Chapter 2

Question 1

What is strategic leadership?

Answer 1

Strategic leadership pertains to executives’ use of power and influence to direct the activities of others when pursuing an organization’s goals. In other words, power refers to the strategic leader’s ability to influence the behavior of other organizational members to do things, including thins they wouldn’t do otherwise.

Question 2

What do strategic leaders do?

Answer 2

Studies have found that leaders spend 67% of their time in meetings, 13% working alone, 7% on email, 6% on phone walls, 5% on business meals and 2% on public events. These studies also show that CEO prefer oral communication over the use of technology

Question 3

Whats the upper-echelons theory?

Answer 3

The upper-echelons theory is a conceptual framework that views organizational outcomes – strategic choices and performance levels – as reflections of the values of the members of the top management team. It favors the idea that effective strategic leadership is the result of both innate abilities and learning.

Question 4

Whats the pattern of the Level 5 leadership pyramid?

Answer 4

Level 1: Highly Capable Individual
Level 2: Contributing Team Member
Level 3: Competent Manager
Level 4: Effective Leader
Level 5: Executive

Question 5

What 2 parts does the strategy process consist of?

Answer 5

1. Strategy Formulation

2. Strategy Implementation

Question 6

What are the three areas of strategy formulation & implementation?

Answer 6

(1) Corporate strategy
(2) Business strategy
(3) Functional strategy

Question 7

What is corporate strategy?

Answer 7

(1) Corporate strategy, which concerns questions relating to where to compete as to industry markets, and geography.

Question 8

What is business strategy?

Answer 8

(2) Business strategy, which concerns the question of how to compete within strategic business units (SBUs) – standalone divisions of a larger conglomerate each with their own profit-and-loss responsibility. With guidelines from the corporate headquarters they formulate appropriate generic business strategies such as: cost leadership, differentiation, or value innovation.

Question 9

What is functional strategy?

Answer 9

(3) Functional strategy, which concerns the question of how to implement a chosen business strategy. Within each SBU are various business functions (such as accounting, finance, human resources, …) for which a functional manager is responsible as well as the decisions and actions within it. Different corporate and business strategies will require different activities across the various functions.

Question 10

Whats the strategic management process?

Answer 10

The strategic management process is a method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage. When setting it, strategic leaders rely on three approaches: strategic planning, scenario planning and strategy as planned emergence.

Question 11

What is top-down strategic planning?

Answer 11

Top-down strategic planning is a rational, data-driven strategy process through which top management attempts to program future success. All strategic intelligence and decision-making responsibilities are concentrated in the office of the CEO, which leads the company.

Question 12

What is scenario planning?

Answer 12

Scenario planning is a strategy planning activity in which top management envisions different what-if scenarios to anticipate plausible futures in order to derive strategic responses. This method adds to the top-down approach as it anticipates plausible futures in order to derive strategic responses. These scenarios can be very global or very specific. For example, some scenarios can be: being the target of a terrorist attack.

Question 13

Whats a dominant strategic plan?

Answer 13

The strategic option that top managers decide most closely matches the current reality and which is then executed. If the situation changes, managers can quickly retrieve and implement any of the alternative plans developed in the formulation stage.

Question 14

Whats the Illusion of control?

Answer 14

A tendency by people to overestimate their ability to control events

Question 15

Whats the planned emergence model?

Answer 15

A strategy process in which organizational structure and systems allow bottom-up strategic initiatives to emerge and be evaluated and coordinated by top management.

Question 16

Whats an intended strategy?

Answer 16

The outcome of a rational and structures top-down strategic plan. These are likely to fall by the wayside because of unpredictable events and turn into unrealized strategy.

Question 17

Whats a firms realized strategy?

Answer 17

A firm’s realized strategy is formulated through a combination of intended strategy and bottom-up emergent strategies – any unplanned strategic initiative bubbling up from the bottom of the organization.

Question 18

What are strategic initiatives?

Answer 18

Strategic initiatives play a big role in the strategy as planned emergence model. They refer to any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures. They can come from anywhere; they can be the result of top-down planning by executives, or they can also emerge through a bottomup process.

Question 19

What are autonomous actions?

Answer 19

Autonomous actions are strategic initiatives undertaken by lower-level employees on their own volition and often in response to unexpected situations.

Question 20

What is serendipity?

Answer 20

Serendipity refers to any random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm’s strategic initiatives.

Question 21

Whats the RAP (ressource allocation process?)

Answer 21

The resource-allocation process (RAP) is the way a firm allocates its resources based on predetermined policies, which can be critical in shaping its realized strategy

Question 22

What is stakeholder strategy?

Answer 22

Stakeholder strategy is an integrative approach to managing a diverse set of stakeholders effectively in order to gain and sustain competitive advantage.

Question 23

Whats the stakeholder impact analysis?

Answer 23

The stakeholder impact analysis provides a decision tool with which managers can recognize, prioritize, and address the needs of different stakeholders, enabling the firm to achieve competitive advantage while acting as a good corporate citizen.

Question 24

What are the three most important stakeholder attributes?

Answer 24

(1) Power. A stakeholder has power over a company when it can get the company to do something that it would not otherwise do.
(2) Legitimacy. A stakeholder has a legitimate claim when it is perceived to be legally valid or otherwise appropriate.
(3) Urgency. A stakeholder has an urgent claim when it requires a company’s immediate attention and response.

Question 25

What are the 5 steps towards the stake holder analysis?

Answer 25

1. Who are our stakeholders?
2. What are our stakeholders interests and claims?
3. What opportunities abd threats do our stakeholders present?
4. What economic, legal, ethical and philantrophic responsibilities do we have towards our stakeholders?
5. Address stakeholder concerns – “What should we do to effectively address the stakeholder concerns?”

Question 26

What are the four components of corporate social responsibility?

Answer 26

1. Economic responsibilities. A firm must pay back its debt, pay suppliers and employees, pay taxes,… to accomplish all of this, a firm must obey the law and act ethically in their quest to fain and sustain competitive advantage.
2. Legal responsibilities. Laws and regulations are a society’s codified ethics, embodying notions of right and wrong. They establish the “rules of the game.” Strategic leaders must ensure that their firms obey all the laws and regulations, including but not limited to labor, consumer protection, and environmental laws.
3. Ethical responsibilities. As law only define the minimum acceptable standards of firm behavior, strategic leaders are asked to go beyond what is required.
4. Philanthropic responsibilities. This refers to the notion of voluntarily giving back to society, which is also known as corporate citizenship.

Question 27

What are the three dimensions of Pepsis vision?

Question 27

What are the three dimensions of Pepsis vision?

Answer 27

(1) Human sustainability. Indra wants to make PepsiCo healthier. She aims to do this by developing more the healthy brands it owns but also making the other healthier. Her goal is to increase PepsiCo’s revenues from nutritious foods, substantially as detailed in her 2025 Performance with Purpose agenda.
(2) Environmental sustainability. PepsiCo’s goal is to achieve a net-zero impact on the environment. To do so, they ensure that their operations don’t harm the natural environment, the company has programs in place to reduce water and energy use, increase recycling, and promote sustainable agriculture.
(3) The whole person at work. PepsiCo wants to create a corporate culture in which employees can also have a life in addition to making a living. Nooyi believes that this allows employees to unleash both their mental and emotional energies.