Strategic Management And Leadership Based Structure

Strategic Management is defined as the “process by which organization’s objectives are set, policies are developed and plans are laid out to achieve these objectives”. This requires the management to allocate resources to implement the plans. Essentially, this refers to the top echelon of management in an organization which strives to provide the overall direction of the whole enterprise to achieve their set targets and goals. These responsibilities are usually performed by their Chief Executive Officer (CEO) and the executive team, guided by organizational mission and vision statements.

The strategic management is the on-going process that can be broken down into several stages. First and foremost, a plan (strategy formulation) is established whereby the functions or purpose of an organization is identified. This helps to shape and implement the broad objectives of the organization. It involves identifying the companies’ strategic advantages and core competencies, whether to focus customer service, gross margin, research and developments and the ideal strategy to best deploy their resources to achieve their objectives.

What is Leadership?

Leadership within an organization, in essence, is the action of leading a group of people or an organization, in the sharing and communicating of a vision to a large group of people. Leadership often comes in many different styles, accordingly to the varied situations. In this instance, these styles could vary depending on the situation, objectives, and the group setting. According to Yukl, this first style refers to situational leadership which is a style that is reliant on the task/situation. The following is transactional leadership whereby the leader is guided by the objectives and adapts accordingly to meet his/her goals. Furthermore, we have participative leadership which is a style that involves collaboration of employees to collectively provide input to achieve their task. And finally, we have transformational leadership is involves inspiring and motivating employees to share a common vision or goal.

How is Strategic Management linked with Leadership?

One might ponder the relationship between Strategic Management and Leadership. Managers today are filled with many responsibilities and objectives that can’t simply be tackled with a single attitude or leadership style in today’s complex marketplace. As the boundaries of countries gradually fade with increasing globalization, “the underpinnings of strategic management hinges on managers’ understanding of competitors, markets, prices, suppliers, distributors, governments, creditors and shareholders, and customers worldwide”. Thus, it is important for leaders to formulate a strategy to communicate their mission or vision statement and enable the successful execution of their business activities. This process is concerned with setting the long-term goals and objectives, which involves several considerations such as:

Allocation of resources

Business to explore, invest, and exit

Joint ventures or mergers

Expansions plans, moving into foreign markets

Strategic Management is tied to leadership in particularly in the implementation process whereby a firm establishes their annual objectives, devise policies, and set aside resources to ensure the successful execution of strategies. This involves devising a strategy to instill a supportive culture, “creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information system and linking employee compensation to organizational performance”. In this implementation process, management would require employee commitment to follow-through with tasks/project to ultimately reach desired goal and outcomes. This is when leadership comes to the fore when employees lean on managers for their leadership and their ability to best utilize their skills and capabilities. Moreover, this includes the efficient use of resources to solve problems, and deliver solutions in place. This link between strategic management and leadership hinges on the use of different leadership styles to make the best of human capital to help the organization succeed.

Management and Leadership styles – Impact on strategic decision

Royal Dutch Shell

Royal Dutch Shell (Shell) is a global oil and gas company headquartered in the Netherlands with registered offices at the Shell Centre in London, United Kingdom. It is the world’s second-largest oil company measured by revenues ($285billion) and is one of the six oil and gas “supermajors”. Shell operates a global business and has operations in “more than 100 countries and employs more than 102,000 people worldwide”. Founded in 1907, the company has grown substantially in a move to gain a competitive advantage with the dominant American petroleum company, Standard Oil.

Shell’s strategy and priorities for the future are to engage in “more upstream and profitable downstream”. “‘Upstream’ refers to the ways that Shell uses to find and extract conventional fuel out of the ground, while ‘downstream’ refers to the process of passing these fuels through refineries and on to consumers, in both instances, in a socially responsible way”. Shell’s leadership in helm is Chief Executive Officer (CEO), Peter Voser. He is reputable in the industry for being a great strategic thinker, a leader that leads through other people and character that would unlikely break Shell’s traditionally consensual leadership style. He is a firm believer of safety and returning to the society, he once said: “A good safety performance maximizes not only our company performance, but also our position impact on how our employees and the local community see us”. Mr. Voser is also passionate about investing in the development of graduates with ambition and creativity to inject fresh thinking and bring about change. His style is to instill a set of core values – honesty, integrity and respect for their people and foster an environment of trust, openness, teamwork and professionalism.

Noble Group

Noble Group is Asia’s largest diversified commodities trading company. It is a “market leader in the management of the global supply chain of agricultural, industrial and energy products”. In a mere two decades, the business has grown to become a world leader in supply chain management and a particularly niche “in the origination and delivery of strategic raw materials”.

Noble’s entrepreneurial origins are an important part of their defining characteristic as an organization. The company advocates seeking out and pursuing opportunities, and pride themselves in their humble beginnings to become a global player in the commodity space it is today. Founded in 1987 by Richard Elman, CEO and Founder of Noble Group, Richard Elman embodies the true definition of what entrepreneurship is about. He has earned a great deal of respect and a reputation for himself, known for being a realist, a visionary, and continues to preach his humble roots to this day: “Our biggest risk remains ourselves. We simply cannot rest on our laurels, or deviate from what we do best. We have the right people in the right places and continue to open our doors to other promising talent. Now is the time to continue to execute as flawlessly as possible and to stay focused. We focus on evolution – not revolution.”

This is a leader that is an inspirational leader, and leads by example. In a mere 21 years, he has transformed and grown Noble Group from his initial $100,000 of his own money into a $15 billion supply chain management business with offices in over 40 countries. A self-admitted failure in school with no great ambition, he entered the commodity business because he thought it was a fun thing to do while enjoying his youth. In his business, he believes in people that are committed, talented and passionate about making things happen. His style is to instill his vision and motivate his employees with words of wisdom. A firm believer of people, he is known to say “a business is only as strong as the people who run it, and we strive to attract and retain the best talent”.

Task 2

Leadership styles adapted to different situations

In this day and age of modern society, competition exists in every scope of business and in this struggle to garner more efficiency and profitability, a good management team can certainty make all the difference. It is no secret that organizational leaders today are confronted with dozens of complex issues. Their success is tied to their ability to motivate their employees and deal with issues in the most effective way. In order to do this, leaders would need to adapt their leadership styles to suit the needs of the organizations in which they function. This is arguably one of the hardest things to realize. But I do believe that when one is faced with an intricate situation involving people of different backgrounds, different leadership styles should be adopted to address these different situations. In general, there are three classic types of leadership style:

The Laissez Faire Leadership Style

The Autocratic Leadership Style

The Participative Leadership Style

“One dimension of leadership style concerned with the control and the perception of how much control one should give to people”. The Laissez Faire leadership style infers a relatively lose form of control where much autonomy is given to employees, while the Autocratic leadership style is the direct opposite, and the Participative Leadership Style s somewhat in between. In my research carried out on Royal Dutch Shell and Noble Group, the leadership styles adapted in different situations can be clearly presented in this table:

Royal Dutch Shell

Business Functions

Leadership style adopted

Shell’s core mandate to focus on its strategy of “More Upstream, Profitable Downstream.”

Autocratic leadership style where a directive from the top is given in their implement of their strategy.

Set priorities for its businesses to secure growth, and to consistently deliver in all its operations and projects.

Participative leadership style should be adopted here whereby its operational efficiency and projects are monitored with consistency and through feedback loop, so teams could cohesively work towards achieving the targets.

Shell working towards delivering cleaner energy and play a part in securing a new low-carbon energy future.

Laissez Faire leadership style is adapted here since this involves the future which requires managers to react to the changes and developments to tackle the challenges.

Meet rising energy demand with lower CO2 emissions and play a part in encouraging effective CO2 policies.

Participative leadership style should be adopted here whereby this situation requires working together with governments and sharing technical know-how.

Noble Group

Business Functions

Leadership style adopted

Noble’s core strategy to pursue a “hands on” approach to business.

Participative leadership style that see employees at every level working together cohesively to get to their objective.

To build a diversified network of “asset-medium” supply pipelines, overseen by experienced professionals with specialized industry knowledge.

Autocratic leadership style where a directive from the top is given in their implement of their strategy.

Integrate their logistics services together to fulfill a critical role in their pipeline strategy, to ensure smooth and reliable transfer and delivery of raw materials.

Participative leadership style should be adopted here whereby this involves working together through following a framework to meet the objectives of the logistical needs.