Chapter 1 Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage

Chapter 1Strategic Leadership:

Managing the Strategy-Making Process for Competitive Advantage

輔仁大學 企業管理學系輔仁大學 企業管理學系林良陽老師林良陽老師

Strategy is a set of related actions that managers take to increase their company’s performance.

• Strategic Leadership• Strategy Formulation• Strategy Implementation

• Competitive Advantage: Results when a company’s strategies lead to superior performance compared to competitors

Superior Performance and Sustainable Competitive Advantage

• Superior Performance

– One company’s profitability relative to that of other companies in the same or similar business or industry

– Maximizing shareholder value

• Competitive Advantage

– When a company’s profitability is greater than the average of all other companies in the same industry & competing for the same customers

Company’s Business Model

Management’s model of how strategy will allow the company to gain competitive advantage and achieve superior profitability

Differences in Industry and Company Performance

• A company’s profitability and profit growth are determined by two main factors.

Performance in Nonprofit Enterprises

• Nonprofit entities such as government agencies, universities, and charities

• A successful strategy gives potential donors a compelling message as to why they should contribute.

Strategic Managers

• Corporate Level Managers• General Managers• Functional Managers

The Five Steps of the Strategy Making Process

1. Select the corporate vision, mission, and values and the major corporate goals and objectives.

2. Identify opportunities and threats.

3. Identify its strengths and weaknesses.

4. Select strategies.

5. Implement the strat strategies.

1. Crafting the Organization’s Mission Statement

• Provides a framework or context within which strategies are formulated– Mission – Vision– Values – Major Goals

The Mission

• What is it that the company does? • What is the companies business?

– Who is being satisfied ?

– What is being satisfied?

– How customer needs are being satisfied ?

The Vision

• What would the company like to achieve?• A good vision is meant to stretch a company by

articulating an ambitious but attainable future state.

Values

The values of a company should state:

How managers and employees should conduct themselves

• How they should do business• What kind of organization they need to build to help

achieve the company’s mission• Organizational culture

Major Goals

• A goal is a precise and measurable desired future state that a company must realize if it is to attain its vision or mission.

• Key characteristics of well-constructed goals:1. Precise and measurable 2. Address crucial issues 3. Challenging but realistic 4. Specify a time period

2. External Analysis

• Purpose is to identify the strategic opportunities and threats.

• External Analysis requires an assessment of:– Industry environment in which company operates– The country or national environments in which

company competes– The wider socioeconomic or macroenvironment that

may affect the company and its industry

3.Internal Analysis

• Purpose is to pinpoint the strengths and weaknesses of the organization.

Internal analysis includes an assessment of:• Quantity and quality of a company’s resources and

capabilities• Ways of building unique skills and company-specific or

distinctive competencies

4.Selecting Strategies: SWOT Analysis and Business Model

• SWOT analyses help to identify strategies that align a company’s resources and capabilities to its environment.

• Functional strategies should be consistent with and support the company’s business level and global strategies.

5.Strategy Implementation

• After choosing a set of congruent strategies to achieve competitive advantage, managers must put those strategies into action.

• The feedback loop.

Intended and Emergent Strategies

• Intended or Planned Strategies

• Emergent Strategies

• Realized Strategies

Strategic Planning in Practice

• Recent studies suggest that formal planning does have a positive impact on company performance – and should include the current and future competitive environments.

– Scenario Planning

– Decentralized Planning

– Strategic Intent

Strategic Decision Making

• In spite of systematic planning, companies may adopt poor strategies if groupthink or individual cognitive biases are allowed to intrude into the decision-making process.

• Cognitive biases• Groupthink

Strategic Leadership

• Good leaders of the strategy-making process have a number of key attributes:– Vision, eloquence, and consistency

– Commitment

– Being well informed

– Willingness to delegate and empower

– The astute use of power

– Emotional intelligence