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Strategic Management: Formulation, Implementation and Control, 9/e

John A. Pearce II, Villanova University
Richard B. Robinson Jr., University of South Carolina

ISBN: 007289024x
Copyright year: 2005

Table of Contents



PART ONE

OVERVIEW OF STRATEGIC MANAGEMENT 1

Chapter 1
Strategic Management 2
The Nature and Value of Strategic Management 3
Dimensions of Strategic Decisions 4
Formality in Strategic Management 9
Benefits of Strategic Management 10
Risks of Strategic Management 11
The Strategic Management Process 12
Components of the Strategic Management Model 12
Strategic Management as a Process 18
Summary 19
Questions for Discussion 19
Discussion Case: Kraft's Global Strategy: Can Kraft Be a Big Cheese Abroad? 21
PART TWO

STRATEGY FORMULATION 23

Chapter 2
Defining the Company's Mission and Social Responsibility 25
What Is a Company Mission? 26
The Need for an Explicit Mission 26
Formulating a Mission 26
Basic Product or Service; Primary Market; Principal Technology 27
Company Goals: Survival, Growth, Profitability 29
Company Philosophy 31
Public Image 32
Company Self-Concept 34
Newest Trends in Mission Components 35
An Exemplary Mission Statement 37
Boards of Directors 38
Sarbanes-Oxley Act of 2002 39
The New Corporate Governance Structure 42
Agency Theory 43
How Agency Problems Occur 43
Problems That Can Result from Agency 44
Solutions to the Agency Problem 45
The Stakeholder Approach to Social Responsibility 45
The Dynamics of Social Responsibility 45
A Continuum of Social Responsibilities 48
Corporate Social Responsibility and Profitability 53
CSR's Effect on the Mission Statement 59
Social Audit 59
Management Ethics 60
The Nature of Ethics in Business 60
Approaches to Questions of Ethics 62
Summary 63
Questions for Discussion 63
Discussion Case: Inside a Chinese Sweatshop 65
APPENDIX 2: BB&T Vision, Mission, and Purpose 68
Chapter 3
The External Environment 77
Remote Environment 79
Economic Factors 79
Social Factors 79
Political Factors 81
Technological Factors 84
Ecological Factors 85
International Environment 89
Industry Environment 90
Overview 90
How Competitive Forces Shape Strategy 90
Contending Forces 91
Threat of Entry 92
Powerful Suppliers 94
Powerful Buyers 95
Substitute Products 96
Jockeying for Position 96
Industry Analysis and Competitive Analysis 97
Industry Boundaries 97
Industry Structure 99
Competitive Analysis 101
Operating Environment 102
Competitive Position 102
Customer Profiles 103
Suppliers 104
Creditors 105
Human Resources: Nature of the Labor Market 106
Emphasis on Environmental Factors 106
Summary 107
Questions for Discussion 110
Discussion Case: McDonald's Hamburger Hell 111
APPENDIX 3: Sources for Environmental Forecasting 115
Chapter 4
The Global Environment: Strategic Considerations for Multinational Firms 119
Development of a Global Corporation 120
Why Firms Globalize 122
Strategic Orientations of Global Firms 123
At the Start of Globalization 126
Complexity of the Global Environment 126
Control Problems of the Global Firm 127
Global Strategic Planning 129
Multidomestic Industries and Global Industries 129
The Global Challenge 131
Market Requirements and Product Characteristics 133
International Strategy Options 134
Competitive Strategies for Firms in Foreign Markets 135
Niche Market Exporting 135
Licensing/Contract Manufacturing 136
Franchising 137
Joint Ventures 137
Foreign Branching 138
Wholly Owned Subsidiaries 138
Summary 138
Questions for Discussion 139
Discussion Case: Planet Starbucks 140
APPENDIX 4: Components of the Multinational Environment 145
Chapter 5
Internal Analysis 147
Resource-Based View of the Firm 150
Three Basic Resources: Tangible Assets, Intangible Assets, and Organizational Capabilities 150
What Makes a Resource Valuable? 151
Using the Resource-Based View in Internal Analysis 156
Value Chain Analysis 159
Conducting a Value Chain Analysis 161
SWOT Analysis 166
Opportunities 166
Threats 166
Strengths 167
Weaknesses 167
Internal Analysis: Making Meaningful Comparisons 169
Comparison with Past Performance 169
Stages of Industry Evolution 169
Benchmarking-Comparison with Competitors 172
Comparison with Success Factors in the Industry 172
Summary 174
Questions for Discussion 175
Discussion Case: Can Dunkin' KO Krispy? 178
APPENDIX 5: Using Financial Analysis 178
Chapter 6
Formulating Long-Term Objectives and Grand Strategies 190
Long-Term Objectives 191
Qualities of Long-Term Objectives 193
The Balanced Scorecard 194
Generic Strategies 195
The Value Disciplines 197
Operational Excellence 197
Customer Intimacy 198
Product Leadership 199
Grand Strategies 200
Concentrated Growth 200
Market Development 203
Product Development 206
Innovation 207
Horizontal Integration 208
Vertical Integration 209
Concentric Diversification 210
Conglomerate Diversification 210
Turnaround 212
Divestiture 213
Liquidation 214
Bankruptcy 215
Corporate Combinations 217
Joint Ventures 218
Strategic Alliances 218
Consortia, Keiretsus, and Chaebols 221
Selection of Long-Term Objectives and Grand Strategy Sets 221
Sequence of Objectives and Strategy Selection 222
Summary 223
Questions for Discussion 224
Discussion Case: Novartis 225
Chapter 7
Strategic Analysis and Choice in Single- or Dominant-Product Businesses: Building Sustainable Competitive Advantages 228
Evaluating and Choosing Business Strategies: Seeking Sustained Competitive Advantage 230
Evaluating Cost Leadership Opportunities 233
Evaluating Differentiation Opportunities 233
Evaluating Speed as a Competitive Advantage 236
Evaluating Market Focus as a Way to Competitive Advantage 238
Selected Industry Environments and Business Strategy Choices 240
Competitive Advantage in Emerging Industries 242
Competitive Advantage in the Transition to Industry Maturity 244
Competitive Advantage in Mature and Declining Industries 245
Competitive Advantage in Fragmented Industries 246
Competitive Advantage in Global Industries 247
Dominant Product/Service Businesses: Evaluating and Choosing to Diversify to Build Value 248
Grand Strategy Selection Matrix 248
Model of Grand Strategy Clusters 250
Opportunities for Building Value as a Basis for Choosing Diversification or Integration 252
Summary 252
Questions for Discussion 252
Discussion Case: The Samsung Way 254
Chapter 8
Strategic Analysis and Choice in the Multibusiness Company: Rationalizing Diversification and Building Shareholder Value 259
The Portfolio Approach 260
The BCG Growth-Share Matrix 260
The Industry Attractiveness-Business Strength Matrix 262
The Life Cycle-Competitive Strength Matrix 264
BCG's Strategic Environments Matrix 265
Limitations of Portfolio Approaches 266
The Synergy Approach: Leveraging Capabilities and Core Competencies 267
Capitalize on Core Competencies 270
Each Core Competency Should Provide a Relevant Competitive Advantage to the Intended Business 270
Businesses in the Portfolio Should be Related in Ways That Make the Core Competencies Beneficial 272
Any Combination of Competencies Must Be Unique or Difficult to Re-create 272
Strategic Analysis and Choice in Multibusiness Companies: The Corporate Parent Role 273
The Parenting Framework 274
The Patching Approach 276
Summary 278
Questions for Discussion 279
Discussion Case: Quanta Group-Is Diversification Wise? 280
PART THREE

STRATEGY IMPLEMENTATION 285

Chapter 9
Implementing Strategy through Short-Term Objectives, Functional Tactics, Reward System, and Employee Empowerment 287
Short-Term Objectives 288
Qualities of Effective Short-Term Objectives 289
The Value-Added Benefits of Short-Term Objectives and Action Plans 292
Functional Tactics That Implement Business Strategies 293
Differences between Business Strategies and Functional Tactics 293
Empowering Operating Personnel: The Role of Policies 295
Creating Policies That Empower 297
Executive Bonus Compensation Plans 299
Major Plan Types 299
Matching Bonus Plans and Corporate Goals 305
Summary 308
Questions for Discussion 308
Discussion Cases: General Mills: Thinking Outside the Cereal Box; and Is Kohl's Becoming Unbuttoned? 309
APPENDIX 9: Functional Tactics 312
Chapter 10
Implementing Strategy: Structure, Leadership, and Culture 320
Structuring an Effective Organization 323
Organizational Leadership 339
Strategic Leadership: Embracing Change 339
Recruiting and Developing Talented Operational Leadership 343
Organizational Culture 345
Summary 352
Questions for Discussion 352
Discussion Case: P&G: New and Improved 353
APPENDIX 10: Primary Organizational Structures and Their Strategy-Related Pros and Cons 359
Chapter 11
Strategic Control and Continuous Improvement 365
Establishing Strategic Controls 366
Premise Control 366
Environmental Factors 367
Strategic Surveillance 368
Special Alert Control 368
Implementation Control 369
The Quality Imperative: Continuous Improvement to Build Customer Value 372
Six-Sigma Approach to Continuous Improvement 376
ISO 9004 and the Era of International Standards 378
The Balanced Scorecard Methodology 383
Summary 386
Questions for Discussion 386
Discussion Cases: Strategic Control at Xerox under Ann Mulcahy's Watch; and The Web of Quality: Worldwide Links Mean Better Products 388
Guide to Strategic Management Case Analysis G-1
PART FOUR

CASES

Section A   BusinessWeek Cases 1-1
1 Avon Calling-Lots of New Reps 1-1
2 BMW 2-1
3 Can Dick Parsons Rescue AOL Time Warner? 3-1
4 Can Ford Pull Out of its Skid? 4-1
5 Can Mike Z Work More Magic at Motorola? 5-1
6 Can Siebel Stop Its Slide? 6-1
7 Chipping Away at Qualcomm's Chips 7-1
8 Down for the Count at HVB 8-1
9 Expedia: Changing Pilots in Mid-Climb 9-1
10 FedEx and Brown Are Going Green 10-1
11 GE: Little Engines That Could 11-1
12 Mitsubishi Moves into High Gear 12-1
13 Pumping Up BP 13-1
14 Rick Wagoner's Game Plan 14-1
15 Southwest Is Holding Steady 15-1
16 Staying on Top 16-1
17 The Linux Uprising 17-1
18 The New Blue 18-1
19 The New Merrill Lynch 19-1
20 The NFL Machine 20-1
21 The Samsung Way 21-1
22 Thinking Outside the Big Box 22-1
23 VW Needs a Jump 23-1
24 Winning in China 24-1
25 Yahoo! Act Two 25-1
Section B   Comprehensive Cases 26-1
26 A Note on the Cuban Cigar Industry 26-1
by Akash Kapoor, Richard Ivey School of Business
27 Alladvantage.Com: An Internet Infomediary 27-1
by Brent D. Beal, Louisiana State University
28 Avon Products, Inc.: The Personal Care Industry 28-1
by Gabriella Del Carro, St. John's University
Robert J. Mockler, St. John's University
Marc E. Gartenfeld, St. John's University
29 Castlerock Veterinary Clinic 29-1
by Harold Daniel, University of Maine
Hampton E. Griffin, The Jackson Laboratory
Peter Tarasweich, Northeastern University
30 Citigroup in Post-WTO China 30-1
by David W. Conklin, Richard Ivey School of Business
31 Conoco's Decision: The First Annual President's Award for Business Ethics 31-1
by J. Brooke Hamilton III, University of Louisiana at Lafayette
Mark Smith, University of Louisiana at Lafayette
Steve L. Scheck, ConocoPhillips
32 Corcoron.com and the Manhattan Real Estate Business 32-1
by Alan B. Eisner, Pace University
Richard Robinson, University of South Carolina
John A. Pearce II, Villanova University
33 Dippin Dot's Ice Cream 33-1
by Brian R. Callahan, Pace University
Alan B. Eisner, Pace University
Richard B. Robinson, University of South Carolina
John A. Pearce II, Villanova University
34 Eli Lilly & Co.: The Global Pharmaceutical Industry 34-1
by Elizabeth Petrovski, St. John's University
Robert J. Mockler, St. John's University
Marc E. Gartenfeld, St. John's University
35 FreshDirect 35-1
by Alan B. Eisner, Pace University
Keeley Townsend, Pace University
Richard B. Robinson, University of South Carolina
John A. Pearce II, Villanova University
36 Honda Insight-Personal Hybrid 36-1
by James Johng, Yong-Joo Kang, Melissa A. Schilling, Jane Sul, and Masayuki Takanashi, all of NYU Stern
37 Huxley Maquiladora 37-1
by Jaechul Jung and Joyce Miller, Richard Ivey School of Business
38 IBM Global Services: The Professional Computer Services Industry 38-1
by Vincent Pawlowski, Dorothy G. Dologite, Marc E. Gartenfeld, and Robert J. Mockler, all of St. John's University
39 I'm from the Government and I'm Here to Help You 39-1
by James C. Cooper, King Fahd University of Petroleum & Minerals
Karl Borden, University of Nebraska
40 JP Morgan Chase & Co.: The Credit Card Segment of the Financial Services Industry 40-1
by Steve Preziosi, Damon Swaner, and Robert J. Mocker, all of St. John's University
41 mGAMES 41-1
by Scott Hill, Richard Ivey School of Business
42 Microsoft's Xbox 42-1
by Stephen Karl, Joshua J. Kittner, and Melissa Schilling, all of NYU Stern
43 Valassis Communications 43-1
by Deborah R. Ettington, Eastern Michigan University
44 Pacific Cataract and Laser Institute: Competing in the LASIK Eye Surgery Market 44-1
by John J. Lawrence, University of Idaho
Linda J. Morris, University of Idaho
45 Perdue Farms Inc.: Responding to Twenty-first Century Challenges 45-1
by George C. Rubenson, Salisbury University
Frank Shipper, Salisbury University
46 Prime Time Can Be Anytime: TiVo Pioneers the Personal Video Recorder 46-1
by Shawn Clark, Mickey Revenaugh, Melissa A. Schilling, and Antoine Theysset, all of NYU Stern
47 The Apollo Group, Inc. (University of Phoenix) 47-1
by Richard B. Robinson, University of South Carolina
John A. Pearce II, Villanova University
48 Treo: Handspring's Last Stand? 48-1
by Chad Beaupierre, Scott Bevier, Roberto Ekesi, Vicken Librarikian, and Melissa A. Schilling, all of NYU Stern
49 Robin Hood 49-1
by Joseph Lampel, New York University
50 XM Radio: The Sky Is the Limit 50-1
by Joseph Jordan, Melissa A. Schilling, Matthew Shaffer, Jason Sullivan, and Nancy Wolfe, all of NYU Stern
Case Index C1-1
Subject Index S1-1

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