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Strategic leadership refers to a manger's potential to express a strategic vision for the organization, or a part of the organization, and to motivate and persuade others to acquire that vision. Strategic leadership can also be defined as utilizing strategy in the management of employees. It is the potential to influence organizational members and to execute organizational change. Strategic leaders create organizational structure, allocate resources and express strategic vision. Strategic leaders work in an ambiguous environment on very difficult issues that influence and are influenced by occasions and organizations external to their own.
The main objective of strategic leadership is strategic productivity. Another aim of strategic leadership is to develop an environment in which employees forecast the organization's needs in context of their own job. Strategic leaders encourage the employees in an organization to follow their own ideas. Strategic leaders make greater use of reward and incentive system for encouraging productive and quality employees to show much better performance for their organization. Functional strategic leadership is about inventiveness, perception, and planning to assist an individual in realizing his objectives and goals.
Strategic leadership requires the potential to foresee and comprehend the work environment. It requires objectivity and potential to look at the broader picture.
Business transformation is the fundamental change to the way a business operates, whether that be moving into a new market or operating in a new way It is an approach that attempts to align an ganisation's activities relating to people, process and technology more closely with its business strategy and vision.
The report provides overview of strategic leadership and their business transformation in electronic appliance market. The studied companies are Siemens and whirlpool and their respective CEO.
Siemens is a German MULTINATIONAL engineering and electronics conglomerate company headquartered inMunich, Germany. It is the largest Europe-based electronics and electrical engineering company.
Siemens' principal activities are in the fields of industry, energy, transportation and healthcare. It is organized into five main divisions: Industry, Energy, Healthcare, Infrastructure & Cities, and Siemens Financial Services (SFS). Siemens and its subsidiaries employ approximately 360,000 people across nearly 190 countries and reported global revenue of approx 73.5 billion euros for the year of 2011.Siemens has a primary listing on the Frankfurt Stock Exchange and a secondary listing on the New York Stock Exchange.
1.2 Whirlpool Corporation
Whirlpool Corporation is an American multinational manufacturer and marketer of home appliances headquartered in Benton Charter Township,Michigan, United States, near Benton Harbor, Michigan. The company is listed in Fortune 500 and has annual revenue of approximately $18.4 billion, more than 70,000 employees, and more than 70 manufacturing and technology research centres around the world. The company markets Whirlpool, Maytag, Kitchen Aid, Jenn Air, Amana, Gladiatorm Garage Works, Inglis, Estate, Brastemp, Bauknecht and Consul. After acquiring theMaytag Corporation on March 31, 2006, the Whirlpool Corporation surpassed Electrolux to become "the largest home appliance maker in the world."
In the U.S., Whirlpool has manufacturing facilities in Amana, Iowa; Tulsa, Oklahoma; Cleveland, Tennessee; Ohio: Clyde, Findlay, Greenville, Marionand Ottawa).
1.3 Peter Loscher, CEO Siemens
The CEO of Siemens is known to drive a tight agenda at the global electronics powerhouse. Löscher, who is down-to-earth and straightforward in team dealings, believes that the biggest threat to leadership is complacency. The astoundingly bright Austrian holds an MBA from the Chinese University of Hong Kong and a Doctorate of Engineering from Michigan State University. A polyglot with five languages under his belt, he is widely respected for his intellect and practical skills. Löscher has guided Siemens with great success since July 2007, and remarkably was the first top executive ever to be hired from outside the company.
He served as Director of Nokia Siemens Networks Oy from July 1, 2007 to September 30, 2007. He served as an Executive Director of Amersham PLC since December 2002. He served as Member of the Board of Trustees of the Ernst von Siemens Kunststiftung, Carl Friedrich von Siemens Stiftung and Glyndebourne Arts Trust. Mr. Löscher is MBA graduate of the Vienna University School of Economics and studied at the Chinese University of Hong Kong and at Harvard Business School and Honorary Doctorate of Engineering from Michigan State University.
1.4 Jeff M Fettig, CEO, Whirlpool,
JEFF M. FETTIG, 55, has served as a director since 1999. Mr. Fettig has been Chairman of the Board and Chief Executive Officer of Whirlpool since 2004 after holding other positions of increasing responsibility since 1981. Mr. Fettig is also a director of The Dow Chemical Company (since 2003).
Fettig joined Whirlpool in 1981 as an operations associate. He held a number of managerial positions in Operations, Sales, Planning and Product Development before being promoted to vice president, Marketing, KitchenAid Appliance Group in July 1989. In October 1990, he was named vice president, Marketing, for the Philips Whirlpool Appliance Group of Whirlpool Europe B.V., the company's European subsidiary, and he was named vice president, Group Marketing and Sales, North American Appliance Group, in October 1992. In 1994 he was named an executive vice president of Whirlpool and president, Whirlpool Europe and Asia.
n October 1990, he was named vice president, Marketing, for the Philips Whirlpool Appliance Group of Whirlpool Europe B.V., the company's European subsidiary, and he was named vice president, Group Marketing and Sales, North American Appliance Group, in October 1992. In 1994 he was named an executive vice president of Whirlpool and president, Whirlpool Europe and Asia.
Fettig also serves on the Board of Directors of The Dow Chemical Company.
A native of Tipton, Indiana, USA. Fettig holds a bachelor's degree in finance and a Master of Business Administration from Indiana University.
2. Current industry trends:
With sales driven primarily by the new-home market (25% of sales) and replacement purchases, the appliance industry has historically lacked a key ingredient when it comes to cooking up sales based on more than necessity. That missing component has been innovation.
The world's top appliance makers (AB Electrolux, General Electric's GE Consumer Products, Merloni, Samsung Electronics, Whirlpool) and Maytag itself were shocked with the new appliance's success. Neptune's booming sales showed the old-school appliance makers that the industry could move beyond a needs-based market and appeal to consumers who follow trends and seek luxury (much like those who purchase DVD players and big-screen TVs).
Although the main avenue of appliance innovation has developed along the lines of faster, quieter, and more efficient, computers and the Internet also offer a realm of possible innovations (i.e., refrigerators that keep a food inventory or an oven that automatically calls police in case of fire).
Technological innovation and the need to replace or upgrade products drive demand. Profitability for individual companies depends on the ability to generate store traffic and repeat business, as well as effective merchandising. Large companies enjoy economies of scale in purchasing and marketing. Small companies can compete effectively by offering specialized products or superior customer service. The industry is concentrated: the 50 largest companies account for 70 percent of sales.
Leadership is traditionally related to a spatial position in an organization of some kind - formal or informal. Thus we can define leadership as the activity undertaken by someone whose position on a vertical, and usually formal, hierarchy provides them with the resources to lead. These people are 'above us', 'at the top of the tree', 'super ordinates', and so on. In effect, they exhibit what we might call 'leadership-in-charge'. This is how we normally perceive the heads of vertical hierarchies, whether CEOs or military generals or head teachers or their equivalents.
3.1 Functions of Leadership:
Mayrowetz ct al. (2009) note that, it is important for researchers to continue to investigate (he linkage between multiple leadership functions and school improvement. They urge researchers to provide further explanation as to why distributed leadership can end in positive results for schools and students. The evidence we have, to date. suggests that distributed leadership is undoubtedly worth further investigation and scrutiny. So too, is some consideration of the interplay between the formal and informal leadership structures and processes. As Hallinger and Heck (in this book) acknowledge the nature of the relationship between principal and teacher leadership needs to he investigated further. More needs to be understood about the formal and informal leadership interdependencies and interconnections that make school improvement more possible or more fragile. Evidence suggests that principal leadership remains a key success factor in school improvement especially in contexts where the challenges are greatest. It also suggests that purposeful distributed leadership is a common denominator of schools that are effective and sustain improvement (Day et al., 2009).
One way in which researchers describe leadership function is in terms of the two dimensions known as consideration and initiating structure (Fleishman & Harris, 1962). Considerable research has demonstrated that most management activities can be classified under one of these two headings:
The functions in the consideration dimension involve the awareness of and sensitivity to, the personal feelings of subordinates. This has grown out of the human relations approach to management. In this approach, leaders must understand and accept subordinates as individuals, each of whom possesses a unique set of motivations, feelings, and needs. Leaders, if they are to be effective, must relate to each subordinate by being considerate of his or her personal characteristics. This places a great demand on the sympathy, warmth, and understanding or managers because they must, at the same time, maintain production levels und deal with the technical details of the plant's operation.
4. Leadership Style
4.1 Peter Loscher.
Tough, independent and resilient.
Loscher took on corporate germany's consensus-minded establishment to boost profits at siemens, but he left when his contract was not renewed due to allegations, unrelated to him, of corruption amongst siemen's top management.
Emerging Stronger, Smarter, and more Sustainable from the Global Crisis Peter Loescher explores what he calls the sustainability imperative for business and society today. Those businesses adhering to a strategy of sustainable growth during the current global economic crisis will emerge stronger and in a better position to take advantage of the coming upturn and surging demand from customers. Providing examples from Siemens' investments in "green technologies" in the U.S. and worldwide, Loescher showed how his company is turning many broad challenges, including climate change and population growth, into a triple win for customers, society and his company.
He has a flair for leadership itself, other saying what needs to be said, and doing what is necessary to improve the company rather than being diplomatic.
Avoid a situation where successful divisions subsidize failure in others - that is not a long-term strategy.
Understand that in the new globalized world, there's nowhere to hide poor performance. the competition will find your weaknesses.
Be bold and implement lower terms and conditions for people in areas where the competition is global.
4.1.1 Siemens performance:
Its leading portfolio of consumer brands includes: Whirlpool, Maytag, Kitchen Aid, Brastemp and Consul , each of which have annual revenues in excess of $1 billion
Consolidated net sales for the three and nine months ended September 30, 2012 for Siemens reflect strong improvements in product price/mix from previously announced pricing actions compared to the same period in 2011. This favourable impact was more than offset by decreases in units sold, the unfavourable impact of foreign currency and lower BEFIEX credits. Excluding the impact of foreign currency, consolidated net sales increased 3.4% and 2.1%, respectively, for the three and nine months ended September 30, 2012.
Siemens monetized $13 million and $22 million of BEFIEX credits during the three and nine months ended September 30, 2012, respectively, compared to $62 million and $207 million for the same periods in 2011. At September 30, 2012, approximately $202 million of future cash monetization remained, including $56 million of related court awarded fees, which will be receivable in subsequent years.
Screen clipping taken: 11/12/2012, 3:17 AM
(Market share, revenue, growth)
4.1.2 Critique of Peter Loscher leadership style:
On the first score, Löscher's success is hard to dispute. Siemens has left the corruption scandal far behind. The Dow Jones Sustainability Index, which focuses on ethical corporate behaviour, ranked Siemens No. 1 in the Diversified Industrials category in 2008, up from the bottom of the list the previous year. The company has been first every year since then.
When Siemens was planning a major corporate overhaul focused on cutting costs and simplifying its business, a revamp that may include asset sales.
The move by Chief Executive Officer Peter Loescher came amid growing criticism that the German company was falling further behind more profitable U.S. and European rivals such as General Electric Co. and ABB Ltd. in selling energy, transport, and industrial equipment and services, having been too focused on sales growth.
LÃ-SCHER'S PERFORMANCE DEMANDS, as it would turn out, were impossible to meet in the global economic crisis of 2008-'09, which hit Siemens hard. Only since fiscal 2009 has the company been able to sustainably improve its sales and profits. Nevertheless, Siemens excels in an important area in which it had failed previously: earning its cost of capital. Historically, it was a lumbering giant that shuffled from quarterly profit to quarterly loss, with operating profit margins thinner than those of its rivals.
In fiscal 2011, however, Loscher has earned for the first time in the history of the company three times our cost of capital, Admittedly, the extraordinarily low interest-rate environment of the past three years has reduced everyone's cost of capital significantly, but the multiple of three remains a standout in the world in which Siemens competes.
4.2 Jeff M Fettig.
Jeff M. Fettig, who became Whirlpool's chairman and chief executive officer in 2004, is a believer in the adage that the best thing to do with lemons is to make lemonade. He has used this rolling series of economic shocks to dramatically reduce the company's costs, while maintaining its global presence and commitment to innovation. Whirlpool's senior leaders quickly seized control and narrowed the company's focus-and almost as quickly delegated responsibilities to middle and line managers through rapid and frequent communication.
One of the lessons of the last year has been that Whirlpool must be far quicker to respond to uncertainty and fast-moving events. The company is now able to react more swiftly to change than it was just a few years ago.
The success of this approach soon became apparent. Within three years of Fettig's arrival in the top job, the share price had risen by more than 50 per cent and Whirlpool had been recognized as one of the most innovative companies in the US.
Deciding to make new products the main focus of operations.
Find a new differentiator - in white goods, cutting prices is the usual way to increase sales. However, Fettig showed that innovation can be just as effective.
4.2.1. Whirlpool Performance:
Consolidated net sales for the three and nine months ended September 30, 2012 reflect strong improvements in product price/mix from previously announced pricing actions compared to the same period in 2011 . This favorable impact was more than offset by decreases in units sold, the unfavorable impact of foreign currency and lower BEFIEX credits. Excluding the impact of foreign currency, consolidated net sales increased 3.4% and 2.1%, respectively, for the three and nine months ended September 30, 2012 . We provide net sales, excluding the impact of foreign currency, as a supplement to net sales as determined by U.S. generally accepted accounting principles ("GAAP") to provide stockholders with a clearer basis to assess Whirlpool's results over time. This measure is considered a non-GAAP financial measure and is calculated by translating the current period net sales in functional currency to U.S. dollars using the prior-year period's exchange rate.
(Market share, revenue, growth)
4.2.2.Whirlpool Business process
Whirlpool business environment and its essential characteristics in the domestic market exude sheer ensembles of its belonging and dominance in the electronic and household appliances, given the 60 percent sales outcome that is generated from its domestic market alone or the region within North America itself.
International business environment of whirlpool post 2006 presents some of its solid statistical results with a sale outcome that stood at $19 billion for the financial year ending 2006, which also explains the increase in its overall market cap by 26 percent in the international arena.
But what is pertinent to whirlpool risky business situations is the cutthroat competition in the international market that results from change in global business environment. The notable risky fact is that domestic market have shown some uncertainty, that can be read loud and clear from lower profit margin, and changing needs and demands of domestic consumers that bore a challenge and dangers to the firm international business expansion and its processes that is yet to find a solid holding in the international arena, despite the acquisition of majors companies in Europe.
4.2.3. Critiques the leadership of Jeff M Fettig .
They reorganize too often, the job titles do not match industry job listings, CEO salary is criticised to be too high.
They continue to de-value the sales force and view them as a necessary expense instead of an asset that brings dollars into the company. Little ownership by Knoxville and Benton Harbor of invoicing, product availability, order issues, or warranty service issues. These tasks then fall upon the field sales force, who would rather be selling than dealing with administrative issues.
A CRM solution is just a basic tool that will help deliver and secure continuity of service for the trade customers. Then back to the issue of not enough sales reps in the company to service the trade. There are literally thousands of one and two store "mom & pop" accounts that could grow (some double or triple) business with the appropriate level of effort.
The management of the sales force is a severe hindrance to market share. Over my six years with the company the numbers of sales people have done nothing but go down. I saw very little that indicated they kept the best in place.
5. Organisation structure and process.
5.1. Organisational structureof Whirlpool:
CEO - Jeff Fettig
Board of Director
Paul Stern, Director
Miles Marsh, Director
Michael Johnston, Director
Michael White, Director
William Kerr, Director
Kathleen Hempel, Director
Gary DiCamillo, Director
Samuel Allen, Director
Jhon Liu, Director
Herman Cain, Director
Janice Stoney, Director
William Perez, CFO
5.2 Organisational structure for Siemens:
5.3 Business transformation for whirlpool:
In 1999, Whirlpool was undergoing a company-wide reorganization to meet the demands of the post-globalization marketplace. To succeed in executing their transformative Brand-Focused Value-Creation strategy, Whirlpool needed to be both operationally excellent and innovative.
In publications such as Business Week and Fast Company, the media have celebrated Whirlpool's transformation into a leading-edge innovator and Nancy Tennant Snyder's role as chief innovation officer. Ten years after this remarkable transformation, Unleashing Innovation tells the inside story of one of the most successful innovation turnarounds in American history. Nancy Tennant Snyder and co-author Deborah L. Duarte reveal how Whirlpool undertook one of the largest change efforts in corporate history and show how innovation was embedded throughout the company, which ultimately led to bottom-line results.
At whirlpool a cross-company team studied the changing demographics and came up with Briva. A small in-sink dishwasher, convenient to use as a microwave oven l3riva can wash and dry a small load of dishes in less than five minutes. Incidental at whirlpool, till 15,000 and more salaried employees are required to complete a two-hour online course on (The basics of business innovation. They are also encouraged to contact the more than 500 innovation mentors across the company who has received extensive training in how to develop. Test, and validate new ideas. It is a great way to equip sour employees with skills to innovate.
5.4 Business transformation for Siemens:
The last few years, we've transformed our organization and continuously strengthened our global competitiveness through our company programs. Our portfolio is geared to attractive growth markets. In terms of profitability, we've closed the gap to our competitors or overtaken them. As an integrated technology company, we're a market leader in many of our businesses. It's from this position of strength that we're approaching the future. With a financial target system and the goal of continuous improvement relative to the market and our competitors, One Siemens is providing the framework.
Framework for sustainable value creation
Focus on innovation-driven growth markets
Get closer to our customers
Use the power of Siemens
Siemens made a strategic decision to move from a product focused organisation to one with a customer orientation. The company faced an uncertain future due to intense competition, price sensitive product supply arrangements and a tender orientated sales approach. Siemens needed to transform itself into a high performing business with defined 'value-adding' offerings, driven by a proactive sales and service focus to achieve organic growth targets.
To support the future sustainability of the company the regional Vision of "We make the INVESTMENTS of our CUSTOMERS BETTER through people, technology, processes and financial strength" was adopted. The Vision communicates that Siemens' innovative offerings are aimed at producing investment returns for the company's customers.
Despite there being many operational opportunities to adopt the Vision, after its launch, there was limited follow-up to explain its relevance to individual employees or to encourage them to adopt behaviours critical to achieving business goals.
Even more ambitious business goals for 2004 and 2005 meant that Siemens leaders needed to re-inspire and further motivate employees to achieve outstanding performance aligned with the Vision.
As a result employee communications were strengthened and a specific "Living Our Vision" program was developed to help management achieve this outcome.