: Managers are responsible for formulating strategies to attain competitive
advantage: and putting the strategies into effect.

Managers must lead strategies making process.

Companies have 2 types of managers.

1. General managers: Responsible for the overall performance of the company.

2. Functional Managers: Responsible for supervising a particular function i.e accounting,
marketing, R&D, IT.

Levels of strategic management

Strategic Implementation:

Having chosen set of strategy to achieve a competitive advantage and increase performance,
managers are to put the strategies into action.

That is strategies must be implemented.

Strategy implementation involves taking action at the functional, business and corporate level to
execute a strategic plan. These can be through:

1. Putting quality improvement programs into place.

2. Changing the way, a product is designed, positioning the product differently in the market
place.
3. Segmenting the market and offering different versions of the product to different consumer
groups.
4. Implementing price increase.
5. Or decrease, expending through mergers and acquisition or downsizing the company by
closing down or selling off parts of the company.

Strategy implementation also entails designing the best organization structure and the best
culture and control systems to put a chosen strategy into action.

The feedback Loop:

This indicates the strategic plan is ongoing, it never ends.

Once the strategy has been implemented, its execution must be monitored to determine if the
strategic goals and objectives are achieved and if competitive advantage is being created and
sustained.

The information is passed to corporate level through feedback loops and becomes the input for
the next round of strategy formulation and implementation.
Intended and Emergent Strategies:

Henry Mintzberg’s model of strategy development provides a more detailed view of what
strategy is.

According to the above figure, a company realized strategy is the result of what planned
strategies that are put into action. (The company’s Intended or deliberate strategies) and of any
unplanned, or emergent, strategies.

According to Mintzberg’s view, many planned strategies are not implemented because of
unpredicted changes in the environment (they are unrealized).

Emergent Strategies are the unplanned responses to unforeseen circumstances.

They arise from autonomous action by each manager deep within the organization or top-level
managers in response to changed circumstances.

They are not the product of formal top- down planning mechanisms.

Mintzberg maintains that emergent strategies are often successful and may be more appropriet
than intended strategies.

Strategic decision making: If Managers do not use the information at their disposal effectively,
the best – designed strategic planning system will fail to produce the desired result.

There fore they should learn to make better use of the information they have and understand why
they sometimes make poor decisions.

STRATEGIC LEADERSHIP.

The strategic role of managers is to use all their knowledge, energy, and enthusiasim to provide
strategic leadership for their subordinates and develop a high performing organization.

Characteristics of good strategic leader.

There are few characteristics of a good strategic leaders that lead to a high performance.

These are:

1. VISSION, ELOQUENCE, AND CONSISTENCE.

A strategic leader should be able to give the organization a sense of direction.

Strong leaders have a clear and compelling vision of where the organization should go, are
eloquent enough to communicate this vision to others within the organization in terms that
energize people, and consistence articulate their vision until it becomes part of the
organization culture. Example of these leaders are Martin Luther King jr, Margaret
Thatcher, and Winston Churchill.

Example of strong business leaders include Microsoft’s Bill Gates, Jack Welch, the former
CEO of General Electricity, and Sam Walton, Wal-Mart’s founder.

2. ARTICULATION OF THE BUSINESS MODEL.

Another key characteristic of a good strategic leaders is the ability to identify and articulate the
business model the company will use to attain its vision.

A Business model is managers conception of how various strategies that the company pursues fit
together into a congruent whole.

3. COMMITMENT.

strong leaders should demonstrate their commitment to their vision and business model by
actions and words and lead by example.

4. BEING WELL INFORMED.

Effective strategic leaders develop a network of formal and informal source who keep them well
informed about what is going on within their company.

They should be able to use informal and convectional ways to gather information. This is because
formal channels can be captured by special interests within the organization.

5. Willingness To Delegate And Empower.

Good leaders are skilled at delegation. They learn that unless they learn how to delegate
effectively, they can quickly become overloaded with responsibilities.
They also recognize that empowering subordinates to make decision is a good motivation
tool and often result in decision being made by those who must implement them.

6. The Astute Use Of Power.

Strategic leaders must often play the power game with skill and attempt to build consensus
for their ideas rather than use their Authority to force ideas through.

They are to act like democratic leaders and not dictators.

7. Emotional Intelligence.
These are psychological attributes that strong and effective leader’s exhibit.
They are:
a. Self – awareness: Is the ability to understand one’s own moods, emotions, and drives
as well as effects of others.
b. Self – regulation: Ability to control or redirect disruptive impulses or moods, that is,
to think before acting.
c. Motivation: A passion for work that goes beyond money or status and a propensity
to pursue goals with energy and persistence.
d. Empathy: The ability to understand the feelings and viewpoints of subordinates and
to take those into account when making decisions.
e. Social skills: Friendliness with purpose

Summary to this topic:

1. Strategy is an action that a company takes to attain one or more of its goals.
2. The major goal of a company is to maximize the returns that shareholders get from holding
shares in the company.
 To maximize shareholder value, managers must follow strategies that result in high and
sustained profitability and also in profit growth.

3. The profitability of a company can be measured by the return that it makes on the capital
invested in the enterprise.

The profit growth of a company can be measured by the growth in earnings per share.

Profitability and profit growth are determined by the strategies managers adopt.

4. A company has competitive advantage over its rivals when it is more profitable than the
average for all firms in its industries.

It has a sustained competitive advantage when it is able to maintain above-average

profitability over a number of years.

In general, a company with competitive advantage will grow its profit more rapidly than
rivals.

5. General managers are responsible for the overall performance of the organization or for
one of its major self-contained division.
Their overriding strategic concern is for the health of the total organization under their
direction.
6. Functional managers are responsible for a particular business function or operation.

Although they luck general management responsibilities, they play a very important
strategic role.

7. Formal strategic planning models stress that an organizations strategy is the outcome of a
rational planning process.
8. The major components of the strategic management process are defining the mission,
vision, and major goals of the organization;- analyzing the external and internal
enviroments of the organization; choosing a business model and strategies that align an
organizations strenghs and weekness with external environmental opportunities and
threats; adopting organizational structures and control system to implement the
organizations chosen strategies.
9. Strategy intent refers to an obsession with achieving an objective that stretches the
company and requires it to build new resources and capabilities.