Description Critical Thinking: Question 1. What is a learning organization? Discuss why is this ...
Description Critical Thinking: Question 1. What is a learning organization? Discuss why is this approach to strategic management better than the more traditional top-down approach in which strategic planning is primarily done by top management. Give an example of a learning organization from the SAUDI market. Describe the mission statement and vision of this organization. In which way this organization is considered a learning organization? Is it successful? What are the main problems faced by this organization to implement this approach? Justify. Question 2. Refer to Porter’s forces driving industry competition to answer the following questions: In your opinion, what is/are the most important force(s) in Porter’s industry forces? Why? What determines the level of competitive intensity in an industry? How can a decision maker identify strategic factors in a corporation’s external international environment? What are the main limits and drawbacks of Porter’s forces? Choose an example of an organization from the Saudi market and draw the matrix of Porter’s forces. What is the main force in this case? Assess the competitive advantage of your chosen organization in relation to these forces. Suggest solutions to improve its position in the market. 1 attachments Slide 1 of 1 attachment_1 attachment_1 UNFORMATTED ATTACHMENT PREVIEW Strategic Management Model Environmental Scanning: Strategy Formulation: Strategy Implementation: Evaluation and Control: Gathering Information Developing Long-range Plans Putting Strategy into Action Monitoring Performance External: Opportunities and Threats Natural Environment: Resources and climate Societal Environment: General forces Task Environment: Mission Reason for existence Objectives What results to accomplish by when Strategies Plan to achieve the mission & objectives Policies Broad guidelines for decision making Industry analysis Programs Activities needed to accomplish a plan Budgets Cost of the programs Procedures Sequence of steps needed to do the job Internal: Strengths and Weaknesses Structure: Chain of command Culture: Beliefs, expectations, values Resources: Assets, skills, competencies, knowledge Feedback/Learning: Make corrections as needed Performance Actual results THIRTEENTH EDITION Strategic Management and Business Policy TOWARD GLOBAL SUSTAINABILITY This page intentionally left blank THIRTEENTH EDITION Strategic Management and Business Policy TOWARD GLOBAL SUSTAINABILITY Thomas L. Wheelen J. David Hunger Formerly with University of Virginia Trinity College, Dublin, Ireland Iowa State University St. John’s University with major contributions by Kathryn E. Wheelen Alan N. Hoffman Bentley University Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sa~o Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Editorial Director: Sally Yagan Editor in Chief: Eric Svendsen Senior Acquisitions Editor: Kim Norbuta Editorial Project Manager: Claudia Fernandes Editorial Assistant: Carter Anderson Director of Marketing: Patrice Lumumba Jones Senior Marketing Manager: Nikki Ayana Jones Marketing Assistant: Ian Gold Senior Managing Editor: Judy Leale Production Project Manager: Becca Groves Senior Operations Supervisor: Arnold Vila Operations Specialist: Cathleen Petersen Creative Director: Blair Brown Senior Art Director/Supervisor: Janet Slowik Cover Designer: Liz Harasymcuk Cover Photo: Courtesy of NASA/Shutterstock Interior Designer: Maureen Eide Media Project Manager, Editorial: Denise Vaughn Media Project Manager, Production: Lisa Rinaldi Full-Service Project Management: Emily Bush, S4Carlisle Publishing Services Composition: S4Carlisle Publishing Services Printer/Binder: Courier/Kendalville Cover Printer: Lehigh-Phoenix Color/Hagerstown Text Font: 10/12 Times Roman Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within text. Copyright © 2012, 2010, 2008, 2006, 2004 by Pearson Education, Inc., publishing as Prentice Hall. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290. Many of the designations by manufacturers and sellers to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps. Library of Congress Cataloging-in-Publication Data Wheelen, Thomas L. Strategic management and business policy : toward global sustainability / Thomas L. Wheelen, J. David Hunger. — 13th ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-13-215322-5 ISBN-10: 0-13-215322-X 1. Strategic planning. 2. Strategic planning—Case studies. 3. Sustainability. I. Hunger, J. David, II. Title. HD30.28.W43 2012 658.4'012—dc22 2011013549 10 9 8 7 6 5 4 3 2 1 ISBN 10: 0-13-215322-X ISBN 13: 978-0-13-215322-5 Dedicated to KATHY, RICHARD, AND TOM BETTY, KARI AND JEFF, MADDIE AND MEGAN, SUZI AND NICK, SUMMER AND KACEY, LORI, MERRY AND DYLAN, AND WOOFIE (ARF!). SPECIAL DEDICATION TO KATHRYN WHEELEN: Kathryn has worked on every phase of the case section of this book. Until this edition, she also managed the construction of the Case Instructor’s Manual. She has done every job with a high level of dedication and concern for both the case authors and the readers of this book. This book is also dedicated to the following Prentice Hall/Pearson sales representatives who work so hard to promote this book: NOLA AKALA KASEY CROCKETT BRIDGET HANNENBERG DAVID ALEVY DAN CURRIER BRYAN HARRELL TARA ALGEO KELLY DAN TARA HARTLEY DAVID ARMSTRONG MICHLENE DAOUD HEALY KENNY HARVEY MIKE ASKEW STACY DAVIS ALISON HASKINS LAURA BAILEY FRANK DEL CASTILLO CAROL HAWKS NICK BAKER MEREDITH DELA ROSA JENNIFER HEILBRUNN ALICIA BARNES CHRIS DELANEY CHRISTINE HENRY ASHLEY BARNES GEORGE DEVENNEY LYNN HICKS ALICE BARR DANA DODGE (Frick) JULIE HILDEBRAND SHERRY BARTEL KATE DOLDER DAUNNE HINGLE KENDRA BASSI BARBARA DONLON WENDI HOLLAND JAY BECKENSTEIN HEIDI DRESSLER CHRISTY HUMENIUK JOSH BECKENSTEIN TRACY DYBALSKI GENE HUMENIUK NICOLE BELL BRIAN DYK ANDREA IORIO CATHY BENNETT KIM ECK SUSAN JACKSON KATIE BOLLIN TRISH EICHHOLD PAM JEFFRIES SCOTT BORDEN KRISTIN ELBER BRITTANY JUCHNOWSKI JENNIFER BOYLE KELSEY ELLIOTT ANJALI JUSTUS AUNDREA BRIDGES KATIE EYNON CHERYL KABB SUZANNE BROWN GENEVA FARROW LAURA KAPPES ALEXANDRA BUEHLER MARIA FELIBERTY GIA KAUL KYLE BURDETTE MIKE FINER JULIE KESTENBAUM WHITNEY CAMERON MICHELLE FINNERTY KARTAPURKH KHALSA RUTH CARDIFF CANDAS FLETCHER KIM KIEHLER AMY CAREY ROBERT FLORY AMANDA KILLEEN MEGAN CARRICO MARCIA FLYNN WALT KIRBY MARTI CARTER BRAD FORRESTER MARY-JO KOVACH ANDREA CATULLO-LINN MARGARET FRENCH ROBYN KOVAR MEREDITH CHANDLER STEPHANIE FRITSON GREG KRAMP LUKE CLAEYS MARK GAFFNEY DANIEL KRAUSS KAYLEE CLAYMORE MICHELLE GARCIA-JUCHTER MICHAEL KRISANDA BRIAN COBB SYBIL GERAUD GINA LaMANTIA JENNIFER COLE AMBER GOECKE CHAFIKA LANDERS TARYLL CONNOLLY CAROLYN GOGOLIN DOROTHY LANDRY THAYNE CONRAD ADAM GOLDSTEIN DUSTIN LANGE DONNA CONROY BETH GRUNFELD ALIX LaSCOLA CAITLIN COUTHEN MICAELA HAIDLE JOE LEE MEGAN JOY COWART GREG HAITH APRIL LEMONS CYNDI CRIMMINS DEMETRIUS HALL KIMBERLY LENAGHAN vi DEDICATION TRICIA LISCIO COLLEEN O’DELL MARY SHAPIRO BETH LUDWIG DEBBIE OGILIVE BARBARA SHERRY CARY LUNA SARI ORLANSKY KEN SHIPBAUGH JEMINA MACHARRY DAVE OSTROW DAVE SHULER KATIE MAHAN DARCEY PALMER JESSICA SIEMINSKI LAURA MANN KRISTINA PARKER LEA SILVERMAN PATRICIA MARTINEZ TONI PAYNE AUTUMN SLAUGHTER CHRISTINA MASTROGIOVANNI JULIANNE PETERSON KRISTA SLAVICEK SONNY MATHARU MELISSA PFISTNER SCOTT SMITH TONY MATHIAS CANDACE PINATARO ADRIENNE SNOW BROOK MATTHEWS BELEN POLTORAK LEE SOLOMONIDES GEORGIA MAY ELIZABETH POPIELARZ BEN STEPHEN ALICIA MCAULIFFE MEGAN PRENDERGAST DAN SULLIVAN MASON McCARTNEY NICOLE PRICE JOHN SULLIVAN KAREN McFADYEN JILL PROMESSO LORI SULLIVAN BRIAN McGARRY LENNY ANN RAPER STEPHANIE SURFUS MICHELLE McGOVERN JOSH RASMUSSEN AMANDA SVEC IRENE McGUINNESS AMANDA RAY CHRISTINA TATE RYAN McHENRY SONYA REED SARAH THOMAS CRISTIN McMICHAEL RICHARD RESCH ABBY THORNBLADH KEVIN MEASELLE MARY RHODES KATY TOWNLEY RAY MEDINA BRAD RITTER ELIZABETH TREPKOWSKI KELLY MEIERHOFER DAN ROBERTSON TARA TRIPP MOLLY MEINERS MATT ROBINSON CAROLYN TWIST MATT MESAROS JENNIFER ROSEN JOE VIRZI SHALON MILLER DOROTHY ROSENE AMANDA VOLZ JAMI MINARD KELLEEN ROWE BRITNEY WALKER WILLIAM MINERICH RICH ROWE MADELEINE WATSON EMILY MITCHELL PEYTON ROYTEK BEN WEBER JILINE MIX SENG SAECHAO DANIEL WELLS JULIE MOREL STEVE SARTORI MARK WHEELER RAFAEL MORENO LYNDA SAX LIZ WILDES TRACY MORSE BOB SCANLON MICHELLE WILES OLIVIA MOUG MARCUS SCHERER BRIAN WILLIAMS DOLLY MUNIZ KIMBERLY SCHEYVING ERIN WILLIAMS TRICIA MURPHY HEIDI SCHICK (Miller) CINDY WILLIAMSON LAUREN MURROW BRAD SCHICK RACHEL WILLIS AMBER MYLLION (Parks) CHRIS SCHMIDT SIMON WONG LINDA NELSON DEBORAH SCHMIDT KIMBERLY WOODS LYNNE NICLAIR MOLLY SCHMIDT JACKIE WRIGHT BOB NISBET CORRINA SCHULTZ HEATHER WRUBLESKY BETSY NIXON WHITNEY SEAGO GEORGE YOUNG TOM NIXON CHRISTIANA SERLE MARY ZIMMERMANN LAURA NOAH MARTHA SERNAS KACIE ZIN vii This page intentionally left blank Brief Contents PART ONE Introduction to Strategic Management and Business Policy 1 1 Basic Concepts of Strategic Management 2 2 Corporate Governance 42 3 Social Responsibility and Ethics in Strategic Management 70 CHAPTER CHAPTER CHAPTER PART TWO Scanning the Environment 93 4 Environmental Scanning and Industry Analysis 94 5 Internal Scanning: Organizational Analysis 136 CHAPTER CHAPTER PART THREE Strategy Formulation 173 6 Strategy Formulation: Situation Analysis and Business Strategy 174 7 Strategy Formulation: Corporate Strategy 204 8 Strategy Formulation: Functional Strategy and Strategic Choice 236 CHAPTER CHAPTER CHAPTER PART FOUR Strategy Implementation and Control 269 CHAPTER CHAPTER CHAPTER 9 Strategy Implementation: Organizing for Action 270 1 0 Strategy Implementation: Staffing and Directing 300 1 1 Evaluation and Control 328 PART FIVE Introduction to Case Analysis 363 CHAPTER 1 2 Suggestions for Case Analysis 364 PART SIX WEB CHAPTERS Other Strategic Issues WEB CHAPTER WEB CHAPTER WEB CHAPTER A Strategic Issues in Managing Technology & Innovation B Strategic Issues in Entrepreneurial Ventures & Small Businesses C Strategic Issues in Not-For-Profit Organizations PART SEVEN Cases in Strategic Management 1-1 GLOSSARY G-1 NAME INDEX I-1 SUBJECT INDEX I-7 ix This page intentionally left blank Contents Preface xxix PART ONE CHAPTER 1 Introduction to Strategic Management and Business Policy Basic Concepts of Strategic Management 2 1.1 The Study of Strategic Management 5 Phases of Strategic Management Benefits of Strategic Management 1 5 6 1.2 Globalization and Environmental Sustainability: Challenges to Strategic Management 7 Impact of Globalization 8 Impact of Environmental Sustainability 8 Global Issue: REGIONAL TRADE ASSOCIATIONS REPLACE NATIONAL TRADE BARRIERS 9 Environmental Sustainability Issue: PROJECTED EFFECTS OF CLIMATE CHANGE 12 1.3 Theories of Organizational Adaptation 1.4 Creating a Learning Organization 13 1.5 Basic Model of Strategic Management Environmental Scanning Strategy Formulation 12 14 16 17 Strategy Highlight 1.1: DO YOU HAVE A GOOD MISSION STATEMENT? 18 Strategy Implementation 21 Evaluation and Control 22 Feedback/Learning Process 23 1.6 Initiation of Strategy: Triggering Events 23 Strategy Highlight 1.2: TRIGGERING EVENT AT UNILEVER 24 1.7 Strategic Decision Making 25 What Makes a Decision Strategic 25 Mintzberg’s Modes of Strategic Decision Making 25 Strategic Decision-Making Process: Aid to Better Decisions 1.8 The Strategic Audit: Aid to Strategic Decision-Making 1.9 End of Chapter Summary 27 28 29 APPENDIX 1.A Strategic Audit of a Corporation 34 xi xii CONTENTS CHAPTER 2 Corporate Governance 42 2.1 Role of the Board of Directors 45 Responsibilities of the Board 45 Members of a Board of Directors 48 Strategy Highlight 2.1: AGENCY THEORY VERSUS STEWARDSHIP THEORY IN CORPORATE GOVERNANCE 50 Nomination and Election of Board Members Organization of the Board 53 54 Impact of the Sarbanes-Oxley Act on U.S. Corporate Governance 55 Global Issue: CORPORATE GOVERNANCE IMPROVEMENTS THROUGHOUT THE WORLD 56 Trends in Corporate Governance 2.2 The Role of Top Management 57 58 Responsibilities of Top Management 58 Environmental Sustainability Issue: CONFLICT AT THE BODY SHOP 59 2.3 End of Chapter Summary 62 CHAPTER 3 Social Responsibility and Ethics in Strategic Management 70 3.1 Social Responsibilities of Strategic Decision Makers 72 Responsibilities of a Business Firm 72 Sustainability: More than Environmental? Corporate Stakeholders 75 75 Environmental Sustainability Issue: THE DOW JONES SUSTAINABILITY INDEX 76 Strategy Highlight 3.1: JOHNSON & JOHNSON CREDO 78 3.2 Ethical Decision Making 79 Some Reasons for Unethical Behavior 79 Strategy Highlight 3.2: UNETHICAL PRACTICES AT ENRON AND WORLDCOM EXPOSED BY “WHISTLE-BLOWERS” 80 Global Issue: HOW RULE-BASED AND RELATIONSHIP-BASED GOVERNANCE SYSTEMS AFFECT ETHICAL BEHAVIOR 81 Encouraging Ethical Behavior 3.3 End of Chapter Summary 83 86 Ending Case for Part One: BLOOD BANANAS 90 PART TWO CHAPTER 4 Scanning the Environment 93 Environmental Scanning and Industry Analysis 4.1 Environmental Scanning 94 98 Identifying External Environmental Variables 98 Environmental Sustainability Issue: MEASURING AND SHRINKING YOUR PERSONAL CARBON FOOTPRINT 100 CONTENTS Global Issue: IDENTIFYING POTENTIAL MARKETS IN DEVELOPING NATIONS 107 Identifying External Strategic Factors 108 4.2 Industry Analysis: Analyzing the Task Environment Porter’s Approach to Industry Analysis Industry Evolution 110 114 Categorizing International Industries International Risk Assessment Strategic Groups 115 Strategic Types 117 Hypercompetition 109 114 115 117 Using Key Success Factors to Create an Industry Matrix 118 Strategy Highlight 4.1: MICROSOFT IN A HYPERCOMPETITIVE INDUSTRY 118 4.3 Competitive Intelligence 120 Sources of Competitive Intelligence 121 Strategy Highlight 4.2: EVALUATING COMPETITIVE INTELLIGENCE 122 Monitoring Competitors for Strategic Planning 4.4 Forecasting 122 123 Danger of Assumptions 123 Useful Forecasting Techniques 124 4.5 The Strategic Audit: A Checklist for Environmental Scanning 4.6 Synthesis of External Factors—EFAS 4.7 End of Chapter Summary 5 126 127 APPENDIX 4.A Competitive Analysis Techniques CHAPTER 133 Internal Scanning: Organizational Analysis 136 5.1 A Resource-Based Approach to Organizational Analysis Core and Distinctive Competencies 138 138 Using Resources to Gain Competitive Advantage 139 Determining the Sustainability of an Advantage 140 5.2 Business Models 125 142 5.3 Value-Chain Analysis 143 Strategy Highlight 5.1: A NEW BUSINESS MODEL AT SMARTYPIG 144 Industry Value-Chain Analysis 145 Corporate Value-Chain Analysis 146 5.4 Scanning Functional Resources and Capabilities Basic Organizational Structures 147 Corporate Culture: The Company Way 149 147 xiii xiv CONTENTS Global Issue: MANAGING CORPORATE CULTURE FOR GLOBAL COMPETITIVE ADVANTAGE: ABB VERSUS MATSUSHITA 150 Strategic Marketing Issues 151 Strategic Financial Issues 153 Strategic Research and Development (R&D) Issues Strategic Operations Issues 154 156 Strategic Human Resource (HRM) Issues 158 Environmental Sustainability Issue: USING ENERGY EFFICIENCY FOR COMPETITIVE ADVANTAGE AND QUALITY OF WORK LIFE 161 Strategic Information Systems/Technology Issues 162 5.5 The Strategic Audit: A Checklist for Organizational Analysis 163 5.6 Synthesis of Internal Factors 5.7 End of Chapter Summary 164 165 Ending Case for Part Two: BOEING BETS THE COMPANY 170 PART THREE CHAPTER 6 Strategy Formulation 173 Strategy Formulation: Situation Analysis and Business Strategy 6.1 Situation Analysis: SWOT Analysis 174 176 Generating a Strategic Factors Analysis Summary (SFAS) Matrix 176 Finding a Propitious Niche 177 Global Issue: SAB DEFENDS ITS PROPITIOUS NICHE 181 6.2 Review of Mission and Objectives 181 6.3 Generating Alternative Strategies by Using a TOWS Matrix 6.4 Business Strategies 182 183 Porter’s Competitive Strategies 183 Environmental Sustainability Issue: PATAGONIA USES SUSTAINABILITY AS DIFFERENTIATION COMPETITIVE STRATEGY 187 Cooperative Strategies 195 6.5 End of Chapter Summary CHAPTER 7 199 Strategy Formulation: Corporate Strategy 7.1 Corporate Strategy 206 7.2 Directional Strategy 206 Growth Strategies 204 207 Strategy Highlight 7.1: TRANSACTION COST ECONOMICS ANALYZES VERTICAL GROWTH STRATEGY 210 CONTENTS Global Issue: COMPANIES LOOK TO INTERNATIONAL MARKETS FOR HORIZONTAL GROWTH 212 Strategy Highlight 7.2: SCREENING CRITERIA FOR CONCENTRIC DIVERSIFICATION 215 Controversies in Directional Growth Strategies 216 Stability Strategies 217 Retrenchment Strategies 7.3 Portfolio Analysis 218 220 BCG Growth-Share Matrix 221 Environmental Sustainability Issue: GENERAL MOTORS AND THE ELECTRIC CAR GE Business Screen 222 223 Advantages and Limitations of Portfolio Analysis Managing a Strategic Alliance Portfolio 7.4 Corporate Parenting 225 226 Developing a Corporate Parenting Strategy 227 Horizontal Strategy and Multipoint Competition 7.5 End of Chapter Summary CHAPTER 8 225 228 229 Strategy Formulation: Functional Strategy and Strategic Choice 8.1 Functional Strategy 236 238 Marketing Strategy 238 Financial Strategy 239 Research and Development (R&D) Strategy Operations Strategy 241 242 Global Issue: INTERNATIONAL DIFFERENCES ALTER WHIRLPOOL’S OPERATIONS STRATEGY 243 Purchasing Strategy 244 Environmental Sustainability Issue: OPERATIONS NEED FRESH WATER AND LOTS OF IT! 245 Logistics Strategy 246 Human Resource Management (HRM) Strategy Information Technology Strategy 247 8.2 The Sourcing Decision: Location of Functions 8.3 Strategies to Avoid 246 247 250 8.4 Strategic Choice: Selecting the Best Strategy Constructing Corporate Scenarios Process of Strategic Choice 257 251 251 xv xvi CONTENTS 8.5 Developing Policies 258 8.6 End of Chapter Summary 259 Ending Case for Part Three: KMART AND SEARS: STILL STUCK IN THE MIDDLE? 266 PART FOUR Strategy Implementation and Control 269 9 Strategy Implementation: Organizing for Action CHAPTER 9.1 Strategy Implementation 272 9.2 Who Implements Strategy? 9.3 What Must Be Done? 270 273 273 Developing Programs, Budgets, and Procedures 274 Environmental Sustainability Issue: FORD’S SOYBEAN SEAT FOAM PROGRAM 274 Strategy Highlight 9.1: THE TOP TEN EXCUSES FOR BAD SERVICE 277 Achieving Synergy 278 9.4 How Is Strategy to Be Implemented? Organizing for Action Structure Follows Strategy 279 Stages of Corporate Development Organizational Life Cycle 280 283 Advanced Types of Organizational Structures 285 Reengineering and Strategy Implementation 288 Six Sigma 278 289 Designing Jobs to Implement Strategy 290 Strategy Highlight 9.2: DESIGNING JOBS WITH THE JOB CHARACTERISTICS MODEL 291 9.5 International Issues in Strategy Implementation International Strategic Alliances 291 292 Stages of International Development 293 Global Issue: MULTIPLE HEADQUARTERS: A SIXTH STAGE OF INTERNATIONAL DEVELOPMENT? 294 Centralization Versus Decentralization 294 9.6 End of Chapter Summary 296 CHAPTER 1 0 Strategy Implementation: Staffing and Directing 10.1 Staffing 300 302 Staffing Follows Strategy 303 Selection and Management Development 305 Strategy Highlight 10.1: HOW HEWLETT-PACKARD IDENTIFIES POTENTIAL EXECUTIVES 306 Problems in Retrenchment 308 International Issues in Staffing 309 CONTENTS 10.2 Leading 311 Managing Corporate Culture 311 Environmental Sustainability Issue: ABBOTT LABORATORIES’ NEW PROCEDURES FOR GREENER COMPANY CARS 312 Action Planning 316 Management by Objectives 318 Total Quality Management 318 International Considerations in Leading 319 Global Issue: CULTURAL DIFFERENCES CREATE IMPLEMENTATION PROBLEMS IN MERGER 321 10.3 End of Chapter Summary CHAPTER 1 1 Evaluation and Control 322 328 11.1 Evaluation and Control in Strategic Management 11.2 Measuring Performance Appropriate Measures Types of Controls 330 332 332 332 Activity-Based Costing 334 Enterprise Risk Management 335 Primary Measures of Corporate Performance 335 Environmental Sustainability Issue: HOW GLOBAL WARMING COULD AFFECT CORPORATE VALUATION 340 Primary Measures of Divisional and Functional Performance International Measurement Issues 342 344 Global Issue: COUNTERFEIT GOODS AND PIRATED SOFTWARE: A GLOBAL PROBLEM 346 11.3 Strategic Information Systems 347 Enterprise Resource Planning (ERP) 347 Radio Frequency Identification (RFID) 348 Divisional and Functional IS Support 348 11.4 Problems in Measuring Performance 348 Short-Term Orientation Goal Displacement 349 350 11.5 Guidelines for Proper Control 351 Strategy Highlight 11.1: SOME RULES OF THUMB IN STRATEGY 351 11.6 Strategic Incentive Management 11.7 End of Chapter Summary 352 354 Ending Case for Part Four: HEWLETT-PACKARD BUYS EDS 360 xvii xviii CONTENTS PART FIVE CHAPTER Introduction to Case Analysis 363 1 2 Suggestions for Case Analysis 364 12.1 The Case Method 365 12.2 Researching the Case Situation 366 12.3 Financial Analysis: A Place to Begin Analyzing Financial Statements 366 369 Environmental Sustainability Issue: IMPACT OF CARBON TRADING 370 Global Issue: FINANCIAL STATEMENTS OF MULTINATIONAL CORPORATIONS: NOT ALWAYS WHAT THEY SEEM 371 Common-Size Statements 371 Z-value and Index of Sustainable Growth Useful Economic Measures 371 372 12.4 Format for Case Analysis: The Strategic Audit 12.5 End of Chapter Summary 373 375 APPENDIX 12.A Resources for Case Research 377 APPENDIX 12.B Suggested Case Analysis Methodology Using the Strategic Audit APPENDIX 12.C Example of a Student-Written Strategic Audit 380 383 Ending Case for Part Five: IN THE GARDEN 391 GLOSSARY G-1 NAME INDEX I-1 SUBJECT INDEX I-1 PART SIX WEB CHAPTERS WEB CHAPTER A Other Strategic Issues Strategic Issues in Managing Technology and Innovation 1 The Role of Management Strategy Highlight 1: EXAMPLES OF INNOVATION EMPHASIS IN MISSION STATEMENTS 2 Environmental Scanning External Scanning Internal Scanning 3 Strategy Formulation Product vs. Process R&D Technology Sourcing Global Issue: USE OF INTELLECTUAL PROPERTY AT HUAWEI TECHNOLOGIES Importance of Technological Competence Categories of Innovation Product Portfolio CONTENTS 4 Strategy Implementation Developing an Innovative Entrepreneurial Culture Organizing for Innovation: Corporate Entrepreneurship Strategy Highlight 2: HOW NOT TO DEVELOP AN INNOVATIVE ORGANIZATION 5 Evaluation and Control Evaluation and Control Techniques Evaluation and Control Measures 6 End of Chapter Summary WEB CHAPTER B Strategic Issues in Entrepreneurial Ventures and Small Businesses 1 Importance of Small Business and Entrepreneurial Ventures Global Issue: ENTREPRENEURSHIP: SOME COUNTRIES ARE MORE SUPPORTIVE THAN OTHERS Definition of Small-Business Firms and Entrepreneurial Ventures The Entrepreneur as Strategist 2 Use of Strategic Planning and Strategic Management Degree of Formality Usefulness of the Strategic Management Model Usefulness of the Strategic Decision-Making Process 3 Issues in Corporate Governance Boards of Directors and Advisory Boards Impact of the Sarbanes-Oxley Act 4 Issues in Environmental Scanning and Strategy Formulation Sources of Innovation Factors Affecting a New Venture’s Success Strategy Highlight 1: SUGGESTIONS FOR LOCATING AN OPPORTUNITY AND FORMULATING A BUSINESS STRATEGY 5 Issues in Strategy Implementation Substages of Small Business Development Transfer of Power and Wealth in Family Businesses 6 Issues in Evaluation and Control 7 End of Chapter Summary WEB CHAPTER C Strategic Issues in Not-for-Profit Organizations 1 Why Not-for-Profit? Global Issue: WHICH IS BEST FOR SOCIETY: BUSINESS OR NOT-FOR-PROFIT? xix xx CONTENTS 2 Importance of Revenue Source Sources of Not-for-Profit Revenue Patterns of Influence on Strategic Decision Making Usefulness of Strategic Management Concepts and Techniques 3 Impact of Constraints on Strategic Management Impact on Strategy Formulation Impact on Strategy Implementation Impact on Evaluation and Control 4 Not-for-Profit Strategies Strategic Piggybacking Strategy Highlight 1: RESOURCES NEEDED FOR SUCCESSFUL STRATEGIC PIGGYBACKING Mergers Strategic Alliances 5 End of Chapter Summary PART SEVEN SECTION A CASE 1 Cases in Strategic Management 1-1 Corporate Governance and Social Responsibility: Executive Leadership The Recalcitrant Director at Byte Products Inc.: Corporate Legality versus Corporate Responsibility 1-7 (Contributors: Dan R. Dalton, Richard A. Cosier, and Cathy A. Enz) A plant location decision forces a confrontation between the board of directors and the CEO regarding an issue in social responsibility and ethics. CASE 2 The Wallace Group 2-1 (Contributor: Laurence J. Stybel) Managers question the company’s strategic direction and how it is being managed by its founder and CEO. Company growth has resulted not only in disorganization and confusion among employees, but in poor overall performance. How should the board deal with the company’s founder? SECTION B CASE 3 Business Ethics Everyone Does It 3-1 (Contributors: Steven M. Cox and Shawana P. Johnson) When Jim Willis, Marketing VP, learns that the launch date for the company’s new satellite will be late by at least a year, he is told by the company’s president to continue using the earlier published date for the launch. When Jim protests that the use of an incorrect date to market contracts is unethical, he is told that spacecraft are never launched on time and that it is common industry practice to list unrealistic launch dates. If a realistic date was used, no one would contract with the company. CONTENTS CASE 4 xxi The Audit 4-1 (Contributors: John A. Kilpatrick, Gamewell D. Gantt, and George A. Johnson) A questionable accounting practice by the company being audited puts a new CPA in a difficult position. Although the practice is clearly wrong, she is being pressured by her manager to ignore it because it is common in the industry. SECTION C CASE 5 International Issues in Strategic Management Starbucks’ Coffee Company: The Indian Dilemma 5-1 (Contributors: Ruchi Mankad and Joel Sarosh Thadamalla) Starbucks is the world’s largest coffee retailer with over 11,000 stores in 36 countries and over 10,000 employees. The case focuses on India as a potential market for the coffee retailer, presenting information on India’s societal environment and beverage industry. Profiles are provided for various existing coffee shop chains in India. The key issue in the case revolves around the question: Are circumstances right for Starbucks to enter India? CASE 6 Guajilote Cooperativo Forestal: Honduras 6-1 (Contributors: Nathan Nebbe and J. David Hunger) exclusive SECTION D This forestry cooperative has the right to harvest, transport, and sell fallen mahogany trees in La Muralla National Park of Honduras. Although the cooperative has been successful thus far, it is facing some serious issues: low prices for its product, illegal logging, deforestation by poor farmers, and possible world trade restrictions on the sale of mahogany. General Issues in Strategic Management INDUSTRY ONE: Information Technology CASE 7 Apple Inc.: Performance in a Zero-Sum World Economy 7-1 (Contributors: Kathryn E. Wheelen, Thomas L. Wheelen II, Richard D. Wheelen, Moustafa H. Abdelsamad, Bernard A. Morin, Lawrence C. Pettit, David B. Croll, and Thomas L. Wheelen) new exclusive Apple, the first company to mass-market a personal computer, had become a minor player in an industry dominated by Microsoft. After being expelled from the company in 1985, founder Steve Jobs returned as CEO in 1997 to reenergize the firm. The introduction of the iPod in 2001, followed by the iPad, catapulted Apple back into the spotlight. However, in 2011 Jobs was forced to take his third medical leave, leading to questions regarding his ability to lead Apple. How can Apple continue its success? How dependent is the company on Steve Jobs? CASE 8 iRobot: Finding the Right Market Mix? 8-1 (Contributor: Alan N. Hoffman) new exclusive Founded in 1990, iRobot was among the first companies to introduce robotic technology into the consumer market. Employing over 500 robotic professionals, the firm planned to lead the robotics industry. Unfortunately, its largest revenue source, home care robots, are a luxury good and vulnerable to recessions. Many of iRobot’s patents are due to expire by 2019. The firm is highly dependent upon suppliers to make its consumer products and the U.S. government for military sales. What is the best strategy for its future success? CASE 9 Dell Inc.: Changing the Business Model (Mini Case) 9-1 (Contributor: J. David Hunger) new exclusive Dell, once the largest PC vendor in the world, is now battling with Acer for second place in the global PC market. Its chief advantages—direct marketing and power over suppliers—no longer provided a competitive advantage. The industry’s focus has shifted from desktop PCs to mobile computing, software, and technology services, areas of relative weakness for Dell. Is it time for Dell to change its strategy? xxii CONTENTS CASE 10 Rosetta Stone Inc.: Changing the Way People Learn Languages 10-1 (Contributors: Christine B. Buenafe and Joyce P. Vincelette) new exclusive Rosetta Stone’s mission was to change the way people learn languages. The company blended language learning with technology at a time when globalization connected more and more individuals and institutions to each other. How should the company move forward? Would it be appropriate for Rosetta Stone to offer products like audio books or services in order to increase market share? Which international markets could provide the company with a successful future? CASE 11 Logitech (Mini Case) 11-1 (Contributor: Alan N. Hoffman) new exclusive Logitech, the world’s leading provider of computer peripherals, was on the forefront of mouse, keyboard, and video conferencing technology. By 2010, however, Logitech’s products were threatened by new technologies, such as touch pads, that could replace both the mouse and keyboard. As the peripherals market begins to disintegrate, Logitech is considering a change in strategy. INDUSTRY TWO: CASE 12 INTERNET COMPANIES Google Inc. (2010): The Future of the Internet Search Engine 12-1 (Contributor: Patricia A. Ryan) new exclusive Google, an online company that provides a reliable Internet search engine, was founded in 1998 and soon replaced Yahoo as the market leader in Internet search engines. By 2010, Google was one of the strongest brands in the world. Nevertheless, its growth by acquisition strategy was showing signs of weakness. Its 2006 acquisition of YouTube had thus far not generated significant revenue growth. Groupon, a shopping Web site, rebuffed Google’s acquisition attempt in 2010. Is it time for a strategic change? CASE 13 Reorganizing Yahoo! 13-1 (Contributors: P. Indu and Vivek Gupta) Yahoo! created the first successful Internet search engine, but by 2004 it was losing its identity. Was it a search engine, a portal, or a media company? On December 5, 2006, Yahoo’s CEO announced a reorganization of the company into three groups. It was hoped that a new mission statement and a new structure would make Yahoo leaner and more responsive to customers. Would this be enough to turn around the company? INDUSTRY THREE: CASE 14 ENTERTAINMENT AND LEISURE TiVo Inc.: TiVo vs. Cable and Satellite DVR: Can TiVo survive? 14-1 (Contributors: Alan N. Hoffman, Randy Halim, Rangki Son, and Suzanne Wong) TiVo was founded to create a device capable of recording digitized video on a computer hard drive for television viewing. Even though revenues had jumped from $96 million in 2003 to $259 million in 2007, the company had never earned a profit. Despite many alliances, TiVo faced increasing competition from generic DVRs offered by satellite and cable companies. How long can the company continue to sell TiVo DVRs when the competition sells generic DVRs at a lower price or gives them away for free? CASE 15 Marvel Entertainment Inc. 15-1 (Contributors: Ellie A. Fogarty and Joyce P. Vincelette) exclusive Marvel Entertainment was
