Relationship between Strategic Management and Leadership

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.

Relationship between Strategic Management and 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. 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:

  1. Allocation of resources.
  2. Business to explore, invest, and exit.
  3. Joint ventures or mergers.
  4. 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.

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