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CMA Intermediate · Operations Management and Strategic Management · Formulation and Implementation of Strategy

A CEO of an Indian IT services firm articulates an inspiring future vision, energises employees to embrace a radical shift in business model, and motivates them to go beyond self-interest for the organisation. Which leadership style is this?

This is transformational leadership. The CEO inspires followers with a compelling vision, energises them for major change and encourages them to put organisational goals above self-interest. Transactional leadership instead depends on exchanging rewards for performance, and laissez-faire leadership offers little direction.

  1. ATransactional leadership
  2. BTransformational leadershipCorrect
  3. CLaissez-faire leadership
  4. DCustodial leadership

Explanation

Transformational leaders inspire through vision and change values and aspirations to drive major strategic shifts. Transactional leaders rely on rewards and penalties for performance against agreed targets, which is not what is described. Laissez-faire involves minimal guidance.

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