Strategic Management, Tenth Edition
By Gregory G. Dess, Gerry Mcnamara, Alan B. Eisner, Seung-Hyun (Sean) Lee and Steve Sauerwald
Contents:
PART 1 STRATEGIC ANALYSIS
CHAPTER 1
Strategic Management: Creating Competitive
Advantages 2
Learning from Mistakes 3
What Is Strategic Management? . 5
Defining Strategic Management 5
The Four Key Attributes of Strategic Management 6
1.1 STRATEGY SPOTLIGHT
Ambidextrous Behaviors: Combining Alignment and Adaptability 9
The Strategic Management Process . 9
Intended versus Realized Strategies 9
Strategy Analysis 12
Strategy Formulation 12
Strategy Implementation 13
1.1 INSIGHTS FROM EXECUTIVES
The Strategic Management Process 14
The Role of Corporate Governance and Stakeholder
Management . 16
Alternative Perspectives of Stakeholder Management 18
Social Responsibility and Environmental Sustainability:
Moving beyond the Immediate Stakeholders 19
1.2 STRATEGY SPOTLIGHT
Environmental Sustainability in the Fashion Industry 22
The Strategic Management Perspective: An Imperative
throughout the Organization . 23
1.3 STRATEGY SPOTLIGHT
Strategy and the Value of Inexperience 24
Ensuring Coherence in Strategic Direction . 24
Why Share a Firm’s Strategic Direction? 24
Organizational Vision 25
1.4 STRATEGY SPOTLIGHT Digital Economy
Alibaba’s Vision Created the World’s Most Valuable Online
Ecosystem 26
Mission Statements 27
Strategic Objectives 28
Issue for Debate 29
Reflecting on Career Implications . . . 30
Key Points 30
Summary Review Questions 31
Key Terms 32
Experiential Exercises and Application Questions 32
Ethics Questions
References 33
CHAPTER 2
Analyzing the External Environment of the Firm ..36
Learning from Mistakes 37
Enhancing Awareness of the External Environment . 38
The Role of Scanning, Monitoring, Competitive
Intelligence, and Forecasting 39
2.1 STRATEGY SPOTLIGHT Ethics
Ethical Guidelines on Competitive Intelligence:
United Technologies 40
SWOT Analysis 42
The General Environment . 43
The Demographic Segment 45
The Sociocultural Segment 45
The Political/Legal Segment 45
2.1 INSIGHTS FROM RESEARCH
New Tricks: Research Debunks Myths about Older Workers 46
2.2 STRATEGY SPOTLIGHT Environmental Sustainability
Environmental Awareness Drives Sustainable
Business Practices 47
The Technological Segment 47
The Economic Segment 48
The Global Segment 48
Relationships among Elements of the
General Environment 49
Digital Economy: A Fundamental Shift in the
Business Environment .50
2.3 STRATEGY SPOTLIGHT Digital Economy
How Big Data Can Monitor Federal, State, and Local
Government Expenditures 51
The Competitive Environment. 52
Porter’s Five Forces Model of Industry Competition 52
How the Internet and Digital Technologies are Affecting the Five Competitive Forces 56
2.4 STRATEGY SPOTLIGHT
Intense Rivalry Prevents U.s. Grocers From Raising Prices 57
2.5 STRATEGY SPOTLIGHT
Buyer Power In Legal Services: The Role of the Internet 59
Using Industry Analysis: A Few Caveats 60
Strategic Groups within Industries 62
Issue for Debate 65
Reflecting on Career Implications . . . 66
Key Points 66
Summary Review Questions 67
Key Terms 68
Experiential Exercises and Application Questions 68
Ethics Questions 68
References 68
CHAPTER 3
Assessing the Internal Environment of the Firm . .72
Learning from Mistakes 73
Value-Chain Analysis . 74
Primary Activities 74
Support Activities 76
3.1 STRATEGY SPOTLIGHT Digital Economy Retailers Rein in their Return Policies 77
3.2 STRATEGY SPOTLIGHT
Schmitz Cargobull: Adding Value to Customers via It 79
Interrelationships among Value-Chain Activities within and across Organizations 79
Applying the Value Chain to Service Organizations 79
3.3 STRATEGY SPOTLIGHT Environmental Sustainability
Sustainability Across the Value Chain 80
Resource-Based View of the Firm . 81
Types of Firm Resources 83
3.4 STRATEGY SPOTLIGHT Digital Economy
Zara Embraces Technology to Meet the Online
Retailer Challenge 84
Firm Resources and Sustainable Competitive Advantages 84
The Generation and Distribution of a Firm’s Profits:
Extending the Resource-Based View of the Firm 89
Evaluating Firm Performance: Two Approaches . 90
Financial Ratio Analysis 90
Integrating Financial Analysis and Stakeholder
Perspectives: The Balanced Scorecard 93
3.1 INSIGHTS FROM RESEARCH
The Benefits of Balance 95
Issue for Debate 96
Reflecting on Career Implications . . . 97
Key Points 97
Summary Review Questions 98
Key Terms 98
Experiential Exercises and Application Questions 98
Ethics Questions 100
References 100
CHAPTER 4
Recognizing a Firm’s Intellectual Assets: Moving beyond a Firm’s Tangible Resources . . 102
Learning from Mistakes 103
The Central Role of Knowledge in Today’s Economy . 104
Human Capital: The Foundation
of Intellectual Capital . 106
4.1 STRATEGY SPOTLIGHT Environmental Sustainability
Can Green Strategies Attract and Retain Talent? 108
Attracting Human Capital 108
4.1 INSIGHTS FROM RESEARCH
Welcome Back! Recruiting Boomerang Employees 109
4.2 STRATEGY SPOTLIGHT Digital Economy
Unilever’s Use of Artificial Intelligence to Hire the
Best Talent 111
Developing Human Capital 111
Retaining Human Capital 113
Enhancing Human Capital: Redefining Jobs and Managing Diversity 115
4.3 STRATEGY SPOTLIGHT
Millennials Have a Different Definition of Diversity and
Inclusion than Prior Generations 117
The Vital Role of Social Capital . .117
How Social Capital Helps Attract and Retain Talent 118
Social Networks: Implications for Knowledge
Management and Career Success 119
The Potential Downside of Social Capital 122
4.4 STRATEGY SPOTLIGHT
How Women Can Network More Effectively 123
Using Technology to Leverage Human
Capital and Knowledge . 124
Using Networks to Share Information 124
Electronic Teams: Using Technology to
Enhance Collaboration 124
4.5 STRATEGY SPOTLIGHT Digital Economy
How SAP Taps Knowledge Well Beyond Its Boundaries 126
Codifying Knowledge for Competitive Advantage 126
Protecting the Intellectual Assets of the Organization:
Intellectual Property and Dynamic Capabilities . 128
Intellectual Property Rights 128
Dynamic Capabilities 129
Issue for Debate 130
Reflecting on Career Implications . . . 131
Key Points 131
Summary Review Questions 132
Key Terms 132
Experiential Exercises and Application Questions 133
Ethics Questions 133
References 133
PART 2 STRATEGIC FORMULATION
CHAPTER 5
Business-Level Strategy: Creating and
Sustaining Competitive Advantages . . 138
Learning from Mistakes 139
Types of Competitive Advantage
and Sustainability .. 140
Overall Cost Leadership 141
5.1 STRATEGY SPOTLIGHT Environmental Sustainability
Primark Strives to Balance Low Costs with
Environmental Sustainability 143
Differentiation 145
5.2 STRATEGY SPOTLIGHT Ethics
The Name of the Game is to Make it Harder to Stop Playing 147
Focus 149
5.3 STRATEGY SPOTLIGHT
Extreme Differentiation: The Aston Martin Valkyrie 150
Combination Strategies: Integrating Overall Low Cost
and Differentiation 151
5.4 STRATEGY SPOTLIGHT Digital Economy
Mass Customized Menswear 153
Can Competitive Strategies be Sustained? Integrating
and Applying Strategic Management Concepts . 154
Atlas Door: A Case Example 154
Are Atlas Door’s Competitive Advantages Sustainable? 155
Strategies for Platform Markets 157
Industry Life-Cycle Stages: Strategic
Implications 158
Strategies in the Introduction Stage 160
Strategies in the Growth Stage 160
Strategies in the Maturity Stage 161
Strategies in the Decline Stage 162
5.5 STRATEGY SPOTLIGHT
Charging Up Profits in a Declining Industry 163
Turnaround Strategies 164
Issue for Debate 165
Reflecting on Career Implications . . . 166
Key Points 166
Summary Review Questions 167
Key Terms 167
Experiential Exercises and Application Questions 167
Ethics Questions 168
References 168
CHAPTER 6
Corporate-Level Strategy: Creating Value
through Diversification . 172
Learning from Mistakes 173
Making Diversification Work: An Overview . 175
Related Diversification: Economies of Scope and Revenue Enhancement . 176
Leveraging Core Competencies 177
6.1 STRATEGY SPOTLIGHT
Leveraging Volvo’s Competencies to Transform Geely 178
Sharing Activities 178
Enhancing Revenue and Differentiation . 179
Related Diversification: Market Power . 179
6.2 STRATEGY SPOTLIGHT Environmental Sustainability
Tesla Breaks Industry Norms by Vertically Integrating 180
Pooled Negotiating Power 180
Vertical Integration 180
Unrelated Diversification: Financial
Synergies and Parenting . 182
Corporate Parenting and Restructuring 183
Portfolio Management 184
Caveat: Is Risk Reduction a Viable Goal of
Diversification? 186
The Means to Achieve Diversification . 186
Mergers and Acquisitions 187
6.3 STRATEGY SPOTLIGHT
A Diversified Firm Uses Acquisitions to Change its Focus 189
6.1 INSIGHTS FROM RESEARCH
Do Managers Learn from Media Assessments of Acquisitions? 191
Strategic Alliances and Joint Ventures 192
Internal Development 193
6.4 STRATEGY SPOTLIGHT
Honda Looks to Alliance Partners to Meet Changing
Market Needs 194
How Managerial Motives Can Erode
Value Creation . 195
Growth for Growth’s Sake 195
Egotism 195
Antitakeover Tactics 196
Issue for Debate 196
Reflecting on Career Implications . . . 197
Key Points 197
Summary Review Questions 198
Key Terms 198
Experiential Exercises and Application Questions 199
Ethics Questions 199
References 199
CHAPTER 7
International Strategy: Creating Value in Global
Markets 202
Learning from Mistakes 203
The Global Economy: A Brief Overview . . 204
Factors Affecting a Nation’s Competitiveness . . 205
Factor Endowments 205
Demand Conditions 205
Related and Supporting Industries 206
Firm Strategy, Structure, and Rivalry 206
Concluding Comment on Factors Affecting a
Nation’s Competitiveness 206
7.1 STRATEGY SPOTLIGHT
India and the Diamond of National Advantage 207
International Expansion: A Company’s
Motivations and Risks . . 208
Motivations for International Expansion 208
Potential Risks of International Expansion 210
7.2 STRATEGY SPOTLIGHT
Reverse Innovation in Health Care 211
7.3 STRATEGY SPOTLIGHT Ethics
The Counterfeit Center on the U.S. Border? It’s Canada 213
Global Dispersion of Value Chains: Outsourcing and Offshoring 214
Achieving Competitive Advantage in Global Markets 216
Two Opposing Pressures: Reducing Costs and Adapting to Local Markets 216
International Strategy 217
Global Strategy 219
Multidomestic Strategy 220
7.4 STRATEGY SPOTLIGHT
Coca-Cola Develops Local Drinks That Taste
Nothing Like Coke 221
Transnational Strategy 222
7.5 STRATEGY SPOTLIGHT
Panasonic’s China Experience Shows the Benefits of
Being a Transnational 223
Global or Regional? A Second Look at Globalization 224
Entry Modes of International Expansion . . 225
Exporting 226
Licensing and Franchising 227
Strategic Alliances and Joint Ventures 227
Wholly Owned Subsidiaries 228
Issue for Debate 229
Reflecting on Career Implications . . . 230
Key Points 231
Summary Review Questions 231
Key Terms 232
Experiential Exercises and Application Questions 232
Ethics Questions 233
References 233
CHAPTER 8
Entrepreneurial Strategy and Competitive Dynamics ..236
Learning from Mistakes 237
Recognizing Entrepreneurial Opportunities . 238
Entrepreneurial Opportunities 238
8.1 STRATEGY SPOTLIGHT
Making it Easier to Take Your Prescriptions:
A Billion Dollar Idea 240
8.2 STRATEGY SPOTLIGHT Environmental Sustainability
Moasis Leverages Technology to Improve Water
Efficiency for Farmers 241
Entrepreneurial Resources 241
Entrepreneurial Leadership 244
8.3 STRATEGY SPOTLIGHT
The Diamond Foundry Shakes up the Diamond Business
Now and, Possibly, the Computing Industry in the
Future 246
Entrepreneurial Strategy . 246
Entry Strategies 247
Generic Strategies 249
Combination Strategies 250
Competitive Dynamics . 251
New Competitive Action 252
Threat Analysis 252
Motivation and Capability to Respond 254
Types of Competitive Actions 255
Likelihood of Competitive Reaction 255
Choosing Not to React: Forbearance and Co-opetition 257
8.4 STRATEGY SPOTLIGHT Ethics
Smoking Out Collusion Among the German Big Three 258
Issue for Debate 258
Reflecting on Career Implications . . . 259
Key Points 259
Summary Review Questions 260
Key Terms 260
Experiential Exercises and Application
Questions 261
Ethics Questions 261
References 261
PART 3 STRATEGIC IMPLEMENTATION
CHAPTER 9
Strategic Control and Corporate Governance . 264
Learning from Mistakes 265
Ensuring Informational Control: Responding
Effectively to Environmental Change . . 266
A Traditional Approach to Strategic Control 266
A Contemporary Approach to Strategic Control 267
Attaining Behavioral Control: Balancing Culture,
Rewards, and Boundaries . . 268
Building a Strong and Effective Culture 269
9.1 STRATEGY SPOTLIGHT
GE Shows One Potential Downside of a Strong Culture 270
9.2 STRATEGY SPOTLIGHT
Using Pictures and Stories to Build a Customer-
Oriented Culture 271
Motivating with Rewards and Incentives 271
Setting Boundaries and Constraints 273
9.1 INSIGHTS FROM RESEARCH
Inspire Passion—Motivate Top Performance 274
Behavioral Control in Organizations: Situational Factors 275
9.3 STRATEGY SPOTLIGHT Data Analytics
Using Data Analytics to Enhance Organizational Control 276
Evolving from Boundaries to Rewards and Culture 277
The Role of Corporate Governance . 277
The Modern Corporation: The Separation of Owners
(Shareholders) and Management 278
Governance Mechanisms: Aligning the Interests of Owners and Managers 279
9.4 STRATEGY SPOTLIGHT
A Push for Younger and More Diverse Boards 281
CEO Duality: Is It Good or Bad? 284
External Governance Control Mechanisms 285
9.5 STRATEGY SPOTLIGHT Ethics
Japanese Government Pushes for Governance Reform 287
Corporate Governance: An International Perspective 288
Issue for Debate 290
Reflecting on Career Implications . . . 291
Key Points 291
Summary Review Questions 292
Key Terms 292
Experiential Exercises And Application Questions 292
Ethics Questions 293
References 293
CHAPTER 10
Creating Effective Organizational Designs . 298
Learning from Mistakes 299
Traditional Forms of Organizational Structure . . 300
Patterns of Growth of Large Corporations:
Strategy-Structure Relationships 300
Simple Structure 302
Functional Structure 302
Divisional Structure 303
10.1 STRATEGY SPOTLIGHT
Where Conglomerates Prosper 306
Matrix Structure 307
International Operations: Implications for
Organizational Structure 308
Global Start-Ups: A Recent Phenomenon 309
10.2 STRATEGY SPOTLIGHT
Global Start-Up, Brck, Works to Bring Reliable Internet
Connectivity to the World 310
How an Organization’s Structure Can Influence
Strategy Formulation 311
Boundaryless Organizational Designs . 311
The Barrier-Free Organization 311
10.3 STRATEGY SPOTLIGHT
GM restructures for innovation 312
10.4 STRATEGY SPOTLIGHT
The Business Roundtable: A Forum for Sharing Best
Environmental Sustainability Practices 314
10.1 INSIGHTS FROM RESEARCH
Where Employees Learn Affects Financial Performance 315
The Modular Organization 316
The Virtual Organization 317
Boundaryless Organizations: Making them Work 318
Creating Ambidextrous Organizational Designs . 321
Ambidextrous Organizations: Key Design Attributes 321
10.5 STRATEGY SPOTLIGHT
How Innovation Benefits from the Involvement of All the Players on the Team 322
Why Was the Ambidextrous Organization the Most
Effective Structure? 322
Issue for Debate 323
Reflecting on Career Implications . . . 324
Key Points 324
Summary Review Questions 325
Key Terms 325
Experiential Exercises and Application Questions 325
Ethics Questions 326
References 326
CHAPTER 11
Strategic Leadership: Creating a Learning
Organization and an Ethical Organization . 330
Learning from Mistakes 331
Leadership: Three Interdependent Activities . 332
Setting a Direction 333
11.1 STRATEGY SPOTLIGHT
Josh Silverman Leads a Turnaround at Etsy 334
Designing the Organization 334
Nurturing a Culture Committed to Excellence and Ethical Behavior 335
11.2 STRATEGY SPOTLIGHT Environmental Sustainability, Ethics
Family Leadership Sustains the Culture of SC Johnson 335
Getting Things Done: Overcoming Barriers and Using Power 336
Overcoming Barriers to Change 336
Using Power Effectively 337
11.3 STRATEGY SPOTLIGHT
The Importance of Moral Leadership 339
Emotional Intelligence: A Key Leadership Trait . 339
Self-Awareness 340
Self-Regulation 340
Motivation 341
Empathy 341
Social Skill 341
Emotional Intelligence: Some Potential Drawbacks and Cautionary Notes 341
Creating a Learning Organization 342
Inspiring and Motivating People with a Mission or Purpose .. 342
Empowering Employees at All Levels . 343
Accumulating and Sharing Internal Knowledge . 343
Gathering and Integrating External Information . 343
Challenging the Status Quo and Enabling Creativity . 344
The Attributes of Superbosses . 345
Creating an Ethical Organization . 347
Individual Ethics versus Organizational Ethics . 347
11.4 STRATEGY SPOTLIGHT Environmental Sustainability, Ethics Green Energy: Real or Just a Marketing Ploy? .. 348
Integrity-Based versus Compliance-Based Approaches to Organizational Ethics . 349
Role Models 350
Corporate Credos and Codes of Conduct . 351
Reward and Evaluation Systems . 351
Policies and Procedures 352
Issue for Debate .352
Reflecting on Career Implications . . . . .353
Key Points .354
Summary Review Questions .354
Key Terms .355
Experiential Exercises and Application Questions . .355
Ethics Questions .355
References .356
CHAPTER 12
Managing Innovation and Fostering Corporate
Entrepreneurship . .358
Learning from Mistakes .359
Managing Innovation .. 360
12.1 STRATEGY SPOTLIGHT
Mio Drops Change the Beverage Game . .360
Types of Innovation 361
Challenges of Innovation . 362
12.2 STRATEGY SPOTLIGHT
The Promise and Peril of Graphene Batteries . .364
Cultivating Innovation Skills . 364
Defining the Scope of Innovation . 365
12.1 INSIGHTS FROM RESEARCH
The Benefits of Dormant Ties .366
12.3 STRATEGY SPOTLIGHT
Building a Corporate Culture to Nurture Innovation . . 367
Managing the Pace of Innovation . 368
Staffing to Capture Value from Innovation . 368
Collaborating with Innovation Partners . 369
The Value of Unsuccessful Innovation . 369
Corporate Entrepreneurship . 371
Focused Approaches to Corporate
Entrepreneurship 372
Dispersed Approaches to Corporate Entrepreneurship 373
Measuring the Success of Corporate Entrepreneurship Activities . .375
Real Options Analysis: A Useful Tool . 376
Applications of Real Options Analysis to Strategic Decisions . 377
12.4 STRATEGY SPOTLIGHT
Saving Millions with Real Options at Intel . . 378
Potential Pitfalls of Real Options Analysis . 378
Entrepreneurial Orientation . 379
Autonomy 379
Innovativeness 380
Proactiveness . 380
Competitive Aggressiveness . 381
Risk Taking . 381
Issue for Debate .382
Reflecting on Career Implications . . . . .383
Key Points .383
Summary Review Questions . .384
Key Terms . .385
Experiential Exercises and Application Questions . .385
Ethics Questions . .385
References . .385
PART 4 CASE ANALYSIS
CHAPTER 13
Analyzing Strategic Management Cases . .388
13.1 STRATEGY SPOTLIGHT
Analysis, Decision Making, And Change At Sapient Health Network . 391
How to Conduct a Case Analysis . 391
Become Familiar with the Material 392
13.2 STRATEGY SPOTLIGHT
Using a Business Plan Framework to Analyze
Strategic Cases 393
Identify Problems 393
Conduct Strategic Analyses 394
Propose Alternative Solutions 396
Make Recommendations 396
How to Get the Most from Case Analysis . . 398
Useful Decision-Making Techniques
in Case Analysis . . 400
Integrative Thinking 400
13.3 STRATEGY SPOTLIGHT
Integrative Thinking at Red Hat, Inc. 402
Asking Heretical Questions 403
Conflict-Inducing Techniques 403
13.4 STRATEGY SPOTLIGHT
Making Case Analysis Teams More Effective 404
Following the Analysis-Decision-Action
Cycle in Case Analysis . . 408
13.5 STRATEGY SPOTLIGHT
Case Competition Assignment 412
Key Points 413
Key Terms 413
References 413
Appendix 1 to Chapter 13: Financial Ratio Analysis 414
Appendix 2 to Chapter 13: Sources of Company and
Industry Information 423