Strategic Management. Gregory G. Dess University of Texas at Dallas. G. T. Lumpkin Syracuse University. Alan B. Eisner Pace University.

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1 Gregory G. Dess University of Texas at Dallas G. T. Lumpkin Syracuse University Alan B. Eisner Pace University Strategic Management text and cases fifth edition I McGraw-Hill Irwin

2 Contents port l Strategic Analysis Chapter 1 Strategic Management: Creating Competitive Advantages * 2 What Is Strategic Management? 9 Defining Strategic Management 9 The Four Key Attributes of Strategic Management 10 The Strategic Management Process 12 Intended versus Realized Strategies 13 Strategy Analysis 13 Strategy Formulation 15 Strategy Implementation 16 The Role of Corporate Governance and Stakeholder Management 16 Alternative Perspectives of Stakeholder Management Social Responsibility and Environmental Sustainability: Moving beyond the Immediate Stakeholders 21 The Strategic Management Perspective: An Imperative throughout the Organization Ensuring Coherence in Strategic Direction 25 Organizational Vision 26 Mission Statements 28 Strategic Objectives 29 Summary / 32 Chapter 2 Analyzing the External Environment of the Firm 38 Creating the Environmentally Aware Organization 41 The Role of Scanning, Monitoring, Competitive Intelligence, and Forecasting 41 SWOT Analysis 47 The General Environment 47 The Demographic Segment 49 The Sociocultural Segment 49 The Political/Legal Segment 50 The Technological Segment 51 The Economic Segment 52 The Global Segment 52 Relationships among Elements of the General Environment 53 The Competitive Environment 56 Porter's Five-Forces Model of Industry Competition How the Internet and Digital Technologies Are Affecting the Five. Competitive Forces 62 Using Industry Analysis: A Few Caveats 67 Strategic Groups within Industries 70 Summary 73 Chapter 3 Assessing the Internal Environment of the Firm 78 Value-Chain Analysis 82 Primary Activities 83 Support Activities 85 Interrelationships among Value-Chain Activities within and across Organizations 89 Applying the Value Chain to Service Organizations 90 Resource-Based View of the Firm 91 Types of Firm Resources 93 Firm Resources and Sustainable Competitive Advantages 94 The Generation and Distribution of a Firm s Profits: Extending the Resource-Based View of the Firm 99 Evaluating Firm Performance: Two Approaches 101 Financial Ratio Analysis 101 Integrating Financial Analysis and Stakeholder Perspectives: The Balanced Scorecard 104 Summary." 108 Appendix to Chapter 3: How the Internet and Digital Technologies Add Value 113 Chapter 4 Recognizing a Firm's Intellectual Assets: Moving beyond a Firm's Tangible Resources 118 The Central Role of Knowledge in Today's Economy 120 Human Capital: The Foundation of Intellectual Capital 123 Attracting Human Capital 125 Developing Human Capital 126 Retaining Human Capital 129 Enhancing Human Capital: The Role of Diversity in the Workforce 131

3 The Vital Role of Social Capital 133 How Social Capital Helps Attract and Retain Talent 134 Social Networks: Implications for Knowledge Management and Career Success 136 The Potential Downside of Social Capital 140 Using Technology to Leverage Human Capital and Knowledge 141 Using Networks to Share Information 141 Electronic Teams: Using Technology to Enhance Collaboration 143 Codifying Knowledge for Competitive Advantage 144 Protecting the Intellectual Assets of the Organization: Intellectual Property and Dynamic Capabilities 147 Intellectual Property Rights 147 Dynamic Capabilities 147 Summary 149 part 2 Strategic Formulation Chapter 5 Business-Level Strategy: Creating and Sustaining Competitive Advantages 156 Types of Competitive Advantage and Sustainability 158 Overall Cost Leadership 160 Differentiation / 165 Focus : 770 Combination Strategies: Integrating Overall Low Cost and Differentiation 172 How the Internet and Digital Technologies Are Affecting the Competitive Strategies 176 Overall Cost Leadership 176 Differentiation 177 Focus 178 Are Combination Strategies the Key to E-Business Success? 179 Industry Life Cycle Stages: Strategic Implications 179 Strategies in the Introduction Stage 182 Strategies in the Growth Stage 182 Strategies in the Maturity Stage 183 Strategies in the Decline Stage 184 Turnaround Strategies 187 Summary 188 Chapter 6 Corporate-Level Strategy: Creating Value through Diversification 194 Making Diversification Work: An Overview 198 Related Diversification: Economies of Scope and Revenue Enhancement 199 Leveraging Core Competencies 200 Sharing Activities 201 Related Diversification: Market Power 203 Pooled Negotiating Power 203 Vertical Integration 206 Unrelated Diversification: Financial Synergies and Parenting 209 Corporate Parenting and Restructuring 209 Portfolio Management 211 Caveat: Is Risk Reduction a Viable Goal of Diversification? 214 The Means to Achieve Diversification 214 Mergers and Acquisitions 215 Strategic Alliances and Joint Ventures 220 Internal Development 222 How Managerial Motives Can Erode Value Creation 223 Growth for Growth's Sake 223 Egotism 224 Antitakeover Tactics Summary 227 Chapter 7 International Strategy: Creating Value in Global Markets 232 The Global Economy: A Brief Overview 234 Factors Affecting a Nation's Competitiveness 235 Factor Endowments 237 Demand Conditions 237 Related and Supporting Industries 237 Firm Strategy, Structure, and Rivalry 238 Concluding Comment on Factors Affecting a Nation's Competitiveness 238 International Expansion: A Company's Motivations and Risks 238 Motivations for International Expansion 238 Potential Risks of International Expansion 243 Global Dispersion of Value Chains: Outsourcing and Offshoring :

4 Achieving Competitive Advantage in Global Markets 248 Two Opposing Pressures: Reducing Costs and Adapting to Local Markets 248 International Strategy 250 Global Strategy 251 Multidomestic Strategy 253 Transnational Strategy 255 Global or Regional? A Second Look at Globalization 257 Entry Modes of International Expansion Exporting 260 Licensing and Franchising 261 Strategic Alliances and Joint Ventures 261 Wholly Owned Subsidiaries 263 Summary 265 Chapter 8 Entrepreneurial Strategy and Competitive Dynamics 270 Recognizing Entrepreneurial Opportunities Entrepreneurial Opportunities 276 Entrepreneurial Resources 279 Entrepreneurial Leadership 285 Entrepreneurial Strategy 285 Entry Strategies 286 Generic Strategies 290 Combination Strategies 293 Competitive Dynamics 294 New Competitive Action 294 Threat Analysis.' 295 Motivation and Capability to Respond 297 Types of Competitive Actions 300 Likelihood of Competitive Reaction 301 Choosing Not to React: Forbearance and Co-opetition 302 Summary 304 part 3 Strategic Implementation Chapter 9 Strategic Control and Corporate Governance 310 Ensuring Informational Control: Responding Effectively to Environmental Change 313 A Traditional Approach to Strategic Control 313 A Contemporary Approach to Strategic Control 314 Attaining Behavioral Control: Balancing Culture, Rewards, and Boundaries 316 Building a Strong and Effective Culture 317 Motivating with Rewards and Incentives 318 Setting Boundaries and Constraints 320 Behavioral Control in Organizations: Situational Factors 323 Evolving from Boundaries to Rewards and Culture The Role of Corporate Governance 324 The Modern Corporation: The Separation of Owners (Shareholders) and Management 326 Governance Mechanisms: Aligning the Interests of Owners and Managers 327 External Governance Control Mechanisms 332 Corporate Governance: An International Perspective Summary 340 Chapter 10 Creating Effective Organizational Designs 346 Traditional Forms of Organizational Structure 349 Patterns of Growth of Large Corporations: Strategy-Structure Relationships 349 Simple Structure 351 Functional Structure 351 Divisional Structure 353 Matrix Structure 356 International Operations: Implications for Organizational Structure 357 Global Start-Ups: A New Phenomenon 358 How an Organization's Structure Can Influence Strategy Formulation 359 Linking Strategic Reward and Evaluation Systems to Business-Level and Corporate-Level Strategies 360 Business-Level Strategy: Reward and Evaluation Systems 361 Corporate-Level Strategy: Strategic Reward and Evaluation Systems 362 Boundaryless Organizational Designs 363 The Barrier-Free Organization 364 The Modular Organization 367 The Virtual Organization 370 Boundaryless Organizations: Making Them Work 372 Creating Ambidextrous Organizational Designs 375 Ambidextrous Organizations: Key Design Attributes Why Was the Ambidextrous Organization the Most Effective Structure? 376 Summary 376

5 Chapter 11 Strategic Leadership: Creating a Learning Organization and an Ethical Organization 382 Leadership: Three Interdependent Activities 385 Setting a Direction 386 Designing the Organization 388 Nurturing an Excellent and Ethical Culture 388 Elements of Effective Leadership 390 Integrative Thinking 390 Overcoming Barriers to Change 391 The Effective Use of Power 393 Emotional Intelligence: A Key Leadership Trait 394 Self-Awareness 396 Self-Regulation 397 Motivation 397 Empathy 397 Social Skill 397 Emotional Intelligence: Some Potential Drawbacks and Cautionary Notes 398 Developing a Learning Organization 400 Inspiring and Motivating People with a Mission or Purpose 401 Empowering Employees at All Levels 401 Accumulating and Sharing Internal Knowledge 402 Gathering and Integrating External Information 404 Challenging the Status Quo and Enabling Creativity Creating an Ethical Organization 407 Individual Ethics versus Organizational Ethics 407 Integrity-Based versus Compliance-Based Approaches to Organizational Ethics 410 RoleModels 411 Corporate Credos and Codes of Conduct 412 Reward and Evaluation Systems 414 Policies and Procedures 415 Summary 418 Chapter 12 Managing Innovation and Fostering Corporate Entrepreneurship 424 Managing Innovation 427 Types ofinnovation 427 Challenges of Innovation 431 Defining the Scope of Innovation 432 Managing the Pace of Innovation 432 Staffing to Capture Value from Innovation 433 Collaborating with Innovation Partners 434 Corporate Entrepreneurship 435 Focused Approaches to Corporate Entrepreneurship 439 Dispersed Approaches to Corporate Entrepreneurship 440 Measuring the Success of Corporate Entrepreneurship Activities 442 Real Options Analysis: A Useful Tool 444 Applications of Real Options Analysis to Strategic Decisions 444 Potential Pitfalls of Real Options Analysis 445 Entrepreneurial Orientation 447 Autonomy 448 Innovativeness 449 Proactiveness 452 Competitive Aggressiveness 453 RiskTaking Summary 457 part 4 Case Analysis Chapter 13 Analyzing Strategic Management Cases 462 Why Analyze Strategic Management Cases? 464 How to Conduct a Case Analysis 465 Become Familiar with the Material 467 Identify Problems 468 Conduct Strategic Analyses 469 Propose Alternative Solutions 471 Make Recommendations 471 How to Get the Most from Case Analysis 473 Using Conflict-Inducing Decision-Making Techniques in Case Analysis 475 Symptoms of Groupthink and How to Prevent It 478 Using Conflict to Improve Decision Making. 479 Following the Analysis-Decision-Action Cycle in Case Analysis 481 Summary 485 Appendix 1 to Chapter 13: Financial Ratio Analysis Appendix 2 to Chapter 13: Sources of Company and Industry Information 495 Cases C-1 XXVII