Strategic leadership is the process of directing and offering a vision for improving organizational performance. It is strategic management of implementing a strategy for managing change and creating a sense of direction in the global competitive business. Effective leaders should provide a strategic direction for transforming the organization in order to achieve success. They should analyze the significant initiatives to be taken by the top leaders in the company, and integrate resources in order to create organization change. Denis, Langley and Rouleau (2010, p.67) argue that strategic leaders should change their skills through implementing unique strategies that will enable them to meet the demanding needs of an organization in today’s changing business world. Michael Porter and Gary Hamel offer varied disciplines that managers or leaders should practice in order to achieve success in the global changing business. Therefore, they have employed varied approaches to the paradox of the market and resources, but organizational circumstances or the changing business world affects the choice of strategic leaders when employing their approaches.
Porter and Hamel offer varied approaches that strategic leaders should follow, but some of their approaches would affect the choice of strategic decisions because of the ever changing business environment. One of the approaches employed is the industrial organization in achieving a competitive advantage in a business entity. Hamel, the American economist in management came up with a core competency management concept in order to achieve a competitive advantage. This concept takes varied forms including technical matter of knowhow and close relationship with clients. It also takes into consideration product development or cultural aspects through employee dedication towards creating a successful business environment. The core competency strengthens the industrial relation with other organization and offers fundamental basis for adding value to products.
Moreover, Hamel emphasizes that the core competency should enable strategic leaders to employ asset of effective skills or design techniques in order to deliver value to their clients. However, the core competency may affect the deliberate decision of leaders in the current business setting. This is because many companies are nowadays employing customer value approach as a way of achieving a competitive advantage. They emphasize on creating product value that satisfies the needs of customers; thus enabling them to become leaders in the global market (Pongsakornrungsilp and Schroeder 2011, 319). Hamel emphasize that the core competencies contributes to the advancement of worth products that meet the needs of customers. The core competency is effective because it is developed continuously with varied organizational improvements overtime.
Hamel further use the industry organization approaches in explaining the way strategic leaders can achieve the core competency. The industrial organization method is a based on the financial theory which deals with competition, distribution of resources and economies of scale issues. The hypotheses behind these approaches are the rationality aspects, profit maximization and self discipline behaviors in the work environment. This approach is essential because leaders in the current changing business environment should understand the core competency in an industry. They should predict the future challenges and business opportunities in order to help them stay top in any varying business situations. Hamel reveals that the core competencies are developed through constant changes of brands in order to meet the demanding needs of customers in the changing business world. Therefore, in order for organizations to succeed in the emerging global market economy, they should create the core competencies instead of vertical integration (Masterson and Pickton 2010, p. 211).
Another approach is the sociological approach and deals with the issues of human interactions in an organization in order to create an effective business environment. The rationale behind this approach is the bounded rationality and satisfaction behaviors with an aim of creating organizational success. Hamel attempt to reveal effective management is a significant tool for mobilizing resources to produce effective results. The management model date back to the 19th century. It was designed with an aim of solving overriding problem in the business environment. It takes into considerations the way leaders can increase organizational efficiency, but this model is challenging in the changing business world. Therefore, strategic leaders should reinvent management in a manner that can make organizations to employ innovative approaches and inspire employees to become productive (Lipman-Blumen 2000, p. 69). Hamel tries to reveal tools that successful leaders should utilize to mobilize resources to achieve significant result is the business environment. Therefore, employing management tool and improving the capacity to manage resources will contribute to successful organization performance.
The most influential strategy for achieving a competitive advantage was developed by Michael Porter. The five forces analysis became the common strategy for shaping the strategic business environment in order to achieve a competitive advantage. This analysis is similar to SWOT analysis in terms of structure and function. They reveal the way an industry can apply them to achieve sustainable business competitive advantage (Armstrong, Kotler and Armstrong 2011, p.34). The 5 forces analysis is a framework employed for industrial analysis. They are employed under the industrial approach to reveal the way strategic leaders can compete with their competitors in the global business environment.
In addition, the five force analysis draw upon the industrial organization economies towards determination of the competitive intensity; thus attracting marketing activities. The market attractiveness in a real context means the achievement of increased industrial profitability. Every industry strives to achieve a competitive advantage in order to increase their profits. This is because the main aim of the industry is to maximize profits through offering effective services that will enable them to achieve a competitive advantage. Therefore, Porter reveals the way strategic leaders can employ industrial organization approach to create a competitive business environment; thus increasing revenues. Unappealing business would become pure competitive, and they would attain standard profits.
Porter’s five force analysis used in the industrial organization approaches is viewed from the external forces. Others are vied from the internal threat aspects, but the most preferred forces are viewed from the micro-environment in contrast to the macro environment. These forces are close to industrial activities that may affect the ability of strategic leaders towards making effective decision of serving customers. Many strategic leaders in the cotemporary business environment employ Porter’s five forces with an aim of achieving a competitive advantage. For instance, many companies such as MacDonald and other American corporations employ this approach in analyzing the business industry; thus determining the internal and external factors that may impact effective business performance. The change in any of the forces may affect strategic decisions of leaders because of the ever changing business world. Many industries examine the internal and external environment in order to implement effective strategies, which will enable them to respond to any impacts affecting effective business performance.
Dess (2012, p. 79) argues that industries apply the core competency and employ effective business model in order to achieve high revenues above business average. For instance, the case of the airline industry is one of the companies whereby leaders apply unique business model to achieve high profitability. The business model examines the underlying principle on the way business can deliver and generate value as well as other forms of value. The business model is part of strategic a management employed as a business strategy for achieving organizational needs. It takes into considerations the core aspects including the organizational structure, business practices and organizational policies. Although, business model employed in the business industry man affect the strategic decision of managers, but leaders need to align them with the changing business world. It is significant to employ particular business strategies or models that can create value and capture the mechanism employed in an entity. Therefore, it should define the way through which an entity delivers value to customers (Gronroos 2010, p.12). It will also reflect the hypothesis of management on things customers want and the way organization will deliver the services.
The five forces of Porter are based on the industrial organization approach; thus t erection of SWOT analysis became popular in the contemporary business world. This concept has been used in a wide range of solving business problems in order to help industries achieve high profitability and stabilize business environment. For instance, many companies employ SWOT matrix, which is structured approach for evaluating or analyzing the strength, weakness, opportunities and threat impacting effective organization performance. The SWO analysis can impact the strategic decision made by organization leaders, and it takes into consideration the product, environment and people. Brassington and Pettitt (2003, p. 89) argue that SWOT analysis is one of the effective approaches for analyzing the internal and external environment; thus enabling organization leaders to respond faster to organization needs. This is essential because it enables an industry to implement proper strategies for achieving competitive advantage. The decision makers should carry out analysis to determine in case the stated objective would be attainable prior to use of SWOT analysis. This is because of the changing business environment; thus SWOT analysis users should generate effective answers that will generate meaningful information.
Dessler (2012, p.34) reveals that strategic management as a bottom up approach or collaborative approach is vital for managing and improving organizational performance. Organization employs different approaches such as collaborative approach in leveraging the advancement of information technology. Other employ bottom up or top down approach meet the organizational needs. The research study indicates that knowledge management in any organization is crucial because it enables managers to manage organization information and create a common objective towards successful organization performance (Daft and Dorothy (2012, p.122). Although strategic divisions may impede the process, the notion of strategic management through proper integration of strategy formulation creates successful business performance in the global business world.
Kotler and Keller (2005, p. 123) reveal that managerial work is increasingly a leadership task and leadership task operate through a complex web of dependent relationships; thus managerial worth is increasingly becoming a game of informal independence. Therefore, the leaders in the current business atmosphere encounter diverse challenges in managing organizations. Even though, they have effective leadership skills, it is often difficult for them to address organizational issues unless they implement effective strategic or approaches towards effective decision making. Leaders should encourage their followers at all levels to integrate their inventory and resources for effective business growth or success. Porter reveals many strategies that leaders should employ in order to become successful. However, in the business a changing world, leaders need to change their leading and strategic skills in order to align with the changing business world.
Moreover, many economists constantly emphasize that people are the most valuable resources in an organization and their effective performance is the key towards organization performance. Therefore, leaders should employ effective strategies that can enable them to manage people as organization asset; thus enabling them to become productive. Northouse (2007 p, 78) reveals that leadership strategy should be related to the organization strategies or goals. They should join the values of the business and the organizational objectives as well as the culture of an entity. Organizational culture is critical aspects that can impact better organizational performance in case leaders do not take it into considerations effectively. Therefore, strategic leaders should emphasize on organizational culture and offer training programs to enable people meet the organizational needs effectively.
Young and Burgess (2010, p.115) argue that technology advancement has contributed to varied ways through which many organization perform business to achieve a competitive advantage. Many industries nowadays utilize technology in order to create value for both product people and other organizational resources. Although, Hamel and Porter attempt to emphasize on the core competency and varied approaches of improving performance, globalization has affected the way many business perform their business. Many industries attempt to integrate technology with an aim of improving value and increasing productivity. However, many of them lack effective skills on the way they should integrate technology to create a competitive advantage. For instance, numerous companies use electronic marketing in order to reach customers and reveal to them the brand products they offer in the market. However, due to poor integration of technology, many of them have ended up operating at high cost; thus failure to achieve successful business performance.
The use of industrial organization and sociological approaches are effective I business performance, but they may affect the strategic decisions employed by management leaders. This is because leaders have varied skills and other employs their own strategies in managing organizational resources. The business environment is changing every day; thus leaders are also making efforts of implementing innovative ideas in order to create a successful business environment. Therefore, effective leaders should set effective goals and manage people because they are a significant asset for creating organizational change. Hellriegel and Slocum (2010, p. 33) argue that successful leaders can motivate followers and create a smooth working environment. This is essential because it will enable employees to work effectively towards meeting the demanding needs of customers; thus contributing to achievement of competitive advantage.
In conclusion, Porter and Hamel’s approaches to market ad resources are effective, but they affect the strategic decision of leaders in the changing business world. This is because leadership decision is dynamic and it changes depending on the changes in the business environment. One of the approaches put forward by these two management economist is the industrial organization approach. This is where they emphasize on the core competency concept in order to enable organizational to achieve a competitive advantage. Many organizations strive to achieve competitive advantage; thus many of them employ the five forces of Porter and Hemel’s core competency concept in order to improve organizational profitability. Another approach is sociological approach, and this involves effective interaction with people through employing significant management tool; thus achieving effective organizational performance.
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