Strategic Leadership in a Changing World - Essay Example

?STRATEGIC LEADERSHIP IN A CHANGING WORLD Strategic leadership is one of the core functions of any business organization. This is because of its role in designing and implementing strategic plans and objectives for organizations which define its success and competitiveness within the business environment or market. Strategic leaders employ various models, theories and approaches for effective strategic leadership. These are however influenced by several factors such as the organizational circumstances and culture, organizational resources and the nature of the market in addition to the rivalry or competitiveness of the market. The paradox that exists between the market environment and the resources that are available to the organization are evaluated by strategic leaders as a basis upon which they select the most appropriate model or strategy for the organization. The most important consideration however is the role of the strategy in allowing the organization to meet its objectives and goals in an effective and efficient manner. It is in line with this that this essay gives a critical analysis and discussion of the Gary Hamel and Michael Porter’s approaches to strategic management with an aim of illustrating how the circumstances within an organization and the market environment influences the choice of strategic managers for either of these approaches in their leadership role within illustrated organizations. The essay focuses on strategic management within the changing world which is characterized by a diverse workforce and application of information and communication technologies for competitive advantage and business success. According to the generic strategies for leadership and management that were proposed by Michael Porter, the attractiveness of a market is the core determinant of the profitability of an organization (Colvin, 2012, p. 70). It is in this regard therefore that strategic managers of companies which require internationalizing their business activities strategize for market entry modes for an attractive market with high demand and more business opportunities. Therefore Porter’s approach to strategic leadership is important in making market choices for expansion. For example the growth of Apple into a multinational company was motivated by strategic leadership which targeted the most attractive markets for their smart phones and Mac computers. Gobble, Petrick & Wright (2012, p. 63) however argue that in the selection of strategic markets, leaders must put into consideration of the resources available to the organizations such as capital for international expansion of the business and the forces within the new market environment such as political, economic and social cultural factors. Porter, in his generic strategy further points out that the position of a company within a specific market or industry is the second most vital element that determines it profitability and performance (Pathak, 2012, p. 154). It is through effective strategic management and allocation of resources that leaders of an organization are able to enable them to become market leaders. For example effective strategic marketing which fits the changing market environment such as online marketing communication are applied by effective leaders to make their organization to climb the competitive ladders within the market or industry (Foss, 2006, p. 10). This can be illustrated by the market leadership of Coca-Cola within its world markets. This company achieved this leadership in the market through proper allocation of resources for marketing, innovation and motivational compensation of its workforce by its strategic leaders. Moreover the company invested in market research which allowed it to determine the characteristics of the market and the changing trends of business operations (Saeidinia, 2012, p. 7). It is through this that the company became a leader within the soft drink industry and as a result gaining from huge profits. Gary Hamel views strategy within any organization as a revolution. It is in this line of thought that Hamel brought forth ten main principles within which strategy can be defined as a revolution (Chesbrough & Appleyard, 2007, p. 58). According to the postulates of Gary Hamel, the making of strategy must be democratic (Hryniuk, 2008, p. 36). This means that strategic leaders must involve human resources within the organization in making decisions and strategic plans. The views of Hamel are in line with the transformational leadership approach in which leaders demonstrate an interactive or communicative behavior in which decision making on strategy is achieved through a consensus with the human resource. This form of strategic decision making is said to be more effective as opposed to letting a single in individual to make decisions for the whole organization which may be erroneous. It is therefore arguable that effectiveness in strategic leadership and decision making is achieved through the involvement of an organization’s human resource in reaching decisions which affect strategy and future business operations. In this regard, it is notable that leaders choose a specific strategy for leadership depending on their leadership trait or style (Kermally, 2008, p. 59). In his model for strategy and leadership, Gary Hamel points out that that the major consideration in strategic leadership is not change but engagement (Stewart & Hamel, 2009, p. 387). This point of view is in line with the characteristic of the contemporary business environment which is characterized by increased adoption and implementation of information and communication technologies which facilitate the engagement of stakeholders in the business operations and activities. Therefore strategic leaders within an engaging business environment are likely to choose Hamel’s approach to strategy. This will enable them to use resources of the organization such as technology in order to effectively engage all stakeholders in the activities of the organization in addition to the process of making strategic choices or decisions (Wonglimpiyarat, 2012, p. 90). The competitiveness of an organization within a specific industry or market is often determined by the extent to which consumers who comprise of the most important stakeholder is engaged in the business processes (Kermally, 2008, p. 60). This is because effective engagement through communication with consumers allows an organization to get feedback from the market. This allows an organization to determine the needs of the market and changes in tastes and preferences as attributed to the dynamic business environment. In return, the organization focuses on meeting these needs for competitive advantage and increased performance. The illustrations of Porter’s approach to strategy against that of Gary Hamel reveals that these two management experts agree that competitive advantage and growth within the market is defined by the resources available within an organization and the factors or forces within the sterna environment. However, Hamel demonstrates more support for a democratic approach to making strategic decisions and plans for an organization. On the other hand, Porter reveals the importance of the position of an organization within the market as a measure for profitability without illustrating how the engagement of resources is used to achieve a competitive position within the market. Both of these approaches are however effective in strategic leadership and their choice by a strategic leader is determined by interplay between organizational resources and circumstances and the external environment or the forces within the market. Leaders may employ both the generic leadership strategy and the revolutionary model as appropriate with an aim of driving an organization into the top of the competitive ladder. In this sense, effective leadership is argued to be the most important prerequisite for attainment of strategic goals and objectives. Colvin (2012, p. 72) points out that the cost leadership strategy that Michael Porter proposes is very effective in achievement of organizational goals of profitability. Porter’s approach argues that effective leadership causes an organization to produce its products at a low cost while maintaining a specific level of product quality. This means that an organization is able to reap maximum profit in the application of this approach to strategic leadership. Regardless of the production resources that would be available to an organization, it is important to consider that the forces within the market such as competitive prices of business rivals, changes in supply and demand and government regulation are likely to determine the level of profitability that an organization achieves through the implementation of the cost leadership strategy or approach that Porter postulates (Foss, 2006, p. 10). It is therefore notable that the choice of strategic leaders for the cost leadership approach must consider the business environment within which the organization operates so that effective decisions are made on how high profits can be made without a compromise on quality of products. The contemporary business environment is characterized by changes in technology which have made consumer preferences to be extremely dynamic. It is in line with this that Michael Porter proposes a differentiation strategy which allows companies to produce unique products that are aimed at meeting specific needs of consumers in a way that rival products could not (Kermally, 2008, p. 58). An illustration of Microsoft Corporation’s differentiates computer and software application is effective in achieving an understanding of strategic leadership which employ’s Porter’s differentiation strategy. The company produces hardware and software that are designed with an aim of meeting the unique needs of individual and organizations for computing. In the same line of argument, the Apple Inc. application software is differentiated with an aim of meeting the needs of users for publishing. These illustrations demonstrate that the differentiation strategy is applied in real world business environments to allow organizations and companies effectively achieve their strategic goals and objective. It is therefore through the differentiation strategy that Microsoft and Apple have become successful multinational companies within the computing and mobile phone industries (Wonglimpiyarat, 2012, p. 90). In Gary Hamel’s argument on strategy as a revolution, he presents nine routes through which revolution within a specific industry can be achieved. Hindle (2008, p. 245) says that the most important of these routes in industry revolution is the great improvement of price and performance through strategic leadership. The issue of price is important in strategic leadership because it determines the ability of a company to become profitable through acquiring more revenue in sales than the cost of production. It is therefore relevant that to mention that effective leadership is likely to adopt Hamel’s approach on strategy as a revolution in making appropriate strategic decisions on pricing policies in different markets. Kermally (2008, p. 70) reveals that the contemporary business environment is driven by change such as diversity of the workforce which emanates from the forces of globalization. Therefore strategic management must be able to ensure that the diversity in the workforce does not inhibit the productivity of employees and the resultant performance of the organization. Since Hamel presents performance as one of the important routes to strategic revolution, it is notable that his approach is adopted by strategic leaders in motivating the performance of human resources within the dynamic or changing business environment. The adoption of Porter’s cost leadership and differentiation strategies by strategic leaders is determined by organizational circumstances, changes in the market or industry and the forces within the market. In the same manner, strategy as a revolution through improved performance and pricing is also determined by internal and external factors of a company as well as the dynamism within the business environment. It is therefore notable that both Porter and Hamel present strategic management approaches which are adaptable by strategic leaders and influenced by similar factors within a company and in the market environment. Regardless of the differences of these two management scholars and experts, it is notable that either or both of these approaches to strategic management can be implemented by strategic managers with an aim of improving performance as therefore achieving a competitive advantage in the market. This is demonstrated by the role of these approaches in effective management of resources and the application of knowledge on the market so that business opportunities that emanate from changes in the market are employed for business advantage of overcoming business rivalry. It is therefore conclusive that effective strategic leadership is achieved through an analysis of the internal and external environment of an organization and application of an effective strategic leadership approach to achieve high performance and competitive advantage within the market. 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