I Concepts only ompettveness and Globalzaton R. Duane Ireland SOUTH-WESTERN CENGAGE Learnng- Brazl Japan Korea Mexco Sngapore Span Unted Kngdom -
Preface xx About the authors xxv Acknowledgements xxx Walk through tour xxxv About the Webste xxxv 2 THE EXTERNAL ENVIRONMENT: OPPORTUNITIES, THREATS, INDUSTRY COMPETITION AND COMPETITOR ANALYSIS m The general, ndustry and compettor envronments 51 External envronmental analyss 53 Scannng 54 Montorng 55 Forecastng 55 Assessng 57 STRATEGIC MANAGEMENT INPUTS 1 1 STRATEGIC MANAGEMENT AND STRATEGIC COMPETITIVENESS 3 The compettve landscape 11 The global economy 13 / The march of globalzaton 14 Technology and technologcal changes 15 Technology dffuson and dsruptve technologes 15 The nformaton age 16 Increasng knowledge ntensty 17 The I/O model of above-average returns 17 The resource-based model of above-average returns 20 Vson and msson 22 Vson 22 Msson 23 Stakeholders 23 Classfcatons of stakeholders 25 Captal market stakeholders 30 Product market stakeholders 30 Organzatonal stakeholders 30 Strategc leaders 31 The work of effectve strategc leaders 32 Predctng outcomes of strategc decsons: proft pools 32 The strategc management process 33 Segments of the general envronment 58 The demographc segment 58 The economc segment 62 The poltcal/legal segment 62 The soco-cultural segment 63 The technologcal segment 64 The global segment 65 The physcal envronment segment 67 Industry envronment analyss 67 Threat of new entrants 69 Barganng power of supplers 72 Barganng power of buyers 72 Threat of substtute products 73 Intensty of rvalry among compettors 73 Interpretng ndustry analyses 75 Strategc groups 76 Compettor analyss 77 Ethcal consderatons 81 3 THE INTERNAL ORGANIZATION: RESOURCES, CAPABILITIES, CORE COMPETENCIES AND COMPETITIVE ADVANTAGES 93 Analysng the nternal organzaton 96 The context of nternal analyss 96 Creatng value 98 The challenge of analysng the nternal organzaton 98 Resources, capabltes and core competences 102 Resources 102 Capabltes 104 Core competences 105
Buldng core competences 105 Four crtera of sustanable compettve advantage 106 Value chan analyss 110 Outsourcng 114 Competences, strengths, weaknesses and strategc decsons 118 INTEGRATING INTERNAL AND EXTERNAL RESOURCES: OPEN INNOVATION, ABSORPTIVE CAPACITY AND INTEGRATION APPROACHES 131 The context of resource ntegraton 137 Benefts of ntegraton and ts' costs 140 Resource ntegraton: open nnovaton, absorptve capacty and organzatonal change 141 The challenge of beng open and closed: dentfyng crtcal external resources 143 The challenge of selectng and absorbng knowledge: nternalzng crtcal external resources 146 New ways of ntegratng external resources 148 The challenge of developng routnes for open nnovaton: why dong what s good s dffcult 148 The purpose of a busness-level strategy 172 Types of busness-level strateges 173 Cost-leadershp strategy 174 Dfferentaton strategy 179 Focus strateges 184 Integrated cost leadershp/dfferentaton strategy 188 6 COMPETITIVE RIVALRY AND COMPETITIVE DYNAMICS 202 A model of compettve rvalry 207 Compettor analyss 208 Market commonalty 209 Resource smlarty 210 Drvers of compettve actons and responses 211 Compettve rvalry 213 Strategc and tactcal actons 213 Lkelhood of attack 215 Frst-mover ncentves 215 Organzatonal sze 217 Qualty 218 Lkelhood of response 219 Type of compettve acton 219 Actor's reputaton 220 Dependence on the market 220 Compettve dynamcs 221 Slow-cycle markets 222 Fast-cycle markets 223 Standard-cycle markets 226 Basc models of ntegraton 151 \ /' 7 CORPORATE-LEVEL STRATEGY 23? Levels of dversfcaton 242 Low levels of dversfcaton 243 Moderate and hgh levels of dversfcaton 244 Reasons for dversfcaton 244 DEFINING THE STRATEGIC ACTIONS 163 BUSINESS-LEVEL STRATEGY 164 Customers: ther relatonshp wth busness-level strateges 167 Effectvely managng relatonshps wth customers 168 Reach, rchness and afflaton 168 Who: determnng the customers to serve 169 What: determnng whch customer needs to satsfy 170 How: determnng core competences necessary to satsfy customer needs 171 Value-creatng dversfcaton: related constraned and related lnked dversfcaton 246 Operatonal relatedness: sharng actvtes 247 Corporate relatedness: transferrng of core competences 247 Market power 249 Smultaneous operatonal relatedness and corporate relatedness 251 Unrelated dversfcaton 253 Effcent nternal captal market allocaton 253 Restructurng of assets 255 Value-neutral dversfcaton: ncentves and resources 255 Incentves to dversfy 256 Resources and dversfcaton 260 Value-reducng dversfcaton: manageral motves to dversfy 260
STRATEGIC ACQUISITION M'C RESTRUCTURING 276 The popularty of merger and acquston strateges 279 " Mergers, acqustons and takeovers: what are the dfferences? 280 Reasons for acqustons 281 Increased market power 281 Overcomng entry barrers 284 Cost of new product development and ncreased speed to market 285 Lower rsk compared to developng new products 287 Increased dversfcaton 289 Reshapng the frm's compettve scope 290 Learnng and developng new capabltes 290 Problems n achevng acquston success 292 Integraton dffcultes 292 Inadequate evaluaton of target 294 Large or extraordnary debt 294 Inablty to acheve synergy 295 Too much dversfcaton 296 Managers overly focused on acqustons 296 Too large 297 Effectve acqustons 298 Restructurng 299 Downszng 300 Downscopng 300 Leveraged buyouts 301 Restructurng outcomes 302 9 INTERNATIONAL SC-t-'.. 3U Identfyng nternatonal opportuntes: ncentves to use an nternatonal strategy 319 Increased market sze 320 Return on nvestment 321 Economes of scale and learnng 321 Locaton advantages 322 Internatonal dversfcaton and returns 338 Internatonal dversfcaton and nnovaton 339 Complexty of managng multnatonal frms 340 Rsks n an nternatonal envronment 340 Poltcal rsks 340 Economc rsks 343 Lmts to nternatonal expanson: management problems 345 COOPERATIVE STRATEGY 360 Strategc allances as a prmary type of cooperatve strategy 363 Three types of strategc allances 364 Reasons frms develop strategc allances 366 Busness-level cooperatve strategy 369 Complementary strategc allances 369 Competton response strategy 372 Uncertanty-reducng strategy 373 Competton-reducng strategy 373 Assessment of busness-level cooperatve strateges 374 Corporate-level cooperatve strategy 375 Dversfyng strategc allance 375 Synergstc strategc allance 376 Franchsng 376 Assessment of corporate-level cooperatve strateges 377 Internatonal cooperatve strategy 377 Network cooperatve strategy 379 Allance network types 379 Compettve rsks wth compettve strateges 380 Managng cooperatve strateges 381 Internatonal strateges 322 Internatonal busness-level strategy 322 Internatonal corporate-level strategy 326 Envronmental trends 329 Lablty of foregnness 329 Regonalzaton 330 Choce of nternatonal entry mode 331 Exportng 331 Lcensng 332 Strategc allances 333 Acqustons 336 New wholly-owned subsdary 336 Dynamcs of mode of entry 337 Strategc compettve outcomes 338 IMPLEMENTATION OF STRATEGIC ACTIONS 397 11 STRATEGIC LEADERSHIP Strategc leadershp and style 402 The role of top-level managers 405 Top management teams 406 Manageral successon 409 Key strategc leadershp actons 412 Determnng strategc drecton 412 398
Effectvely managng the frm's resource portfolo 413 Sustanng an effectve organzatonal culture 416 Emphaszng ethcal practces 418 Establshng balanced organzatonal controls 419 U STRATEGIC ENTREPRENEURSHIP 521 Entrepreneurshp and entrepreneural opportuntes 523 12 CORPORATE GOVERNANCE 435 Separaton of ownershp and manageral control 440 Agency relatonshps 441 Product dversfcaton as an example of an agency problem 442 Agency costs and governance mechansms 443 Ownershp concentraton 446 The growng nfluence of nsttutonal owners 446 Board of drectors 447 Enhancng the effectveness of the board of drectors 449 Executve compensaton 451 The effectveness of executve compensaton 452 Market for corporate control 453 Manageral defence tactcs 454 Internatonal corporate governance 456 Corporate governance n Germany and Japan 456 Corporate governance n Chna 458 Global corporate governance and ethcal behavour 458 13 ORGANIZATIONAL STRUCTURE AND CONTROLS\ x Organzatonal structure and controls 479 Organzatonal structure 479 Organzatonal controls 480 Strategy and structure 482 Evolutonary patterns of strategy and organzatonal structure 482 Smple structure 482 Functonal structure 484 Multdvsonal structure 485 Matches between busness-level strateges and the functonal structure 486 Matches between corporate-level strateges and the multdvsonal structure 489 Matches between nternatonal strateges and worldwde structure 497 Matches between cooperatve strateges and network structures 504 Implementng busness-level cooperatve strateges 506 Implementng corporate-level cooperatve strateges 508 Implementng nternatonal cooperatve strateges 508 Innovaton 525 Incremental and radcal nnovaton 526 Autonomous strategc behavour 527 Induced strategc behavour 529 Implementng nternal nnovatons 530 Cross-functonal product development teams 531 Creatng value from nternal nnovaton 532 The functons of start-up entrepreneurshp and venture captal 534 Start-up entrepreneurshp 534 Venture captal 536 15 STRATEGIC RENEWAL 545 Strategc renewal: defnton, theoretcal perspectves and dmensons 550 Selecton and adaptaton perspectves on strategc renewal 550 Dmensons of strategc renewal 556 Incremental and dscontnuous strategc renewal 557 Organzatonal learnng n strategc renewal 557 The flexblty paradox: tensons between exploraton and explotaton 558 A strategc framework of flexblty 560 A typology of organzatonal forms for copng wth compettve envronments 566 The rgd form: strategc programmng 566 The planned form: strategc plannng 566 The flexble form: adaptve strateges 567 The chaotc form: spontaneous strateges 567 Sngle and dual trajectores of renewal 568 The natural trajectory of routnzaton: decreasng levels of competton 569 The reversed trajectory of revtalzaton: escalatng levels of competton 570 Dual renewal trajectores n mult-unt organzatons 571 Towards sustaned strategc renewal: permanent solutons for the mult-unt frm 574 Organzatonal ambdexterty: generc modes of balancng exploraton and explotaton 575 Masterng strategc renewal journeys wthn mult-unt frms: explorng the dfferent roles of managers 579 Manageral roles of top-, mddle- and front-lne management 582 Idealzed strategc renewal journeys: nteractons between levels of analyss 583 Renewal journeys of the future 585 Glossary 599 Name Index 606 Company Index 620 Subject Index 623