STRATEGIC LEADERSHIP

Strategic Management
Definitions
• Strategy - Set of related actions that managers take to increase their
company’s performance.

• Strategic leadership - Creating competitive advantage through effective

management of the strategy-making process.

• Strategy formulation - Selecting strategies based on analysis of an

organization’s external and internal environment.

• Strategy implementation - Putting strategies into action.

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Determinants of shareholder value

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Superior performance
• Risk capital from shareholders

• Shareholder value: The returns that shareholders earn from

purchasing shares in a company (via capital appreciation and
dividends)

• Build customer base and revenues [WIPRO]

• Employee welfare [Cisco Systems; Amazon ]

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Superior performance
• Profitability - The return a company makes on the capital (equity + debt raised from creditors)
invested in the enterprise.

Return on invested capital (ROIC) - Net profit (net income after tax) over the capital invested in a firm.
[Honasa Consumer (Mamaearth) : FY22 Net profit - Rs 14 crore. FY21 Loss - Rs1,332 crore. FY20
Loss - Rs428 crore. In the first half of FY23, Net profit - Rs3.67 crore.]

Result of how efficiently the capital is used to satisfy customer needs.

• Profit growth by increase in sales volume and market share [Xiaomi in India]; diversification [L&T]
and expansion [Marico--Kaya].

• High profitability and high profit growth [Apple, Google]

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Competitive advantage
• Profitability and profit growth greater than the average of other companies [Maruti Suzuki India, N.P.
basis].

• Sustained competitive advantage – A company’s strategies that enable it to maintain above-average

profitability for a number of years [Unilever, Nestle].

Business model concerning how a company:

o selects, acquires, and retains its customers [Amazon].
o defines and differentiates its product offerings [Tanishq].
o creates customer value
o produces and delivers to the market [Dell, Amway]
o lowers costs and organizes its resources and activities [Wal-Mart]
o achieves and sustains high profitability and growth.
[Sears, Home Depot]
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STRATEGIC MANAGERS
Strategic managers

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Strategic managers
CORPORATE-LEVEL MANAGERS/ GENERAL MANAGERS

BUSINESS-LEVEL MANAGERS

FUNCTIONAL-LEVEL MANAGERS

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STRATEGY-MAKING
Strategic planning process

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Mission, vision, values
Mission: what to do, how; e.g., customer-oriented or product-oriented
Vision: what to achieve in future
Values: how to conduct to achieve the mission

[Thermax Onsite Energy Solutions Limited

Mission
We will harness best available technology, operational excellence and service innovation to deliver utilities to
our customers.
We will be extremely service focused – predicting and fulfilling customer needs and expectations.
Environment sustainability will be the foundation of our business and will drive our thinking and actions at
every time.
Our services will enable long term economic benefit to our customers.
Vision
To be a leader in utility delivery services, committed to long term sustainability.
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Mission, vision, values
Values:
COST EFFECTIVE DELIVERY GUARANTEE
• Highest and consistent operating • Assured utility quantity and quality
efficiency
• Guaranteed performance and uptime
• Comprehensive O&M
• Complete ownership of O&M
• Pay as you consume
ASSET LIGHT
GREEN
• Little or no capital expenditure
• Reduced carbon footprint
• Allows ploughing of capital in core
• Compliance with regulatory
business
requirements
• Dedicated biomass fuel supply chain • Abates technology risks]
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 Assignment 1
ABC India Ltd is an FMCG company that offers brands across different
product categories such as bathing soaps, shampoos, hair oils, and
deodorants.
There are three other companies in the market that offer similar products.

Write down the mission, vision and values statements for ABC.

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STRATEGY AS AN EMERGENT
PROCESS
Strategy-making
External variables can nullify the effect [Archies Greetings & Gifts]

People at the bottom of the hierarchy matter [Starbucks]

Serendipity/chance effect [3M--Scotchgard]

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Strategy-making
Intended and emergent strategies (Henry-Mintzberg’s model of
strategy development)

[Honda Motor Co.]

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 Assignment 2
With reference to Henry-Mintzberg’s model of strategy development,
develop and describe a hypothetical situation in which a firm’s
emergent strategy turned into a realized strategy.

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STRATEGIC PLANNING
Scenario planning
What-if approach (optimistic, pessimistic)

[Shell]
https://www.shell.com/energy-and-innovation/the-energy-future/
scenarios/what-are-scenarios.html

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Decentralized planning
Managers at all levels to contribute

Avoiding inter-level conflicts

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STRATEGIC DECISION MAKING
Cognitive biases and strategic decision
making
Prior hypothesis bias

Escalating commitment

Reasoning analogy

Representativeness

Illusion of control

Availability error
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Improving decision-making
Devil’s advocacy (one member opposes)

Dialectic inquiry (thesis and antithesis)

Outside view (identification of past successes)

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 Assignment 3
The head of a newly-launched business venture into cosmetics has developed the
following plan thesis after the first round of capital investments:
• Conduct extensive consumer research and field study.
• Recruit for all business functions.
• Associate with distributors and retailers.
• Start manufacturing for primary markets only.
• Launch marketing campaigns and sell.
• Expand into secondary markets after achieving profitability.

With reference to ‘dialectic inquiry’, develop an antithesis to achieve profitability

that leads to expansion into secondary markets.
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STRATEGIC LEADERSHIP
Strategic leadership
Vision, communication, goal-orientation [Bill Gates, Jack Welch, Narayan Murthy, Dhirubhai Ambani]

Robust business model [Google, Facebook]

Commitment [Vineet Nayar, former CEO, HCL]

Getting information [Herb Kelleher, Founder, Southwest Airlines]

Delegation

Not misusing power

Emotional intelligence
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Reference
Book
Chapter 1 of ‘Strategic Management: An Integrated Approach’ by Hill, Schilling & Jones, 12 th Edition, Cengage

Weblinks
https://www.forbesindia.com/article/take-one-big-story-of-the-day/the-valuations-conundrum-and-hullabaloo-around-
mamaearth/82399/1

https://www.businessworld.in/article/Robust-Business-Model-A-Game-Changer-in-Competitive-World-/25-02-2018-141
103/

https://timesofindia.indiatimes.com/business/india-business/top-10-most-influential-business-leaders-of-2022-by-the-i
ndian-alert/articleshow/95666278.cms

https://www.businessworld.in/article/India-s-Most-Innovative-Business-Leaders/20-05-2022-429687/

https://www.business-standard.com/article/specials/india-at-75-tatas-to-naik-murthy-25-towering-business-leaders-of-i
ndia-122081100023_1.html

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