Preface

Strategy: Winning in the Marketplace is intended for core courses in strategic management.

It has two very distinctive features: (1) a crisp, substantive treatment of the principles of crafting and executing strategy and (2) an unusually appealing lineup of 36 freshly written cases that are tightly linked to both the chapter content and the strategy-making, strategy-executing challenges in today’s companies. We have covered the main elements of strategic thinking and strategic analysis in nine manageable chapters (just over 300 pages), striving for a presentation that is appropriately rigorous but that also can be readily digested by students and comfortably covered in a single term. Skirting the temptation to incorporate too many topics and include too much detail (in a 12- to 16-chapter presentation) results, we think, in three very positive benefits for adopters and students: (1) It creates more leeway for case assignments. (2) It opens up time to utilize a substantive, stimulating simulation exercise—which not only is a pedagogically powerful way for students to learn about strategy but also introduces a welcome degree of added excitement and variety into the course. (3) It helps make the course workload less intimidating or overwhelming for students.

Like most authors of second editions, we are confident that the content of this edition represents a solid improvement over the first edition. It includes an all-new and very timely chapter entitled “Strategy, Ethics, and Social Responsibility,” a more streamlined two-chapter treatment of strategy execution (down from three chapters), and a raft of improvements and updates of all the chapter presentations. Although the book is shorter than most leading texts, you’ll find that the nine chapters cover the principles of crafting and executing strategy with plenty of depth and substance.

There’s a straightforward, integrated flow from one chapter to the next. The writing style aims squarely at making the discipline of business strategy relevant and professionally interesting to students. And the lineup of cases in this second edition is virtually all-new, with 36 freshly written cases and 5 holdover cases that have been updated and revised. The cases, which range from 2 to 30 pages in length (with an average of about 16 pages per case), will push students to apply the concepts and analytical tools covered in the chapters and do some first-rate strategic thinking.

A Text with On-Target Content

In our view, for a senior-level/MBA strategy text to qualify as having on-target content, it must:

■ Explain core concepts in language that students can grasp and provide examples of their relevance and use by actual companies.

■ Take care to thoroughly describe the tools of strategic analysis, how they are used, and where they fit in the managerial process of crafting and executing strategy.

■ Be up to date and comprehensive, presenting solid coverage of the landmark changes in competitive markets and company strategies that are being driven by globalization and Internet technology.

■ Focus squarely on what every student needs to know about crafting, implementing, and executing business strategies in today’s market environments.

■ Contain freshly researched, value-adding cases that feature interesting products and companies, illustrate the important kinds of strategic challenges managers face, tie closely to the chapter content, contain valuable teaching points, and ignite lively class discussions.

We believe this second edition measures up on all five of these criteria. Chapter discussions cut straight to the chase about what students really need to know. Our explanations of core concepts and analytical tools are covered in enough depth to make them understandable and usable, the rationale being that a shallow explanation carries little punch and has almost no instructional value. All the chapters are flush with convincing examples of strategy in action; we made a point of choosing current examples that students can easily relate to. We have striven to incorporate all relevant state-of-the-art research pertinent to a first course in strategy. And, thanks to the excellent case research and case writing being done by colleagues in strategic management, this edition includes a truly fine collection of timely, interesting, and relevant cases to drive home valuable lessons in the whys and hows of successfully crafting and executing strategy. You’ll find this case collection up to the tasks of sparking student interest and giving class members a solid workout in applying the concepts and analytical tools covered in the text chapters.

Organization, Content, and Features of the

Text Chapters

The inclusion of the all-new chapter on strategy, ethics, and social responsibility and the combining of the former three-chapter presentation on the managerial aspects of executing strategy into two chapters give this edition a different texture and feel. We think the new chapter will (1) better alert students to the role and importance of incorporating business ethics and social responsibility into decision making and (2) address the accreditation requirements of the AACSB, which mandate that business ethics be visibly and thoroughly embedded in the core curriculum. In addition to making these two highly visible changes, we have thoroughly overhauled the opening chapter, which introduces the concept of strategy and the managerial process of crafting and executing strategy; added a host of current examples and new Company Spotlights; and embellished and refined the presentation of numerous topics and concepts throughout the chapters.

No other text comes close to matching our coverage of the resource-based theory of the firm and business ethics. The resource-based view of the firm is prominently and comprehensively integrated into our coverage of crafting both single-business and multi-business strategies. Chapters 2, 3, 4, 5, and 6 emphasize that a company’s strategy must be matched both to its external market circumstances and to its internal resources and competitive capabilities. Moreover, Chapters 8 and 9 have a strong resource-based perspective that makes it unequivocally clear how and why the tasks of assembling intellectual capital and building core competencies and competitive capabilities are absolutely critical to successful strategy execution and operating excellence. The all-new, 30-page Chapter 7 contains a very meaty and comprehensive treatment of business ethics and socially responsible behavior as it applies to crafting and executing company strategies.

As always, we have endeavored to highlight the latest developments in the theory and practice of strategic management and to keep the chapter presentations solidly in the mainstream of contemporary strategic thinking. You’ll find up-to-date coverage of the continuing march of industries and companies to wider globalization, the growing scope and strategic importance of collaborative alliances, the spread of high-velocity change to more industries and company environments, and the way implementation of Internet technology applications in countries all across the world is driving fundamental changes in both strategy and internal operations.

The following rundown summarizes the noteworthy chapter features and topical emphasis in this edition:

■ Chapter 1 continues to focus squarely on the central questions of “what is strategy and why is it important?” It introduces and defines a host of core concepts—strategy, business model, strategic visions and business missions, strategic versus financial objectives, strategic plans, strategic intent, strategy crafting, and strategy execution. Clear distinction is made between a company’s strategy and its business model. A section on strategic visions and mission statements hammers home the importance of clear direction setting and a motivating strategic vision; there’s an accompanying discussion of how core values and ethics tie in to a company’s vision and business purpose. Emphasis is placed on why companies have to rapidly adapt strategy to newly unfolding market conditions and why strategy life cycles are often short.

Following Henry Mintzberg’s pioneering research, we stress how and why a company’s strategy emerges from (1) the deliberate and purposeful actions of management and (2) as-needed reactions to unanticipated developments and fresh competitive pressures. There’s a section underscoring that a company’s strategic plan is a collection of strategies devised by different managers at different levels in the organizational hierarchy. We’ve taken pains to explain why all managers are on a company’s strategy-making, strategy-implementing team, why every manager is well advised to make the concepts and techniques of strategic management a basic part of his or her toolkit, and why the best companies want their personnel to be true “students of the business.” The chapter concludes with a substantially expanded section on corporate governance and a discussion of why good strategy making+good strategy execution= good management

.

The role of this first chapter is to give readers a solid grasp of what the term strategy means, pique their interest, and convince them that the ins and outs of crafting and executing a winning strategy are things every business student should know. We intend this chapter to be a perfect accompaniment for the instructor’s first one or two lectures on what the course is all about and why it matters.

■ Chapter 2 sets forth the now-familiar analytical tools and concepts of industry and competitive analysis and demonstrates the importance of tailoring strategy to fit the circumstances of a company’s industry and competitive environment. The standout feature of this chapter is a presentation of Michael E. Porter’s “five forces model of competition” that we think is the clearest, most straightforward discussion of this model in any text in the field. Globalization and Internet technology are treated as potent driving forces capable of reshaping industry competition—their roles as change agents have become factors that most companies in most industries must reckon with in forging winning strategies.

■ Chapter 3 establishes the importance of doing solid company situation analysis as a basis for matching strategy to organizational resources, competencies, and competitive capabilities. The roles of core competencies and organizational resources and capabilities in creating customer value and helping build competitive advantage are center stage in the discussions of company resource strengths and weaknesses. SWOT analysis is cast as a simple, easy-to-use way to assess a company’s resources and overall situation. There is solid coverage of the now-standard tools of value chain analysis, benchmarking, and competitive strength assessments—all of which, we believe, provide insight into a company’s relative cost position and market standing vis-à-vis rivals. There’s solid coverage of how company implementation of Internet technology applications is altering company and industry value chains and the performance of specific value chain activities.

■ Chapter 4 deals with a company’s quest for competitive advantage—the options for crafting a strategy that simultaneously holds good prospects for competitive advantage while also being well suited both to industry and competitive conditions and to its own resources and competitive circumstances. While the chapter is framed around the five generic competitive strategies—low-cost leadership, differentiation, best-cost provider, focused differentiation, and focused low cost—you’ll also find important sections on what use to make of strategic alliances and collaborative partnerships, what use to make of mergers and acquisitions in strengthening the company’s competitiveness, when to integrate backward or forward into more stages of the industry value chain, the merits of outsourcing certain value chain activities to outside specialists, whether and when to employ offensive and defensive moves, and the different types of Web site strategies that companies can employ to position themselves in the marketplace.

■ Chapter 5 explores a company’s strategy options for expanding beyond its domestic boundary and competing in the markets of either a few or a great many countries— options ranging from an export strategy to licensing and franchising to multicountry strategies to global strategies to heavy reliance on strategic alliances and joint ventures. Four strategic issues unique to competing multinationally are given special attention: (1) whether to customize the company’s offerings in each different country market to match the tastes and preferences of local buyers or whether to offer a mostly standardized product worldwide; (2) whether to employ essentially the same basic competitive strategy in the markets of all countries where the company operates or whether to modify the company’s competitive approach country by country as may be needed to fit the specific market conditions and competitive circumstances it encounters; (3) locating production facilities, distribution centers, and customer service operations to maximum competitive advantage; and (4) efficient cross-border transfer of a company’s resource strengths and capabilities to build competitive advantage. There’s also coverage of the concepts of profit sanctuaries and cross-market subsidization, the special problems associated with entry into the markets of emerging countries, and strategies that local companies in such emerging countries as India , China , Brazil , and Mexico can use to defend against the invasion of opportunity-seeking, resource-rich global giants.

■ Our rather meaty treatment of diversification strategies for multibusiness enterprises in Chapter 6 begins by laying out the various paths for becoming diversified, explains how a company can use diversification to create or compound competitive advantage for its business units, and examines the strategic options an already-diversified company has to improve its overall performance. In the middle part of the chapter, the analytical spotlight is on the techniques and procedures for assessing the strategic attractiveness of a diversified company’s business portfolio—the relative attractiveness of the various businesses the company has diversified into, a multiindustry company’s competitive strength in each of its lines of business, and the strategic fits and resource fits among a diversified company’s different businesses. The chapter concludes with a brief survey of a company’s four main postdiversification strategy alternatives: (1) broadening the diversification base, (2) divesting some businesses and retrenching to a narrower diversification base, (3) restructuring the makeup of the company’s business lineup, and (4) engaging in multinational diversification.

■ Our all-new Chapter 7, “Strategy, Ethics, and Social Responsibility,” zeroes in on whether and why a company’s strategy should pass the test of moral scrutiny. Students usually acknowledge that a company and its personnel have a legal duty to obey the law and play by the rules of fair competition. But today’s students seem to be much less clear on (1) whether a company has a duty to operate according to ethical standards and (2) whether a company has a duty or obligation to contribute to the betterment of society regardless of the needs and preferences of the customers it serves. Is it in the best interests of shareholders for a company to operate ethically and/or to operate in a socially responsible manner? There is substantive discussion of what linkage, if any, there should be between a company’s efforts to craft and execute a winning strategy and its duties to (1) conduct its activities in an ethical manner and (2) demonstrate socially responsible behavior by being a committed corporate citizen and attending to the needs of nonowner stakeholders—employees, the communities in which it operates, the disadvantaged, and society as a whole. The chapter reflects the very latest in the literature. The opening section of the chapter addresses whether ethical standards are universal (as maintained by the school of ethical universalism) or dependent on local norms and situational circumstances (as maintained by the school of ethical relativism) or a combination of both (as maintained by integrative social contracts theory). Following this is a section on the three categories of managerial morality (moral, immoral, and amoral), a section on the drivers of unethical strategies and shady business behavior, a section on the approaches to managing a company’s ethical conduct, a section on linking a company’s strategy to its ethical principles and core values, a section on the concept of a “social responsibility strategy,” and sections that explore the business case for ethical and socially responsible behavior. The chapter gives students some serious ideas to chew on and, hopefully, will make them far more ethically conscious. It has been written as a stand-alone chapter that can be assigned in the early, middle, or late part of the course.

■ The two-chapter module on executing strategy (Chapters 8 and 9) is anchored around a solid, compelling conceptual framework: (1) building the resource strengths and organizational capabilities needed to execute the strategy in competent fashion; (2) allocating ample resources to strategy-critical activities; (3) ensuring that policies and procedures facilitate rather than impede strategy execution; (4) instituting best practices and pushing for continuous improvement in how value chain activities are performed; (5) installing information and operating systems that enable company personnel to better carry out their strategic roles proficiently; (6) tying rewards and incentives directly to the achievement of performance targets and good strategy execution; (7) shaping the work environment and corporate culture to fit the strategy; and (8) exerting the internal leadership needed to drive execution forward. The recurring theme of these two chapters is that implementing and executing strategy entails figuring out the specific actions, behaviors, and conditions that are needed for a smooth strategy-supportive operation and then following through to get things done and deliver results—the goal here is to ensure that students understand that the strategy-implementing/strategy-executing phase is a make-things-happen and make-them-happen-right kind of managerial exercise.

Our top priority has been to ensure that the nine chapters of text hit the bull’s-eye with respect to content and represent the best thinking of both academics and practitioners. But, at the same time, we’ve gone the extra mile to stay on target with clear, crisp explanations laced with enough relevant examples and Company Spotlights to make the presentation convincing, pertinent, and worthwhile to readers preparing for careers in management and business. We have gone all out to create chapter discussions and compile a case lineup capable of persuading students that the discipline of strategy merits their rapt attention.

The Case Collection

The 36 cases included in this edition are the very latest and best that we could find. The lineup is flush with examples of strategy in action and valuable lessons for students in the art and science of crafting and executing strategy. And there’s a good blend of cases from a length perspective—close to one-fourth are under 15 pages, yet offer plenty for students to chew on; about one-fourth are medium-length cases; and the remainder are longer, detail-rich cases that call for more sweeping and detailed analysis.

At least 28 of the 36 cases involve high-profile companies, products, or people that students will have heard of, know about from personal experience, or can easily identify with. There are four dot-com company cases, plus several others that will provide students with insight into the special demands of competing in industry environments where technological developments are an everyday event, product life cycles are short, and competitive maneuvering among rivals comes fast and furious. Close to two-thirds of the cases involve situations where company resources and competitive capabilities play as large a role in the strategy-making, strategy-executing scheme of things as industry and competitive conditions do. Scattered throughout the lineup are 15 cases concerning non-U.S. companies, globally competitive industries, and/or cross-cultural situations; these cases, in conjunction with the globalized content of the text chapters, provide ample material for linking the study of strategic management tightly to the ongoing globalization of the world economy. You’ll also find 6 cases dealing with the strategic problems of family-owned or relatively small entrepreneurial businesses and 29 cases involving public companies about which students can do further research on the Internet. Nine of the cases (Starbucks, Competition in the Digital Music Industry,

Competition in the Bottled Water Industry, eBay, Google, Harley-Davidson, Atkins Nutritionals, Wal-Mart, and Merck and the Recall of Vioxx) have accompanying videotape segments. We believe instructors will find the collection of 36 cases quite appealing, eminently teachable, and very suitable for drilling students on the use of the concepts and analytical treatments in Chapters 1 through 9. With this case lineup, instructors should have no difficulty whatsoever choosing a set of cases to assign that will capture the interest of students from start to finish.

In addition, the publisher is making five other cases from prior edition available to students who purchase the text and to adopters—these cases are posted at the Strategy: Winning in the Marketplace Web site ( www.mhhe.com/thompson2e ). This extends the number of cases available in the total package to 41.

Two Accompanying Online, Fully

Automated Simulation Exercises: GLOBUS and The Business Strategy Game

GLO-BUS: Developing Winning Competitive Strategies and The Business Strategy Game (the online eighth edition) — two strategy-related simulations that are available online and that feature automatic processing of student decisions—are being marketed by the publisher as companion supplements for use with this and other texts in the field. The Business Strategy Game is the world’s leading strategy simulation, having been played by well over 350,000 students at universities throughout the world. GLOBUS, a somewhat less complicated online simulation that was introduced in fall 2003, has been played by over 10,000 students at more than 100 universities worldwide and is equally suitable for courses in business strategy. All activity for GLO-BUS occurs at www.glo-bus.com and all activity for The Business Strategy Game takes place at www.bsg-online.com . Table 1 provides a comparison of the industry and competitive features of GLO-BUS and the online edition of The Business Strategy Game.

Both simulations have attractive operating and administrative characteristics that make them a breeze to utilize in giving students valuable practice in thinking strategically and applying basic strategy concepts and analytical tools:

■ Time requirements for instructors to administer the simulations are minimal. Instructors must go through Industry Set-up and specify a decision schedule and desired scoring weights (which can be altered later). Setting up the simulation for the course is done online and takes about 10 to 15 minutes. Once set-up is completed, no other administrative actions are required beyond moving participants to a different team (should the need arise) and monitoring the progress of the simulation (to whatever extent desired). Instructors who wish to do so can track happenings in the simulation by printing copies of the Industry and Company reports (done online), change selected costs and rates to introduce different operating conditions (players are automatically notified of any changes if instructors so choose), and serve as a consultant to troubled companies.

■ There’s no software for students or administrators to download and no disks to fool with. When participants log on to the Web site, the needed programming and company data are automatically transferred into Excel on the user’s PC for the duration of the session and then automatically saved and uploaded back to the server on exit. All work must be done online, and the speed for participants using dial-up modems is quite satisfactory.

■ Participant’s guides for both simulations are available at the Web site—students can read either guide on their monitors or print out a copy, as they prefer. The Participant’s Guide for GLO-BUS is 25 pages, and the Participant’s Guide for The Business Strategy Game is 33 pages.

■ There are extensive built-in help screens explaining (1) each decision entry, (2) the information on each page of the Industry Reports, and (3) the numbers presented in the Company Reports. The help screens allow company co-managers to figure things out for themselves, thereby curbing the need for students to always run to the instructor with questions about how things work.

■ The results of each decision are processed automatically on the simulation’s server and are available to all participants within one hour after the decision deadline

GLO-BUS The Business Strategy Game

specified by the instructor or game administrator—typically the results are available 15 to 20 minutes after the decision deadline. The servers dedicated to hosting the two simulations have appropriate backup capability and are maintained by a prominent Web-hosting service that guarantees 99.9 percent reliability on a 24/7 basis.

■ Participants and instructors are notified via e-mail when the results are ready; the e-mail contains highlights of the results.

■ Decision schedules are determined by the instructor (done online and automatically communicated to all players). Decisions can be made once per week, twice per week, or even twice daily, depending on how instructors want to conduct the exercise. One popular decision schedule involves 1 or 2 practice decisions, 6 to 10 regular decisions, and decisions made once a week across the whole term. A second popular schedule is 1 or 2 practice decisions, 6 to 8 regular decisions, and biweekly decisions, all made during the last four or five weeks of the course (when it can be assumed that students have pretty much digested the contents of Chapters 1 to 5, gotten somewhat comfortable with what is involved in crafting strategy for a single-business company situation, and have prepared several assigned cases).

■ Instructors have the flexibility to prescribe 0, 1, or 2 practice decisions and from 3 to 10 regular decisions.

■ Company teams can be composed of 1 to 5 players each, and the number of teams in a single industry can range from 4 to 12. If your class size is too large for a single industry, then it is a simple matter to create two or more industries for a single class section. You’ll find that having more than one industry per class presents no significant change in administrative requirements, because everything is processed automatically and all company and individual performances are automatically recorded in your online grade book. Thus it turns out not to be an extra administrative burden to divide a large class into two or more industries.

■ Following each decision, participants are provided with a complete set of reports—a six-page Industry Report, a one-page Competitive Intelligence report for each geographic region that includes strategic group maps and bulleted lists of competitive strengths and weaknesses, and a set of Company Reports (income statement, balance sheet, cash flow statement, and assorted production, marketing, and cost statistics).

■ Two open-book multiple-choice tests of 20 questions (optional, but strongly recommended) are included as part of each of the two simulations. The quizzes are taken online and automatically graded, with scores reported instantaneously to participants and automatically recorded in the instructor’s electronic grade book. Quiz 1 has a time limit of 45 minutes and covers contents of the Participant’s Guide. Quiz 2 has a time limit of 75 minutes and checks whether players understand what the numbers in the company reports mean and how they are calculated. Students are automatically provided with three sample questions for each test.

■ At the end of the simulation exercises, there are peer evaluations that instructors can have students complete. The peer evaluations are optional but strongly recommended; they are completed online and automatically recorded in the instructor’s electronic grade book. Results can be reviewed by clicking on each comanager’s peer scores in the grade book. Simulations now have a track record as a proven and very effective vehicle for giving students valuable practice in being active strategic thinkers, reading the signs of industry change, reacting to the moves of competitors, evaluating strengths and weaknesses in their company’s competitive position, and deciding what to do to improve a company’s financial performance.

Why Simulations Are Widely Used in Capstone

Strategy Courses

All three coauthors of this book are avid, longtime simulation users. Our own experiences over the years, together with numerous discussions with colleagues around the world, have convinced us that competition-based simulation games are the single most powerful pedagogical device for hammering home the core concepts and analytical techniques that constitute the discipline of business and competitive strategy. We see three big reasons why simulations are rapidly growing in popularity and have earned a place in so many of today’s strategy courses:

■ Both GLO-BUS and The Business Strategy Game have been carefully designed to connect directly to the chapter material and give students the experience of putting what they read in the chapters into play. Company co-managers have to wrestle with charting a long-term direction for their company, setting strategic and financial objectives, and crafting strategies that produce good results and perhaps lead to competitive advantage. In crafting and executing a strategy, they can choose from a wide array of the strategic options discussed in the text chapters and they can practice using the tools of strategic analysis. In both GLO-BUS and The Business Strategy Game , students are provided with strategic group maps and lists of competitive strengths and weaknesses, as well as an assortment of cost benchmarks and comparative financial statistics, allowing them to diagnose their company’s market standing vis-à-vis rivals and decide on a course of action to improve it. Moreover, simulations provide instructors with opportunity after opportunity to draw upon the industry and company circumstances in the simulation for examples to use in lectures on the text chapters—examples that all students in the class can relate to because of their personal experience in running their companies.

■ The market and competitive dynamics of an industry simulation—which make the simulation a “live case” in which class members are active managerial participants— give students valuable practice in thinking strategically and in making responsible, results-oriented decisions. Company comanagers can pursue a competitive advantage keyed to low cost/low price or to top-notch features and styling or to more value for the money. They can try to gain an edge over rivals with more advertising or wider product selection. They can focus on one or two geographic regions or strive for geographic balance. They can pursue essentially the same strategy worldwide or craft slightly or very different strategies for the Europe-Africa, Asia-Pacific, Latin America , and North America markets. Almost any well-conceived, well-executed competitive approach is capable of succeeding provided it is not overpowered by the strategies of competitors or defeated by the presence of too many copycat strategies that dilute its effectiveness. In other words, which company strategies end up delivering the best performance hinges on the interaction and competitive strength of the strategies employed by rival companies—not on “silver bullet” decision combinations that players are challenged to discover. Since, in a simulation, students have to live with all the decisions they make and the results they produce, they experience firsthand what is involved in crafting and executing a strategy that delivers good results— it is this understanding that is the essence of a course in business strategy.

■ Based on the classroom experiences of hundreds of instructors and the mushrooming use of simulations in strategy courses worldwide, incorporating a simulation as a centerpiece turns strategy courses into a livelier, richer, more powerful learning experience. A realistic, substantive, “learn by doing” simulation like GLO-BUS or The Business Strategy Game sparks a highly desirable degree of student excitement about the subject matter of crafting and executing strategy. More and more professors who teach strategy courses are finding that simulations are every bit as pedagogically effective as case analysis as the prime vehicle for showing students how to make use of core concepts and analytical techniques. Competition-based simulation games give students valuable practice in being active strategic thinkers and drill them on responsible, results-oriented decision making.

There are two other reasons why a simulation is a good exercise to include as an integral and featured part of the course:

■ A well-conceived simulation adds an enormous amount of student interest and excitement—a head-to-head competitive battle for market share and industry leadership is certain to stir students’ competitive juices and emotionally involve them in the subject matter. Most students will enjoy the exercise, recognize its practical value, and learn a lot—all of which tends to result in higher instructor evaluations at the end of the course.

■ Students will almost certainly learn more about the ins and outs of crafting and executing strategy from playing a simulation than they will learn from preparing two or three extra cases or doing a second or third written case analysis. Since use of GLO-BUS or The Business Strategy Game can add net time to the course requirements from a student perspective, instructors can compensate by trimming the total number of assigned cases or using a simulation as a substitute for a written case, an hour exam, or both. Happily, a simulation lightens the grading burden for instructors as compared to written cases or essay exams.

In sum, the value that a first-rate simulation adds to a strategy course boils down to two things:

1. The “WOW! This is great, plus I am learning a lot” reaction of students.

2. The contribution a good simulation exercise makes to better preparing students for a career in business and management— a simulation makes courses in strategy much more of a true capstone experience and puts students under the gun of competition to improve their business acumen and managerial judgment.

Invitation to Instructors: To learn more about GLO-BUS or The Business Strategy Game , please visit www.glo-bus.com or www.bsg-online.com and browse the wealth of information that is at your fingertips. There is a Guided Tour link on each of the Web sites that provides a quick bird’s-eye view and takes about five minutes—enough to determine whether there’s sufficient interest on your part to explore further. There are also instructor’s guides and PowerPoint presentation slides that you can skim to preview the two simulations. If you call the senior author of this text at 205-348-

8923, the simulation authors will be glad to provide you with a personal tour of either or both Web sites (while you are at your PC) and walk you through the many features that are built into the simulations. We think you’ll be quite impressed with the capabilities that have been programmed into The Business Strategy Game and GLO-BUS, the simplicity with which both simulations can be administered, and their exceptionally tight connection to the text chapters, core concepts, and standard analytical tools.

Adopters of the text who want to incorporate use of either of the two simulation supplements should instruct their bookstores to order the “book-simulation package”—the publisher has a special ISBN number for this package that entails a discounted price; shrink-wrapped with each text is a special card that provides students with a prepaid access code for participating in either simulation.

Student Support Materials

Key Points Summaries

At the end of each chapter is a synopsis of the core concepts, analytical tools, and other key points discussed in the chapter. These chapter-end synopses, along with the margin notes scattered throughout each chapter, help students focus on basic strategy principles, digest the messages of each chapter, and prepare for tests.

Chapter-End Exercises

Each chapter contains a select number of exercises, most related to research on the Internet, that reinforce key concepts and topics covered in the chapters.

A Value-Added Web Site

The student section of www.mhhe.com/thompson2e contains a number of helpful aids:

■ Twenty-question self-scoring chapter tests that students can take to measure their grasp of the material presented in each of the nine chapters.

■ A “Guide to Case Analysis” containing sections on what a case is, why cases are a standard part of courses on strategy, preparing a case for class discussion, doing a written case analysis, doing an oral presentation, and using financial ratio analysis to assess a company’s financial condition.

■ A table containing formulas and brief explanations of all the various financial ratios that are commonly used in evaluating a company’s financial statements and financial strengths.

■ A select number of PowerPoint slides for each chapter.

PowerWeb

With each new copy of this text, students gain access to the publisher’s PowerWeb site offering current news, articles from 6,300 premium sources, a Web research guide, current readings from annual editions, and links to related sites.

Case-T UTOR Software

Accompanying the 36 cases in the text is a downloadable software package containing assignment questions for all 36 cases, plus analytically structured exercises for 12 of the cases that coach students in doing the strategic thinking needed to arrive at solid answers to the assignment questions for those cases. Conscientious completion of the case preparation exercises helps students gain quicker command of the concepts and analytical techniques and points them toward doing good strategic analysis. The 12 cases that have case preparation exercises are indicated by the Case-T UTOR logo in the case listing section of the Table of Contents (the Case-T UTOR logo also appears on the first page of every case for which there is an exercise). Students can download the Case-T UTOR software at the publisher’s Web site.

Instructor Support Materials

Instructor’s Manual

The accompanying instructor’s manual contains a section on suggestions for organizing and structuring your course, sample syllabi and course outlines, a copy of the test bank, and comprehensive teaching notes for each of the 36 cases.

Test Bank

The test bank, prepared by the coauthors, contains about 700 multiple-choice questions and 100 short-answer and essay questions.

Computest

A computerized version of the test bank allows you to generate tests quite conveniently and to add your own questions.

PowerPoint Slides

To facilitate preparation of your lectures and to serve as chapter outlines, approximately 500 colorful and professional-looking slides are available. You’ll have access to slides displaying core concepts, analytical procedures, key points, and all the figures in the text chapters. The slides are the creation of Professor Jana Kuzmicki of Troy State University .

Accompanying Case Videos

Nine of the cases (Starbucks, Competition in the Digital Music Industry, Competition in the Bottled Water Industry, eBay, Google, Harley-Davidson, Atkins Nutritionals, Wal-Mart, and Merck and the Recall of Vioxx) have accompanying videotape segments that you can show during the course of the case discussions. Suggestions for using each video are contained in the teaching note for the case.

Presentation CD-ROM

The instructor’s manual, all of the PowerPoint slides, the video clips, teaching notes or the 36 cases in the text, and the 5 supplemental e-cases and teaching notes available with Crafting and Executing Strategy: The Quest for Competitive Advantage have been installed on a CD that is available to all adopters. The CD is a useful aid for compiling a syllabus and daily course schedule, preparing customized lectures, and developing tests on the text chapters.

The Business Strategy Game and GLO-BUS

Online Simulations

Using one of the two companion simulations is a powerful and constructive way of emotionally connecting students to the subject matter of the course. We know of no more effective and interesting way to stimulate the competitive energy of students and prepare them for the rigors of real-world business decision making than to have them match strategic wits with classmates as they run a company in head-to-head competition for global market leadership.

With this second edition, we’ve done our level best to provide you with a comprehensive teaching/learning package that squarely targets what every business student needs to know about crafting and executing business strategies, that works magic in the classroom, and that wins the applause of students. Our goal has been to raise the bar for what a text package in the discipline of strategy ought to deliver. We tried to equip you with a smorgasbord of teaching/learning opportunities and keep the nature of student assignments varied and interesting. We’ve pursued every avenue we know to provide you with all the resources and materials you’ll need to design and deliver a course that is on the cutting edge and is pedagogically effective.

Acknowledgements

We heartily acknowledge the contributions of the case researchers whose case-writing efforts appear herein and the companies whose cooperation made the cases possible. To each one goes a very special thank-you. We cannot overstate the importance of timely, carefully researched cases in contributing to a substantive study of strategic management issues and practices. From a research standpoint, strategy-related cases are invaluable in exposing the generic kinds of strategic issues that companies face, in forming hypotheses about strategic behavior, and in drawing experience-based generalizations about the practice of strategic management. From an instructional standpoint, strategy cases give students essential practice in diagnosing and evaluating the strategic situations of companies and organizations, in applying the concepts and tools of strategic analysis, in weighing strategic options and crafting strategies, and in tackling the challenges of successful strategy execution. Without a continuing stream of fresh, well researched, and well-conceived cases, the discipline of strategic management would lose its close ties to the very institutions whose strategic actions and behavior it is aimed at explaining. There’s no question, therefore, that first-class case research constitutes a valuable scholarly contribution to the theory and practice of strategic management.

In addition, a great number of colleagues and students at various universities, business acquaintances, and people at McGraw-Hill provided inspiration, encouragement, and counsel during the course of this project. Like all text authors in the strategy field, we are intellectually indebted to the many academics whose research and writing have blazed new trails and advanced the discipline of strategic management. We are most grateful to the reviewers who made valuable suggestions that guided our preparation of the first edition: Seyda Deligonul, David Flanagan, Esmeralda Garbi, Mohsin Habib, Kim Hester, Jeffrey E. McGee, and Diana Wong. The following reviewers provided seasoned advice and suggestions for improving the chapters in this second edition:

Donald P. Austin, Saint Michael’s College of Vermont

R. Ivan Blanco, Emporia State University

Debbie Gilliard, Metropolitan State College–Denver

Dale Henderson, Radford University

Matthew Howard, Park University

Tammy G. Hunt, University of North Carolina at Wilmington

Dennis M. Kripp, Roosevelt University

Thomas C. Leach, University of New England

Paul D. Maxell, St. Thomas University

Raza Mir, William Paterson University

Gordon Riggle, University of Colorado

Daniel A. Sauers, Winona State University

Srivatsa Seshadri, University of Nebraska at Kearney

As always, we value your recommendations and thoughts about the book. Your comments regarding coverage and contents will be taken to heart, and we always are grateful for the time you take to call our attention to printing errors, deficiencies, and other shortcomings. Please e-mail us at athompso@cba.ua.edu, jgamble@usouthal.edu, or astrickl@cba.ua.edu; fax us at 205-348-6695; or write us at PO Box 870225 , Department of Management and Marketing, The University of Alabama, Tuscaloosa , AL 35487-0225 .

Arthur A. Thompson

John E. Gamble

A. J. Strickland