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Strategic Leadership: Business Logic

Strategic leadership and competitive advantage are concerned with managing the strategy-making process to increase a company's performance and outperform rivals. There are three levels of management - corporate, business, and functional - each with distinct strategic roles in developing and implementing strategies. The strategic planning process involves five main steps: selecting a mission and goals, analyzing external and internal environments, selecting strategies based on strengths/weaknesses and opportunities/threats, and implementing strategies. Cognitive biases and pitfalls can undermine planning, so managers must prepare strategies carefully based on analysis.

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Marjorie Rose Guarino
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82 views14 pages

Strategic Leadership: Business Logic

Strategic leadership and competitive advantage are concerned with managing the strategy-making process to increase a company's performance and outperform rivals. There are three levels of management - corporate, business, and functional - each with distinct strategic roles in developing and implementing strategies. The strategic planning process involves five main steps: selecting a mission and goals, analyzing external and internal environments, selecting strategies based on strengths/weaknesses and opportunities/threats, and implementing strategies. Cognitive biases and pitfalls can undermine planning, so managers must prepare strategies carefully based on analysis.

Uploaded by

Marjorie Rose Guarino
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Business Logic

3
STRATEGIC LEADERSHIP

MS. MARJORIE ROSE GUARINO


NO. 3
Business Logic

“STRATEGY MAKING PROCESS FOR


COMPETITIVE ADVANTAGE”

• Explain what is meant by "competitive advantage"


• Discuss the strategic role of managers at different levels in an organization
• Identify the main steps in a strategic planning process
• Discuss the main pitfalls of planning and how those pitfalls can be avoided
• Outline the cognitive biases that might lead to poor strategic decisions
and explain how these biases can be overcome
NO. 3
Business Logic

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
Strategic leadership is concerned with managing the strategy-making process to
increase the performance of a company. To do this, a company must be able to
outperform its rivals; it must have a competitive advantage
NO. 3
Business Logic
NO. 3
Business Logic

Superior Performance
Maximizing shareholder value is the ultimate goal of profit-making
companies, for two reasons:

a. First, shareholders provide a company with the risk capital that


enables managers to buy the resources needed to produce and sell
goods and services.

b. Second, shareholders are the legal owners of a corporation, and


their shares, therefore, represent a claim on the profits generated by
a company.
NO. 3
Business Logic

Risk capital is capital that cannot be recovered if a company fails


and goes bankrupt. Shareholders will not provide risk capital unless
they believe that managers are committed to pursuing strategies that
provide a good return on their capital investment.

Profitability is the return that it makes on the capital invested in


the enterprise. It is the result of how efficiently and effectively
managers use the capital at their disposal to produce goods and
services that satisfy customer needs.
NO. 3
Business Logic

Competitive Advantage and a Company's Business Model

A company is said to have a competitive advantage over its rivals


when its profitability is greater than the average profitability and
profit growth of other companies competing for the same set of
customers. The higher its profitability relative to rivals, the greater its
competitive advantage will be. A company has a sustained
competitive advantage when its strategies enable it to maintain
above average profitability for a number of years.
NO. 3
Business Logic

A business model is managers' conception of how the set of strategies their


company pursues should work together as a congruent whole, enabling the
company to gain a competitive advantage and achieve superior profitability and
profit growth. A business model encompasses the totality of how a company will:

1. Select its customers.


2. Define and differentiate its product offerings.
3. Create value for its customers.
4. Acquire and keep customers.
5. Produce goods or services.
6. Lower costs.
7. Configure its resources.
8. Achieve and sustain a high level of profitability.
NO. 3
Business Logic

Strategic Managers
Managers must lead the strategy making process. In most companies, there are
two primary types of managers:

A. General managers who bear responsibility for the overall


performance of the company or for one of its major self-contained
subunits or divisions.
B. Functional managers who are responsible for supervising a
particular function, that is, a task, activity, or operation, such as
accounting, marketing, research and development (R&D), information
technology, or logistics.
NO. 3
Business Logic

There are THREE main levels of management: Corporate, Business,


and Functional.
1. Corporate-Level Managers
The corporate level of management occupy the apex of decision making within the
organization. It consists of the chief executive officer (CEO), other senior executives,
corporate staff.
The CEO is the principal general manager. In consultation with other senior
executives, the role of corporate-level managers is to oversee the development of
strategies for the whole organization. This role includes:
a. defining the goals of the organization,
b. determining what businesses it should be in
c. allocating resources among the different businesses,
d. formulating and implementing strategies and providing leadership for the entire
organization
NO. 3
Business Logic

2. Business-Level Managers
A business unit is a self-contained division (with its own functions—e.g., finance,
purchasing, production, and marketing departments) that provides a product or
service for a particular market.
The principal general manager at the business level, or the business-level manager,
is the head of the division. The strategic role of these managers is to:
a. translate the general statements of direction and intent that come
from the corporate level into concrete strategies for individual businesses.
b. business-level general managers are concerned with strategies that are specific
to a particular business.

The general managers in each division work out for their business the details of a
business model that is consistent with this objective.
NO. 3
Business Logic

3. Functional-Level Managers
Functional-level managers are responsible for the specific business functions or
operations (human resources, purchasing, product development, customer service,
etc.) that constitute a company or one of its divisions. Thus, a functional manager's
sphere of responsibility is :
a. generally confined to one organizational activity
b. Functional managers nevertheless have a major strategic role: to develop
functional strategies in their area that help fulfill the strategic objectives set by
business- and corporate-level general managers.
c. Functional managers provide most of the information that makes it possible for
business- and corporate-level general managers to formulate realistic and
attainable strategies. Indeed, because they are closer to the customer than is the
typical general manager, functional managers themselves may generate important
ideas that subsequently become major strategies for the company.
NO. 3
Business Logic

The Strategy-Making Process


A Model of the Strategic Planning Process
The formal strategic planning process has five main steps:
1. Select the corporate mission and major corporate goals.
2. Analyze the organization's external competitive environment to identify
opportunities and threats.
3. Analyze the organization's internal operating environment to identify the
organization's strengths and weaknesses.
4. Select strategies that build on the organization's strengths and correct its
weaknesses in order to take advantage of external opportunities and counter
external threats. These strategies should be consistent with the mission and major
goals of the organization. They should be congruent and constitute a viable
business model.
5. Implement the strategies.
NO. 3
Business Logic

“By failing to prepare, you are preparing


to fail.”

Benjamin Franklin

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