Lecture 1 - Strategic Leadership - Managing The Strategy-Making Process For Competitive Advantage

CHAPTER 1
STRATEGIC LEADERSHIP: MANAGING THE STRATEGY-MAKING PROCESS FOR

COMPETITIVE ADVANTAGE
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LEARNING OBJECTIVES
 Explain what is meant by competitive advantage.
 Discuss the strategic role of managers at
different levels within the organization.
 Identify the primary steps in a strategic planning
process.
 Discuss the common pitfalls of planning and how
those pitfalls can be avoided.
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2
LEARNING OBJECTIVES
 Outline the cognitive biases that might lead to
poor strategic decisions, and explain how these
biases can be overcome.
 Discuss the role strategy leaders play in the
strategy-making process.
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.
SUPERIOR PERFORMANCE
 Profit growth - The increase in net profit over
time, achieved by:
 selling products in rapidly growing markets.
 gaining market share from rivals.
 selling more to existing customers.
 expanding overseas or diversifying into new businesses.
 To boost profitability and profit growth,
managers must:
 use strategies to give their company a competitive
advantage over rivals.
 deliver high profitability and sustainable profit growth.
COMPETITIVE ADVANTAGE
 Occurs when a company’s profitability is greater
than the average profitability of firms in its
industry.
 Sustained competitive advantage – A company’s
strategies that enable it to maintain above-
average profitability for a number of years.
WHAT DO YOU THINK?
Apple being one of the most valued brands in the

world rolled out new iPhone and the company has
been operating less profitably than Oppo, which is
a rather new mobile phone brand.
Which brand has competitive advantage?
BUSINESS MODEL
 Conception of how strategies should work
together as a whole to enable the company to
achieve competitive advantage.
 Deals with how a company:
 selects, acquires, and keeps its customers.
 defines and differentiates its product offerings.
 creates value for its customers.
 produces goods or services and delivers to the market.
 lowers costs and organizes its resources and activities.
 achieves and sustains high profitability and growth.
BUSINESS MODEL (EG. RESTAURANT)
FAST FOOD FAST CASUAL
CASUAL DINING FINE DINING

TYPES OF RESTAURANTS (BY CUISINE)
CHINESE MALAY
ENGLISH ARABIAN
STRATEGIC MANAGEMENT
General managers
• Bear responsibility for a company’s overall performance or

for one of its major self-contained subunits or divisions.
Functional managers
• Responsible for supervising a particular function, task,

activity, or operation.
Multidivisional company
• Competes in several different businesses and has a separate

self-contained division to manage each.
EXAMPLES THE 3 STRATEGIC LEVELS
Corporate Level
BIBD
Business Level
Corporate, Consumer, Trade Finance
BIBD At-Tamwil, BIBD Securities, Takaful Brunei
Functional Level
HR, Card, Marketing, IT, etc.
STEPS IN A FORMAL STRATEGIC
PLANNING PROCESS
1. Select the corporate mission and goals.
2. Analyze the organization’s external competitive
environment and internal operating
environment.
3. Select strategies that:
I. build on the organization’s strengths and correct it’s
weaknesses.
II. are consistent with the organization’s mission and
goals.
III. are congruent and constitute a viable business model.
4. Implement the strategies
©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
COMPONENTS OF A MISSION
STATEMENT
Mission
• Purpose of the company, or a statement of what the company strives to

do.
Vision
• Articulation of a company’s desired achievements or future state.
Values
• Statement of how employees should conduct themselves and their

business to help achieve the company mission.
Establishing major goals
• Goal - Precise and measurable desired future state that a company

attempts to realize.
EXTERNAL AND INTERNAL ANALYSIS
 External analysis identifies strategic opportunities
and threats that will affect how an organization
pursues its mission.
 Involves examination of the:
 industry environment in which the company operates.
 country or national environment.
 macroenvironment.
 Internal analysis focuses on reviewing the
resources, capabilities, and competencies of a
company.
 Goals identify the company’s strengths and weaknesses.
SWOT ANALYSIS
 Comparison of strengths, weaknesses,
opportunities, and threats.
 Purpose - Identify the strategies to:
 exploit external opportunities.
 build on and protect company strengths.
 eradicate weaknesses and counter threats.
 Goals - Affirm a company-specific business
model.
 To align, fit, or match a company’s resources and
capabilities to the demands of its environment.
SWOT ANALYSIS
(Source: bcchealthcarebranding.com/swot.php)
SWOT ANALYSIS (EG. RESTAURANT)
Strengths
- good to high-rated chef
- variety of menu
Weaknesses
- few employees
- simple design and layout
Opportunities
- potentially low to middle income customers
- Asian cuisines in demand
Threats
- numerous restaurants
- regulatory issues
SWOT STRATEGIES
 Functional-level strategies - Directed at
improving the effectiveness of operations within
a company.
 E.g. food menu, tables arrangement, etc.
 Business-level strategies - Encompass the
business’s overall competitive theme.
 How it positions itself in the marketplace to gain a
competitive advantage.
 Different position strategies that can be used in
different industry settings.
 E.g. open another outlet, shift location, etc.
SWOT STRATEGIES
 Global strategies - address how to expand
operations outside the home country.
 Since competitive advantage is determined at a global
level.
 Corporate-level strategies determine:
 the businesses a company should be in to maximize
profitability and profit growth.
 how to gain a competitive edge.
 E.g. set up new business, form alliances, etc.
STRATEGY IMPLEMENTATION AND
FEEDBACK LOOP
 Strategy implementation
 Taking action at the functional, business, and corporate
levels to execute a strategic plan.
 Designing the best organization structure, culture, and
control systems to put a chosen strategy into action.
 Feedback loop - Provides information to the
corporate level on the:
 strategic goals that are being achieved.
 degree of competitive advantage being created and
sustained.
SCENARIO PLANNING
 Formulating plans that are based on “what-if”
scenarios about the future.
 Encourages managers to:
 think outside the box and be more flexible.
 anticipate probable scenarios.
 Ivory tower planning - Recognizes that
successful strategic planning encompasses
managers at all levels of the corporation.
SCENARIO PLANNING (EG. RESTAURANT)
Scenario 1 (Fine Dining)
- Masterchef
- Upscale setting
Scenario 2 (Casual Dining)
- Lower grade chef
- Waiters
Scenario 3 (Fast Casual)
- Lower grade chef
- Less employees with counter service
Scenario 4 (Fast Food)
- Similar to Scenario 3
CHARACTERISTICS OF GOOD STRATEGIC
LEADERS
 Vision, eloquence, and consistency
 Articulation of a business model
 Commitment
 Being well informed
 Willingness to delegate and empower
 Astute use of power
 Emotional intelligence
 Self-awareness, self-regulation, and motivation
 Empathy and social skills

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CHAPTER 1

STRATEGIC LEADERSHIP: MANAGING THE STRATEGY-MAKING PROCESS FOR

Apple being one of the most valued brands in the

Which brand has competitive advantage?

FAST FOOD FAST CASUAL

CASUAL DINING FINE DINING

• Bear responsibility for a company’s overall performance or

• Responsible for supervising a particular function, task,

• Competes in several different businesses and has a separate

• Purpose of the company, or a statement of what the company strives to

• Articulation of a company’s desired achievements or future state.

• Statement of how employees should conduct themselves and their

Establishing major goals

• Goal - Precise and measurable desired future state that a company

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