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Author: Gideon Gono
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Leadership And Strategic Management
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  SECTION 1:

1. Introduction and Background

1.1. Strategic management, popularized during the 1980s, is a
term that covers enterprise ­ wide strategy formulation,
implementation, and evaluation. The subject of strategic
management has become integral to the success or failure of
organizations, especially now when the business environment
demands rapid monitoring, analysis and accurate
interpretation.

1.2. Any organization, whether profit oriented or not is created
for a purpose and it needs resources namely: human,
equipment, intellectual, financial, informational and others to
realize its goals. In addition, a lot of information from many
sources needs to be considered to understand the organization
and its environment so that effective action is taken. There
are numerous outside interests that affect it too. Finlay (2000)
notes that, someone or much more likely a group of people,
must handle this complexity, and the ambiguity that is often
3



associated with information from multiple sources and be
responsible for the overall direction of the organisation.
1.3 Strategic management is the solution and it is explained as a
process through which organizations analyse and learn from
their internal and external environments, establish strategic
direction, create strategies that are intended to help achieve
established goals, and execute those goals, all in an effort to
satisfy key organizational stakeholders (Harrison, 1998).
Strategic management is different from other aspects of
management (Johnson and Scholes, 2004). It emphasizes the
growing significance of environmental impacts on
organizations and the need for organizational leadership to
react appropriately to them. Organ (1971) has observed that
there is a growing suspicion that the more relevant criterion
of organizational effectiveness is not, as it used to be, that of
efficiency, but rather that of adaptability to changes in the
environment. Although strategic management in Schendel and
Hatten (1972)s terms, emphasizes adaptation to the
environment, it does not neglect management of internal
affairs. Finlay (2000) advises that, the responsibility for the
overall direction of the organization sums up what strategic
management is all about. It involves the development of an
organisations mission, setting objectives, forming a strategy,
4



implementing and executing the strategic plan and evaluating
performance. Specifically, it is concerned with complexity
arising out of ambiguous and non-routine situations with
organization-wide implications (Johnson and Scholes, 2004).

1.4 But what are the origins of strategic management?
Management writers agree that strategic management evolved
from the field of planning. According to Mintzberg (1994), as
planning efforts at major companies grew and became more
formalized at corporate level in the 1970s and early 1980s,
focus shifted from emphasizing financial planning to more
issue ­ oriented planning. Early (1990) and Noyes (1985) noted
that as the 1980s progressed, there was a further shift from
focusing on plan development to focusing on plan
implementation, and from centralised planning to decentralized
planning. With the shifts in emphasis, Mockler (1997), advises
that the term ,,strategic management instead of ,,strategic
planning was used more and more in business to describe
this evolving process, especially as greater attention was paid
to implementation considerations.

1.5 It emphasizes concern and sustained well-being of organizations.
Why? Because according to Thompson and Strickland (1996),
5



strategic management 1) provides guidance to the entire
organization on the crucial point of ,,what it is we are trying
to do and to achieve, 2) make managers more alert to the
winds of change, new opportunities, and threatening
developments, 3) providing managers with a rationale for
evaluating competing budget requests for investment capital
and new staff ­ a rationale that argues strongly for steering
resources into strategy ­ supportive, results ­ producing areas,
4) helping to unify the numerous strategy - related decisions
by managers across the organization and, 5) creating a more
proactive management posture and counteracting tendencies
for decisions to be reactive and defensive.

1.6 As organizations face an uncertain, chaotic, and unforgiving
business environment, these issues outlined above by
Thompson and Strickland can only be realized by companies
with sound organizational leadership. The leadership that is
critical here is transformational leadership as opposed to
transactional leadership. In transformational leadership, leaders
are expected to accurately interpret the goings on in the
environment and take appropriate actions to exploit the
opportunities created by uncertainty. These leaders are risk
takers, love change, stay ahead of the change curve, redefine
6



their industries (Gibson, 1998), great communicators, team
players, technology masters, problem solvers, change makers
and foreign ambassadors (Lewis, Goodman and Fandt, 2001).
They are not the masters of the status quo as is the case
with the transactional leaders. This suggest that the role of
leadership (transformational) in the strategic management
process is integrative and hence success or failure hinges on
,,the drivers of the organisation.

1.7 Empirical evidence seem to suggest that organizations that
follow the strategic management framework with
transformation leadership are high performers. As high -
performing organizations, they initiate and lead in their
respective industries, they dont just react and defend. They
launch strategic offensives to out ­ innovate and out ­
maneuver rivals and secure sustainable competitive advantage,
then use their market edge to achieve superior financial
performance according to Thompson and Strickland (1996).




7



SECTION 2:
2. 1 Theoretical Framework
2.1.1 Strategic management is an on-going activity concerned with
strategy formulation, implementation and periodic evaluation
in line with changes taking place in both the internal and
external environment. According to Thompson and Strickland
(1996), strategic management framework consist of five major
tasks as shown in Figure 1.

Task 1
Task 2

Task 3

Task 4

Task 5
Strategic Vision
Setting Objectives
Crafting
Implementing &
Evaluating
&


Strategy
Executing Strategy
Performance,
Business Mission








Reviewing
New









Developments


Revise

Revise

Improve/
Improve/

Recycle to Task
as Needed
as Needed Change As Needed Change As Needed 1,2,3,4 as needed


Figure 1: The Five Tasks of Strategic Management
Source: Thompson A.A. and Strickland A. J; Strategic Management
(Concepts and Cases), Ninth Edition, Irwin, 1996 Page 4
8



2.2 Key Tasks of Strategic management
2.2.1 The first task involves developing a strategic vision and
business mission. The mission statement explains what a
company seeks to do and to become. It defines a companys
business and provides a clear view of what the company is
trying to accomplish for its customers (Robert, 1993). On the
other hand, a strategic vision represent managements view of
the kind of company it is trying to create and its intent to
stake out a particular business position (Dobson and Starkey,
1999). By developing and communicating a business mission
and strategic vision, management infuses the workforce with
a sense of purpose and a persuasive rationale for the
companys future direction. It serves as a sound rationale for
allocating resources (Certo, 2000). Above all, management
should ensure that the organization walk and talk their
strategic direction statements.

2.2.2 The second task concerns the setting up of organizational
objectives. Managerial statements of business mission and
company direction are translated into specific performance
targets, something the organisations progress can be
measured by. Objectives which are short-term, medium ­ term
or long ­term in nature can be set to improve the financial
9



performance of the organization, its business position in the
industry and makes it more intentional and focused in its
actions (Harrison,1998). Short-term objectives spell out the
immediate improvements and outcomes management desires
whilst long-term objectives prompt managers to consider what
to do now to position the organization to perform well over
the longer term. According to Thompson and Strickland
(1996), setting up challenging but achievable objectives (top ­
down or participative approach) thus helps guard against
complacency, drift, internal confusion over what to
accomplish and status quo organizational performance.

2.2.3There are two types of performance yardsticks (Lynch, 2000)
from a companywide perspective (Thompson and Strickland,
1996): financial objectives and strategic objectives. Financial
objectives relate to such measures as earnings growth, return on
investment, cash flow and shareholder returns. These are
important because without acceptable financial performance an
organization risks being denied the resources it needs to grow
and prosper. Strategic objectives on the other hand, are needed
to prompt managerial efforts to strengthen a companys overall
business and competitive position. Examples of strategic
objectives include: growing faster than the industry average;
10



overtaking key competitors on product quality, customer service
or market share and exercising technological leadership. Strategic
objectives serve notice that management not only intends to
deliver good financial performance but also to improve the
organisations competitive strength and long ­ range business
prospects.

Examples of Strategic Objectives:
General Electric: To become the most competitive enterprise in
the world by being number one or number two in market share in
every business the company is in.
Apple Computer: To offer the best possible personal computer
technology and to put that technology in the hands of as many
people as possible.

2.2.4 The third task in strategic management is that of crafting a
strategy. This task requires that management correctly
analyze the companys internal and external environment.
,,Armed with hard analysis and a clear vision of the
companys strategic vision and business mission, management
11



devise sound strategies to achieve both the financial and
strategic objectives for the organization.

2.2.5 Thompson and Strickland (1996), notes that a companys
strategy is typically a blend of a) deliberate and purposeful
actions and b) as ­ needed reactions to unanticipated
developments and fresh competitive pressures. New
circumstances always emerge, whether important technological
developments, rivals' successful new product introductions,
newly enacted government regulations and policies and
others. There is always enough uncertainty about the future
that managers can not plan every strategic action in advance
and pursue their intended strategy without alteration (Lynch,
2000 and Robert, 1993). Company strategies end up, therefore
being a composite of planned actions (intended strategy) and
as-needed reactions to unforeseen conditions (unplanned
strategy responses). Consequently, strategy is best conceived
as a combination of planned actions and on ­ the ­ spot
adaptive reactions to fresh developing industry and
competitive events. Hence crafting a strategy is an exercise in
entrepreneurship and outside - in strategic thinking.

12



2.2.6 Thompson and Strickland (1996) advises that a company
encounters two dangers when its managers fail to exercise
strategy ­ making entrepreneurship. One is a stale strategy.
The faster a companys business is changing, the more
critical it becomes for its managers to be good entrepreneurs
in diagnosing shifting conditions and instituting strategic
adjustments. Coasting along with a status quo strategy tends
to be riskier than making modifications. Strategies that are
increasingly out of touch with market realities make a
company a good candidate for a performance crisis. A view
shared with Gibson (1998).

2.2.7 The second danger is inside ­ out strategic thinking. Managers
with weak entrepreneurial skills are usually risk ­ averse and
hesitant to embark on a new strategic course so long as the
present strategy produces acceptable results. They pay only
perfunctory attention to market trends and listen to customers
infrequently. Often, they either dismiss new outside
developments as unimportant or else study them to death
before taking actions. Being comfortable with the present
strategy, they focus their energy and attention inward on
internal problem ­ solving, organizational processes and
procedures, reports and deadlines, company politics, and the
13



administrative demands of their jobs. Consequently, the
strategic actions they initiate tend to be inside ­ out and
governed by the companys traditional approaches, what is
acceptable to various internal political coalitions, what is
philosophically comfortable, and what is safe, both
organizationally and career-wise (Thompson and Strickland,
1996; Kakabadse and Kakadadse, 2005).

2.2.8 The weaker a managers entrepreneurial instincts and
capabilities, the greater a managers propensity to engage in
inside-out strategizing, an outcome that raises the potential for
reduced competitiveness and weakened organizational
commitment to total customer satisfaction."

2.2.9 The fourth task entails strategy implementation and execution.
This demands ,,figuring out what must be done to put the
strategy in place, execute it proficiently and produce good
results. The strategy ­ implementing task is easily the most
complicated and time-consuming part of strategic management.
It cuts across virtually all facets of managing and must be
initiated from many points inside the organization. Key
aspects include as discussed by Thompson and Strickland
(1996):
14



Building an organization capable of carrying out the strategy
successfully
Developing budgets that steer resources into those internal
activities critical to strategic success
Establishing strategy ­ supportive policies
Motivating people in ways that induce them to pursue the
target objectives energetically and, if need be, modifying their
duties and job behavior to better fit the requirements of
successful strategy execution.
Tying the reward structure to the achievement of targeted
results
Creating a company culture and work climate conducive to
successful strategy implementation
Installing internal support systems that enable company
personnel to carry out their strategic roles effectively day in
and day out
Instituting best practices and programmes for continuous
improvement
Exerting the internal leadership needed to drive
implementation forward and to keep improving on how the
strategy is being executed.

15



2.2.10 The fifth task involves evaluating performance, reviewing
new developments and initiating corrective adjustments.
Thompson and Strickland (1996) advises that new
circumstances call for corrective adjustments. Long-term
direction may need to be altered, the business redefined, and
managements vision of the organisations future course
narrowed or broadened. Performance targets may need raising
or lowering in light of past experience and future prospects
(Cooper, 2005). Strategy may need to be modified because of
shifts in long-term direction, because new objectives have
been set, or because of changes in the environment. Lewis,
Goodman and Fandt (2001) have observed that realizing
developments in the environment is one thing whilst taking
the appropriate response is another. Therefore, recognizing
change is insufficient, responding proactively is essential. This
is where action minded and risk taking leadership is required
to take on issues head ­ on and not wish the challenges
away. Leadership according to Johnson and Scholes (2004),
being the process of influencing an organization (or group
within an organization) in its efforts towards achieving an
aim or goal. However, required in todays complex operating
environment is transformational leadership, which is leadership
that inspires organizational success by profoundly affecting
16



followers beliefs in what an organization should be, as well
as their values, such as justice and integrity (Certo, 2000).

2.211Transformational leadership because of the dramatic changes
that many organizations are going through and the critical
importance of transformational leadership in ,,transforming or
changing organizations successfully. Lee Iacocca is often cited
as an example of transformational leader because of his
success in transforming Chrysler Corporation from a company
on the verge of going under into a successful company.

2.3 Reasons for failures in strategic management

2.3.1 Lynch (2000), advises that some of the major reasons for
failures in strategic management include poor direction from
top management. Discussed here are issues like planning
replacing the flexibility and uncertainty needed in some
environments, deep strategic thought replaced by planning
formulae, short-term focus and financial emphasis (quarter to
quarter planning by most American companies), poor
discussion of key issues and inadequate resources allocated
for plans. Need for greater flexibility is another factor that
contributes to failure. For example, annual budget takes
17



priority, industry barriers are accepted, there is overemphasis
on procedures and form filling and sticking with rigid plans.

2.3.2 Political difficulties characterizes failing companies. Planning
was controlled by specialist staff and not by line managers
who have the responsibility. At the same time, power of
some managers was threatened by new procedures. The
corporate culture was the greatest hindrance. Most
organizations can not cope with uncertainty, put more
emphasis on financial results, are not risk takers, do not have
the entrepreneurial flair and have little tolerant of the
occasional failure.

SECTION 3:

Empirical Review

3.1 Decades ago, successful corporations and long-established
institutions were driving into the future like large luxury
sedans on a wide open freeway. They imagined they saw a
long, straight road stretching out before them into the distant
horizon, one that could be travelled in much the same way
18



as the road they had left behind. The future, it seems
belonged to them (Gibson, 1998). Strategic management
process was a straight forward exercise. Most organizations
came up with strategic plans and there were very few off-the
track behaviours as the environment and the future was a
given.

3.2 However, the lessons of the last three decades have taught us
that ,,nobody can drive to the future on cruise control. The
strategic management environment has completely changed -
getting harsher by the day. It has become very unpredictable
and characterized by chaos, complexity, dynamism, turbulence
and uncertainty. The organizations are experiencing hyper-
change to use Lewis, Goodman and Fandts terminology. In
the space of just a few years, ,,the roads that many once
thought they owned have become crowded, competitive arenas
(Gibson, 1998). Competition and markets have become fierce
and merciless, smaller companies are outsmarting giant
corporations on a global scale, customers are having infinite
access to products, services and information. According to
Gibson, (1998), business books are replete with examples of
apparently invincible corporations who fell asleep at the
19



wheel and paid a heavy price. The global computer giant,
IBM who had a near death experience is a classic example.

3.3 Lewis, Goodman and Fandt (2001) adds that as early as the
1970s, top level managers at McDonalds recognized the
trend away from eating red meat and high - fat foods.
Nevertheless, they continued to focus almost exclusively on
hamburgers and fry their French fries in animal fat. Similarly,
the three major U.S car manufacturers knew that American
public wanted smaller, more fuel ­ efficient automobiles, yet
they continued to turn out large, gas ­ guzzling cars. And
although Xerox recognized that demand for the low ­ end
copiers produced by its Japanese competitors was rising, it
continued to market only high ­ end products. In each of
these cases, managers realized that changes were occurring
but failed to react proactively. And in all these cases, they
responded only when the competition forced them to do so.

3.4 For many the punishment of taking the environment for
granted came unexpectedly from foreign competitors, who had
appeared to be insignificant dots in the rear ­ view mirror,
but who raced past to become the new industry leaders. For
example, foreign competition forced US automobile
20



manufacturers to respond to the needs of the consumer and
also it is competition from both domestic and Japanese
organizations that caused Xerox to open its eyes to the
changing marketplace. Others were overtaken by smaller,
more entrepreneurial players like Compaq Computers (formed
in 1987) who took advantage of the intersections or entry
points on to the freeway. These changes have a more
significant impact on the way organizations are managed than
did the changes of the past (Lewis, Goodman and Fandt,
2001).

3.5 Complexity and dynamism in the environment as explained
by Finlay (2000) arise in situations that are intrinsically
understood. For instance, complexity can be understood by
carrying out more detailed analysis, while dynamism can be
understood through faster analysis. Complexity and turbulence
are similar in that they describe situations where the links
between cause and effect are difficult to discern. In complex
situations, the many cause ­ and ­ effect relationships that exist
can be understood whereas in turbulent environments the
interactions between many different causes and effects make
it such that no one is in a position to make predictions. For
example, the East ­ Asias economic boom miracle that began
21



in 1997 and came to a dramatic and humiliating end is an
example of turbulence. Turbulence and chaos characterize
situations where the future is unknowable, however detailed
the analysis may be. The defining difference between
turbulence and chaos is that in chaos the general patterns are
repeated, whereas with turbulence there are no discernible
patterns to help predict the future.

The East ­ Asia Miracle
Look at the Asian financial crisis that started in Thailand and
spread to Indonesia, Malaysia and South Korea. It teaches us a lot
of lessons about this paradox of globalization and tribalism.
Lets not forget that before we had the Asian meltdown we had
the Asian miracle. We had economies that were growing at 8 or 9
percent for up to a decade or more. And what was fueling that
growth? The market mechanisms of the global economy: free
trade, the free flow of capital and relatively free markets. These
forces are not going to go away, so ultimately were going to see
the new economies get right back on track. But the crisis pointed
out some of the fundamental weaknesses of the Asian system of
capitalism ­ the outdated bureaucracy, the cronyism and corruption,
the lack of transparency in the banking system ­ and they will
22



learn those lessons very quickly and come back stronger than
ever...People in Asia were knocked off their pedestal... Many of
them lost huge fortunes overnight. So they went from having this
greatest sense of pride in the Asian way of doing things to a
sense of embarrassment, a sense of total disillusionment and
despair.
Source: Naisbitt J.(1998): "From Nation States to Networks",
Rethinking the Future, Edited by Gibson R. Pages 211-227

This high degree of unpredictability makes strategic
management challenging and exciting for leaders with strong
entrepreneurial instincts and capabilities and devastating for
managers with inside-out mindsets.

3.6 The reality is that, we are living in a radically different
world, and it calls for different methods of management.
Achieving organizational success will be extremely
challenging. As Gibson (1998) puts it, to grab hold of the
future we have to let go of the past. We have to challenge
and, in many cases, unlearn the old models, the old
paradigms, the old rules, the old strategies, the old
assumptions, the old success recipes. Hence, the effectiveness
23



of putting strategies to work in a business depends, to a
large extent, on skillfully directing and managing changes in
both the internal and external environment. Mockler (1997),
gives an example of Colman Mockler, Chairman of Gillette
Company. The most difficult aspect of strategic management
for him was the organisational dynamics necessary to shape
the specifics of the vision and to make it work. For example,
it took him several years to put in place the kind of key
entrepreneurial managers (staff) he knew could create the
organizational environment and structure needed to carry out
his strategic vision within a very turbulent competitive
market. He was also determined to do it while maintaining
Gillettes corporate culture which placed on high premium on
preserving and fostering human values. Fortunately, he also
possessed the natural and acquired leadership skills needed to
develop and foster the strategic thinking, policy framework,
entrepreneurial organizational culture and structure, and
controls needed for the precise definition of his strategic
vision to emerge and be carried out over time.

3.7 Another example discussed is Warren Buffet. It is said that
one of the major reasons cited for a successful turnaround of
Salomon Brothers brokerage firm after the 1991 trading
24



scandal was the appointment of Warren Buffet as Chief
Executive Officer (Mockler, 1997). Buffet, an Omaha investor
noted for his conservative management style and ethical
philosophy, implanted a very conservative, risk ­ averse
culture at Salomon and so enabled it to regain customer
confidence. This was the same style Buffet exhibited when
successfully managing Berkshire Hathaway Inc. another of his
investments (Faison, 1992; Fisher, 1993). It was a style that
enabled him to win the trust of managers and customers at
Salomon, an important leadership success factor.

3.8 Mockler (1997), notes that determining which leadership style
or combination of styles might be most effective in a
managers own situation will depend on situation factors such
as nature of company, industry and competitive market,
existing internal business processes, existing organizational
structure and external and internal departmental environment;
existing organizational structure; individuals involved; existing
management information systems and other available
resources. Such a factor analysis may lead to the conclusion
that a single leadership style will best suit the situation under
study, or that a combination of leadership styles is more
appropriate. For example, Thomas Murphy and Daniel Burke,
25



who were credited with turning the merged Capital Cities and
ABC Communication Company into a money machine, used
a mixed style characterized as "prudence, management
autonomy, and meddling when it is called for" (Auletta,
1991). At other times, the leadership style needed will change
over time as situation requirements change. At AM
International a tough analytical leadership style was needed
initially to take the company out of bankruptcy; later a style
oriented towards people was needed (Johnson, 1987).

3.9 According to Gibson (1998), transformational leadership that is
critical in facing todays challenges will not be content to sit
back and let the cruise control do the driving. These leaders
will be looking forward, scanning the landscape, watching the
competition, spotting emerging trends and new opportunities,
avoiding impending crisis. They will be explorers,
adventurers, trailblazers. Lewis, Goodman and Fandt (2001),
explains that some organizations have capitalized on changes
in the environment. Starbucks as a coffee peddler, Sony as
the worlds largest provider of electronic products, and Dell
Computer as the provider of high ­ quality, low ­ cost
computer equipment. Each of these companies has achieved
success by proactively addressing changing market conditions.
26




3.10 Empirical evidence suggest that these companies decentralized
power and democratized strategy by involving a rich mixture
of different people from inside and outside the organization
in the process of inventing the future. They are comfortable
with the concept of discontinuity and understand how to use
it to create opportunities. Notable world personalities that
have embraced the new form of leadership and taken their
organizations into the twenty-first century include: Jack Welch
from General Electric, Michael Dell from Dell Computer,
John Chambers from Cisco Systems, and Larry Weinbach
from Unisys (Lewis, Goodman and Fandt, 2001).

3.11 Trice and Beyer (1991), suggest that successful strategic
management demands ,,new school leadership that possess the
characteristics shown in Table 1.







27



Table 1: Old Leadership Vs New Leadership
Old Leadership



New Leadership
Non-charismatic


Charismatic
Transactional



Transformational
Management




Leaders
Non ­ visionary



Visionary
Non-magical




Magical

Less Emphasis On


More Emphasis On
Planning



Vision
Routine




Change
Compliance




Commitment
Contract



Extra Effort
Reaction



Pro-action

Source: Cooper C.L (2005); Leadership and Management in the 21st
Century ­ Business Challenges of The Future, Oxford University
Press, Page 17

3.12 Transformational leadership is different from transactional
leaders who characterize a number of organizations who are
28



struggling to cope with todays rapid environmental changes.
Transactional leaders are masters at controlling resources,
procedures and routines (Darling, 1999). They are ,,caretakers
of the status quo (Warburton, 1993) who think in terms of
explicability, with a focus on control and accountability
(Bennis, 1984). These leaders relate to other actors in role-
terms and favour loyalty, conformity, coordination and team
spirit (Fairholm, 1996). They prefer security and are effective
in situations where they can direct the desired behavior,
control deviation from set norms, and punish recalcitrance
(Zemke, 1987).

3.13 Instinctively, transactional leaders avoid complexity and
attempt to ensure tangible, detached control to limit the
danger and insecurity of uncertainty (McAdam, 1993) and,
through efficiency, are in danger of producing mediocrity and
suffocating innovation and creativity when major steps
forward are required by the organization (Fairholm, 1996).
Lewis, Goodman and Fandit (2001) give examples of once -
prominent and well-respected transactional type CEOs who
resigned from their jobs ­ James Robinson from American
Express, John Akers from IBM, and Eckhard Pfeiffer from
Compaq, to name just a few. Many of these CEOs failed
29



because their leadership style was simply not appropriate for
the rapidly changing and highly dynamic business
environment.

How a biscuits strategy crumbled
When Eric Nicoli, chief executive of United Biscuit, took over at
UB in 1991, it had sales of $3 billion and pre-tax profits of
$211.3 million, and its UK McVities biscuits business had
margins of 15.7%. In 1998 it reported sales of $1.7 billion, pre-
tax profits of $110.1 million and margins of 11.5% at McVities.
To be fair to Nicoli, the reduction in sales and profits was partly
because UB had sold of large chunks of its activities, but this was
forced on the group by its abysmal performance and for that
Nicoli must bear the blame.
UB is still struggling to recover from the effects of three key
strategic mistakes made by Nicoli and his team in the early 1990s.
First, it was so confident of its pre-eminent position in British
biscuits ­ where it still has over half the market ­ that it thought it
could keep pushing up its margins for ever, at the expense of
boring things like marketing and product development. Second, it
developed grandiose ambitions to be a global player and rushed
out on a spending spree, snapping up biscuit and snack businesses
30



from Poland to China. And third, it failed to appreciate the
strength of Frito Lay, the crisps and snacks business owned by
PepsiCo, which dominates most of the markets into which UB was
expanding.
The results of the strategic errors soon became all too clear.
Customers got tired of paying ever higher prices, particularly when
they could buy supermarket own brands (some of them actually
made by McVities) far cheaper. And they were easily tempted
away by the more interesting products on offer from the likes of
Cadbury and Fox, both more successful than UB in new product
development. McVities profits collapsed from $92.9 million in
1992 to $57.1 million in 1995 and even in 1996 they had crept
up only to $60.5 million.
Internationally, UB was spreading itself too thinly across too many
fronts instead of focusing on areas where it could have a real
advantage. No sooner had it sorted out one set of problems than
another set appeared. One analyst cites frozen foods ­ its ranges
include Ross Foods and the Linda McCartney vegetarian products -
as an example of businesses where Nicoli should have bitten the
bullet and sold.
31



Source: Finlay (2000); Strategic Management ­ An Introduction to
Business and Corporate Strategy, Prentice Hall: Financial Times
Page: 13

3.14 Empirical evidence seem to suggest that success or failure in
strategic management depends on the quality of leadership an
organization have. Issues that are critical include keeping
abreast of changing conditions that affect the organization,
developing an understanding of the major environmental
trends that are affecting organizations across the globe, being
flexible and adaptable to organizational changes, as well as
proactive in initiating change when appropriate, understanding
the role of the manager within the corporate structure,
making the most of a managers education and developing
skills, keeping the organization responsive to changing
conditions, alert for new opportunities and bubbling with
innovative ideas, building consensus, containing ,,power
struggles and dealing with the politics of crafting and
implementing strategy and competencies necessary for
managerial success.

32



3.15 For the transformational leaders to be able to become great
communicators, team players, trouble-shooters and change
makers, they ought to possess certain competencies. These
include environmental competence (knowledge of the dynamics
of world economy, of major national markets, and of social
and cultural environments), analytic competence is needed to
pull together a vast array of information and data and to
assemble relevant facts. Strategic competence helps executives
focus on the strategic or long-term requirements of their
firms, as opposed to short-term, opportunistic decisions and
managerial competence, which entails the ability to implement
programs and organize effectively (Jeannet and Hennessey,
1995).

3.16 Johnson and Scholes (2004), advises that leadership literature
suggest that successful leaders have particular personal
characteristics or traits. These include visionary capacity,
being good at team building and team playing, a capacity for
self-analysis and self ­ learning, mental agility and the ability
to cope with complexity; self ­ direction and self - confidence;
and charismatic leaders in particular are good at expressing
complex ideas simply, creating commitment and channeling
peoples energy.
33




3.17 Transformational leadership leaders raise their followers
awareness of organizational issues and their consequences,
they create a vision of what the organization should be, build
commitment to that vision throughout the organization, and
facilitate organizational changes that support the vision
(Certon, 2000).
SECTION 4:
The Case For Zimbabwe
4.1 The Zimbabwean economy is going through considerable socio-
economic challenges, ranging from high inflation, foreign
exchange shortages, capacity underutilization in factories, to rising
poverty levels.

4.2 These developments are causing anxiety among the business
leaders. The majority are faced with what is proving to be a
journey requiring determination. The role of the media in
Zimbabwe is fueling the anxiety and speculative behavior which
is further complicating strategic decision-making in the corporate
world. The media is largely responsible for both the
confidence index and the fear-versus-optimism syndromes in
society. It is not an exaggeration to say that, there has been
34



a propensity for negative reporting in the last few years.
Though difficult to quantify, the impact on the national
consciousness of this continuous negative bombardment has
been decidedly destructive. The content and quality of
reporting on such issues as politics, human rights, hate
speech, company underperformance and corruption has given
many business leaders the feeling that, given the present
turbulence in Zimbabwe, the future will probably be as
uncertain as the present.

4.3 Business executives are constantly being battered with news
of underperforming organizations, poor economic projections
and further stagnation. The effect is a feeling of being
immersed in a theatre of the absurd. Hence the general
feeling and observation is that most, most business leaders in
Zimbabwe have a deteriorating mindset filled with negative
thinking, hopelessness minds whilst some are adopting a ,,wait
and see attitude. Failure to appreciate the new trends in
management thinking and lack of transformational leadership
skills have added the misery among many. In some instances,
one get the feeling that these business leaders are aware of
these developments, but they are not responding appropriately
­ hence the wait and see attitude.
35




4.4 Required in Zimbabwe at the moment is a frame-breaking
approach that banishes the fear of failure and nurtures the vision
of winning.

4.5 Literature on business performance suggest that winners respond
appropriately to environmental challenges. It is managements
responsibility to adjust to unexpectedly tough conditions by
undertaking strategic defenses and business approaches that
can overcome adversity. New Generation Organisation is a
term that one can use to describe these winners and we have
very few of these in Zimbabwe at the moment. Probably,
some of the companies who won last year (2006) in the Top
Companies Survey facilitated by The Financial Gazette and
officially sponsored by Premier Banking Corporation Limited
qualify to be in this category. A new generation organization
led by a transformational leader defy the traditional way of
looking and doing things for the purpose of constant desire for
value-creation. Such organizations, characterized by high degree
of innovation, psychological stamina and high levels of creative
insights are able to take a quantum leap and effect such major
changes as are required to make them leaders in their
respective sectors.
36



4.6 Effectively managed new generation organizations become
counter-trend organizations which Zimbabwe desperately needs
now. These organizations perform despite environmental
turbulence, that is, they ,,buck the trend of inadequate economic
performance in the country. Counter-trend organization create
value despite the many negative factors, including deteriorating
mindset ­ which surround it. Mindset is about forging a
positive future outcome despite limited opportunities and
resources, a hostile environment, socio-economic turmoil and
political uncertainty. In other words, a counter-trend organization
possess a strong belief in its own ability to make things happen.

4.7 For Zimbabwe, the good thing about new generation organization
is that its principles are universally applicable. They are generic
to government, business and civic society. Zimbabwes leaders
in government, business, labour, the media, churches and
politics must develop the framework underlying the principles of
the new generation organization.

4.8 For example, the necessary but ill-conceived execution of the land
reform programme, bureaucratic bungling, misappropriation and
corruption (that have compounded the lack of economic growth)
37



have left Zimbabwe in a far worse state than it was a few
years ago. As a direct result, Zimbabwe has become
uncompetitive in terms of world standards. International research
on competitive nations highlights the necessity of generating
an appropriate economic policy based on a mindset which
nurtures and rewards new behaviours which are fundamentally
innovative and lead to economic growth. Hence, as we look east,
China, Indonesia and Malaysia are classic examples of success
stories.

4.9 On the other hand, government, labour and business have far
too long maintained an adversarial relationship ­ a wind tunnel
has developed among these major players in the economy.
Government is viewed as creating regulations and red-tape
which tie the hands of business, whilst business is viewed by
government as being concerned with corporate wealth creation
and the best possible return on assets ­ often at the expense
of the larger national picture. Labour on the other hand is
viewed to be siding with the opposition for the purpose of
,,regime change. These perceptions, unfortunately cause the
divergence in the way all think.

38



4.10 For Zimbabwe, the lesson is that successful economies have
succeeded in integrating national priorities for business, labour
and government to achieve a unified national policy of global
intent. Government ought to understand the mechanics and
mindset required to ensure wealth creation within the global
context and needs to support the same priorities in the interest of
creating new horizons for value-adding to the present economy.
There is need to embrace all stakeholders in the economy
irrespective of backgrounds and political affiliation. The
international community ought to be engaged - this is a
reality that the country can not run away from. The
government must create the enabling environment for
businesses to flourish. The ,,command and control attitude
that seem to characterize the thinking in government is
outdated and will not take the country anywhere. It must be
remembered that, it is business that create wealth and not the
other way round.

4.11 Business on the other hand need to urgently overhaul their
organizational configurations. For instance, the majority of our
companies are suffering from outdated management approaches, a
sense of smugness, uncompetitive organizational designs,
impoverished leadership and impotent strategic thinking. What is
39



puzzling however is that majority of the managers are going
through some management development programmes offered
by various institutions in the country. You wonder what they
go through. Worse still, most of these companies performance is
stifled by corporate chimneys, excessive clutter, fixed decision
boundaries and dysfunctional vertical organizational designs.

Section 5:
Policy Implications
5.1 Ministry of Higher Education and Tertiary Institutions must
have a monitoring mechanism in place to ensure that the
various management development programmes being offered
by both private organizations and public institutions are of
high quality, current in terms management thinking and
relevant to the country.

5.2 Relevant tertiary institutions should lobby the government for
research related funding especially in the areas of
management and leadership. One way could be to sponsor
doctoral research programmes on Zimbabwe companies.

5.3 There is very little in terms of documented business/
management Zimbabwe Case Studies. In most tertiary
40



institutions students are using foreign cases, there is nothing
wrong but, we need a balance. Zimbabwe Cases will also be
useful for policy-makers to have a clear view of what is
going on around. Hence, there should be deliberate funding
programmes to develop Zimbabwe Companies Cases.

5.4 Duty ­ free on educational books so as to increase
affordability (if not in place already)

5.5 Promote institutions offering management development
programmes. This provides an opportunity for management
practitioners to be updated with the latest thinking in their
various areas. Ideally, every manager should go for a skills
development progamme at least once a year to avoid using
outdated strategies in addressing current challenges.

5.6 The government, labour and business must work as one team
in addressing the ever changing challenges. The Tripartite
Negotiating Forum, NEDPP and NECF need to be re-
invigorated. The government must play a facilitative role and
not to be ,,a player and referee at the same time.

41



5.7 Fund some research into the causes of the deteriorating
business performance over the past six years

Section 6:
Conclusion
6.1 The field of strategic management is critical for the survival
of organizations. Evidence suggest that successful
organizations world-wide engage the strategic management
framework. The framework is important in that it directs
organizational resources to one particular direction. Through
the strategic direction of an organization, resources are
effectively and efficiently used. Increasingly, the framework
has become important in addressing the ever changing
business environment. At every point, management must
constantly scan the environment and respond accordingly.
Therefore what is important is to have a vision and
periodically check the environment for any potential threats or
issues. For the framework to be meaningful, the role of
transformational leadership has equally become key. It is
concerned with embracing environmental changes and doing
something about it.

42



6.2 Zimbabwe needs transformational leadership, embrace the
concept of the new generation organization , change of the
mindset and a frame-breaking approach that banishes the fear
of failure and unlearn the ,,old success story rhetoric and
move on with the times.


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