Developing Strategic Management and Leadership - Term Paper Example

Developing Strategic Management and Leadership By: Executive Summary Strategic management includes top management analysis of the organization’s working environment. It is a very important tool in any firm. Good leadership is very important if firms want to be successful in formulating their strategies. The paper will analyze the relationship that exists between leadership and strategic management. The paper will define what strategic management means, the relationship between leadership and strategic management, leadership success factors, the reasons why leaders fail, the leadership theories, intended and realized strategies, scientific and artistic perspective on strategic management, strategic decisions, and finally a conclusion. Contents Executive Summary 2 1.Introduction 4 2. Strategic Management 4 3.Leadership 7 3.1 Process of developing leadership strategy 7 3.2 Current leadership requirements 9 4.Leadership and Strategic Management 11 4.1Development of leadership skills for top management position, for instance, Finance Director 11 4.2 Benefits of leadership training programs 14 4.3 Development of Future Situations Requiring Leadership 15 5.Conclusion 16 6.References 16 1. Introduction Every organization exists for a purpose. The top leadership of these organizations articulates the purposes in a defined statement. The report identifies the scope of an organization’s operations. Therefore, a strategy is top management’s plans to develop and sustain competitive advantage as by its statement. According to experts, its competitors cannot duplicate strategies of an organization. The paper will conduct a detailed analysis of developing strategic management and leadership. 2. Strategic Management The term ‘strategic management’ is bigger than the term ‘strategy’. Strategic management includes top management analysis of the organization’s working environment. The difference that exists between strategic management and policy is that the latter considers what must take place before formulating a plan. Strategic management assesses whether or not the strategy implemented was successful. The paper summarizes strategic management process in five steps. Each step is discussed in depth (Nanda, 2004). (i) External analysis: This includes analysis of opportunities and threats that are there in the organization’s external environment. It will also include industry and forces in the external environment. (ii) Internal analysis: This includes analysis of the organization’s strengths and weaknesses in the internal environment. The paper will consider the context of managerial ethics and corporate social responsibility. (iii) Strategy formulation: The management often formulates strategies that sustain and develop a competitive advantage. Every effective leader matches the organization’s strengths and weaknesses with the environment’s opportunities and threats. (iv) Strategy execution: During this step, the top leadership implements the strategies developed. (v) Strategic control: The top management forms a team that measures success and make corrections when strategies are not productive. The above order is logical. From numerous literature reviews, it is evident that understanding the organization and its environment is essential if the top leadership wants to develop an appropriate strategy. In the above-listed order, one can change the first two steps. A person may analyze the internal environment before the external environment. The idea behind this transpose of steps is that it informs the strategic assessment of factors outside the firm (Burke, 2006). It is critical to highlight the difference between outside and inside views on strategies. Outside perspectives have to derive the logic by applying a systematic approach that progresses through the steps in order. By doing this, outsiders will develop a holistic understanding of the firm, its environment, and the strategic challenges (Bell, 2010). The management always reassesses both internal and external factors when developing and implementing strategies. Changes in a single stage of strategic management process would affect other steps. Experts argue that it is necessary to consider modification as conditions change when implementing a planned strategy. Therefore, insiders treat all the steps as a single process because the steps are intertwined tightly (Bell, 2010). The paper will use the example of strategic management processes of Wal-Mart. Wal-Mart is a fast food restaurant chain. In this restaurant, managers always assess changes in consumer taste preferences, analyze the competitors, maximizing on the strengths and overcoming the weaknesses, researching on new strategies, implementing new strategies, and formulating new strategies. One can link all these activities to a distinct stage, but they occur simultaneously (Yuece, 2012). A study by Bass found out that a good strategy developed based on the organization’s business model (Bass, 2009). A business model is mechanisms used by organizations to earn profit by trading. Business models are stated in detail even though all organizations trade and sell products at a price higher than their production. For instance, a television company may use the subscription model, or an advertising model, or a combination of the two (Chance, 2013). The television company’s profits would mainly come from viewers under the subscription model and the advertisers from the advertising model. Therefore, from the discussion it is evident an organization’s business model could be complex when considering more details. Progressive leaders usually formulate innovative business models that bring more profits, from sources not identified by the competitors (Frankel, 2008). The paper identified good leadership of Gillette Company. The managers of this company came up with the razor and blades business model. From the model, the company offers discounts as a product, in this case the razor. Concurrently, the company is planning to benefit from future sales of required replacement, in this case the blades. It was a good business model used by Gillette, however in a competitive market; customers may purchase complementary products at lower prices from competitors (Hartline, 2010). Business models, even though successful, change over time. Creating a strategy based on a business model can be a challenge (Morris, 2010). The paper will list factors usually associated with successful strategies, (a) The firm should understand its competitive environment. (b) It should assess strengths and weaknesses in detail. (c) Seek consistent strategy with mission and goals. (d) Designing plans for putting the plan into action before it is implemented. (e) Possible future changes in the proposed policy. Experts call this strategic control. Managers who consider the above factors increase the interrelatedness of the steps in strategic management process. A close analysis of each factor finds out that each factor associated closely with one of the five steps (Frankel, 2008). Strategic management is not only limited to profit organizations (Palestini, 2009). Leaders, both from the profit and non-profit organizations, have to understand the firm’s environment and its ability to develop strategies. Firms have to make investments in leadership skill to ensure growth, competitiveness, and development of strategies. Nowadays, successes of companies depend on whether or not firms have the right talent in place. An effective leadership, notwithstanding, is at the core of such decisions (Coggins, 2009). 3. Leadership 3.1 Process of developing leadership strategy The paper will examine a systematic approach to strategy development. A good leadership strategy will increase profitability, gain more market share, increase approval ratings and boost customer satisfaction, and complete a project under budget (Bertocci, 2009). Step 1: Analyze the environment The company has to understand itself and the environment (Bischoff, 2010). (a) Explain the organization: The leadership has to discuss the resources, capabilities, strengths and weaknesses (Bischoff, 2010). (b) Analyze the environment: The leadership has examined the current operating environment to enable them predict where things are moving. The leaders have questions such as, are there exciting opportunities that the company should pursue? What future scenarios are likely in the firm? (c) Analyze the customers and stakeholders: Obviously, the strategy defines how the firm will win. The winning frame is typically by how the firm will satisfy the customers. Government and non-profit organizations have to satisfy their teams and stakeholders. Profit firms have to keep both their customers and stakeholders happy. Therefore, the leadership has to identify the clients and stakeholders, and study them carefully (Bischoff, 2010). (d) Analyze the competitors: The leadership has to understand how the firm’s products compare with the competitor’s products. They have to respond to questions such as, how difficult is it for the products to enter the market? What alternatives do customers have? Step 2: Identify Strategic Options As discussed above, it is critical for the leadership to understand how the business fits within the context of internal and external environments. The next step is to create a clear advantage that meets the firm’s objectives (Bischoff, 2010). (a) Brainstorming options: The leadership has to use creative tools such as brainstorming to explore projects that could benefit the company (Bischoff, 2010). (b) Examine the opportunities and threats: The leaders have to conduct a SWOT analysis. After the analysis, the leadership should combine it with the brainstorming ideas to create ways of maximizing the competitive advantage (Bischoff, 2010). (c) Solve problems: In this stage, the leaders have to apply the problem-solving approach. A good example is, if a firm wants to improve its public image, the starting positions for solving such problem is “low satisfaction”. Thereafter, the leaders brainstorm on this issue, and create strategic options (Bischoff, 2010). Step3: Evaluating and Selecting Strategic Options After covering the steps above, the last procedure is to evaluate the strategic options in detail. The leadership, in this step, selects the strategies that they want to pursue (Bischoff, 2010). (a) Evaluate Options: During this stage, the leadership has identified a variety of options to choose from. Therefore, the task available now is to evaluate the best option. It is important to consider every option identified. However, it is unadvisable to make a final judgment until discussing all the options in detail (Bischoff, 2010). (b) Choose the Best Way Forward: The evaluation by this time has to be complete. Now, the leadership has to settle on the best strategic option. It is necessary to select ideas for consistency with the firm’s vision, mission, and values, and update if necessary (Bischoff, 2010). 3.2 Current leadership requirements The paper will use the method of a recruitment process of the leaders in firms. Obviously, recruiting leaders is always an arduous and time-consuming procedure. Recruiting is about selling. Before advertising for a leadership position, companies always think about what makes the job and the organization attractive to potential hires. In order to recruit effectively, organizations have to pinpoint the qualities of a productive employee. With this in place, one can define success in advance and predict it accurately. The firm has to consider many factors when bridging the connection between entry-level candidates today (Bell, 2010). For instance, the requirements for non-management positions require skills different from the manager’s ability to recruit, hire, train, manage, and motivate an entire department. In addition, competencies required for success differ based on each organization, including a firm’s corporate, and market environment (Bell, 2010). Firms have to understand the diverse requirements for each role before conducting a recruitment process. Good understanding will accelerate leadership readiness and build a team necessary for a high-performance organization (Bell, 2010). As mentioned above, recruiting the right talent for the leadership position is a challenging task. Therefore, firms have to establish a corporate competency model in order to eliminate unqualified candidates early in the hiring process so that recruiters spend time interviewing only potential best-fit candidates (Bell, 2010). Questions often asked by recruiters are: Is the communication in the company formal or informal? What are the assumptions, values, norms, beliefs and principles that define the company’s culture? How does the company handle conflict? What is the company’s leadership style? What is the firm’s attitude towards training and development? Firms have to define clearly and answer these questions in order to get the right type of leaders. Current leadership requirements are: A leader should be able to fulfill group roles Leadership should have a systemic and continuous series of action A leader should aim at influencing followers The control by a leader should be geared towards achieving group goals The influence by leaders should be seen toward achieving group goals 4. Leadership and Strategic Management There is a need for collaboration between human resource professionals and the leaders, in order to ensure application and integration of policies and development activities. Being an efficient leader is not an easy task. There are heightened expectations from investors, tight government regulations, rapid technological and developments global business competition (Sperry, 2002). Leaders have always been vital to implementation of strategies. Strategic management demand skills and expertise. The paper will discuss in depth ten success factors that leaders have to note. 4.1 Development of leadership skills for top management position, for instance, Finance Director For instance, the changing market trends motivate the Macdonald’s restaurants to diverse more services and customer friendly menus. With this case, firms have to devise strategies based on its leadership philosophy and operating philosophy. This is the core competency of the organization. Therefore, philosophies must seek ways for harmonizing personal goals of individuals with the leadership goals by compensating them effectively. 1. Integrity: Every leader has to be committed to ethics. Integrity should be the cornerstone of every leader. There should be avoidance of issues such as financial scandals. The best business leaders are respected and trusted, setting the trend for all organization through their ethical behavior (Nohria, 2013). 2. Fearlessness: Business leaders have to take a stand on risky matters. A good leader has to confident in making challenging decisions. For instance, leaders have to make a decision on what they perceive as a wrong move into a new line of business. Experts argue that successful leaders always ask difficult questions during meetings o other discussions (Schyns, 2005). 3. Command of technology issues: Every leader has to safeguard the integrity of the company’s data and to improve efficiency (Bischoff, 2010). Successful executives are knowledgeable about firewall systems and servers. Ina addition, they are capable of identifying technology strategies, which will help the organization achieve immense success (Palestini, 2009). 4. Ability to wear many hats: Every firm leader is pulled in many directions. For instance, a leader may provide advice on a business deal while offering input on a purchasing decision. This makes a challenge of keeping constant tabs on growth and cost reduction strategies that will affect the firm’s general output. Studies indicate that good business leaders are the best time managers (Goethals, 2007). 5. Good motivators: Leaders have to bring out the best in people around them. These leaders have to give autonomy to fellow employees. Many books point out at support of training and internship as a factor that demonstrates leaders as good motivators. Good leaders serve as mentors and educate the community. These types of leaders want to ensure future leaders have necessary skills and guidance (Lussier, 2012). 6. Ability to embrace change: Good leaders have to demonstrate eagerness to embrace change. Successful leaders have always recognized that change is a constant and keep a flexible mindset when it comes to modifying company plans. These leaders see their role as the ‘enablers’ of the organization. The view makes them address new strategies and developments successfully. Successful leaders support those who challenge the status quo and encourage other employees to exercise creativity (Bass, 2009). 7. Vision: Leaders have to have a strategic mindset. They have to take note of trends that may influence the company (Miner, 2005). 8. Good communication skills: Every firm leader takes the lead in business discussions that are critical, negotiations, and presentations. Good leaders must be able to communicate complex information effectively. They have to challenge questions with ease. Successful leaders are dear, concise, and persuasive with their messages, either verbally or in writing (Montana, 2008). 9. Strong interpersonal skills: Every business leader has to cooperate with a wide range of people from other executives to investors and representatives from the government. Good leaders move through office politics, unequivocal in their convictions and statements (Bogardus, 2009). Therefore, every leader has to contain good interpersonal approaches to suit priorities of different individuals (Northouse, 2010). 10. Accessibility: Good managers and leaders always embrace the ‘open-door policy’. This promotes teamwork and encourages feedback from employees. Researchers indicate that successful leaders usually have a visible presence in their offices, and always interacting with employees (Rhode, 2006). From the above ten traits, the paper summarizes the executive competencies required for success. They include creating a strategic vision, developing an accurate and comprehensive overview of the business, politically astute, selecting and developing successors, inspiring others and maintaining leadership responsibility. Others include decision making, initiative to produce appropriate change, identifying and focusing on critical priorities, technical and business expertise, collaborative, and timely execution (Winkler, 2010). After developing the skills in leadership, it is necessary for organizations to take their potential leaders to leadership training programs. 4.2 Benefits of leadership training programs Participants who attend such programs benefit from: Leaders get a personalized approach in which they develop in their position. The leaders become more confident, resilient, and adaptable. They can meet any situation as they arise (Bell, 2010). Leaders gain particular methodology for creating good teamwork and building organizations culture (Bell, 2010). The leaders receive a lot of feedback about the impact participants have on others, and techniques that increase their presence (Bell, 2010). Leaders practice the skills of leading group interaction, giving feedback and having conversations that involve different topics (Bell, 2010). Organizations will benefit from: Trained leaders will positively influence both organizational culture and the bottom line (Bell, 2010). The firm would retain employees through leadership capacity building, which develops and uses their talent effectively (Bell, 2010). Since leaders will understand ways of managing change and response to resistance, the firm will enjoy an enhanced response to rapid shifts in the environment (Bell, 2010). 4.3 Development of Future Situations Requiring Leadership The paper will now analyze the plans for development of future situations requiring leadership. Many corporations in the world are developing potential leaders in order to prepare for the future. Everybody makes efficient business level and corporate strategies to gain a sustainable competitive advantage in the marketplace relative to competition. The pimary role of leadership is to devise strategies for corporation to sustain a competitive advantage. The management develops corporate theory and from this philosophy, firms give rise to visions and missions for the organization (Coggins, 2009). Understanding the philosophy aligns personal goals of individuals with the organizational goals. Therefore, every individual in the firm will know that to succede, they have to reach organizational strategic goals first before realizing personal goals. Such case demands organizations to offer motivations such as career development, and compensation such as promotions, to ensure that they meet organizational goals (Coggins, 2009). Each leader should have interpersonal skills and capabilities. Thus, the leader would acknowlegde that corporate culture and philosophy is important for the success of the individuals and the organization. Using interpersonal skills to develop self-motivation will generate an internal passion, which will drive one to meet their personal goals. In most cases, it is by moving the person on the way of reaching organizational strategic goals (Coggins, 2009). 5. Conclusion The paper has discussed in depth the relationship between leadership and strategic management. The first part of this paper analyzed the microeconomic aspects of strategic analysis, focusing on the structure of the firm’s business environment, and the range of strategic options open to it. The next section analyzed the leadership and the theories of leadership. From this analysis, it is evident a strategy must be managed effectively by qualified leaders. It must be evaluated against each criteria, because if it does not meet one of the requirements, the approach will fail (Maassen, 1999). 6. References Bass, B. M., 2009. The Bass Handbook of Leadership: Theory, Research, and Managerial Applications. New York: Simon and Schuster. Bell, J., 2010. Nonprofit Sustainability: Making Strategic Decisions for Financial Viability. New York: John Wiley & Sons. Bertocci, D. I., 2009. Leadership in Organizations: There is a Difference Between Leaders and Managers. 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