4EDITION STRATEGIC. Theory and Practice JOHN A. PARNELL. University of North Carolina, Pembroke. Los Angeles London New Delhi Singapore Washington DC

Transcription

1 4EDITION STRATEGIC M A N A G E M E N T Theory and Practice JOHN A. PARNELL University of North Carolina, Pembroke Los Angeles London New Delhi Singapore Washington DC

2 Preface xv Description of Text xv Key Features xvi What's New inthis Edition Ancillaries xvii Acknowledgments xvm XVI About the Author xix 1. Fundamentals of Strategic Management What Is Strategic Management? 1 Intended and Realized Strategies 4 Scientific and Artistic Perspectives on Strategic Management 5 Influence on Strategic Management 6 Corporate Governance and Boards of Directors 7 Strategic Decisions 10 The Global Imperative 12 Summary 13 Key Terms 13 Review Questions and Exercises 14 Practice Quiz 14 True or False? 14 Multiple Choice 15 Student Study Site 15 Notes 16 STRATEGY+BUSINESS READING: THE CHINA CHALLENGE Industry Competition 27 Industry Life Cycle Stages 30 Industry Structure 32 Intensity of Rivalry Among Incumbent Firms 32 Concentration of Competitors 34 High Fixed or Storage Costs 35 Slow Industry Growth 35 lack of Differentiation or Low Switching Costs 35 Capacity Augmented in Large Increments 36 Diversity of Competitors 36

3 High Strategic Stakes 36 High Exit Barriers 36 Threat of Entry 37 Economies ofscale 38 Brand Identity and Product Differentiation 38 Capital Requirements 39 Switching Costs 39 Access to Distribution Channels 39 Cost Advantages Independent ofsize 39 Government Policy 39 Pressure FromSubstituteproducts 40,\Bargaining;Power of Buyers 40 Bargaining Power of Suppliers 41. Limitations of Porter's FiveForces Model: 42. Summary 43; ;. KeyTerms, 43 : v, ' " Review Questions and Exercises 44 * Practice Quiz,44 / JrueorFalse? M : Multiple Choice AS Student Study Site 45.. ". N o t e s 4 6 ;.'-. '..' '..,. ' STRATEGY"+BUSINESS^ READING: FOCUS AND SCALE ON THE INTERNET The External Environment: Political-Legal and Economic Forces 53 Analysis ofthe External Environment 53 Political-Legal Forcei 54 Global Considerations 60 Economic Forces 63 Gross Domestic Product 64. ;:; inflation Rates 66 Interest Rates 66,,, ; Exchange Rates 66. ; Ecological Influences 67, Summary 69,.:-"' ;^ : KeyTerms 69 Review Questions and Exercises 69 Practice Quiz 69 TrueorFalse? 69 Multiple Choice 70 Student Study Site 70 Notes 71 STRATEGY+BUSINESS READING: COMPETING FOR THE GLOBAL MIDDLE CLASS The External Environment: Social and Technological Forces 79 Social Forces 79 I Case #1;Eating Habits, 83,

4 Case #2: Automobiles 86 Global Concerns 88 TechnolbgicalForces 90 Thelnternet 92 Strategic Dimensions of the Internet 96 Movement toward Information Symmetry 96 Internet as Distribution Channel 97 Speed]'; 97 Interactivity 97 Potential for Cost Reductions and Cost Shifting 97 Forms of Electronic Commerce 98 Busmess-tO'Business 98 Business-to-Cohsumer 98 Busihess-to-Goverhment 99 Consunier-to-Coiisumer 99 Cohscimer-to-Business 99 Cpmmoditization and Mass Customization 99 Environmental Scanning 100 Summary 102 KeyTerms 102 Review Questions and Exercises 103 PracticeQuiz 103 True or False? 103 Multiple Choice 103 Student Study Site \ 104 Notes 104 STRATEGY+BUSINESS READING: THE RISE OF GENERATION C The Organization: Ethics and Corporate Social Responsibility 117 Organizational Direction: Mission, Goals, and Objectives 118 Goals and Stakeholders 118 The Agency Problem 120 _ Management Serves Its Own Interests 120 Management and Stockholders Sharethe Same Interests 122 Managerial Ethics 123 Perspectives on Ethics 126,, Social Responsibility 129,,, Corporate Social Responsibility in Practical T e r m s ^ Sustainable Strategic Management 135 Takeovers 135 Outsourcing and Offshoring 136 Linking Managerial Ethics and Corporate Social Responsibility 139 Summary 140, KeyTerms 140 Review Questions and Exercises 141 PracticeQuiz 141

5 TrueorFalse? 141 MultipleChoice 142 Student Study Site 143 Notes 143 STRATEGY+BUSINESS READING: VALUES VS. VALUE Corporate-Level Strategies 151 The Corporate Profile 151 Strategic Alternatives at the Corporate Level 153 Growth Strategies 153 Horizontal (Related) Integration 156 Horizontal (Related) Diversification 156 Conglomerate (Unrelated) Diversification 157 Vertical Integration 157,: Strategic Alliances (Partnerships) 157 Stability Strategy 159 Retrenchment Strategies 161 Turnaround 161 Divestment 163 Liquidation 163 Boston Consulting Group Growth-Share Matrix 163 Global Corporate Strategy 166 Wal-Mart Abroad 168 Global Orientation Assessment 169 Summary 170 / KeyTerms, 170 Review Questions and Exercises 172, PracticeQuiz 172 TrueorFalse? 172 MultipleChoice 172 Student Study Site Notes 173 : STRATEGY+BUSINESS READING: THE UNIQUE ADVANTAGE Business Unit Strategies 183 Porter's Generic Strategies 184 Low-Cost (Cost Leadership) Strategy (Without Focus) 185 Focus-Low-Cost Strategy 187 Differentiation Strategy (WithoutFocus) 188 Focus-Differentiation Strategy 190 Low-Cost-Differentiation Strategy 191 Focus-Low-Cost-Differentiation Strategy 195 Multiple Strategies 195 The Miles and Snow Strategy Framework 196 Business Size, Strategy, and Performance 197 Assessing Strategies 198 Global Concerns 199 Summary 202 ;

6 KeyTerms 203 Review Questions and Exercises 204 PracticeQuiz 204 TrueorFalse? 204 MultipleChoice 204 Student Study Site 205 Notes 205 STRATEGY+BUSINESS READING: GROWTH THROUGH FOCUS: A BLUEPRINT FOR DRIVING PROFITABLE EXPANSION Functional Strategies 219 Marketing 221 Pricing Strategies 221 Promotion Strategies 222 Product/Service Strategies 222 Place (Distribution)Strategies 224 Finance 225 Production 227 ; Quality Considerations, 228 Research and Development 229 Purchasing 230 Human Resources 231 Human Capital and Knowledge Management 233 Knowledge and Competitive Advantage 234 Information Systems Management 234 Functional Strategies and Industry Life Cycle 235 Summary 236 KeyTerms 236 Review Questions and Exercises 237 PracticeQuiz 237,..,_., TrueorFalse? 237 ; MultipleChoice 238 ' : Student Study Site 238 Notes 239 STRATEGY+BUSINESS READING: THE POWER OF THE POST-RECESSION CONSUMER Strategy Formulation 247 Strengths and Weaknesses 247,, r,, Human Resources 248 : ;v, Board of Directors 249 Top Management 249,"' Middle Management, Supervisors, and Employees 250 Organizational Resources 250 Physical Resources 251.," Opportunities and Threats 254 SW/OT Matrix 255

7 Issues in Strategy Formulation 260 Evaluating Strategic Change 260 Strategy, Corporate Social Responsibility, and Managerial Ethics 262 Effects on Organizational Resources 262 Anticipated Responses From Competitors and Customers 262 Summary 263 KeyTerms, 263 Review Questions and Exercises 264 PracticeQuiz 264 TrueorFalse? 264 MultipleChoice 265 Student Study Site 266 Notes 266 STRATEGY* BUSINESS READING: 1 0 CLUES TO OPPORTUNITY Strategy Execution: Structure 271 rganizational Structure 271 Vertical Growth 273 Horizontal Growth 27'4 StructuraLForms 275 ;,.'.-', Functional Structure 275 Product Divisional Structure 276 Geographic Divisional Structure 277 Matrix Structure 278 '" >;, Assessing Organizational Structure 279 Corporate Involvement in Business Unit Operations 281 Corporate Restructuring 282 Summary 282 KeyTerms 283 Review Questions and Exercises 283 PracticeQuiz 284 TrueorFalse? 284 MultipleChoice 284 Student Study Site 285 Notes STRATEGY+BUSINESS READING: DESIGN FOR FRUGAL GROWTH Strategy Execution: Strategic Change, Culture, and Leadership 293 Organizational Culture and Strategy 295 Cultural Strength and Diversity 297 Shaping the Culture 298 Global Concerns 298 Strategic Leadership 299 : Leadership Style 300 Executing Strategic Change 303

8 Recognize the Need for Change 304 Create a Shared Vision 304 Institutionalize the Change 304 Summary 306 KeyTerms 306 Review Questions and Exercises 307 PracticeQuiz 307 TrueorFalse? 307 MultipleChoice 307 Student Study Site 308 Notes 308 STRATEGY+BUSINESS READING: CEO SUCCESSION 2010: THE FOUR TYPES OF CEOS Strategic Control and Crisis Management 327 Step 1:The Focus of Strategic Control 328 Step 2: Strategic Control Standards (Benchmarks) 329 Published Information for Strategic Control 330 Product/Service Quality 330 Innovation 331 Market Share and Relative Market Share 331 Steps 3Through 5: Exerting Strategic Control 332 Control Through the Formal and Informal Organizations 333 Crisis Management 334 Prominent Crises in Recent History 336 Crisis Planning 339 Trends in Strategic Management 341 Summary 342 KeyTerms 342 Review Questions and Exercises 342 PracticeQuiz 343 TrueorFalse? 343 MultipleChoice 343 Student Study Site 344 Notes 344 STRATEGY+BUSINESS READING: HOW TO PREVENT SELF-INFLICTED DISASTERS 347 Appendix 353 Case Analysis 354 Real-Time Cases 361 Case 1: Allstate '. Case 2: Amazon.com 362 Case3: American Express 363 Case 4: Anheuser-Busch InBev 364 Case 5: AutoZone 366 Case 6: Avon 366 Case 7: Bank of America 368

9 Case 8: Bed Bath & Beyond 369 Case 9: Stanley Black & Decker 370 Case 10:Cici's Pizza 371 Case11:Costco 372 Case12:Dell 373 Case 13: Delta Air Lines 374 ; Case14:DollarTree 375 Case15:FedEx 376 ; - Case16:Ford 377 Case 17: Home Depot 378 Case 18: International Paper 379 Case 19: Jack in the Box 380 Case 20: Kroger 382 Case 21: Lands'End 382 ; Case 22: Mattel 384. Case23:Nike 385 V Case 24: Papa John's 386., Case25:Pfizer 387 Case 26: Southwest Airlines 388 Case 27: Starbucks 389 ' Case28:Walgreens Case 29: Wal-Mart 392 Case 30: Yum! Brands 393 Traditional Cases 395 Case 1: Bob's Supermarket: Competing With the Big Boys 395 Case 2: Costco: Maximum Employee Benefits or Maximum Shareholder Return? 407 Case 3: Dollar General Today's Neighborhood Store 422 Case4;:Family Dollar Stores 448 Case}5: General Electric: Ecomaginatipn as a CSR Initiative 476 :^ase :ikapai,new Zealand: Eat Your Greens! 484 Case7: Kodak's Challenge: Surviving the Disruptive "Winds of Change" 499 Case 8: Macy's, Inc. 2010: Could Macy's Bring Back the Magic? 518 Case 9: Netflix: Entering, Engaging, and Embracing Innovation in the Movie Rental Industry 539 Case 10: Skoda Auto Case 11: Staples Pantaloon Retail Limited Tie-Up: Going for Growth in India's Modern Retail Market 563 Case 12: Hitting the Brakes:Toyota in Crisis 593 Glossary 611 /', -''-.;' : ' /.;- ;: " - v; : index 621