STRATEGIC LEADERSHIP

Strategic Leadership
 Strategic leadership is the ability to lead an organisation
towars the achievement of its objectives.
 Organisational leaders influence the behaviour of
subordinates so that they can work willingly and
enthusiastically.
 Strategic Leaders
 Strategic leaders are charged with responsibilityof
managing the strategic management process of an
organisation. Among the strategic leaders we have
managers operating at different levels of an
organisation, corporate level, business level,
functional level and operational level.
 Corporate level includes CEO, senior executives and the corporate
staff.
 BOD and top management teams exercise startegic leadership.

 Business level managers are GM- General managers or vice

presidents.
 These managers manage the strategic management at business

level.

 Functional level managers are managers of specific functions such

as marketing or operations. They are called marketing managers or
operational managers. They manage the strategic management at
functional level.
 Operational level managers are deputy managers of
marketing or assistant managers of operations.
They are responsible for implementation of
strategies assigned within the functional areas.
 Tasks of Strategic Leaders
 Determining strategic direction
 Effectively managing the organisational resources
portfolio
 Sustaining an effective organisational culture
 Emphasising ethical practices
 Establishing balanced organisational controls.
 Building partnerships
 Developing future strategic leaders
CORPORATE POLITICS
AND

POWER IN

STRATEGIC
MANAGEMENT
 Corporate politics and use of power

All corporate cultures include a political component and therefore all organizations are political in nature.

Sources of power :
1. Reward power - Reward power arises from the ability of a person to influence the allocation of incentives in

an organization. These incentives include salary increments, positive appraisals and promotions. In an
organization, people who wield reward power tend to influence the actions of other employees. 
2. Coercive power - Coercive power is derived from a person's ability to influence others via threats,

punishments or sanctions. A junior staff member may work late to meet a deadline to avoid disciplinary action
from his boss. Coercive power is, therefore, a person's ability to punish, fire or reprimand another employee.
3. Legitimate power - It's derived from the position a person holds in an organization’s hierarchy. Job

descriptions, for example, require junior workers to report to managers and give managers the power to assign
duties to their juniors. 
4. Reference power - Referent power is derived from the interpersonal relationships that a person cultivates with

other people in the organization. People possess reference power when others respect and like them. 
5. Expert power - Expert power is derived from possessing knowledge or expertise in a particular area. Such

people are highly valued by organizations for their problem solving skills.
 TYPES OF POWER

Positive Types of Power

 Positive power in an organization involves encouraging productivity. This includes
giving employees the power to make decisions, rewarding employees for strong
performance and appointing employees who perform strongly to supervise other
employees. Positive power builds employee confidence and motivates employees to
work harder. It also results in those in higher-level positions gaining power through
employee respect and communication, rather than coercive efforts. Employee
retention rates are higher when employees are given the power to express concerns
and work together in an organization.
Negative Types of Power
 When leaders in an organization do not have the respect of the employees under
them, they have a negative power. This type of leader motivates employees to
perform by threatening them with job loss and other punishments or shows
favoritism to certain employees rather than recognizing the hard work of multiple
employees. Not only does the quality of work produced decrease under this type of
power, but it leads to higher turnover rates in an organization.
 Strategic use of power and politics

 Accept the inevitability of politics being there in the organization

 Understanding the power structure

 Lead strategy

 Be sensitive and alert to political signals

 Reward organizational commitment

 Use openness and honesty

 Corporate politics and power in the Indian context

 Nature of Indian society – The person-oriented nature of indian society suggests an emphasis on
particularistic rather than universalistic treatment of employees , which leads to reliance on personal
characterstics in hiring, promoting and rewarding employees

 Higher level of enviousness – another factor could be pervasive enviousness exhibited in an indian
organizations.

 Managers not only have to deal with – and be affected by- Intracorporate politics but also intercorporate
politics between rival companies

 At a higher level, Indian companies are plagued with politics between associations and federations of
business and industry, public versus private sector, small versus large sector, multinational versus local
firms, and technocrats versus bureaucrats.

 In such condition, strategists have to be aware of not only internal political consideration but also the
politics and power play present in other organization, particularly government departments and ministries,
with whom they have to deal with on a continual basis.
CORPORATE ETHICS AND
PERSONAL VALUES FOR
STRATEGIC MANAGEMENT
 Meaning of ethics and values

 ETHICS
 Ethics is a broad area of philosophy dealing with the study of what
is right and wrong in behaviour.
 Corporate ethics deals with conduct of business according to what
is right and wrong.
 Business ethics is the study of how personal moral norms apply to
activities and goods of an organisation.
 VALUES
 Personal values refer to a conception of what an individual or
group regards as desirable.
 A value is a view of life and judgement of what is desirable that is
very much part of a person's personality and a group's morale.
 IMPORTANCE OF VALUES AND ETHICS IN
BUSINESS

 Ethics correspondence to basic human

needs
 Values create credibility with the public

 Values give management credibility with

employees
 Values help better decision making

 Ethics and profit ethics

 Law cannot protect society, ethics can

 VALUES, ETHICS AND STRATEGY

 Ethical decisions are in accordance with those accepted

principles, whereas unethical decisions violate accepted
principles.

 Managers may be confronted with ethical dilemmas,

situations in which there’s no agreement over exactly what
the accepted principles of right and wrong are or where none
of the available alternatives seems ethically acceptable.

 Strategies must be consistent with the laws that govern

business behavior.
CORPORATE CULTURE IN STRATEGIC
MANAGEMENT
 Corporate Culture in Strategic Management

 Introduction:
 Corporate culture refers to the beliefs and behaviors that determine how a company’s management and
employees interact and handle outside business transactions. Often, corporate culture is implied, not
expressly defined, and develops organically over time from the cumulative traits of the people the
company hires. A company's culture will be reflected in its dress code, business hours, office setup,
employee benefits, turnover, hiring decisions, treatment of clients, client satisfaction and every other
aspect of operations.

 Components of corporate culture:

 1) Vision statement: An aspirational description of what an organization would like to achieve or accomplish in the
mid-term or long-term future. It is intended to serve as a clear guide for choosing current and future courses of action.
 2) Value: A company’s values are the core of its culture. While a vision articulates a company’s purpose, values offer a

set of guidelines on the behaviors and mindsets needed to achieve that vision. This is just the next step after vision. You
cannot achieve your vision without proper sets of values.
 3) Practices: There is a saying that we should practice what we preach, so the “Value” is of no use until put into proper

practice.
 4) People: A company’s core value is only formed by the willingness of its people. No company can build its culture

without its people. “People” are the most crucial component. Not just the employees hired by the company but this also
include the customers who buy your products and services, the vendors from whom the company purchases. All of
them equally contribute to the culture of the company.
 Components Continued…

5) Place: A place shapes the culture of the environment. Place can be its geography,
environment, architecture or aesthetic design. All these influence the value and behaviors of
people in a workplace.
6) Celebration: As a whole community, your company should have fun and get the chance
to know each other just beyond colleagues. That enhances each other’s personality as well as
communication skill.
7) Symbol: The symbol can be anything; it can be a logo, color or formula. A symbol also
highlights the culture of your company.
Types of Corporate Culture:
 Impact Of Corporate Culture:

 Productivity rises:

Positive relationship and trust with the workplace will be established.

This trust and alignment are key building blocks for engaged and happy employees. A good culture is imperative for high
levels of productivity.

 Business goals are supported:

“Executives highlight that culture can circumvent mistakes in a way that other executive actions, formal institutions, or
corporate assets cannot. Many executives believe culture contributes more to firm value than strategy does. For example, a
company performs better with a strong culture and weak strategy than the other way around.” This is because even if your
strategy isn’t perfect, your strong culture will help to keep everyone marching to the beat of the same drum. People will stay
on track, striving towards overall company goals.

 Business performance is improved:

After years of research, John Kotter found that companies that empowered their people to live their culture significantly
outperformed those that didn’t. “Strong corporate cultures that facilitate adaptation to a changing world are associated with
strong financial results.” Affordable luxury hotel chain, YOTEL, is a great example of this in practice. YOTEL has a rich
company culture, and believe it’s important to live the company values at work every day. YOTEL staff members are
remaining true to the values of the brand and delivering this to their hotel guests. The expanding hotel chain provides a
consistent and excellent level of service to their customers internationally. The impact of company culture extends far beyond
the happiness of employees. A good company culture will improve productivity, performance and customer experience.
Strategy-Culture Relationship:
 Corporate Culture Case Study:
 Twitter: Rooftop meetings, friendly coworkers and a team-oriented environment in which each person
is motivated by the company’s goals have inspired that praise. Employees of Twitter can also expect
free meals at the San Francisco headquarters, along with yoga classes and unlimited vacations for some.
These and many other perks are not unheard of in the startup world. But what sets Twitter apart?
Employees can’t stop talking about how they love working with other smart people. Workers rave about
being part of a company that is doing something that matters in the world, and there is a sense that no
one leaves until the work gets done. Takeaway: You can’t beat having team members who are pleasant
and friendly to each other, and are both good at and love what they are doing. No program, activity or
set of rules tops having happy and fulfilled employees who feel that what they are doing matters.

 Chevron: While oil and gas companies are prime targets for a lot of negative PR and public ire,
Chevron employees responded favorably towards the company’s culture. Employees compared Chevron
with other similar companies and pointed out “the Chevron way” as being one dedicated to safety,
supporting employees and team members looking out for each other. Chevron shows it cares about
employees by providing health and fitness centers on site or through health-club memberships. It offers
other health-oriented programs such as massages and personal training. Chevron insists employees take
regular breaks. In other words, the company shows it cares about the well being of employees, and
employees know that they are valued. Takeaway: Your company culture doesn’t have to be ping-pong
tables and free beer. Simply providing employees with a sense of safety and well being and creating a
policy where everyone looks out for each other can easily suffice.
THE MCKINSEY 7S
FRAMEWORK
 Developed in the early 1980s by Tom
Peters and Robert Waterman

 The basic premise of the model is that

there are seven internal aspects of an
organization that need to be aligned if it
wats to be successful.
 Where 7S model can be
used?
 To improve the performance of a
company,
 To examine the likely effects of future

changes within a company,

 To align departments and processes,

 To determine what is the best way to

implement a proposed strategy.

 The Seven Elements
Hard elements Soft elements
Strategy Shared values
Structure Skills
Systems Style
Staff

"Hard" elements are easier to define or identify and

management can directly influence them: These are
strategy statements; organization charts and reporting
lines; and formal processes and IT systems.

"Soft" elements, on the other hand, can be more difficult

to describe, and are less tangible and more influenced by
culture. However, these soft elements are as important as
 The key point of
the model is that
all the seven
areas are
interconnected
and a change in
one area requires
change in the rest
of them for it to
function effectively.
 Strategy: the plan devised to maintain and
build competitive advantage over the
competition.
 Structure: the way the organization is

structured and who reports to whom.

 Systems: the daily activities and procedures

that staff members engage in to get the job

done.
 Shared Values: these are the core values of
the company that are evidenced in the
corporate culture and the general work ethic.
 Style: the style of leadership adopted.

 Staff: the employees and their general

capabilities.
 Skills: the actual skills and competencies of

the employees working for the company

 How to use the tool?
 Step 1. Identify the areas that are not
effectively aligned
 Step 2. Determine the optimal organization

design
 Step 3. Decide where and what changes

should be made
 Step 4. Make the necessary changes

 Step 5. Continuously review the 7s

 IKEA

 IKEA McKinsey 7S framework explains how individual elements of

businesses can be aligned to increase the overall effectiveness.
McKinsey 7S framework considers strategy, structure and systems as
hard elements, whereas shared values, skills, style and staff are
accepted as soft elements.
 HARD ELEMENTS

 Strategy.  IKEA business strategy is based on the IKEA Concept, which is to pursue low cost
leadership in furniture industry by producing good quality products at low cost . Moreover,
IKEA business strategy involves concentrating on core competencies and outsourcing the low
value activities to buyers and suppliers. Another factor leading to IKEA success is its ability
to redefine the customer and suppliers goals.
 Structure. Structure refers to manner in which the firm sets its business units and division of
work. For example structure arranged according to geographical arrangement. IKEA has a flat
structure which means a horizontal structure where there is few or no middle management
between the workers and executives. As a result decentralized decision making is crucial in
IKEA’s structure
 Systems. System refers to the various procedure and methods which are employed in the
company. IKEA business relies on a set of systems. These include employee recruitment and
selection system, team development and orientation system, transaction processing systems,
customer relationship management system, business intelligence system, knowledge
management system and others. The systems used in IKEA are designed to comply with the
motive of production of good quality products at low cost
 SOFT ELEMENTS
 
 Style - is often referred to as the organization culture of a particular firm. It is about the aggregate behaviors, thoughts, beliefs,
assumptions and symbols that are practiced and communicated to people in the organization. For IKEA, it is famous for the culture of
frugality, efficiencies, hard work, individual responsibilities and customer services. Such a culture enables the firm to deliver good
quality products at low costs in the competitive furniture industry. From another perspective, IKEA culture can be categorized as the
‘role’ culture. According to Handy, culture can be categorized into power, role, task, and person culture. IKEA can be considered as the
‘role’ culture as employees play their roles, and employees are expected to make decentralized decisions based on the circumstances.
 Staff- in the seven-S model refers to the human resources management system in a company. Here, leadership is an important
subject, as how the leader led its people in the organization will affect the organizational performance in the marketplace. It is said that
key management at IKEA viewed themselves as the coach, supporter and enabler. According to Adair, leadership can be separated into
different styles, namely authoritarian, participative, and laissez faire. For this, IKEA should be a culture of participative leadership
where the employees can have their own opinion on various aspevts of business
 Skills can be referred to the distinctive abilities and talents that a company possesses. It is the competitive advantage as well as core
competency that a firm possesses. For this, IKEA competitive advantage is its ability to deliver good quality products at low costs, with
a track record of customer satisfaction.
 Shared Goals are also often named as the super-ordinate goals for a firm. Such a goal is the fundamental ideas on which a firm
is built on. For this, IKEA shared goal is to deliver quality products with greatest economic efficiencies. This can be seen from the
behaviors and attitudes of the frugal founder and management that will waste no money in unnecessary things, but still striving to
deliver excellent products to customers.
 McKinney's 7s model is not just building the 7s elements of the model but it also includes linking of each of the element with each other
The framework focueses the presence of strong links between elements in a way that a change in one element causes
changes in others