Chapter 2: Strategic Leadership: Managing the Strategy Process

Question 1

Define “strategic management process.”

Answer 1

method put in place by strategic leaders to formulate and implement a strategy, which can lay the foundation for a sustainable competitive advantage.

Question 2

Define “strategic leadership.”

Answer 2

executives’ use of power and influence to direct the activities of others when pursuing an organization’s goals.

Question 3

What is the first step in the strategic management process?

Answer 3

define the firm’s vision, mission, and values.

Question 4

What are the key aspects of an effective vision? (4)

Answer 4

• captures an organization’s aspiration.
• identifies what it ultimately wants to accomplish.
• motivates employees to aim for a target.
• leaves room for contributions.

Question 5

Why is a vision important? (3)

Answer 5

• employees feel part of something bigger.
• helps employees find meaning in their work.
• allows employees to experience a greater sense of purpose.

Question 6

What is a mission statement?

Answer 6

describes what a company does, the products/services it provides, and the market in which it competes.

Question 7

What is the difference between a vision and a mission?

Answer 7

Vision statements include what a company wants to accomplish. Mission statements include how the vision will be accomplished.

Question 8

What are strategic commitments?

Answer 8

actions to achieve the mission that are costly, long-term oriented, and difficult to reverse.

Question 9

What is a core values statement?

Answer 9

a 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.

Question 10

Why are values important? (4)

Answer 10

• guide behavior
• can be used by employees at all levels
• helps deal with complexity and conflict.
• provides employees with a moral compass.

Question 11

What are product-oriented vision statements?

Answer 11

Defines a business in terms of a good or service it provides. They are not flexible or need-based and can lead to a myopic view. e.g., railroad business

Question 12

What are customer-oriented vision statements?

Answer 12

Defines a business in terms of providing solution to consumers’ needs. e.g., Google: “to organize the world’s information and make it universally accessible and usable.”

Question 13

Can visions help create competitive advantage?

Answer 13

Yes- if the vision is customer-oriented, if internal stakeholders help to define the vision, and if organizational structures align with the vision statement.

Question 14

Strong ethical values have what 2 important functions?

Answer 14

1. ) lays a solid foundation on which a firm can build its vision and mission, thus laying the groundwork for long term success.
2. ) Helps keep the company on track.

Question 15

What is upper-echelons theory?

Answer 15

Posits that organizational outcomes reflect the values of the top management team.

Question 16

Leadership actions reflect…? (4)

Answer 16

age, education, experience, and personal interpretation of a situation.

Question 17

According to the upper-echelons theory, strong leadership is the result of…? (2)

Answer 17

innate abilities and learning.

Question 18

What is the Level-5 leadership pyramid?

Answer 18

a conceptual framework of leadership progression with 5 distinct, sequential levels. (good to great book).

Question 19

What is strategy formulation?

Answer 19

the part of the strategic management process that concerns choice of strategy in terms of where and how to compete.

Question 20

What is strategy implementation?

Answer 20

the part of the strategic management process that concerns the organization, coordination, and integration of how work gets done. i.e., strategy execution.

Question 21

What are the 3 distinct areas of strategy formulation and implementation?

Answer 21

Corporate strategy, business strategy, and functional strategy.

Question 22

What is corporate strategy?

Answer 22

concerns questions of where to compete in terms of industry, market, and geography.

Question 23

What is business strategy?

Answer 23

concerns the question of how to compete. Three generic business strategies are available- cost leadership, differentiation, or value innovation.

Question 24

What is functional strategy?

Answer 24

concerns the question of how to implement a chosen business strategy.

Question 25

What are strategic business units? (SBU)

Answer 25

a standalone division of a larger conglomerate with its own profit-and-loss responsibility.

Question 26

What are the 3 approaches to strategize for competitive advantage?

Answer 26

top-down strategic planning, scenario planning, strategy as planned emergence.

Question 27

What is top-down strategic planning?

Answer 27

a rational, data-driven strategy process through which top management attempts to program future success. Involves detailed analyses, monitoring, 5-year plans and correlated budgets.

Question 28

What are the shortcomings of the top-down approach?

Answer 28

-may not adapt well to change
-formulation separate from implementation
-information only flows one way (top-down).
- leaders’ future visions can be wrong
Example of top-down = Apple under Steve Jobs

Question 29

What is the scenario planning approach?

Answer 29

strategy-planning activity in which top management envisions different “what-if” scenarios to anticipate plausible futures and create strategic responses. They consider both optimistic and pessimistic futures.

Question 30

What does the formulation and implementation of the scenario-planning approach involve?

Answer 30

Formulation involves identifying strategies and contingency plans. Implementation involves choosing the strategy that best matches reality (aka dominant strategic plan).

Question 31

What is the strategy as planned emergence approach?

Answer 31

-both top-down and bottom-up. Bottom-up strategic initiatives emerge and are evaluated and coordinated by management.

Question 32

The strategy as planned emergence approach relies on…? (3)

Answer 32

• personal experience
• deep domain experience
• front-line employee insights.

Question 33

What is an intended strategy?

Answer 33

the outcome of a rational and structured top-down strategic plan.

Question 34

What is a realized strategy?

Answer 34

combination of intended and emergent strategies.

Question 35

What is an emergent strategy?

Answer 35

any unplanned strategic initiative bubbling up from the bottom of the organization.

Question 36

What is a strategic initiative?

Answer 36

any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures.

Question 37

How do strategic initiatives bubble up from deep within a firm? (3)

Answer 37

autonomous actions, serendipity, or the resource allocation process (RAP).

Question 38

What are autonomous actions?

Answer 38

strategic initiatives undertaken by lower-level employees on their own volition- usually in response to unexpected situations.

Question 39

What is serendipity?

Answer 39

random events that can have a profound impact on a firm’s strategy initiatives. e.g., viagra initially used to treat hypertension.

Question 40

What is the resource-allocation process?

Answer 40

the way a firm allocates resources based on policy. It helps to shape realized strategy.

Question 41

What is the effectiveness of a chosen strategy process contingent upon? (2)

Answer 41

1. ) The rate of change in the internal and external environments of the firm. Slow/stable firms should choose top-down.
2. ) Firm size: large firms should use top-down or scenario planning. For example, a nuclear power plant can use a top-down approach, but also use scenario planning to prepare for black swan events.

Question 42

Fast-moving companies like Google or Facebook should use which strategy process?

Answer 42

strategy as planned emergence.