Chapter 2: Strategy Leadership-Managing the Strategy Process
Strategic Management Process
• Method put in place by strategic leaders to formulate and implement a strategy, which
can lay the foundation for a sustainable competitive advantage
Strategic Leadership
• Executives’ use of power and influence to direct the activities of others when pursuing an
organization’s goals
• Describes the executives’ successful use of power and influence to direct the activities of
others when pursuing an organization’s goals
• Questions (3)
o Vision. What do we want to accomplish ultimately
o Mission. How do we accomplish our goals
o Values. What commitments do we make, and what guardrails do we put in place,
to act both legally and ethically as we pursue our vision and mission
Vision
• A statement about what an organization ultimately wants to accomplish; it captures the
company’s aspiration
Mission
• Description of what an organization actually does—the products and services it plans to
provide, and the markets in which it will compete
Strategic Commitments
• Actions to achieve the mission that are costly, long-term oriented, and difficult to reverse
Core Values Statement
• Statement of principles to guide an organization as it works to achieve its vision and
fulfill its mission, for both internal conduct and external interactions; it often includes
explicit ethical considerations
Organizational Core Values
• Ethical standards and norms that govern the behavior of individuals within a firm or
organization
Strategy Formulation
• The part of the strategic management process that concerns the choice of strategy in
terms of where and how to compete
Strategy Implementation
• The part of the strategic management process that concerns the organization,
coordination, and integration of how work gets done, or strategy execution
• Areas (3)
o Corporate strategy
▪
Concerns questions relating to where to compete in terms of industry,
markets, and geography
o Business strategy
▪
Concerns the question of how to compete
▪
Types (3)
•
Cost leadership
•
Differentiation
•
Value innovation
o Functional strategy
▪
Concerns the question of how to implement a chosen business strategy
Strategic Business Units (SBUs)
• A standalone division of a larger conglomerate, with its own profit-and-loss responsibility
Competitive Advantage Approaches (3)
• Strategic planning
• Scenario planning
o Strategy-planning activity in which top management envisions different what-if
scenarios to anticipate plausible futures in order to derive strategic responses
• Strategy as planned emergence
Top Down Strategic Planning
• A rational, data-driven strategy process through which top management attempts to
program future success
Dominant Strategic Plan
• The strategic option that top managers decide most closely matches the current reality
and which is then executed
Illusion of Control
• A tendency by people to overestimate their ability to control events
Intended Strategy
• The outcome of a rational and structured top-down strategic plan
Realized Strategy
• Combination of intended and emergent strategy
Emergent Strategy
• Any unplanned strategic initiative bubbling up from the bottom of the organization
Strategic Initiative
• Any activity a firm pursues to explore and develop new products and processes, new
markets, or new ventures
• Conditions that cause it to bubble up from deep within a firm
o Autonomous actions
o Serendipity
o Resource-allocation process (RAP)
Autonomous Actions
• Strategic initiatives undertaken by lower level employees on their own volition and often
in response to unexpected situations
Serendipity
• Any random events, pleasant surprises, and accidental happenstances that can have a
profound impact on a firm’s strategic initiatives
Resource Allocation Process
• The way a firm allocates its resources based on a pre-determined policies, which can be
critical in shaping its realized strategy
Planned Emergence
• Strategy process in which organizational structure and systems allow bottom-up strategic
initiatives to emerge and be evaluated and coordinated by top management
