Description
Read carefully case study No. 24 from your textbook (Best Buy Co. Inc: Sustainable Customer Centricity Model?) and answer the following questions: Identify opportunities and threats as well as strengths and weaknesses of the company (draw a SWOT matrix). 2ptsWhat is the competitive strategy used by Best Buy? Justify your answer. 2ptsWhat are the main functional strategies used by this company? Are they successful? Justify 2ptsWhat are the different difficulties faced by the company to maintain and reinforce its competitive advantage?2ptsSuggest some recommendations or solutions to Best Buy to improve its competitive advantage. 2pts
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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
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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
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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
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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
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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
CHAPTER
3
62
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
238
Marketing Strategy
238
Financial Strategy
239
Research and Development (R&D) Strategy
Operations Strategy
236
241
242
Global Issue: INTERNATIONAL DIFFERENCES ALTER WHIRLPOOL’S
OPERATIONS STRATEGY
Purchasing Strategy
243
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
270
9.1 Strategy Implementation 272
9.2 Who Implements Strategy?
9.3 What Must Be Done?
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 known for its comic book characters Captain America, Spider Man,
the Fantastic Four, the Incredible Hulk, the Avengers, and the X-Men. With its 2008 self-produced
films, Iron Man and The Incredible Hulk, Marvel had expanded out of comic books to become a
leader in the entertainment industry. The company was no longer competing against other comic
book publishers like DC Comics, but was now competing against entertainment giants like Walt
Disney and NBC Universal. What should Marvel’s management do to ensure the company’s future
success?
CONTENTS
CASE 16
xxiii
Carnival Corporation and plc (2010) 16-1
(Contributors: Michael J. Keeffe, John K. Ross III, Sherry K. Ross, Bill J. Middlebrook,
and Thomas L. Wheelen)
new
exclusive
With its “fun ship,” Carnival Cruises changed the way people think of ocean cruises. The cruise
became more important than the destination. Through acquisition, Carnival expanded its product line
to encompass an entire range of industry offerings. How can Carnival continue to grow in the industry
it now dominates?
INDUSTRY FOUR:
CASE 17
TRANSPORTATION
Chrysler in Trouble 17-1
(Contributors: Barnali Chakraborty and Vivek Gupta)
new
CASE 18
On April 30, 2009, Chrysler Motors, the third-largest auto manufacturer in the United States, filed
for bankruptcy protection along with its 24 wholly o
