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‡ Romantic view
Ǧ Leader is the key force in organization¶s success
‡ External view of leadership
Ǧ Focus is on external factors that affect an organization¶s
success
‡ Leaders can make a difference
Ǧ Must be aware of opportunities and threats faced in
external environment
Ǧ Must have thorough understanding of the firm¶s resources
and capabilities
 | 

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‡ Analysis
Ǧ Strategic goals (vision, mission, strategic objectives)
Ǧ Internal and external environment of the firm
‡ Strategic decisions
Ǧ What industries should we compete in?
Ǧ How should we compete in those industries?
‡ Actions
Ǧ Allocate necessary resources
Ǧ Design the organization to bring intended strategies to
reality
 | 

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‡ Strategic management is the study of why some firms

outperform others
Ǧ How to compete in order to create competitive advantages
in the marketplace
Ǧ How to create competitive advantages in the market place
o Unique and valuable
o Difficult for competitors to copy or substitute
 | 


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Ëey Attributes of strategic management:

‡ Directs the organization toward overall goals and objectives
‡ Includes multiple stakeholders in decision making
‡ Needs to incorporate short-term and long-term perspectives
‡ Recognizes trade-offs between efficiency and effectiveness
 | "

p
  
 


Adapted from Exhibit 1.2 Realized Strategy and Intended Strategy: Usually Not the Same
Source: H. Mintzberg and J. A. Waters, ³Of Strategies, Deliberate and Emergent,´ p
  
 
 (1985), pp. 257-
72.
 | #

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‡ Starting point in the

strategic management
process
‡ Precedes effective
formulation and
implementation of
strategies
 | %

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‡ Clear goals and objectives permit effective allocation

of resources
‡ Hierarchy of goals
- Vision
- Mission
- Strategic objectives
‡ Analyzing external environments
- Managers must scan the environment and analyze
competitors
- General environment
- Industry environment
 | )

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‡ Frameworks for analyzing a firm¶s internal

environment
- Strengths
- Weaknesses
‡ Analyzing strengths can uncover potential sources of
competitive advantage
 | |

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‡ Intellectual assets are drivers of

- Competitive advantage
- Wealth creation
‡ Networks and relationships among
- Employees
- Customers
- Suppliers
- Alliance partners
 | ||

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‡ Business level strategy:

- Successful firms develop bases for competitive
advantage
‡ Cost leadership
‡ Differentiation
‡ Focusing on narrow or industry-wide market segments
- Sustainability
- Industry life cycle
 | |

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Corporate-level strategy addresses:

‡ Firm¶s portfolio or group of businesses
- What business(es) should we be in?
- How can we create synergies among the businesses?
‡ Diversification
- Related
- Unrelated
 | |

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‡ International Strategy
- Appropriate entry strategies for foreign markets
- Sustain competitive advantage in global markets
‡ Effective strategies for entrepreneurial initiatives
 | |

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‡ Informational control
- Monitor and scan the environment
- Respond effectively to threats and opportunities
‡ Behavioral control
‡ Effective corporate governance
- Interests of managers and owners of the firm
‡ Organizational structure and design
 | |

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‡ Organizational boundaries
- Flexible
- Permeable
‡ Strategic Alliances
‡ Develop organization that is committed to
- Excellence
- Ethical behavior
 | |"

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‡ Learning organization responsive to

- Rapid and unpredictable change
‡ Corporate entrepreneurship and innovation
- New opportunities
- Enhance innovative capacity
- Autonomous entrepreneurial behavior
- Product champions
 | |#



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‡ Corporate governance: the relationship among various

participants in determining the direction and
performance of corporations
- Shareholders
- Management (led by the CEO)
- Board of Directors
 | |%



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‡ Board of Directors
- Elected representatives of the
owners
- Ensure interests and motives of
management are aligned with
those of the owners
‡ Effective and engaged Board of
Directors
‡ Shareholder activism
‡ Proper managerial rewards and
incentives
 | |)

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‡ Two views of stakeholder management

- Zero sum
‡ Stakeholders compete for attention and resources of the
organization
‡ Gain of one is a loss to the other
- Symbiosis
‡ Stakeholders are dependent upon each other
‡ Mutual benefits
 | 

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‡ Social responsibility: the expectation that businesses

or individuals will strive to improve the overall
welfare of society
Ǧ Managers must take active steps to make society better
Ǧ Socially responsible behavior changes over time
Ǧ Triple bottom line
 | |


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Starbucks Coffee Company

> Corporate social responsibility is embedded throughout the
organization.
> The following are some of the commitments they have
made to be socially responsible:
‡ Commitment to origins
‡ Helping protect the environment
‡ Starbucks in your community
‡ Commitment to partners

Source: www.starbucks.com
 | 

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‡ Integrative view of the organization

‡ Assess how functional areas and activities ³fit
together´ to achieve goals and objectives
‡ All managers and employees must take and
integrative, strategic perspective of issues facing the
organization
 | 

 
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‡ Company vision
- Massively inspiring O
  
- Overarching
- Long-term
- Driven by and evokes
passion
- Fundamental statement of
the organization¶s ß
 

‡ Values
‡ Aspiration
‡ Goals
 | 

 
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 /
 

‡ Mission statements
- Purpose of the company O
  
- Basis of competition and
competitive advantages
   

- More specific than vision
- Focused on the means by
which the firm will
compete ß
 

 | 

 
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 /
 

‡ Strategic objectives
- Operationalize the mission O
  
statement
- Provide guidance on how
   

the organization can fulfill
or move toward the ³higher
goals´  
- More specific
ß
 

- Cover a more well-defined
time frame
 | "

 
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‡ Strategic objectives
- Measurable O
  
- Specific
- Appropriate
   

- Realistic
- Timely  
- Challenging
- Resolve conflicts that arise ß
 

- Yardstick for rewards and
incentives