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Strategic management theory an integrated approach 8th by charless hill Strategic management theory an integrated approach 8th by charless hill Strategic management theory an integrated approach 8th by charless hill Strategic management theory an integrated approach 8th by charless hill Strategic management theory an integrated approach 8th by charless hill Strategic management theory an integrated approach 8th by charless hill Strategic management theory an integrated approach 8th by charless hill Strategic management theory an integrated approach 8th by charless hill
342927_FM_Theory_pi-xvi.qxd 9/21/07 2:57 PM Page i Strategic Management Theory An Integrated Approach EIGHTH EDITION Charles W L Hill UNIVERSITY OF WASHINGTON Gareth R Jones TEXAS A&M UNIVERSITY Houghton Mifflin Company Boston New York 342927_FM_Theory_pi-xvi.qxd 9/21/07 2:57 PM Page ii For my children, Elizabeth, Charlotte, and Michelle Charles W L Hill For Nicholas and Julia and Morgan and Nia Gareth R Jones Executive Publisher: George Hoffman Executive Editor: Lisé Johnson Senior Marketing Manager: Nicole Hamm Development Editor: Suzanna Smith Senior Project Editor: Carol Merrigan Art and Design Manager: Jill Haber Cover Design Director: Tony Saizon Senior Photo Editor: Jennifer Meyer Dare Senior Composition Buyer: Chuck Dutton New Title Project Manager: James Lonergan Editorial Assistant: Kathryn White Marketing Assistant: Tom DiGiano Cover image: Jason Hawkes, www.jasonhawkes.com Copyright © 2008 by Houghton Mifflin Company All rights reserved No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or by any information storage or retrieval system without the prior written permission of Houghton Mifflin Company unless such copying is expressly permitted by federal copyright law Address inquiries to College Permissions, Houghton Mifflin Company, 222 Berkeley Street, Boston, MA 02116-3764 Printed in the U.S.A Library of Congress Control Number: 2007934815 Instructor’s examination copy: ISBN-10: 0-547-00490-7 ISBN-13: 978-0-547-00490-7 For orders, use student text ISBNs: ISBN-10: 0-618-89476-4 ISBN-13: 978-0-618-89476-5 9–DOW–11 10 09 08 07 342927_FM_Theory_pi-xvi.qxd 9/21/07 2:57 PM Page iii Contents Preface xiii Part Introduction to Strategic Management Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage Opening Case: Dell Computer Overview Strategic Leadership, Competitive Advantage, and Superior Performance Superior Performance ● Competitive Advantage and a Company’s Business Model ● Industry Differences in Performance ● Performance in Nonprofit Enterprises Strategic Managers Corporate-Level Managers ● Business-Level Managers 10 ● Functional-Level Managers 10 The Strategy-Making Process 10 A Model of the Strategic Planning Process 10 ● Mission Statement 11 ● External Analysis 16 Strategy in Action 1.1: Strategic Analysis at Time Inc 17 Internal Analysis 18 ● SWOT Analysis and the Business Model 18 ● Strategy Implementation 19 ● The Feedback Loop 19 Strategy as an Emergent Process 20 Strategy Making in an Unpredictable World 20 ● Autonomous Action: Strategy Making by Lower-Level Managers 20 Strategy in Action 1.2: Starbucks’s Music Business 21 Serendipity and Strategy 21 Strategy in Action 1.3: A Strategic Shift at Charles Schwab 22 Intended and Emergent Strategies 22 Strategic Planning in Practice 24 Scenario Planning 24 ● Decentralized Planning 25 ● Strategic Intent 26 Strategic Decision Making 27 Cognitive Biases and Strategic Decision Making 27 ● Groupthink and Strategic Decisions 29 ● Techniques for Improving Decision Making 29 Strategy in Action 1.4: Was Intelligence on Iraq Biased by Groupthink? 30 Strategic Leadership 31 Vision, Eloquence, and Consistency 31 ● Articulation of the Business Model 32 ● Commitment 32 ● Being Well Informed 32 ● Willingness to Delegate and Empower 33 ● The Astute Use of Power 33 ● Emotional Intelligence 33 Summary of Chapter 34 ● Discussion Questions 35 Practicing Strategic Management 35 Small-Group Exercise: Designing a Planning System ● Article File ● Strategic Management Project: Module ● Ethics Exercise iii 342927_FM_Theory_pi-xvi.qxd iv 9/21/07 2:57 PM Page iv Contents Closing Case: The Best-Laid Plans—Chrysler Hits the Wall 37 Appendix to Chapter 1: Enterprise Valuation, ROIC, and Growth 39 External Analysis: The Identification of Opportunities and Threats 41 Opening Case: The United States Beer Industry 41 Overview 42 Defining an Industry 43 Industry and Sector 43 ● Industry and Market Segments 44 ● Changing Industry Boundaries 44 Porter’s Five Forces Model 45 Risk of Entry by Potential Competitors 46 Strategy in Action 2.1: Circumventing Entry Barriers into the Soft Drink Industry 47 Rivalry Among Established Companies 49 Strategy in Action 2.2: Price Wars in the Breakfast Cereal Industry 51 Industry Demand 51 ● Cost Conditions 52 ● Exit Barriers 52 ● The Bargaining Power of Buyers 53 ● The Bargaining Power of Suppliers 54 Strategy in Action 2.3: Wal-Mart’s Bargaining Power over Suppliers 55 Substitute Products 56 ● A Sixth Force: Complementors 56 ● Porter’s Model Summarized 57 Running Case: Dell Computer and the Personal Computer Industry 57 Strategic Groups Within Industries 58 Implications of Strategic Groups 59 ● The Role of Mobility Barriers 59 Industry Life Cycle Analysis 60 Embryonic Industries 61 ● Growth Industries 61 ● Industry Shakeout 61 ● Mature Industries 62 ● Declining Industries 63 ● Industry Life Cycle 63 Limitations of Models for Industry Analysis 63 Life Cycle Issues 63 ● Innovation and Change 64 ● Company Differences 66 The Macroenvironment 66 Macroeconomic Forces 66 ● Global Forces 68 ● Technological Forces 68 ● Demographic Forces 69 ● Social Forces 70 ● Political and Legal Forces 70 Summary of Chapter 71 ● Discussion Questions 71 Practicing Strategic Management 72 Small-Group Exercise: Competing with Microsoft Project: Module ● Ethics Exercise Closing Case: The Pharmaceutical Industry 73 ● Article File ● Strategic Management Part The Nature of Competitive Advantage Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability Opening Case: Southwest Airlines 75 Overview 76 The Roots of Competitive Advantage 77 Distinctive Competencies 77 ● Competitive Advantage, Value Creation, and Profitability 80 The Value Chain 83 Primary Activities 83 75 342927_FM_Theory_pi-xvi.qxd 9/21/07 2:57 PM Page v Contents v Strategy in Action 3.1: Value Creation at Burberry 85 Support Activities 85 Strategy in Action 3.2: Competitive Advantage at Zara 86 The Building Blocks of Competitive Advantage 87 Efficiency 87 ● Quality as Excellence and Reliability 88 ● Innovation 90 ● Customer Responsiveness 91 ● Business Models, the Value Chain, and Generic Distinctive Competencies 91 Analyzing Competitive Advantage and Profitability 93 Running Case: Comparing Dell to Hewlett-Packard 95 The Durability of Competitive Advantage 97 Barriers to Imitation 97 ● Capability of Competitors 99 ● Industry Dynamism 99 ● Summarizing Durability of Competitive Advantage 100 Avoiding Failure and Sustaining Competitive Advantage 100 Why Companies Fail 100 ● Steps to Avoid Failure 102 Strategy in Action 3.3: The Road to Ruin at DEC 103 The Role of Luck 104 Strategy in Action 3.4: Bill Gates’s Lucky Break 105 Summary of Chapter 105 ● Discussion of Questions 106 Practicing Strategic Management 106 Small-Group Exercise: Analyzing Competitive Advantage Project: Module ● Ethics Exercise Closing Case: Starbucks 107 ● Active File ● Strategic Management Building Competitive Advantage Through Functional-Level Strategy Opening Case: Boosting Efficiency at Matsushita 109 Overview 110 Achieving Superior Efficiency 111 Efficiency and Economies of Scale 111 ● Efficiency and Learning Effects 113 Strategy in Action 4.1: Learning Effects in Cardiac Surgery 114 Efficiency and the Experience Curve 115 ● Efficiency, Flexible Production Systems, and Mass Customization 117 Strategy in Action 4.2: Mass Customization at Lands’ End 118 Marketing and Efficiency 119 Materials Management, Just-in-Time, and Efficiency 121 R&D Strategy and Efficiency 122 ● Human Resources Strategy and Efficiency 122 ● Information Systems and Efficiency 124 ● Infrastructure and Efficiency 124 Running Case: Dell’s Utilization of the Internet 125 Summary: Achieving Efficiency 125 Achieving Superior Quality 126 Attaining Superior Reliability 126 Strategy in Action 4.3: General Electric’s Six Sigma Quality Improvement Process 128 Implementing Reliability Improvement Methodologies 128 ● Improving Quality as Excellence 132 Strategy in Action 4.4: Six Sigma at Mount Carmel Health 132 Achieving Superior Innovation 134 The High Failure Rate of Innovation 134 ● Building Competencies in Innovation 136 Strategy in Action 4.5: Corning: Learning from Innovation Failures 141 Achieving Superior Responsiveness to Customers 142 Focusing on the Customer 142 ● Satisfying Customer Needs 143 Summary of Chapter 145 ● Discussion Questions 146 109 342927_FM_Theory_pi-xvi.qxd vi 9/21/07 2:57 PM Page vi Contents Practicing Strategic Management 146 Small-Group Exercise: Identifying Excellence Module ● Ethics Exercise Closing Case: Verizon Wireless 147 ● Article File ● Strategic Management Project: Part Strategies Building Competitive Advantage Through Business-Level Strategy 149 Opening Case: E*Trade’s Changing Business Strategies 149 Overview 150 Competitive Positioning and the Business Model 151 Formulating the Business Model: Customer Needs and Product Differentiation 151 ● Formulating the Business Model: Customer Groups and Market Segmentation 153 ● Implementing the Business Model: Building Distinctive Competencies 156 Competitive Positioning and Business-Level Strategy 157 Competitive Positioning: Generic Business-Level Strategies 159 Cost Leadership 160 Strategy in Action 5.1: Ryanair Takes Control over the Sky in Europe 162 Focused Cost Leadership 163 ● Differentiation 166 ● Focused Differentiation 168 Strategy in Action 5.2: L L Bean’s New Business Model 169 The Dynamics of Competitive Positioning 170 Strategy in Action 5.3: Zara Uses IT to Change the World of Fashion 171 Competitive Positioning for Superior Performance: Broad Differentiation 172 Strategy in Action 5.4: Toyota’s Goal? A High-Value Vehicle to Match Every Customer Need 174 Competitive Positioning and Strategic Groups 177 ● Failures in Competitive Positioning 179 Strategy in Action 5.5: Holiday Inns on Six Continents 181 Summary of Chapter 182 ● Discussion Questions 183 Practicing Strategic Management 183 Small-Group Exercise: Finding a Strategy for a Restaurant ● Article File ● Strategic Management Project: Module ● Ethics Exercise Closing Case: Samsung Changes Its Business Model Again and Again 184 Business-Level Strategy and the Industry Environment 186 Opening Case: Competition Gets Ugly in the Toy Business 186 Overview 187 Strategies in Fragmented Industries 188 Chaining 189 ● Franchising 190 ● Horizontal Merger 190 ● Using Information Technology and the Internet 190 Strategy in Action 6.1: Clear Channel Creates a National Chain of Local Radio Stations 191 Strategies in Embryonic and Growth Industries 192 The Changing Nature of Market Demand 193 ● Strategic Implications: Crossing the Chasm 195 Strategy in Action 6.2: How Prodigy Fell into the Chasm Between Innovators and the Early Majority 197 Strategic Implications of Market Growth Rates 198 ● Factors Affecting Market Growth Rates 198 ● Strategic Implications of Differences in Growth Rates 199 342927_FM_Theory_pi-xvi.qxd 9/21/07 2:57 PM Page vii Contents vii Navigating Through the Life Cycle to Maturity 200 Embryonic Strategies 201 ● Growth Strategies 201 ● Shakeout Strategies 202 ● Maturity Strategies 203 Strategy in Mature Industries 203 Strategies to Deter Entry: Product Proliferation, Price Cutting, and Maintaining Excess Capacity 204 ● Strategies to Manage Rivalry 206 Strategy in Action 6.3: New Competitors for Toys “R” Us 207 Running Case: Dell Has to Rethink Its Business-Level Strategies 212 Game Theory 214 Strategy in Action 6.4: Coca-Cola and PepsiCo Go Head-to-Head 220 Strategies in Declining Industries 221 The Severity of Decline 221 ● Choosing a Strategy 222 Strategy in Action 6.5: How to Make Money in the Vacuum Tube Business 223 Summary of Chapter 224 ● Discussion Questions 225 Practicing Strategic Management 225 Small-Group Exercise: How to Keep the Salsa Hot ● Article File ● Strategic Management Project: Module ● Ethics Exercise Closing Case: Nike’s Winning Ways 226 Strategy and Technology 228 Opening Case: Format War—Blu-Ray Versus HD-DVD 228 Overview 229 Technical Standards and Format Wars 230 Examples of Standards 230 ● Benefits of Standards 232 ● Establishment of Standards 233 ● Network Effects, Positive Feedback, and Lockout 233 Strategy in Action 7.1: How Dolby Became the Standard in Sound Technology 236 Strategies for Winning a Format War 237 Ensure a Supply of Complements 237 ● Leverage Killer Applications 237 ● Aggressively Price and Market 238 ● Cooperate with Competitors 238 ● License the Format 239 Costs in High-Technology Industries 240 Comparative Cost Economics 240 ● Strategic Significance 241 Strategy in Action 7.2: Lowering the Cost of Ultrasound Equipment Through Digitalization 242 Managing Intellectual Property Rights 242 Intellectual Property Rights 243 ● Digitalization and Piracy Rates 243 ● Strategies for Managing Digital Rights 244 Strategy in Action 7.3: Battling Piracy in the Videogame Industry 245 Capturing First-Mover Advantages 246 First-Mover Advantages 247 ● First-Mover Disadvantages 247 ● Strategies for Exploiting First-Mover Advantages 248 Technological Paradigm Shifts 251 Paradigm Shifts and the Decline of Established Companies 252 Strategy in Action 7.4: Disruptive Technology in Mechanical Excavators 255 Strategic Implications for Established Companies 256 ● Strategic Implications for New Entrants 258 Summary of Chapter 258 ● Discussion Questions 259 Practicing Strategic Management 259 Small-Group Exercise: Digital Books ● Article File ● Strategic Management Project: Module ● Ethics Exercise Closing Case: The Failure of Friendster 260 342927_FM_Theory_pi-xvi.qxd viii 9/21/07 2:57 PM Page viii Contents Strategy in the Global Environment 262 Opening Case: MTV—A Global Brand Goes Local 262 Overview 263 The Global and National Environments 264 The Globalization of Production and Markets 264 Strategy in Action 8.1: Finland’s Nokia 266 National Competitive Advantage 267 ● Using the Framework 269 Increasing Profitability and Profit Growth Through Global Expansion 269 Expanding the Market: Leveraging Products 270 ● Realizing Cost Economies from Global Volume 270 ● Realizing Location Economies 271 ● Leveraging the Skills of Global Subsidiaries 272 Cost Pressures and Pressures for Local Responsiveness 273 Pressures for Cost Reductions 274 ● Pressures for Local Responsiveness 275 Strategy in Action 8.2: Localization at IKEA 276 Choosing a Global Strategy 278 Global Standardization Strategy 279 Running Case: Dell’s Global Business Strategy 279 Localization Strategy 280 ● Transnational Strategy 280 ● International Strategy 282 ● Changes in Strategy over Time 282 Basic Entry Decisions 283 Which Overseas Markets to Enter 283 ● Timing of Entry 284 ● Scale of Entry and Strategic Commitments 285 The Choice of Entry Mode 286 Exporting 286 ● Licensing 287 ● Franchising 288 ● Joint Ventures 289 ● Wholly Owned Subsidiaries 290 ● Choosing an Entry Strategy 291 Global Strategic Alliances 293 Advantages of Strategic Alliances 293 Strategy in Action 8.3: Cisco and Fujitsu 294 Disadvantages of Strategic Alliances 294 ● Making Strategic Alliances Work 295 Summary of Chapter 298 ● Discussion Questions 299 Practicing Strategic Management 299 Small-Group Exercise: Developing a Global Strategy ● Article File Management Project: Module ● Ethics Exercise Closing Case: The Evolution of Strategy at Procter & Gamble 300 ● Strategic Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing Opening Case: Oracle Strives to Become the Biggest and the Best 302 Overview 303 Corporate-Level Strategy and the Multibusiness Model 304 Horizontal Integration: Single-Industry Strategy 305 Benefits of Horizontal Integration 307 Running Case: Beating Dell: Why HP Acquired Compaq 308 Problems with Horizontal Integration 310 Strategy in Action 9.1: Horizontal Integration in Health Care 311 Vertical Integration: Entering New Industries to Strengthen the Core Business Model 312 Increasing Profitability Through Vertical Integration 314 302 342927_FM_Theory_pi-xvi.qxd 9/21/07 2:57 PM Page ix Contents ix Strategy in Action 9.2: Specialized Assets and Vertical Integration in the Aluminum Industry 316 Problems with Vertical Integration 317 ● The Limits of Vertical Integration 318 Alternatives to Vertical Integration: Cooperative Relationships 319 Short-Term Contracts and Competitive Bidding 319 ● Strategic Alliances and Long-Term Contracting 320 Strategy in Action 9.3: DaimlerChrysler’s U.S Keiretsu 321 Building Long-Term Cooperative Relationships 322 Strategic Outsourcing 323 Benefits of Outsourcing 325 ● Risks of Outsourcing 326 Summary of Chapter 327 ● Discussion Questions 328 Practicing Strategic Management 328 Small-Group Exercise: Comparing Vertical Integration Strategies ● Article File ● Strategic Management Project: Module ● Ethics Exercise Closing Case: Read All About It News Corp 329 10 Corporate-Level Strategy: Formulating and Implementing Related and Unrelated Diversification Opening Case: Tyco’s Rough Ride 331 Overview 332 Expanding Beyond a Single Industry 333 A Company as a Portfolio of Distinctive Competencies 333 Increasing Profitability Through Diversification 335 Transferring Competencies Across Industries 336 ● Leveraging Competencies 337 Strategy in Action 10.1: Diversification at 3M: Leveraging Technology 338 Sharing Resources: Economies of Scope 339 ● Using Product Bundling 340 ● Managing Rivalry: Multipoint Competition 340 ● Utilizing General Organizational Competencies 341 Two Types of Diversification 343 Related Diversification 344 ● Unrelated Diversification 344 Strategy in Action 10.2: Related Diversification at Intel 345 Disadvantages and Limits of Diversification 346 Changing Industry- and Firm-Specific Conditions 346 ● Diversification for the Wrong Reasons 346 ● The Bureaucratic Costs of Diversification 347 Choosing a Strategy 349 Related Versus Unrelated Diversification 349 ● The Web of Corporate-Level Strategy 350 Entering New Industries: Internal New Ventures 351 The Attraction of Internal New Venturing 351 ● Pitfalls of New Ventures 352 ● Guidelines for Successful Internal New Venturing 353 Entering New Industries: Acquisitions 354 The Attractions of Acquisitions 355 ● Acquisition Pitfalls 355 Strategy in Action 10.3: Postacquisition Problems at Mellon Bank 357 Guidelines for Successful Acquisition 358 Entering New Industries: Joint Ventures 360 Restructuring 361 Why Restructure? 361 Summary of Chapter 362 ● Discussion Questions 362 331 342927_FM_Theory_pi-xvi.qxd x 10/5/07 3:51 PM Page x Contents Practicing Strategic Management 363 Small-Group Exercise: Dun & Bradstreet ● Article File 10 ● Strategic Management Project: Module 10 ● Ethics Exercise Closing Case: United Technologies Has an “ACE in Its Pocket” 364 Part Implementing Strategy 11 Corporate Performance, Governance, and Business Ethics 366 Opening Case: The Rise and Fall of Dennis Kozlowski 366 Overview 367 Stakeholders and Corporate Performance 367 Stakeholder Impact Analysis 368 ● The Unique Role of Stockholders 368 ● Profitability, Profit Growth, and Stakeholder Claims 369 Strategy in Action 11.1: Price Fixing at Sotheby’s and Christie’s 371 Agency Theory 372 Principal-Agent Relationships 372 ● The Agency Problem 372 Strategy in Action 11.2: Self-Dealing at Computer Associates 376 Governance Mechanisms 377 The Board of Directors 377 ● Stock-Based Compensation 379 ● Financial Statements and Auditors 380 ● The Takeover Constraint 380 ● Governance Mechanisms Inside a Company 381 Ethics and Strategy 384 Ethical Issues in Strategy 384 Strategy in Action 11.3: Nike and the Sweatshop Debate 385 The Roots of Unethical Behavior 388 ● The Philosophical Approaches to Ethics 389 ● Behaving Ethically 392 Running Case: Dell’s Code of Ethics 394 Summary of Chapter 396 ● Discussion Questions 397 Practicing Strategic Management 397 Small-Group Exercise: Evaluating Stakeholder Claims ● Article File 11 ● Strategic Management Project: Module 11 ● Ethics Exercise Closing Case: Working Conditions at Wal-Mart 399 12 Implementing Strategy in Companies That Compete in a Single Industry 401 Opening Case: Strategy Implementation at Dell Computer 401 Overview 402 Implementing Strategy Through Organizational Design 403 Building Blocks of Organizational Structure 404 Grouping Tasks, Functions, and Divisions 404 ● Allocating Authority and Responsibility 405 Strategy in Action 12.1: Union Pacific Decentralizes to Increase Customer Responsiveness 408 Integration and Integrating Mechanisms 409 Strategic Control Systems 409 Levels of Strategic Control 411 ● Types of Strategic Control Systems 411 ● Using Information Technology 414 Strategy in Action 12.2: Control at Cypress Semiconductor 415 Strategic Reward Systems 415 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I1 www.downloadslide.com Index Aaker, David A., 483 ABB, 281, 461 Abell, Derek F., 477, 482 Abernathy, William J., 477, 481 Abrams, Jonathan, 260, 261 Abramson, Ronna, 494 Absolute cost advantages, 48 Absorptive capacity, 99, 137 Accenture, 327 Accord, 210 Accounting terms, 94 Acer, 2, 57 Achieving Competitive Excellence (ACE), 365 Acquisitions, 306, 354–359, 360 Adaptive culture, 417, 418, 419 Adelaide News, 329 Adelphia Communications, 375 Adidas, 227 Adner, R., 479 Adobe Acrobat Reader, 244 Advanced Micro Devices (AMD), 55, 56, 345 Advertising barrier to entry and, 210 brand loyalty and, 46, 47 competitive industry environment and, 191 customers and free, 120 private-label brand and, 47 spending and, 41, 42 value creation and, 85 Aer Lingus, 162 Aetna, 166 Affymetrix, 141 After Eight Mints, 460 Agency theory, 372–376, 377, 379 Ahuja, K G., 488 Airbus, 371 Air France, 162 Air Jordans, 227, 472 Airline industry, 3, 50, 62, 70, 74, 75, 76, 208, 265 Aladdin, 79 Alchian, A A., 481 Alco Standard, 451, 452 Aldag, R J., 478 Alienware Corp., 212 Alitalia, 162 Allen, Paul, 192 Alleven, M., 482 Alliances See Foreign markets Alliance structure, 296, 297 Allied Signal, 128 Allison, K., 477 Allstate Insurance, 305 Altair, 192 Amazon, 28, 133, 144, 169, 177, 190, 194, 207 AMD, 212 American Airlines, 75 American Express, 101, 324 American Quality Foundation, 127 Ameritrade, 22, 256 Amgen, 74, 98, 288 Amit, R., 480 AMP, 331 Anand, J., 479 Anderson, C R., 479 Anderson, E., 485 Andersson, U., 485 Andrews, Kenneth R., 477, 489 Andrews, Paul, 493 Anheuser-Busch, 41, 42, 46, 47, 66, 190 Anslinger, P L., 488 Ansoff, H Igor, 477, 483 Anticompetitive behavior, 387 AOL, 238 AOL Time Warner, 196, 197 Aplin, J C., 478 Apple Computer, 43, 57, 84, 90, 100, 135, 136, 200, 212, 233, 238, 243, 246, 308, 312, 313, 325, 379 Arensman, R., 494 Arizona State Retirement System, 357 Armani, 171 Armour, H O., 490 Arthur, B., 484 Arthur Anderson, 380 Artzt, Russell, 376 AstraZeneca, 74 ATL, 242 AT&T, 307, 312 Authority and responsibility, 405–408, 465 Auto company supply industry, 54 Auto industry, 69, 77, 97, 99, 112, 152, 253, 275 Automobile manufacturing industry, 54 Auto Nation, 69 Availability error, 28, 29 Axelrod, Robert, 483 Babies “R” Us, 207 Babyboom, 69 Bad news, 131 Bailey, Christopher, 85 Bain, J E., 478 Bak, D D., 493 Balanced scorecard model, 382, 383 Baldwin, C Y., 478 Baliga, B Ram, 489 Ballmer, Steve, 342 Bally’s health club, 188 Bamberger, Peter, 481 Bank of America, 150, 324 Bank of New York, 357 Bankruptcies, 50, 52, 64, 67 Barbie doll, 187, 209 Bargaining power of buyers, 53, 54, 69 Bargaining power of suppliers, 54–55, 56 Bargaining power over buyers/suppliers, 310 Barkema, H G., 488 Barnes & Noble, 65, 189 Barnett, D F., 479, 481 Barney, J B., 480 Barrett, Colleen C., 407 Barriers to entry, 61, 62, 69 to entry and acquisitions, 355 to entry and advertising, 210 to entry and cost advantage, 163 to entry and fragmented industries, 188 exit, 52, 53 to imitation, 78, 97–98, 249 imitation and, 246 limits of entry, 49 low-entry, 50, 57, 68 overcoming inertia as, 104 strategic groups and mobility, 59, 60 tariff, 287 to trade and investment, 68 Barshay, J J., 493 Barsky, N P., 480 Bartlett, C A., 275, 281, 481, 485, 491 Barton, D Leonard, 487 BASIC, 192 Batsell, J., 481 Bauer, 227 Bausch and Lomb, 135 Bay of Pigs, 29 Bayus, B L., 484 Bean, Leon Leonwood, 169 Beatty, S., 493 Beauchamp, Tom L., 489 Beauty and the Beast, 79 Beer industry, 41, 42, 44, 46, 62, 70, 336, 337 Behavior control system, 413, 414 Bell, Alexander Graham, 22 Bell-shaped curve, 194, 195 Bell South, 312 Benchmarking, 104 Benefit-cost-risk calculations, 283 Benetton, 86 Ben & Jerry’s, 170 Bennett, D., 481 Berman, S L., 481 Besanko, D., 480 Best Buy, 189, 313 Best practices, 104 Betamax technology, 135, 228, 234, 235, 239 Bethlehem Steel, 64 Beverage Partners Worldwide, 465 Bextra, 74 Bezos, Jeff, 194 Bias for action, 418 BIC, 165 Bidding strategy, 359 Biggadike, R., 487 Birchall, J., 486 Birkinshaw, J M., 485 Birtwistle, G., 493 Biyalogorsky, E., 482 Blackberry, 199 Blaine doll, 187 Blau, P., 489 Bleeke, J., 486 Block, Z., 487 Blockbuster, 188, 190 Blu-ray format, 228, 229 BMW, 151, 166, 179 Boeing 737, 74 Boeing 747, 253 Boeing Company, 246, 265, 271, 289, 293, 296, 306, 322, 370, 371, 387 Boeing-Mitsubishi, 295 Bogenr, W C., 485 Bohmer, R M J., 493 Bombardier, 277 Booker, E., 486 Booth, Lewis, 443 Booz, Allen, and Hamilton, 487 Borders, 189 Borland, V S., 493 Borrus, M., 481 Borzo, J., 484 Boston Co., 356, 357 Boudette, N., 478 Boulding, W., 482, 484 Boundaries changing industry and, 44, 45 vertical integration and, 319 I1 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I2 www.downloadslide.com I2 Index Bowen, D E., 482 Bowen, H K., 480 Bowens, G., 494 Bowerman, Bill, 226, 227 Bowie, Norman E., 489 Bowles, J., 482 BP Amoco, 324 Brand breakfast cereal industry and, 51 imitation and, 98 international laws and, 292 mature industries and, 62 Brandchannel, 108 Brandenburger, A M., 483 Brander, J., 483 Brand loyalty, 46, 47, 144, 168 Brand positioning, 84 Bratz doll, 186, 187, 210 Bravo, Rose Marie, 85, 87 Breakfast cereal industry, 51, 62 Breen, Edward, 332, 366 Brelis, M., 480 Brews, P J., 477, 478 Brigham & Women’s Hospital, 311 British Airways, 162 British Satellite Broadcasting, 330 British Sunday Telegraph, 330 Broad differentiators, 427 Brooks, Dede, 371 Brooks Brothers, 170 Brouthers, K D., 485 Brouthers, L B., 485 Brown, S L., 477, 482 Brown, Tony, 443 Brush, T H., 486, 487, 488 Bruton, G D., 490, 491 BSkyB, 330 Buckman, R., 484 Buderi, R., 487 Budget process, 11 Budweiser, 44, 47 Buffer stocks, 121, 122 Buffett, Warren, 379 Builders, 102 Bulik, B S., 483 Bunderi, R., 490 Bunker, J., 481 Bunkley, N., 478 Burberry, 84, 85, 87 Bureaucratic costs, 318, 347, 348, 405, 423–424, 425, 427, 451 Bureau of Economic Analysis, 483 Burgelman, Robert A., 20, 477, 487, 491 Burger King, 188 Burgers, W., 485 Burley, J., 482 Burrows, P., 494 Busch, H F., 481 Bush, George W., 30, 70 Business 2.0, 17 Business(es) coordination among, 348, 349 mission statement and, 13 number of, 348 See also Company/companies Business ethics decision-making processes and, 394 ethics officer and, 395 explanation of, 384 Friedman doctrine and, 389, 390 hiring and promoting with, 393 justice theories and, 392 Kantian ethics and, 390, 391 moral courage and, 396 organizational culture and leadership with, 393 principles of, 392–396 rights theories and, 391 roots of unethical behavior, 388, 389 strategy and, 384, 386–387, 388 strong corporate governance and, 395 utilitarian approach to, 390, 391 Business-level managers, 9, 10, 26 Business-level strategy chaining, 189, 190 competitive advantage and, 18 competitive position as, 151 declining industries and, 221–224 embryonic industries and, 192–199, 200 fragmented industries and, 188 franchising as, 190 growth industries and, 192–199, 200 horizontal merger, 190 location economies and, 271 mature industries and, 204 pioneering companies and, 195 using information technology and the Internet, 190 Business model articulation of the, 32 broad differentiation, 172–176, 177 building distinctive competencies and the, 156 categories of, 18 competitive advantage and, 74 competitive positioning and the, 151–156, 157 cost leadership, 160–162, 163 customer groups and, 153, 154 customer needs and the, 151 dealing with piracy, 245 Dell Computer and, 57 differentiation, 166–167, 168 differentiation advantage, 188 direct selling, 1–2 distinctive competencies and, 83 explanation of, feedback loop and, 19 focused cost leadership, 163–165, 166 focused differentiation, 168–169, 170 fragmented industries and, 188 issues of, 159, 160 levels of, 305 market segmentation and, 153, 154–155, 156 Nordstrom and, 92 product differentiation and the, 151–152, 153, 156 razor and blade strategy, 238, 245 replicating the, 309, 310 SWOT and strategies for, 19 value chain and a, 91, 92 Wal-Mart and, 92, 157 Business outputs/inputs, 87 Business process, 435, 436 Business Software Alliance, 244 Business-to-business (B2B), 470 Business Week, 374 Busse, M., 479 Butler, J., 482, 489 Butler, K., 493 Buyers bargaining power of, 53, 54 industry products and, 43 Buzzell, Robert D., 483 Cable television companies, 46 Cadbury Schweppes, 43, 461 Cahouet, Frank, 357 Cambridge University, 236 Caminiti, S., 482 Camry, 174 Candid Camera, 263 Cannella, A A., 488 Canon, 27, 238, 251, 334, 337, 341, 347 Capabilities explanation of, 78 imitation of, 98, 99 resistance to, 101 Walt Disney Company and, 79 See also Intangible resources Capabilities of competitors, 99 Capable competitors, 250 Capacity, 62, 63 Capacity control, 211, 213, 214 Capell, K., 493, 494 Capital, 3, 55, 335 Capital appreciation, Capital productivity, 87, 88 Capital turnover, 94, 95 Cardinal, L B., 478 Carnation Company, 460 Carrier, 364 Carter, J R., 481 Casadesus-Masanell, R., 484 Case(s) See Closing Case; Opening Case; Running Case Cash-rebate game, 217, 218 Caterpillar, 85, 144, 255, 281 Caves, R E., 479, 483, 484, 486, 487 CBS, 197, 385 CDMA network, 148, 277 CD players, 235, 237, 238 Celica, 210 Central Intelligence Agency (CIA), 29 Centralization, 407, 408, 448, 452, 453 Century 21 Real Estate, 190 CEO, 378 See also Corporate-level managers; General Managers Chaffin, J., 494 Chaining, 189, 190 Chambers, S., 481 Champy, J., 490, 491 Chandler, Alfred D., 405, 486, 489, 490 Chanel, 171 Chang, L T., 485 Chaparral Steel, 64 Charles Schwab, 21, 22 Cheerios, 51 Chen, M J., 484 Cheney, Dick, 30 Cherney, E., 493 Cherry Coke, 221 Chery Motors, 38 Chesbrough, H W., 487 Chevrolet Nova, 297 Chi, T., 485 Child, J., 489 Child World, 207 China, 68 Chipello, C J., 485 Christen, M., 484 Christensen, C R., 482, 487, 494 Christensen, Clayton, 254, 255, 256, 257 Christensen, M., 484 Christie’s, 371, 378 Chrysler, 37, 38, 98, 99, 102, 306, 321 Chrysler Suzuki, 178 Chubb, 364 Churchill, Winston, 31 Churn rates See Defection rates Cingular Wireless, 148 Cisco Systems, 67, 90, 124, 134, 192, 246, 293, 294, 323, 324, 326 Citibank, 90, 330, 458, 468 Citicorp, 265 Citigroup, 265 Clark, K B., 482 Clear Channel Communications, 190, 191 Clear Vision, 271, 272 Close coordination, 101 Closing Case business ethics, 399–400 business model strategy changes, 184, 185 competitive advantage, 147, 148 corporate-level strategy, 364–365 decision making errors, 37, 38 distinctive competencies, 107, 108 first-mover disadvantages, 260, 261 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I3 www.downloadslide.com Index global environment strategies, 300, 301 global structure, 474–475 horizontal/vertical integration, 329–330 industry competition and business model, 226, 227 product structure, 440–441 profitability of pharmaceutical industry, 73, 74 Club Med, 461 CNN, 17, 18, 329 CNNMoney.com, 17 Coca-Cola, 43, 44, 47, 70, 98, 220, 249, 263, 275, 305, 356, 465, 466 Coffee, J C., 486, 487, 488 Coffee industry, 56 Cognitive biases, 27, 28 COGS/Sales, 94 Cohen, W M., 481 Cohn, L., 488 Coke, 220 Coldwell Banker, 305 Cole Haan, 227 Colgate-Palmolive, 301 Collectively, 204 Collins, J C., 477 Collis, D., 485 Columbia Pictures, 228, 305, 351 Colvin, G., 489 Comanor, W S., 479 Comcast Corporation, 48, 340 Comet, 246 Commercialization, 353 Commitment, 32, 127, 134 Commonalities, 336, 344 Company/companies acquisition guidelines for, 358–359, 360 bureaucratic costs of diversification in, 347, 348 business model of a, 92 capabilities of a, 78 categories of, 102 competitive positioning failures by, 179–181, 182 core business focus of, 326 cost leader, 160–162, 163 demonstrating leadership and customers, 142, 143 differences, 65 as differentiator, 166–167, 168 dimensions of a, 13 disappearance of focus, 188 disruptive technology and, 256, 257 distinctive competencies and a, 78, 79 diversification and changing, 346 efficiency steps for, 111–125, 126 expense of acquisitions to, 356, 358 explanation of, 8, 111 format war strategies and, 237–239 functions of a, 83–84, 85 game theory and, 214, 215 goal and value creation frontier, 178 governance mechanisms and, 377–383, 384 Icarus paradox and, 102 infrastructure, 87, 124, 125 integration of acquired, 356 interest rates and, 67 licensing and, 239 outsourcing and loss of information, 327 overestimation of economic benefits to, 356 paradigm shifts and decline of, 252–255, 256 related vs unrelated diversification for a, 349, 350 role of luck in, 104 role of R & D in, 122 specialist, 325 strategic groups within, 58–59, 60 superior profitability of, 79 tactics to avoid failure by, 102–103, 104 types of managers in a, uniqueness of a, 91 wrong reasons for diversification in, 346, 347 Compaq, 100, 103, 140, 252, 306, 307, 308, 310, 401, 465, 466 Comparative cost economics, 240, 241 Compatibility, 199 Competition declining industry and intensity of, 221, 222 framework and global, 269 globalization and, 265 innovations and, 91 product improvement and, 134 of related/supporting industries, 268 Competitive advantage basis for, 74, 75 building blocks of, 76, 87–91, 151 building of, 109–144, 145 business model as, 74 company failure and, 100, 101, 102, 103 Dell Computer and, 3, 57 distinctive competencies and, 77, 78 durability of, 97–99, 100 employee productivity and, 88 entry mode and, 292 explanation of, 5, format wars and, 233 innovation and, 91, 134 inventory turnover as, Nucor Steel and, 14 organizational design and, 403, 404 overestimation of economic benefits and, 356 performance measurements of, 382, 383 Porter’s five forces model and, 161, 162, 163 process innovation and, 122 product quality and, 90 profitability and analyzing, 93–96 reliability and, 90 response time as, 144 roots of, 110, 111 scarcity value as, 86 sources of, 77, 78 Starbucks and, 107, 108 strategic commitments and, 99 strategic control systems and, 410 superior profitability and, 80, 92 sustained, 77 SWOT and strategies for, 18 value creation and profitability, 80–82, 83 value creation cycle and, 92 Competitive bidding strategy, 319, 320 Competitive chasm, 196 Competitive forces absolute cost advantage and, 48 analysis of, 45, 46 industry changes in, 60 as static, 65 weak, 48 Competitive positioning broad differentiation and, 172–176, 177 business-level strategies and, 151, 157–158, 159 dynamics of, 170–181, 182 failures in, 179–181, 182 general business-level strategies, 159–169, 170 investment strategy and, 201 strategic groups and, 177–178, 179 Competitive pressures, 273–277 Competitive rivalries, 265 Competitive strategy, 290 Competitive structure, 65, 70, 158 Competitors capabilities of, 99 capable, 250 competency and imitation by, 97 cooperating with, 238, 239 cost-leadership strategy and, 163 strategy of, 239 Complementary assets, 248, 249 Complementors, 56 Complements, 237 Complexity, 199 CompuServe, 197 Computer-aided design (CAD), 472 I3 Computer Associates, 16, 375, 376, 380 Condit, Phil, 371 Conglomerate, 364 Consolidated industries, 49–50, 51, 64 Consumers See Customer(s) Consumer surplus, 80 Contadina, 460 Contemplating entry, 205 Continental Airlines, 74, 75, 180 Continuous improvement, 103, 104 Contractor, F J., 485 Contracts, 319, 320 Control Data, 252 Control system, 403 See also Strategic control Converse, 227 Conversion activities, 414 Cookell, H., 484 Cool, K., 479 Cooper, R G., 134, 482 Cooperative relationships, 319–322, 323 Coordination of businesses, 348, 349 Coordination strategy, 214, 290, 310 Coors, 47 Coors Light, 44 Copeland, Tom, 477, 478, 480, 488 Cornelius, A J M., 478 Cornelius, P., 478 Cornflakes, 51 Corning, 141 Corolla, 210 Corporate culture, 451 Corporate governance, 395 See also Governance mechanisms Corporate headquarters staff, 445 Corporate-level managers, 8, 9, 26 Corporate-level strategy acquisitions and failure as a, 355–357, 358 cooperative relationships and, 319–322, 323 explanation of, 18 horizontal integration, 305–311, 312 internal new ventures and, 351–353, 354 joint ventures as, 360, 361 multibusiness model, 304, 305 outsourcing, 323–327 portfolio of distinctive competencies, 333–334, 335 restructuring as, 361 vertical integration, 312–318, 319 web of, 350, 351 Corporate raiders, 381 Corruption, 388 Cosier, R A., 478 Cost advantages, 46, 247, 271, 279 Costco, 170 Cost conditions, 52 Cost leaders, 160–162, 163, 167, 427 Cost leadership, 426, 427 Cost reductions, 274, 275, 280, 281, 292, 293, 339 Cost structure capital and, 95 competitive advantage and, 74 customers and lower, 120, 121 horizontal integration and, 307, 308 of industry, 52 law of diminishing returns and, 240 lowering of, 116 marketing strategy and, 119 outsourcing and lower, 325 profitability and, 82 strategic significance of, 241, 242 and unit cost of product differentiation, 157 unit costs and, 115 vertical integration and, 312, 317, 318 Cott Corporation, 47 Courtney, H., 477, 478 COX-2 inhibitors, 74 Coyne, William, 338 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I4 www.downloadslide.com I4 Index Craftsman tool, 309 Craftsmen, 102 Crandall, R W., 479, 481 Creditable commitment, 322 Crestor, 74 Crisco, 300, 301 Crosby, P B., 482 Cross-functional activities, 138, 139, 436 Cross-functional teams, 463 Cross-licensing agreement, 288 Cross-selling, 309 CT scanners, 249, 251 Culture and values, 14 Cultures, 275, 402, 427 See also Organizational culture Cuneo, A Z., 482 Cunningham, R., 494 Currency exchange, 68 Curve Ball, 30 Customer defection rates, 119, 120 Customer groups, 193, 194 Customer-oriented business, 13, 14 Customer-oriented view, 43 Customer(s) basic needs of, 43 change and attributes of, 192 competitive chasm between, 196, 197 defection and satisfaction, 119, 120 differences in tastes and preferences, 275 different segments of, 193–194, 195 focused differentiator and, 169, 170 focus on the, 142, 143 foreign differences of, 276, 277 groups, 153, 154 long-time benefit of loyalty, 120 loyalty and profit, 120 needs, 151, 402 new groups of, 192 products and values by, 80 response time, 91 responsiveness, 91 satisfying needs of, 143–144, 145 value creation and, 81 Customer service, 2, 85 Customer’s reservation price, 80 Customization, 144, 161, 275, 276, 277, 279 Cusumano, M., 480 Cypress Semiconductor, 415 Daewoo, 475 Daft, R L., 489 Daimler-Benz, 37, 179, 306 DaimlerChrysler, 37, 38, 54, 306, 320, 321, 326, 457, 458 Daniels, C., 489, 494 Darby, M R., 482 Dasani, 43 D’Aveni, Richard, 65, 479, 488, 490 David, George, 364 Davidge, Christopher, 371 Davidow, W H., 486, 487 Davidson, Dick, 408 Davis, S M., 490 Days Inn, 181 Deal, E., 490 Dean, J W., 482 Deans, G K., 479 Dean Witter, 305 DEC See Digital Equipment Corporation (DEC) Decentralization, 407, 408, 448, 452 Decentralized planning, 25, 26 Decision-making process business ethics and, 394 empowerment and, 123 procedural justice and, 26 Decision trees, 215, 216 Declining industries, 60, 63, 221–224 Deeds, D., 479, 480 Deephouse, D L., 479 Deere & Company, 104 Defection rates, 147, 148, 326 See also Customer defection rates; Six Sigma DeFillippi, R J., 480 DeHavilland, 246 Delegation and empowerment, 33 Deliberate strategies, 23 Dell, Michael, 1, 8, 32, 125, 394, 401, 402, 482 Dell Computer articulation of business model for, 32 business-level strategies, 212 business model and competitive advantage of, 57 business model at, 6, capital productivity and, 88 as competition, 308 competitive advantage and, 472 customization and, 161 differentiation and, 132, 133 distinctive competencies and, 206 feedback loop and, 19 global standardization strategy, 279 Hewlett-Packard and, 57 Hewlett-Packard (HP) compared to, 95, 96 industry analysis of, 57 information systems and, 87 as innovators, 64 Internet and, 124, 177 inventory turnover and, 16 loss of information and, 327 low profitability and, 66 materials-management process and, 86 net profit and, online selling by, 125 paradigm shifts and, 252 price war and, 310 product imitation by, 312 reasons for market value loss and, responsiveness to customers and, 166 ROIC and, same customer needs and, 43 shareholders and, specialist companies and, 326 strategy implementation at, 401, 402 supply chain and, supply-chain management and, 122 sustained competitive advantage and, 6, 77 “the Soul of Dell” and, 394 value-added chain stage and, 313 Windows Vista and, 240 Demand capacity and growth in, 62 growth, 49, 51 industry, 51, 52 jump-start, 238, 239 local, 267, 268 local responsiveness to government, 277 market and, 43 product and, 82 stable, 62, 63 unpredictability and vertical integration, 318 Deming, W E., 127, 130, 482 Demographic forces, 69 Dent-Micallef, A., 481 Design elegance, 84 Dess, G., 487 Deutsch, C H., 493 Development research, 353 Devers, C., 479 Devil’s advocacy, 29 Dewett, T., 491 Dialectic inquiry, 29, 30 Dicken, P., 484 Dickerson, M., 493 Dickson, M., 493 Dick’s Sporting Goods, 169 Dierickx, I., 479 Diet Coke, 98, 221 Diet Pepsi, 98 Difference principle, 392 Differentiated products, 151 See also Product differentiation Differentiation enhanced, 326 implementing, 425, 427, 428 prisoner’s dilemma game and, 219, 220 Differentiation strategy, 132–133, 134, 166–167, 168 Differentiators, 166, 167, 203, 427 Digital Equipment Corporation (DEC), 101, 102, 103, 252, 306 Digitalization, 243, 244, 251 Digital rights management, 244, 245 Digital technology, 266 Digital television broadcasts (DTV), 233 Dillard’s, 170, 190, 430 Diltz, J David, 487 DiMasi, J A., 480 Dior, 165, 171 Dipert, B., 483 Direct contact, 409 Direct selling, 1–2, DIRECTV, 330 Discounter business, 59 Diseconomies of scale, 112, 113, 188 Disney Channel, 79 Disney Studio, 228 Disruptive technology, 254, 255 Distinctive competencies best practices and, 104 business model and, 156 company strategies and, 79 competitive advantage and, 92 competitors and imitation of, 97 differentiated company and, 167 diversification and agenda, 333, 334, 335 entry mode and, 292 exchange of, 450 explanation of, 77 functional structure and, 419–424, 425 global expansion and, 270 of improvement and learning, 103, 104 investment strategy and, 201 Japanese auto companies and, 99 leveraging, 337–338 portfolio of, 333–334, 335 professional cultures and, 427 transfer of, 336, 337 Diversification choosing a strategy for, 349–350, 351 commonalities and, 336, 339 competencies across industries and, 336, 337 disadvantages of, 346–348, 349 economies of scope and, 339 explanation of, 335 leverage competencies and, 333–334, 335 leveraging competencies and, 337–338 multibusiness model and, 336 multipoint competition and, 340, 341 organizational competencies and, 341–343 product bundling and, 340 profitability and, 335–343 sharing resources and, 339 types of, 343–344 Diversification discount, 361 Diversified company, 335 Divestment strategy, 222, 224 Dividend payments, Division, 405, 445 See also Multidivisional structure Dixit, A K., 483 DNA, 141 Dobnik, V., 494 Dolby, Ray, 236 Dolby Digital, 236 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I5 www.downloadslide.com Index Dolby Digital Surround Sound, 236 Dolby Laboratories, 235, 236, 239, 251 Dominant design, 231 Dominant strategy, 217, 218 Domino’s Pizza, 143 Donald, Jim, 32, 33, 478 Donaldson, Thomas, 489 Dorr, John, 260 Dover, 451 Dow Chemical, 360 Down, J W., 481, 488 Downsizing, 435 Doz, Yves L., 297, 485, 486 DRAM memory chip, 20 Dranove, D., 480 Dreamcast, 135 Dreazen, Y J., 486, 494 Dreyer’s Grand Ice Cream, 460 Dreyfus Corp., 357 Dritas, D., 494 Drucker, Peter F., 477, 483 Druyun, Darleen, 371 DSL, 340 Duncan, R., 490 DuPont Company, 93, 94, 134, 351, 445 DuPont Formula, 93, 94 DVD, 236 Dyer, J H., 494 Dyment, Roy, 143 Dynergy, 375 Early adopters, 194, 195, 239 Early majority, 194 Easy Writer, 238 Eaton, J., 483 eBay, 67, 190 Echo, 174 EchoStar, 340 Eckert, Bob, 186 Economies of scale concept of, 112, 117 explanation of, 46, 111 global expansion and, 270 horizontal integration and, 307 impact of learning on unit costs, 115 sources of, 111, 112 Economies of scope, 339 Edgecliffe-Johnson, A., 494 Edmondson, A C., 482, 493 Edmondson, Gail, 478, 488 EDS, 269, 327 Eesley, C., 488 Efficiency competitive advantage and, 87, 88, 382 control and, 410 economies of scale and, 111–112, 113 experience curve and, 115–116, 117 flexible production systems and, 117, 118, 119 human resources strategy and, 122–123 information systems and, 124 infrastructure and, 124, 125 learning effects and, 113–114, 115 marketing and, 119, 120 mass customization and, 117, 118, 119 materials management and, 121 measure of, 111 role of research and development in, 122 value creation functions in, 126 Eisenhardt, K M., 477, 478, 480, 482, 490 Eisner, Michael, 79 Eli Lilly, 58 Ellison, Larry, 302, 303, 306, 342, 469 Embryonic industry, 60, 61, 192, 193, 351 Embryonic strategies, 201 Emergent process, 20–22 Emergent strategies, 22, 23 EMI, 249, 251 Emotional intelligence, 33, 34 Empire building, 374 Employee incentives, 383, 384 Employee productivity, 87, 88, 90, 104, 122–123, 271 Employee stock ownership plan (ESOP), 369, 383, 421 Employee training, 123, 143 Empowerment, 123 Enbrel, 98, 249 Enron Corporation, 16, 70, 375, 380, 389 Ensign, P C., 485 Enterprise resources planning (ERP), 454, 460 Enterprise solutions, 440 Enterprise valuation, drivers of, 39 Enthoven, A., 481 Entrepreneurial capabilities, 341, 342 Entrepreneurship, 416 See also Intrapreneurs Entry modes, 286–292, 293 Environmental degradation, 388 Eoderer, C., 489 Epic, 141 Erez, M., 477 Ericsson, 266, 268, 277 Ernst, D., 486 Ernst & Young, 376, 385 Erotica, 263 Escalating commitment, 28 eSchwab, 22 ESOP See Employee stock ownership plan (ESOP) Esquire, 260 Etch A Sketch, 387 Ethical dilemmas, 384 Ethics, 16, 392 See also Business ethics Ethics officer, 395 E*Trade, 22, 149, 150, 163, 256 Excess capacity, 213 Exchange of distinctive competencies, 450 Experience curve, 115–116, 117, 119, 421 Exploratory research, 353 Exporting, 286, 287 Express Mail, 91, 144 External analysis, 16, 17, 43 External stakeholders, 367 Exult, 324, 325 Exxon, 374, 454 Facebook, 261 Face-to-face-interaction, 411 Factor endowments, 267 Fama, E F., 477, 488 Federal Communications Commission (FCC), 147, 233 Federal Express See FedEx Federal Trade Commission (FTC), 312 FedEx, 52, 53, 61, 166, 178, 215, 216, 430 Feedback, 143 Feigenbaum, A V., 127 Ferdows, K., 493 Fields, G., 494 Fields, Mark, 443 15% rule, 341 Fill in the blankets, 334 Financial performance, 93 Financial statements and auditors, 380 Finkelstein, S., 488 Fiorina, Carly, 308 First Lady health club, 188 First mover, 246 First-mover advantages, 247, 284 First-mover disadvantages, 246, 247, 248, 284, 285 Fit approach, 26, 27 Fitchard, K., 494 Fixed costs, 52, 111, 120, 240, 293 Fladmoe-Lindquist, K., 485 Flamholtz, E., 490 I5 Flamm, M., 493 Flat structure, 406 Flexible machine cells, 119 Flexible manufacturing processes, 122, 175 Flexible production technology, 117, 118, 119 Flextronics, 324, 325, 326 Florida Power & Light, 104, 130 Focused cost leadership, 163–165, 166 Focused differentiation, 168–169, 170 Focusing on the customer, 142–144 Folgers, 300 Food and Drug Administration, U.S (FDA), 58, 98 Ford Motor Company, 11, 12, 38, 54, 97, 317, 477 cost disadvantages of, 320 credit card plan and, 219 differentiation and, 176 global-area structure and, 457 global-matrix structure and, 459 global structure and, 442, 443 leveraging by, 270 marketing and, 98 Mazda and, 297 oligopoly and, 99 product-group strategy, 461 rebate program, 217 Foreign markets alliance management in, 297, 298 choice of, 283, 284 exporting and, 286, 287 strategic alliance advantages, 293, 294 strategic alliance disadvantages, 294, 295 strategic commitments and, 285, 286 success of strategic alliances in, 295, 296 timing of entry into, 284, 285 wholly owned subsidiaries and, 290, 291 Foreign sales organization, 457 Forelle, C., 494 Forest Labs, 58, 59 Format wars, 228–229, 230, 233, 234, 237–239 Foroohar, R., 483 Forsgren, M., 485 Fortune, 17, 18 48 Hours, 385 Foster, R N., 252, 253, 484 Four Season hotel, 143, 289 Fowler, Bennie, 443 FOX Broadcasting Company, 330 Fox Studio, 228 Fragmentation, 144 Fragmented industries, 49, 50, 64, 188–191, 307 France Telecome, 248 Franchising, 190, 288, 289, 292 Frankel, M., 486 Fray, L L., 488 Fred Meyer (store), 59 Free cash flow, 335 Freeman, E., 477, 488 Freeman, J., 481 Freeman, R E., 491 Freiberger, P., 483 Freisen, P H., 490 Fresno County Retirement System, 357 Freston, Tom, 262 Friedman, Milton, 389, 390 Friedman doctrine, 389, 390 Friendster, 260, 261 Frost, T S., 485 Fry, L., 481 Fuji, 251, 252, 295, 297 Fujimoto, T., 482 Fujitsu, 57, 293, 294 Fuji-Xerox, 289, 295 Fulghum, D A., 488 Fuller, S R., 478 Full integration, 314, 318 Function, 405 Functional boss, 432 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I6 www.downloadslide.com I6 Index Functional-level managers avoiding complacency of, 116, 117 explanation of, 9, 10 ivory tower approach and, 26 Six Sigma and, 126, 127 Functional-level strategies, 18, 110, 156 Functional managers, Functional structure advantages of, 420 bureaucratic costs and, 423–424, 425 developing culture and, 421–422, 423 focus strategy and, 434 grouping by function and, 419, 420, 421 manufacturing and, 421, 422 outsourcing option in the, 424, 425 for research and development, 422 sales, 422, 423 Fung, Victor & William, 471 Gabor, A., 482 Galbraith, J K., 488 Galbraith, J R., 489, 490 Gale, S F., 493 Gale, T., 483 Gallini, N T., 484 Gallo, 203 Game theory, 214, 215 Gander Mountain, 169 The Gap, 59, 86, 90, 275, 323 Garr, D., 487 Garten, J E., 485 Garvin, D., 480 Gates, Bill, 32, 104, 105, 192, 416, 469, 482, 493 Gateway, 3, 5, 6, 43, 163, 212, 313, 472 Gatignon, H., 485 Gavetti, G., 477 Gaylin, D H., 488 Gellerman, Saul W., 489 GE Medical Systems, 249, 251 Genentech, 74 General Electric (GE), 103, 223, 322 alliance with Snecma, 296 diversification by, 346 functional-level managers and, 10 general manager and goals of, ivory tower approach by, 26 Jack Welch and, 343 self-managing teams at, 123 service demand and, 69 Six Sigma program and, 127, 128 visionary leader and, 32 General Foods, 316 Generally accepted accounting principles (GAAP), 373, 380 General managers, General Mills, 51 General Motors (GM) acquisition by, 337 alliances of, 297 comparison of, 84 competitive advantage and, 83 competitive advantage and failure of, 101 competitive bidding strategy and, 319 cost disadvantages of, 320 credit card plan and, 219 fit approach and, 27 global-area structure and, 457 global structure and, 474–475 imitation by, 97 innovation and, 99 multidivisional structure and, 446, 447 oligopoly and, 99 poorly performing, 15 powerful buyers and, 54 price war and, 38 profitability and, 82 rebate programs by, 217 restructuring of, 435 reward systems and, 415 Saturn division of, 91 as a slow innovator, 136 Toyota compared to, 82 value and, 80 value creation frontier and, 176 vertical integration and, 317 General organizational competencies, 341–343 Generic, 160 Generic business-level strategy, 160 Gentry, C R., 489 Geographic structure, 429–430 George, J M., 489 George, R., 487 Geroski, P., 484 Gersick, C J G., 479 Gestalt, 6, 91 Ghemawat, Pankaj, 99, 479, 480, 484, 485 Ghoshal, Sumantra, 275, 281, 481, 485, 491 Gilbert, R J., 478 Gillette, 165, 210, 238, 300 Gilman, H., 493 Gilmore, J H., 481 Ginsberg, P B., 480 Glassman, David, 271, 272 Gleason, Mark, 493 Global-area structure, 456, 457 Global Crossing, 49 Global division, 457, 458 Global environment caveats of, 272 competitive pressures in the, 273–277 entry decisions into, 283–285, 286 entry mode choice into, 286–292, 293 entry modes advantages and disadvantages, 291, 292 entry strategy and, 292, 293 expansion in the, 269–272, 273 functional factors of a, 455 global standardization strategy and, 455, 456, 458, 459 global strategic alliances and the, 293–298 international strategy and, 455, 456, 457, 458 leveraging skills of subsidiaries in, 272, 273 licensing and, 287, 288 localization strategy and, 455, 456 mergers and acquisitions in, 306, 307 national competitive advantage and, 267–268, 269 production and markets in, 264–266, 267 strategies for the, 278–282, 283 timely strategy changes in, 282, 283 transnational strategy and, 455, 456, 459–461, 462 Global Exchange, 385 Global forces, 68 Global leadership, 27 Global markets, 16, 26 Global-matrix structure, 459–460, 461 Global product-group structure, 458, 459 Global standardization strategy, 278, 279, 280, 455, 456, 458, 459 Global strategies, 18 Globe Project, 461 GM See General Motors (GM) Goals, 15, 16, 18 Godiva chocolates, 151, 152, 170, 173 Goedert, J., 493 Gold, R., 489 Golden Step program, 463 Golder, P N., 482 Goldman, Daniel, 33, 34, 478 Goldman Sachs, 359 Gomez-Mejia, L R., 488, 491 Google, 20, 137, 191, 260, 261 Google Earth, 137 Google News, 137 Gort, M., 479 Governance mechanisms board of directors and, 377–378 employee incentives and, 383, 384 financial statements and auditors, 380 purpose of, 377 stock-based compensation and, 379 strategic control systems and, 382, 383 takeover constraint and, 380, 381 Governance skills, 342, 343 Government regulation, 48 Govindarajan, V J., 485, 493 Gowrisankaran, G., 484 Grabowski, H G., 480 Graffiti, 238, 247 Grant, R W., 477 Gray, S., 493 Greenhouse, S., 494 Greenmail, 381 Greenwood, N., 481 Greyhound-Dial, 364 Grimm, M., 489 Grouping tasks, functions and divisions, 404, 405 Groups, 459, 460 Groupthink, 29 Grove, A S., 20, 56, 477, 479 Grover, R., 494 Growth, 39 Growth industries, 60, 61 Growth rates, 374, 375 Growth strategies, 201, 202 GSM, 148, 277 Gucci, 165, 171 Guidera, J., 494 Gulati, R., 486 Gulf & Western, 102 Gunther, M., 484 Gupta, A K., 485, 487 Guyon, J., 483 Häagen-Dazs, 170 Hagland, M., 493 Hall, G., 481 Hall, K., 481 Hall, W K., 483 Hallmark Cards, 436 Hambrick, D C., 478, 479, 483, 484, 488 Hamburger University, 418 Hamel, Gary, 26, 297, 333, 477, 478, 483, 485, 486, 487, 490, 491 Hamilton Sunderstrand, 365 Hammer, M., 490, 491 Hammer and Champy, 437 Hammond, J S., 478 Hampton, W., 490 Handoffs, 405, 423, 427, 446 Hannah, M T., 481 Hansen, R W., 480 Happy Meals, 418 Harbour & Associates, 82 Harrigan, K R., 479, 483, 486 Harris, C., 481 Harrison, J S., 487, 491 Hart, S L., 477 Harvard Business School, 114 Harvard Graphics, 309 Harvest strategy, 202, 203, 222, 224 Haspeslagh, Philippe, 358, 488 Hatfield, D E., 488 Hatten, K J., 479, 483 Hayes, Robert H., 477 Haynes, P., 494 Hayward, M L A., 488 HD-DVD format, 228, 229 Health care industry, 54 HealthSouth, 375 “Hear Music,” 21 Heathwood, Desmond, 357 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I7 www.downloadslide.com Index Heavyweight project manager, 139 Hee, Lee Kun, 185 Heeley, Michael, 484 Heil, O., 483 Helper, S., 486 Helyar, J., 480 Hennart, J F., 485, 487, 494 Hennegar, Anne, 22 Henry, D., 488 Hershey, 461 Hershey chocolates, 152 Heskett, J L., 477, 490 Heuristics, 27, 28 Hewlett, Bill, 389 Hewlett-Packard (HP) acquisitions by, 308 capital productivity and, 88 centralization and, 408 Compaq and, 103, 306 Dell compared to, 95, 96 Dell Computer and, 57 digital cameras, 251 disruptive technology, 257 entrepreneurial capabilities at, 341 formats and, 229 global-matrix structure and, 459 holdup, 327 internal new venturing and, 351 inventory turnover and, merger of Compaq and, 466 new-venturing and, 464, 465 personal computer industry and, 5, price war and, 310 razor and blade strategy by, 238 redundant functions and, 307 research projects and, 137 same customer needs and, 43 supply chain and, 212 “The HP Way” and, 389 values of, 15 Hierarchy of authority, 405 High-technology industries (high-tech) costs in, 240–241, 242 economic activity of, 229 explanation of, 229 first-mover advantages and, 246–250, 251 format war strategies and, 237–239 intellectual property rights management and, 242–245 technical standards of, 230–237 technological paradigm shifts, 251–258 Hill, Charles W L., 477, 479, 480, 481, 482, 484, 485, 486, 487, 488, 489, 490, 494 Hilton Hotels, 289, 292 Himelstein, L., 494 Hirschmann, W B., 481 Hitachi, 185, 281 Hitt, M A., 477, 491 Hoerr, J., 481 Hofer, Charles W., 477, 479, 483 Hoffman, K., 484 Hold-and-maintain strategy, 203 Holdup, 315, 316, 326 Holiday Inn, 180, 181 Holland, K., 494 Holloway, Andy, 494 Hollywood Video, 188 Holm, U., 485 Holt, S., 489 Home Depot, 189, 374, 379 Homes, S., 481 Honda Cubs, 23 Honda Motor Co., 23, 27, 38, 84, 144, 166 Hood, N., 485 Hoover, 61 Horizontal integration, 305–312 Horizontal merger, 190 Hoskisson, R E., 477, 487 Hostage, 322 Hostile takeover, 381 Hotmail, 200 Hout, T M., 480, 481, 482, 485 Howell, S., 481 HP See Hewlett-Packard (HP) H&R Block, 197 Huba, J., 478 Hubris, 356 Hughes, 432 Hughes Aircraft, 337 Hulland, J., 485 Human resources, 86, 87, 123, 126 Hunt, M R., 477, 478 Hunter, D., 477 Hurley International, 227 Hussein, Saddam, 30 Hwang, P., 485 Hyatt, 181 Hyland, David C., 487 Hypertext markup language (HTML), 233 Iacocca, Lee, 98 IAMS pet food, 300 IBM, 5, 14, 100, 101, 105, 140, 180, 197, 212, 233, 238, 269, 295, 308, 322, 324, 327, 401, 434, 458 IBM Credit, 436 Icarus paradox, 102, 179 IKEA, 269, 275, 276, 280 Illusion of control (hubris), 28 iMac, 243 Imitation barriers to, 97–98 of capabilities, 98, 99 differentiators and threat of, 168 first mover and, 246 resources and, 97 Immelt, Jeffrey, 9, 342, 343 Immigration and Customs Enforcement, U.S., 400 Immunex, 98, 249 Imperato, G., 491 Incentives, 218, 219 Incremental innovation, 135 India, 2, 68 Individual stock keeping units (SKU), 55 Industry boom-and-bust cycle of, 50 changing boundaries of, 44, 45 competitive analysis, 45 complementors and substitutes in, 56 consolidated, 49–50, 51 cost structure of, 52 definition of an, 43–44, 45 demand, 51, 52 differences in performance and, environments, 60 exit barriers and, 52, 53 fragmented, 49, 50 growth and complementors, 56 innovation and change, 64–65, 66 Industry analysis life cycle, 200–202, 203 life cycle analysis, 60–62, 63 life cycle issues of, 63, 64 life cycle stages in the, 60–62, 63 limitations of models for, 63–65, 66 market segments and, 44 Porter’s framework and, 57 premium segment and, 47 price signaling and the, 206, 207, 208 sector and, 43, 44 segment and, 47 Industry competitive structure, 70 Industry dynamism, 99, 100 Industry life cycle, 200–202, 203 Industry structure, 64, 65, 69 Inertia, 101, 104 I7 Information asymmetry, 372, 373 distortions, 423, 424 manipulation, 386 processing and storage business, 14 Information systems, 87, 124, 126, 189 Information technology (IT), 414, 415, 453, 454, 467–469, 470 Informed, 32, 33 Infosys, 269 Infrastructure, 126 Initial public offering (IPO), 368, 369 Innovation basic/applied research skills and, 137 and change, 64–65, 66 competitive advantage and, 90, 91, 382 control and, 410 cross-functional integration, 138, 139 cross-functional teams and, 137, 138 experience and, 140, 141 failure of, 134, 135 functional roles for superior, 142 partly parallel development processes and, 140 poor commercialization, 135, 136 positioning strategy and, 136 project selection/management and, 137, 138 slow to market, 136 steps to building competencies in, 136–141, 142 strategies, 250, 251 technological myopia and, 136 uncertainty and, 135 Innovators, 193, 194, 195, 249 Inputs, 87, 414 Inside directors, 377 Intangible resources, 77, 98 Integrating mechanisms, 409, 450, 463 Integrating roles, 452 Integration, 359 Intel Corporation, 5, 20, 55, 56, 57, 61, 116, 135, 140, 231, 246, 252, 280, 313, 345, 346, 422 Intellectual property, 243 Intellectual property rights, 242–245 Intended strategies See Strategy-making process Interdependent, 215 Interest rates, 67 Internal new venturing, 351–353, 354, 355, 462–464, 465 Internal stakeholders, 367 International Federation of the Phonographic Industry, 244 International strategy, 278, 282, 455, 456, 457, 458 Internet broad differentiation and, 177 cost leader and the, 165 digital media and the, 243, 244 disruptive technology and the, 256 entrepreneurs and the, 28 fragmented industry and use of the, 190 low-barriers to entry and the, 69 Nokia and, 14 online selling on, 125 social network and, 251, 260 standard and, 231 supply chain and, website selling and, See also World Wide Web (www) Internet Explorer, 249 Intrapreneurs, 463 Inventory, 2, 6, 16, 189 Invested capital, 93, 95 Investment planning, 68 Investment strategy, 200, 201 Ip, G., 486, 494 iPod, 17, 84, 90, 191, 241, 312, 325, 353 Iraq, 30 Isikoff, M., 493 Isuzu, 179 Ito, Yuzuru, 365 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I8 www.downloadslide.com I8 Index ITT Industries, 102, 364 Iverson, Ken, 32 Ivory Soap, 270, 300, 301 Ivory tower approach, 26 Iwaski, N., 478 J D Power and Associates, 82, 90 Jabil Circuit, 324, 325, 379 Jablonsky, S F., 480 Jackson, Michael, 262 Jacobs, D G., 477 Jacobson, Robert, 479, 483 Jaeger, 171 Jaguar, 176, 457 Jaikumar, R., 481 James, LeBron, 227 Janis, Irvin L., 29, 478 J.C Bamford, 255 JCPenney’s, 170 Jeep Commander, 38 Jehl, D., 493 Jemison, David, 358, 488 Jensen, M C., 477, 486, 487, 488 JetBlue, 164 J.I Case, 255 Jobs, Steve, 135, 136, 342, 353 John Deere, 255 Johnson & Johnson, 249 Johnston, R., 481 Joint ventures, 289, 290, 292, 360 Joint venturing, 465, 466 Jones, D., 481, 486, 494 Jones, G R., 482, 487, 489, 490, 491 Jones, P E., 488 Jones, Reg, 348 Jones, T M., 21, 488 Joseph E Seagram & Sons, 356 JPMorgan, Judge, W Q., 478 Jump-start demand, 238, 239 Juniper Technologies, 294 Juran, Joseph, 127 Just distribution, 392, 394 Justice Department, 387 Just-in-time inventory system, 121, 125, 130, 131, 317, 323 JVC, 238, 239, 265 Kador, John, 493 Kahn, Joseph, 489 Kahneman, D., 31, 478 Kale, P., 485, 486 Kamprad, Ingvar, 276 Kano, C., 482 Kant, Immanuel, 391 Kantian ethics, 390, 391 Kaplan, A., 493 Kaplan, R S., 383, 488, 489 Karakaya, F., 479 Karni, E., 482 Karnitsching, M., 493 Kazanjian, R K., 489, 490 Kearns, D., 481 Keels, J K., 490 Keeny, R L., 478 Keiretsu system, 320, 321 Kelleher, Herb, 33, 180 Kellogg, 51 Kelly, Kevin, 486 Ken doll, 187 Kennedy, A A., 490 Kennedy, John F., 29, 31 Kerwin, K., 478 KFC, 285, 289 Khanna, T., 486 Kids “R” Us, 207 Kidwell, P A., 477 Killer applications, 237, 238 Killing, P J., 484 Kim, W Chan, 26, 478, 480, 485 Kimberly-Clark, 301 King, Martin Luther, Jr., 31 King, N., 489 Kirin, 288 Kirkland, J., 477, 478 Kirkland, R., 488 Kirkpatrick, David, 477 KISS, 191 KKR venture capitalist group, 207 Klepper, J., 479 KLH, 236 Klippan love seat, 276 Kmart, 55, 59, 207, 309, 472 Knight, Phil, 226, 227, 385 Knight, Philip, 471 Knowledge management system, 470 Know thy rivals, 216, 217 Kodak, 11, 13, 251, 252, 265, 316, 341, 347, 415, 435, 477 Koenig, B., 490 Kogut, B., 485 Koller, Tim, 477, 480, 488 Komatsu, 27, 144, 281 Koogle, Tim, 261 Kosnik, R D., 489 Kotha, S., 479, 481 Kotler, P., 480 Kotler, R., 482 Kotter, J P., 477, 490 Kozlowski, Dennis, 331, 332, 366, 374 KPMG, 310, 311, 376 Kraft Foods, 51 Krane, J., 487 Krazr, 325 Kreps, D M., 483 Krishnan, 480 Krispy Kreme Doughnuts, 180 Kroc, Ray, 417, 418, 421 Kroeger, F., 479 Kroger’s, 51 Krol, C., 486 Krugman, P R., 481 Kulish, N., 486, 494 Kumar, Sanjay, 376 Kurzweil, Ray, 484 Kuzak, Derrick, 443 Kwan, Taek, 261 Kyocera, 313 L L Bean, 104, 130, 168 Labor, U.S Dept of, 480 Laggards, 194 Laing, J R., 487 Lamont, A., 488 Lancaster, K., 480 Lands’ End, 118, 143, 169 Lane, Peter J., 488 Laser technology, 238, 239 LaSorda, Thomas, 38 Late majority, 194 Later adopters, 239 Latham, G P., 477 Latour, A., 482 Laura Ashley, 171 Law brand name and international, 292 brand name imitation and the, 98 intellectual property rights and the, 243 Lawler, E E., III, 490 Law of diminishing returns, 240 Lawrence, P R., 489, 490 Lay, Ken, 389 Lazarus, I R., 493 Lead adopters, 200 Leadership strategy, 222, 223 Lean organizational culture, 401, 402 Lean production system, 176, 177 Learning effects, 113–114, 115 Learning organizations, 103, 104 Lee, J., 483 Lee, L., 477 Lei, D., 479 Leleux, B., 479 Lenovo, 2, 43, 57 Lenox, M J., 488 Leung, S., 485 Level Communications, 49 Leveraging competencies, 337 Levinthal, D., 477, 479, 481 Levitt, T., 484, 485 Lewellen, W G., 489 Lewis, W W., 485 Lexmark, 434 Lexus, 80, 89, 152 LG, 266 Liaison roles, 409 Licensing, 239, 240, 251, 287, 288, 292 Lie, Erik, 489 Lieberman, Marvin B., 481, 482, 483, 484, 485 Liebskind, J P., 488 Li & Fung, 470, 471 Lightspeed (CT scanner), 128, 130 Limits of entry barriers, 49 Lindblad, C., 494 Lindstrom, Kent, 261 Linzer, D., 493 Lionel, 207 The Lion King, 79 Lioukas, S., 477 Lipitor, 73 Little, Arthur D., 127 The Little Mermaid, 79 Llosa, P D., 493 Loblaw, 47 Local demand conditions, 267, 268 Localization strategy, 278, 280, 455, 456 Local responsiveness pressures, 274, 275, 281 Location economies, 271, 272, 290 Locke, E A., 477 Lockheed Martin, 371 Long-term contracts, 320, 325 Long-term cooperative relationships, 322, 323 Look forward and reason back, 215, 216 Lorsch, J W., 489, 490 Loughran, T., 487, 488 Lovallo, D., 478 Lowenstein, L., 487, 488 Low-entry barriers, 57 See also Barriers Lowenstein, L., 486 Loyalty, 120, 142 LTV, 64 Lubatkin, M H., 488 Luce, R A., 479 Lucent, 345, 407 Luck, 104 Luft, H., 481 Lyles, M A., 485 Maanen, J Van, 490 McAffe, R P., 478 McCartney, S., 489 McConnell, B., 478 McCormick, Chris, 169 McDonald’s, 170, 188, 190, 205, 265, 270, 273, 275, 285, 288, 289, 292, 417, 418 McDonnell Douglas, 306 McDowell, Mary, 441 Mace, M L., 489 McGahan, A N., 479 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I9 www.downloadslide.com Index McGee, J., 485 McGee, M Kolbasuk, 486 McGinn, D., 493 McGregor, J., 493 McKinnell, Hank, 374 McLean, C., 481 MacMillan, I C., 487, 488 McNamara, G., 479 Macroeconomic forces, 66–67, 68 Macroenvironment, 66–69, 70 McWilliams, G., 489 Macy’s, 166, 170 Madhok, A., 485 Madonna, 262 Mahoney, J T., 480 Maidique, M M., 487 Mail and parcel delivery industry, 53 Maintaining excess capacity, 206 Malone, M S., 486, 487 Manage by exception, 421 Management by objective, 421 Managers alliances and, 297, 298 business model decisions by, 151 challenges for multinational enterprise, 273 challenges of, competitive advantage and, 82 demographic forces and, 69 development process and, 142 ethical principles and, 392–396 evaluation of, 15 goals and incentives and role of, 131 marketing intelligence and, 133 strategic, 8–9, 10 Manes, Stephen, 493 Mankin, E D., 486 Mann, Marvin, 434 Mansfield, E., 481, 482, 484, 487 Manufacturing managers, 10 March, J G., 488 Maremont, M., 487, 494 Marginal costs, 240, 241 Market demand, 43, 158, 192, 193–194, 195, 233 Market development, 210, 211 Market discipline, 322, 323 Market growth rates, 198–199, 200 Marketing aggressive, 238 customization of global, 279 differences in distribution channels of, 277 efficiency and, 119, 120 exporting and, 287 global expansion and, 270 imitation of intangible resources and, 98 intelligence and managers, 133 poor commercialization and, 135, 136 positioning strategy and, 136 and production role with R&D, 142 slow, 136 strategy, 119 value creation function and, 126 Marketing and Sales, 84, 85 Market penetration, 209 Market segment broad differentiation and, 175 focused cost leaders and, 163 horizontal integration and new, 309, 310 industry and, 44 nonprice competition and, 209 prices and, 80 product redefinition and, 210, 211 Market segmentation, 154–155, 156 Market share brand loyalty and, 47 broad differentiators and, 173 business model and, consolidated industries and, 50 cost leadership and, 162, 163 factors of market growth rates and, 198, 199 investment strategy and, 201 rivalry and, 51, 52, 265 Market structure, 402, 429 Markides, C., 484 Marks & Spencer, 120, 269 Marris, R., 488 Martha Stewart designer line, 309 Martin, J A., 480 Martin, X., 485, 486 Mason, R O., 478 Massachusetts General, 311 Mass customization, 118, 119 Mass markets, 192, 193, 194, 248 Mass-market segment, 41, 42 Materials management (logistics), 86, 121, 126 Mathews, A W., 494 Matrix, 174 Matrix-in-the-mind, 462 Matrix structure, 431, 432 Matsushita, 109, 110, 113, 116, 124, 185, 234, 239, 247, 265, 292, 341, 365 Mattel, 186, 187, 207, 209, 210 Mature industries, 60, 62, 63, 66, 210 Maturity strategies, 203 Mauborgne, Renée, 26, 478, 480 Maucher, Helmut, 460 Mauri, A J., 477, 479 Maynard, M., 478 Maytag, 166 Mazda, 173, 297 Meckling, W H., 477, 488 Mega-opportunities, 334, 335 Mellon Bank, 356, 357 Mercedes-Benz, 38, 152, 166, 457 Merchant, H., 485 Merck, 58, 74, 422 Merger, 306 Mergers and acquisitions, 306, 307, 310, 311, 312, 466, 467 Merrill, A., 493 Merrill Lynch, 22, 149, 256, 265, 283, 284, 359, 408 Meshoulam, Ilan, 481 Metromedia, 330 MGA Entertainment, 186, 187, 210 MGM, 228, 351 Mialon, H M., 478 Michaels, M P., 477, 479 Micron Technology, 313 Microsoft, 5, 19, 20, 32, 57, 77, 104, 105, 231, 232, 233, 252, 282, 293, 337, 338, 387, 422 Microsoft Office, 309 Microsoft-Toshiba, 295 Microwave ovens, 134 Midas International, 189 Midas Muffler, 188 Midland, Archer Daniels, 371 Miles, G., 479 Miles, R E., 490 Miller, A., 478 Miller, C.C., 478 Miller, Danny, 102, 481, 483, 490, 493 Miller, G J., 481 Miller, Julie, 493 Miller, P M., 494 Miller Beer, 41, 42, 47 Miller Brewing Company, 70, 336, 337 Miller Lite, 70 Minimum chain of command principle, 407 Minimum efficient scale, 42 Minitel, 248 Mintroff, I I., 478 Mintzberg, Henry, 22, 24, 477, 478, 490 Minute Maid, 43 Mirror, 329 Mission, 11, 12 Mitchell, W., 485, 486 MITS, 192 Mitsubishi Heavy Industries, 289 Mobility barriers, 59, 60 Model T, 112 Moeller, M., 494 Molson Coors, 41, 42, 47 Monaghan, Tom, 143 Money, 17, 18 Monopoly, 49 Monsanto, 335, 352 Monsters Incorporated, 80 Montgomery, C A., 491 Montgomery, D., 482, 484, 485 Moore, Ann, 17 Moore, C M., 493 Moore, Geoffrey, 195, 483 Moral compass, 391, 394 Moral courage, 396 Morgenson, G., 493 Morrison, A., 485 Mosakowski, E., 485 Moss, Kate, 85 Motel 6, 181 Motley Fool, 69 Motorola, 45, 128, 265, 266, 268, 277, 280, 325, 345, 441, 461 Moyer, R C., 489 MP3 players, 191, 440 MS-DOS, 105 MSN, 17, 20, 337 MTV Bakra, 263 MTV Cricket in Control, 263 MTV Europe, 262 MTV Housefull, 263 MTV Kitchen, 263 MTV Networks, 262, 263, 275, 280 Mudambi, R., 486 Mueller, D T C., 487 Mulally, Alan, 443, 447, 453 Muller, J., 493 Multibusiness model corporate-level strategy and the, 304, 305 diversification and the, 335, 336 related diversification and, 344 unrelated diversification and, 344, 346 vertical integration and the, 312 Multidivisional company, 8, 9, 10 Multidivisional structure advantages of a, 447, 448 competition for resources and, 449 corporate headquarters staff and, 445 corporate strategies and, 450, 451, 452 distortion of information and, 448, 449 divisional-corporate authority relationship and, 448 divisions of a, 444, 445 financial control and, 447 functional resources and, 449, 450 growth and, 447 implementation problems of, 448–449, 450 information technology and, 453, 454 internal efficiency and, 447 R & D focus and, 449 strategic control and, 447 transfer pricing and, 449 typical, 445, 446 unrelated diversification and, 450, 451 Multinational company, 263 Multipoint competition, 340, 341 Murdoch, Rupert, 329 Murphy, K J., 488 Murray, M., 494 Murrin, Jack, 477, 480, 488 Mutual dependence, 315, 322 Mylan Labs, 58 MySpace, 260, 261 I9 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I10 www.downloadslide.com I10 Index Nair, A., 479 Nakamura, Kunio, 109, 113, 124 Nalebuff, B J., 483 Named Organization 2005, 301 Narasimhan, R., 481 Nardelli, Bob, 374 Narrow product line, 433, 434 National Enquirer, 329 National expansion, 429, 430 National Star, 330 Naval, 224 Nayyar, P R., 491 Neff, J., 486 Neiman Marcus, 166, 170, 171, 415, 416, 430 Nelson, J P., 478 Nelson, Martha, 17 Nelson, R R., 480 Nemetz, P., 481 Nestlé, 454, 459, 460, 461, 465, 466, 467 Net profit, 5, 93 Netscape, 249, 387 Network effects, 233, 234, 237 Network structure, 470, 471 New entrants, 258 New industries internal new venturing and, 462–464, 465 joint venturing and, 465, 466 mergers and acquisitions with, 466, 467 Newman, W H., 479, 489 News Corporation Limited, 329 Newton, 135, 136, 238, 246, 247 New United Motor Manufacturing, 297 New-venture division, 464 New York Post, 330 NeXT, 136, 353 Niche strategy, 222, 224 Nickelodeon, 262 Nike, 199, 210, 226, 227, 323, 325, 384, 388, 435, 471, 472 Niketown, 385 Nintendo, 237, 245, 266, 351 Nohria, N., 486 Nokia, 14, 45, 134, 185, 265, 266, 268, 275, 277, 416, 422, 428, 440, 441 Nonprice competition, 209 Nonprofit enterprises, 7, Nordstrom, 59, 92, 158, 166, 170, 171 Norman, J., 490 North, D C., 480 Northrop, 322 Norton, D P., 383, 488, 489 Nucor Steel, 3, 14, 32, 64, 78, 113, 122, 123, 165, 477 Nuprogene, 288 Nuzum, C., 482 Observability, 199 Occupational Safety and Health Administration (OSHA), U.S., 385 Odle, Stephanie, 399 OfficeMax, 313 Official Starter, 227 Ohio Art Company, 387, 388 Ohmae, K., 485 O’Leary, Michael, 162 Oligopoly, 49, 62, 64, 65, 99, 265, 307 Ollila, Jorma, 440 Olson, Ken, 103 Omniva.com, 369 On-the-job consumption, 374 Opening Case business ethics, 366 business model and changing strategies, 149, 150 change in business model, 331, 332 competitive advantage, 75, 76 corporate-level strategy, 302, 303 environment and business-level strategies, 186, 187 format war, 228, 229 global environment strategy, 262, 263 global structure, 442, 443 high productivity and efficiency, 109, 110 opportunities and threats, 41, 42 strategic leadership, 1–2 strategy implementation, 401, 402 Operating budget, 413 Operating responsibility, 445 Opler, T C., 488 Opportunism, 296 Opportunistic exploitation, 387 Opportunities distinctive competency and imitation as, 97 explanation of, 42 five forces and, 46 political processes and, 70 strategic groups and, 59 technological change as, 69 Oracle Corp., 302, 303, 469 Ordonez, J., 481 Organizational capabilities, 101 Organizational culture, 403, 416–418, 419 Organizational design capabilities in, 342 control system and, 403 explanation of, 403 organizational culture and, 403, 416–418, 419 organizational structure and, 403 profitability and, 425, 426 Organizational mission, 419 Organizational performance, 382 Organizational socialization, 416 Organizational structure, 403, 404–408, 409 Organizational value sets, 418, 419 OS/2, 233 O’Shea, D., 494 OSX, 136 Otis Elevator Company, 364 Ouchi, W G., 489, 490 Output control system, 412, 413 Outputs, 87, 414 Outside directors, 378 Outside view, 31 Outsourcing, 265, 274 See also Strategic outsourcing Overdorf, M., 48 Overseas divisions, 461 Oviatt, B M., 491 Ownership, 416 Packard, David, 389 Page, A L., 487 Paine, F T., 491 Palm, 45, 90, 246, 247, 294, 440 Palmer, A T., 494 PalmPilot, 90, 199, 238, 247 Pampers, 270, 300 Panasonic, 185 Pandian, J R., 480 Parallel sourcing policy, 323, 326 Paramount, 228 Park, Andrew, 483, 494 Parker, D., 477 Parker, John, 443 Parker Bros., 207 Parmalat, 375 Parry-Jones, Richard, 443 Parthasarthy, R., 481 Partly parallel development processes, 140 Partner selection, 295, 296 Partners HealthCare System, 311 Pascale, Richard, 23, 477 Patent Office, U.S., 261 Patents, imitation and, 98 Paycheck, 325 Pay-for-performance system, 123, 379 Payoff structure, 218, 219 Pay packages, 374, 375 PDF-format, 244 Pearson, William, 22 Penrose, Edith, 487, 488 Pentium, 56 Pentium Pro, 135 People, 17, 18 People Express, 180 PeopleSoft, 302 Pepsi, 220, 221, 465 PepsiCo, 15, 43, 47, 70, 98, 220 Performance improvements in, 343 organizational competencies and, 341–343 See also Superior performance Perlmutter, H., 485, 486 Perrier, 84, 460 Personal computer industry defining the, 43 Dell and profitability in the, 1–2 high-tech and, 229 innovation and, 100 maturity of, 62 paradigm shift and, 252 Porter’s model and the, 57 powerful suppliers and the, 55, 56 profitability and, sectors of, 43, 44 strategies and, technical standards for personal computers, 231 Personal control system, 411, 412 Personal digital assistants (PDAs), 238 Personal ethics, 388 Peteraf, M A., 480 Peters, T J., 418, 490 Petroski, H., 482 Pettet, J., 490 Pfeffer, Jeffrey, 33, 478, 486 Pfizer, 58, 73, 74, 134, 307, 374 Pham, A., 494 Phan, Phillip, 488 Pharmaceutical industry, 54, 62, 73, 74 Philip Morris, 51, 70, 223, 336, 337 Phillips, 185, 238, 239, 265, 459 Photography industry, 251 Pike Place Market, 107 Pine, B J., II, 481 Pinkerton, J., 494 Pioneering costs, 285 Pioneers, 102, 246, 247 Piracy, 244 Pisano, G P., 482, 487, 493 Pitta, Julia, 486 Pixar, 79 Player, Gary, 104 PlayStation, 134, 200, 237, 238, 245, 340, 351 Pocahontas, 79 Political and legal forces, 70 Political processes, 70 Polk, C., 488 Pollock, Timothy G., 488 Pomerantz, D., 494 Poor commercialization, 135, 136 Pope, K., 490 Popp, J., 493 Poppo, L., 486 Population, aging, 69 Porac, Joseph F., 488 Porras, J I., 477 Porsche, 151, 173, 176, 179 Port, O., 482 Porter, A M., 487 Porter, Bill, 22 Porter, Michael E., 478, 479, 480, 483, 484, 485, 487, 490, 491 attributes of national environment and, 267 corporate diversification and, 347 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I11 www.downloadslide.com Index five forces model and, 45–56 industry structure and, 64 Porter’s five forces model advantages and disadvantages, 161, 162, 163 bargaining power of buyers, 53, 54 bargaining power of suppliers, 54–55, 56 macroenvironment and, 66 risk of entry by potential competitors, 45–47, 48 rivalry among established customers, 48–52, 53 substitute products, 56 Positioning strategy, 136 Positive feedback, 234, 235, 237 Post, 51 Post-it Notes, 137, 338 Potential competitors, 46 Pottruck, David, 22 Powell, T C., 481, 482 Power, D J., 491 Power, S., 478 PowerPoint, 440 PPE/Sales, 94, 95 Prahalad, C K., 26, 297, 333, 478, 480, 483, 485, 486, 487, 490, 491 Pratt & Whitney, 364 Preempt rivals, 213 Premier plus 10, 334 Premium segment, 41, 47 Prendergast, M., 491 President health club, 188 President’s Choice, 47 Pressures for cost reductions, 274, 275, 280, 281, 292, 293 Pressures for local responsiveness, 274, 275, 280, 281 Price competition, 63 cutting, 205, 206 deflation, 68 fixing, 371 inflation, 68 leadership, 208, 209 leadership agreements, 50, 63 signaling, 206, 207, 208 wars, 38, 50, 51, 62, 63, 66 Priest, D., 493 Primary activities, 83, 84, 85 Pringle, D., 490 Prior hypothesis bias, 28 Prior strategic commitments, 102 Prisoner’s dilemma game, 218 Pritchard, D., 484 Prius, 177 Procedural justice, 26 Process innovation, 90, 92, 122 Procter & Gamble, 53, 55, 102, 104, 210, 270, 282, 300–301, 339, 341 Prodigy Communications, 196, 197 Product bundling, 309, 340 Product development, 210 Product differentiation, 151–152, 153, 157 cost leader and, 160 horizontal integration and, 309 market segmentation decisions and, 193, 194 principal routes to, 166, 167 vertical integration and, 312 Production, 84, 99, 100, 126, 142 Production efficiency, 117, 118 Productivity, 124 Productivity improvements, 109 Product-oriented business, 13 Product-oriented view, 43 Product or project boss, 432 Product proliferation, 204, 205, 211 Product(s) attributes of, 88, 89 customers and decisions for, 151 customization of, 279 defects and minimization, 131 defects and quality, 130 development teams, 139 differentiation and response time, 144 differentiation of, 132–133, 134 enhancing quality of, 316, 317 exporting bulk, 287 failure lessons and, 140, 141 improvements of, 91 innovation, 90 intellectual property and, 243 lead adopters and, 200 leveraging, 270 low-priced, 151 market growth rates and, 199 marketing function and, 84, 85 market segmentation and, 155 narrow line of, 433, 434 offerings and attributes, 133, 134 premium price for, 152 quality, 110 razor and blade strategy for, 238 reliability, 89 technical standards and, 230 threat of substitute, 168 Toyota and quality, 104 universal needs of, 282 Product structure, 428, 429 Product-team structure, 433 Profitability balance of profit growth and, 369, 370 broad differentiators and, 173 busines-level strategy and, 198 complementors and limits of, 56 corporate-level strategy and, 304 cost structure and superior, 167 Dell/HP and drivers of, 95, 96 drivers of, 93, 94, 95 economic structure and, 73 factors of, 7, 80 functional-level strategies and, 157–158, 159 global expansion and, 270, 271 goals and, 16 horizontal integration and, 307–309, 310 innovation strategies and, 250, 251 measuring, organizational design and, 404 revenue growth rates and, 374, 375 ROIC and, 93 superior, 80 through diversification, 335–343 ventures and, 352, 353 Profit growth balance of profitability and, 369, 370 factors of, goals and, 16 measuring, Project management, 137, 138 Proton, 90 Prudential Insurance, 166 PT Cruiser, 38 Public domain, 233 Pulley, B., 484 Punctuated equilibrium, 64, 65 Q-DOS, 105 Quality competitive advantage and, 382 control and, 410 cooperation among functions and, 131, 132 customer focus and, 130 defective processes and, 130 dimensions of, 126 easy to manufacture and, 131 employee input and, 131 excellence and, 132–133, 134 as excellence and reliability, 89, 126–133, 134 goals and incentives for, 131 I11 impact of, 90 improvement program, 127 leaders, 129 measures of, 130, 131 organizational commitment to, 129 perception of, 133, 134 Six Sigma methodology and improvement of, 126, 127 supplier relationship and, 131 Quantum Corporation, 139 Quantum innovation, 135 Quinn, J B., 487 Raiffa, H., 478 Raju, R., 488 Ralston Purina, 460 Ramanujam, V., 487 Random access memory (RAM), 231 Rappaport, A., 488 Rather, Dan, 385 Rathmann, George, 477 Ravenscraft, David, 355, 488, 490 Rawles, John, 489 Rawls, John, 392 Raw-materials-to-customer chain, 312–313, 314 Raymond, Lee, 374 Razor and blade strategy, 238, 245 RCA, 223, 288 RC Cola, 47 R&D/Sales, 94 Real Networks, 233 RealPlayer, 233 The Real World, 263 Reasoning by analogy, 28 Rebelled, J., 494 Redstone, Sumner M., 484 Reed, R., 480 Reengineering, 435–437 Reich, R B., 486 Reichheld, F F., 481 Reid, M., 490 Reinhardt, A., 490 Related diversification, 344, 349, 350, 451, 453 Relative advantage, 198, 199 Reliability improvement methodologies, 128, 129–131, 132 Renault, 179 Representativeness, 28 Research and development (R&D), 84, 126, 353, 354 functional strategy for, 422 marketing and, 138 marketing and production role with, 142 productivity concept and, 88 role of efficiency in, 122 Resources, 77, 79 Resources reduced, 307 Response time, 91, 144 Responsiveness to customers competitive advantage and, 382 control and, 410 differentiation and, 166 explanation of, 91 focus on the customer as, 142, 143 functions in achieving superior, 145 market structure and, 429 satisfying needs as, 143, 144 Restaurant industry, 205 Restructuring, 435 Return on invested capital See ROIC Return on sales, 94, 95 Returns, Reward systems, 415, 416, 422, 428 Reyes, S., 493 Richards, M D., 477 Richardson, James, 486 Richardson Electronics, 223 Ricoh, 27 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I12 www.downloadslide.com I12 Index Ries, A., 482 Rights theories, 391, 394 RISC-based microprocessors, 20 Risk capital, 3, 368 Risk of entry by potential competitors, 46, 47, 48, 49 Rivalries among established customers, 48–52, 53 horizontal integration and industry, 310 intensity of, 268, 269 knowing, 216, 217 market share and, 51, 52, 265 multipoint competition and, 340, 341 strategy and managing, 206–213, 214 Rivalry among established companies, 51–53 Rivkin, J W., 477 Rivlin, Gary, 484, 489 Robertson, T S., 483 Robins, J A., 485 Rodgers, T J., 415 Roehl, W., 486 Rogers, Everett, 483 Rogers, P R., 478 ROIC Anheuser Busch and, 42 Dell Computer and, 1, diversification and, 335, 336 enterprise valuation and, 39 net profit of, pharmaceutical industry and, 73 profitability drivers and, 93, 94 selected industries and, Southwest Airlines and, 75 stock share and, 369 Rolex, 88, 166 Roll, Richard, 356, 478, 486, 487, 488 Roller, L H., 479 Romanelli, E., 479 Romani, M., 478 Romer, P M., 484 Roos, Daniel, 481, 486 Root, F R., 485 Rose, S., 486, 487, 488 Rosenfeld, A., 489 Rothaermel, Frank T., 477, 484 Rowley, I., 481 Rowntree, 460 Royal Crown Cola, 47 Royal Dutch Shell, 24, 25, 375 Ruback, R S., 486, 487 Rubbermaid, 55 Rudden, E., 485 Rumelt, Richard P., 66, 477, 479, 487, 490 Running Case business-level strategies, 212 code of ethics, 394 drivers of profitability, 95, 96 global standardization strategy, 279 industry analysis, 57 Internet usage, 125 merger and acquisition, 308 Ryanair, 161, 162, 164 Saab, 475 SAB-Miller, 41, 42, 47 Sack’s, 170 Sains, A., 494 St John, C H., 487 St Michael, 98 Saks Fifth Avenue, 85, 171 Sakson, Jane, 484 Salancik, Gerald R., 486 Sales capital productivity and, 88 functional structure and, 422, 423 Salesmen, 102 Salmon, R., 485 Salomon, Alan, 493 Salter, M S., 491 Sam’s Choice, 47 Samsung, 184, 185, 229, 266, 440, 441 San Antonio Express, 330 Santana, K., 484 SAP, 302, 303, 454, 459, 460, 461, 467 Sarbanes-Oxley Act, 378, 380 Sassa, Scott, 261 Sasser, W E., 481 Satisfying needs of customers, 144 Saturn, 91 Savoy Hotel, 167 SBC, 340 Scale economies See Economies of scale Scale of entry, 285, 286, 352, 353 Scalise, D., 493 Scenario planning, 24, 25 Schaffner, K., 493 Schein, E H., 490 Schelling, T C., 479 Schendel, D., 477, 479, 483, 485, 487 Scherer, F M., 355, 483, 486, 488 Scherreik, S., 477 Schick, 210 Schiller, Zachary, 486 Schilling, M A., 482, 484 Schleifer, A., 486, 487, 488 Schlosser, J., 493 Schmalensee, R., 478, 479 Schoemaker, P J H., 478, 480 Schonfeld, Erick, 493 Schrempp, Jurgen, 37, 38 Schultz, Howard, 21, 107, 108 Schulz, Mark, 443 Schumpeter, J., 480 Schwab, 149 Schwenk, C R., 478 SCORE, 321 Scotch Guard, 21 Scott, B R., 489, 490 Scottrade, 149 Sears, 55, 101, 197, 305, 309 Sears, Mike, 371 Sears, Roebuck, 23, 26 Sears/Kmart, 170 Seattle Computer, 105 Sector, 43, 44 Securities and Exchange Commission (SEC), 373, 376, 379 See’s chocolates, 173 Sega, 135, 237 Segments, 47, 80 Seiko, 165 Seip, Tom, 22 Seith, S P., 481 Self-contained division, 445 Self-dealing behavior, 386 Self-managing teams, 123, 131 Sellers, P., 482 Selling, Senate Intelligence Committee, 29 Senge, P M., 481 Sequential move game, 214 Sequential resource flows, 452 Serendipity discovery, 21, 22 Servaes, H., 488 Serwer, Andrew E., 477, 485, 489 Seven-Up, 47 SG&A/Sales, 94 Shaheen, George, 470 Shakeout industries, 60, 61, 62 Shakeout strategies, 202, 203 Shane, S A., 483 Shankar, V., 484 Shanley, M., 480 Shapiro, C., 478, 479, 483, 484 Shaq, 227 Shareholders CEO and, free cash flow and, 335 profitable growth and, returns and company goals, 16 Shareholder value, 4, Share-increasing strategy, 202 Sharfman, M P., 479 Sharp, 247 Shaver, J M., 485 Shearson Lehman, 149 Shook, C L., 490 Short-term contracts, 319, 320 Siebel Systems, 302 Sikorsky Aircraft Corporation, 364 Simmons, R., 489 Simon, H A., 478, 488 Simonin, B L., 485 The Simpsons, 330 Simultaneous move game, 214 Singapore Airlines, 133 Singh, H., 479, 485, 486, 491 Six Continents Hotels, 181 Six Sigma, 126, 127, 128, 129, 131, 326, 343 Sloan, Alfred P., 446, 447, 490 Slywowtzky, A J., 479 Smarties, 460 Smircich, L., 489, 490 Smith, E., 493 Smith, G., 482 Smith Corona, 14 Smither, Nick, 443 Snecma, 296 Snell, S A., 481, 489 Snider, M., 494 Snow, C C., 479, 490 Social forces, 70 Soft drink industry, 43, 47, 56 Software industry, 56 Solectron, 325 Song, 164 SonoSite, 241, 242 Sony, 109, 125, 134, 135, 184, 185, 200, 228, 229, 234, 237, 238, 239, 251, 265, 275, 294, 295, 340, 350, 351, 440 Sony-Ericsson, 266 Sorge, A., 481 Sotheby’s, 371, 378 South African Breweries, 41 Southwest Airlines, 3, 33, 407 competitive advantage of, 75, 76 as a cost leader, 164 hiring strategy by, 122 human resources and, 87 Ryanair and, 162 strategic intent, 180 work force and, 77, 78 Souza, C., 486 Span of control, 405 Spanos, Y E., 477 Sparks, L., 493 Spear, S., 480 Spears, Britney, 221 Specialist company, 325 Specialization, 112 Specialized asset, 314 Special K, 51 Spencer, J W., 485 Sports Illustrated, 17, 18 Sprint Nextel, 148 Sprite, 47 Stacey, R., 477 Stakeholders benefits of profitability and profit growth, 370 business ethics and, 386 corporate performance and, 367–371, 372 ethics and, 370, 371 explanation of, 367 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I13 www.downloadslide.com Index impact analysis and, 368 reciprocity and, 367 stockholders’ role and, 268, 269 Stalk, G., 480, 481, 482 Standardization, 414 Stanford University, 20 Staples, 90, 189 Starbucks, 20, 21, 32, 33, 107, 108, 170, 265, 270 Starlin, R., 482 Status Eye, 272 Stavins, J., 484 Staw, B M., 478, 490 Stead, D., 488 Steel industry, 64 Steensma, H K., 485 Stevens, G A., 482 Stock-based compensation, 379 Stock grants, 379 Stockholders accurate information and, 386 agency theory and, 372–376, 377 ROIC and, 369 stakeholders and, 368, 369 See also Stakeholders Stock market, Stock options, 379, 422 Stock ownership grants, 383 Stopford, J., 491 Stouffer Foods, 460 Strategic alliances, 293–298, 319, 320 Strategic business unit (SBU), 460 Strategic capabilities, 342, 343 Strategic commitments, 99, 285, 286 Strategic control systems competitive advantage and, 410 governance mechanisms and, 382, 383 information technology in, 414, 415 levels of, 411, 412 multidivisional structure and, 450 product measurement and, 428, 429 reward systems in, 415, 416 role of, 420, 421 steps in designing a, 411 types of, 411–413, 414 Strategic decision making, 27–30 Strategic-group analysis, 178, 179 Strategic groups, 58–59, 60, 65 Strategic intent, 26, 27, 180 Strategic leadership attributes of good, 31–33, 34 culture and, 417 definition of, efficiency and, 124, 125 explanation of, 3, 4, levels of, 8–9, 10 superior efficiency and, 124, 125 Strategic management See Strategic leadership Strategic-management process See Strategymaking process Strategic managers business model decisions by, 158, 159 business model implementation by, 156 changing customer needs and, 193 competitive positioning and, 178 cost leadership and, 165, 166 customers’ needs and, 196 fragmented industries and, 188, 189 market growth rates, 198–199, 200 market segmentation and, 155, 156 risky decisions and, 163 roles of, 8–9, 10 strategic-group analysis and, 178 Strategic outsourcing advantages of, 325, 326 network structure and, 470–472 noncore activities and, 324 primary value creation functions and, 324, 325 risks of, 326–327 value-chain activities and, 324 value-chain activity and, 323 Strategic planning process, 24–27 See also Strategy-making process Strategic responsibility, 445 Strategy cash-rebate, 217 chaining, 189 competitive advantage and, cost-leadership, 164 digital rights management, 244, 245 explanation of, first-mover advantages, 248–250, 251 format war, 237–239 fragmented industries, 188–191 industry life cycle, 200–202, 203 innovation, 250, 251 managing rivalries, 206–213, 214 in mature industries, 203–220, 221 methods to deter entry, 204–205, 206 positive feedback as, 234, 235 primary objective of, 77 role of, 79, 80 selection in a declining industry, 222, 223 through organizational design, 403–437 Strategy formulation, 3, 11, 304 Strategy implementation explanation of, 3, 19 operational-level managers and, 10 of single industry, 425–434, 435 strategies and, 11 Strategy in Action acquisition and management defection, 357 autonomous action, 21, 22 bargaining power and suppliers, 55 broad differentiation, 174, 175 business model change, 181 competitive advantage, 86 competitive chasm, 197 competitive dynamics, 220 competitive industry environment, 191 consumer differences, 276 control systems, 415 cost leader, 162 cost sharing, 294 cost structure strategies, 242 dealing with piracy, 245 decentralization, 408 differentiator, 169 disruptive technology, 255 diversification and leveraging, 338 entry barriers, 47 ethical issues, 385 external analysis and, 17 failure of a company, 103 focused differentiation strategy, 171 globalization of production and market, 266 global-matrix structure, 460, 461 global supply-chain management, 471 groupthink, 30, 31 horizontal integration, 311 information technology, 469 innovation failure lessons, 141 leadership strategy, 223 learning effects, 114 long-term cooperative relationships, 321 market share and price cutting, 207 mass customization, 118 multidivisional structure, 454 organizational culture, 418 price fixing, 371 related diversification, 345 restructuring, 434 role of luck, 105 securities fraud, 376 Six Sigma, 132 Six Sigma quality improvement process, 128 sound technology standard, 236 I13 specialized assets and vertical integration, 316 tacit price and price war, 51 value creation, 85 Strategy-making process company values and, 14, 15 components of the, 11, 12 criticism of, 20 emergent process as, 20–23, 24 external analysis and, 16, 17 feedback loop and, 19 implementation of, 19 internal analysis and, 18 major goals of, 15, 16 mission statement and, 11–13, 14 model of the, 10, 11 SWOT analysis, 18, 19 vision and, 14 Strategy-making process (alternative), 20–23, 24 Strauss, G., 486 Street Smart, 22 Stretch goals, 338 Subsidiaries, 289, 290, 291, 292 Substandard working conditions, 387, 388 Substitute products, 56, 168 Sultan, Ralph G M., 483 Sun, 330 Sunday Times, 330 Sunderstrand, 365 Superimpose, 427 Superior performance, 4, 5, 7, 8, 342 Superior profitability, 80, 92 Superior quality, 88 Suppliers, bargaining power of, 54–55, 56 Supply-chain management, 122 Support activities, 83, 85–86, 87 Sustained competitive advantage, 6, 77 Swaine, M., 483 Swaminathan, A., 486 Swartz, Mark, 332, 366 Swisher, Kara, 494 Switching costs, 284 SWOT analysis, 18, 19 Systematic errors, 28, 29 Tacit price collusion, 64 coordination, 310 fixing, 209 leadership agreements, 50 Takeover constraint, 380, 381 Tallman, S., 485 Tall structure, 406, 407 Tang, E W K., 486 Tangible resources, 77 Tanzer, A., 484 Taper integration, 314, 318 Target, 59, 167, 170, 188, 207, 471 Tashiro, H., 481 Taubman, Alfred, 371 Taylor, A., III, 490 Taylor, P., 494 TCP/IP, 231, 233 TD Ameritrade, 149 Tea industry, 56 Teams, 409 Technical standards, 230–233, 234 Technological change, 318 Technological forces, 68, 69 Technological myopia, 136 Technological paradigm shifts, 251–258 Technology established and successor, 254 explanation of, 229 imitation of intangible resources and, 98 natural limits to, 252–253, 254 product differentiation and, 175 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I14 www.downloadslide.com I14 Index Technology S-curve, 252, 257 Techsonic Industries, 138 Tedlow, R S., 478 Teece, D J., 482, 484, 487, 490 Telebank, 149 Telebroker, 22 Telecommunications industry, 45, 307 Telefunken, 238, 239 Tellis, G J., 482 Templin, Neal, 486 Tennant, Anthony, 371 Tesco, 301 Texas Air, 180 Texas Instruments (TI), 102, 122, 280, 290, 345 Textron, 364, 451 Thatcher, Margaret, 31 Theodore, S., 478 TheStreet.com, 69 Thomas, H., 485 Thompson, P., 481 Thorncroft, T., 494 Thornton, R A., 481 Threat(s) competitive force as, 45 complementors as, 56 declining demand as, 52 explanation of, 42 parallel sourcing policy and, 323 political processes and, 70 powerful buyers as, 53 to profitability, 74 strategic groups and, 59 substitute products as, 56 technological change as, 69 3M, 21, 134, 137, 206, 338, 341, 344, 346, 347, 463–464 360networks, 49 Tichy, N M., 478 Tide, 210, 300 Time, 17, 260 Time Inc., 16, 17, 18, 19 Times, 330 Time Warner, 17, 48 Timex, 165 Titanium Metals Corporation, 387 Tit-for-tat strategy, 208, 340 T-Mobile, 148 Tobacco industry, 70, 337 Torbenson, E., 493 Toshiba, 228, 229, 293, 295 Tosi, H L., 488 Total Quality Management (TQM), 89, 127, 129, 365, 421, 436 Touchstone, 79 Toy industry, 186, 187 Toyota alliances of, 297 barriers to imitation by, 97 broad differentiator, 174 competitive advantage and, 83 Corolla, 89, 90 employee productivity and, 104 flexible manufacturing processes and, 122 General Motors (GM) compared to, 82 global strategy and, 462 lean production systems of, 77, 90, 99 as learning organizations, 103, 104 leveraging by, 270 Lexus, 80, 89, 90 pricing and, 82 production equipment and, 78 production operation of, 84 product quality and, 104 reliability ratings and, 89 success secrets of, 27 value creation frontier, 176, 177 value sets and, 419 Toys “R” Us, 64, 206, 207 Toy Story, 79 TQM See Total Quality Management (TQM) Transfer prices, 317 Transfer-pricing scheme, 446 Transformation process brand and hidden value in, 85 efficiency improvements and, 109 explanation of, 83 Transnational strategy, 278, 280, 281, 455, 456, 459–461, 462 Treece, James, 486 Tremblay, C., 478 Tremblay, V., 478 Trialability, 199 Trimble, C., 493 Trottman, M., 480 Trout, J., 482 Troy, M., 490 Truitt, J F., 486 Trust, 315 TRW, 296, 432 Tufts, 311 Tully, A., 494 Tully, S., 482 Tushman, M L., 479 Tversky, A., 478 Twentieth Century Fox Movie Studios, 330 Two-boss employees, 431, 432 Tyco International, 16, 331, 332, 343, 346, 355, 361, 366, 375, 451 Tyson, L A., 481 Ulrich, D O., 478 Underwood, 14 Unethical leadership, 389 Unilever, 53, 301, 341 Union Pacific, 408 Unit costs impact of learning and scale economies on, 115 marketing strategy and, 119 of product differentiation and cost structure, 157 United Airlines, 3, 74 United Auto Workers, 317 United Health, 379 United Nations (UN), 30, 486 United States Steel Industry Association, 70 United Technologies Corporation (UTC), 360, 364, 365, 395, 451 Universal Serial Bus (USB), 231 Universal Studios, 228 Unrelated diversification, 344, 346, 349, 350, 450, 451, 452 UPS, 53, 178, 215, 216 U.S Airways, U.S Steel, 64 U.S Weekly, 260 Use of power, 33 USX, 64 Utilitarianism, 390, 391 Utterback, J M., 483 Vaaler, P M., 479 Value chain commonalities between, 344 distinctive competencies and, 92 diversification strategy and, 335 explanation of, 83, 84 primary activities of the, 84, 85 stages of, 312, 313, 314 support activities of the, 85–86, 87 Value creation business model and, 158 cost reductions and, 274 cycle, 92 functions, 126 location economics and, 271 lower costs and, 86 per unit and customer, 80 pricing options, 81 single-business industry and, 305, 306 Value creation frontier business model and, 176 company goal and, 178 competitive advantage and, 159, 160 cost leadership business model and, 160 focus companies and, 188 general business models and, 164 Values of a company, 14, 15 high-performing organizations and, 15 Nucor Steel and, 14, 15 poorly performing companies, 15 product innovation and, 90 See also Business ethics Value sets, 418, 419 Vance, S C., 489 Van de Putte, A., 478 Van der Heijden, K., 478 Van Duyn, A., 493 Vanity Fair, 260 Vara, V., 484 Varadarajan, P., 487 Varchaver, N., 488, 494 Varian, H R., 478, 479, 483, 484 Velocci, A L., 488 Verbeke, A., 485 Verizon, 307, 340 Verizon Wireless, 147, 148 Vermeulen, F., 488 Vertical integration alternatives to, 319–322, 323 backward/forward, 312 demand unpredictability and, 318 limits of, 318, 319 multidivisional structure and, 451, 452, 453 problems with, 317, 318 product quality enhancement and, 316, 317 profitability increase and, 314–316, 317 scheduling improvements and, 317 specialized asset investment and, 314–315, 316 substitute for, 320 technological change and, 318 value-added chain and, 312–313, 314 VH1, 262 VHS technology, 234, 235, 239 Viacom, 262 Viagra, 240 Videocassette recorders (VCRs), 234, 239 Viguerie, P., 477, 478 Vijh, A M., 487, 488 Vioxx, 74 Viral model of infection, 200 Virtual corporation, 325 Virtual organization, 470 Vishny, R W., 486, 487, 488 Vision, 14, 31, 32 Visionary leaders, 31, 32 Volkswagen, 270 Volvo, 133, 134, 179 Wade, James B., 488 Waggoner, Rich, 475 Walkman, 134 Wall, R., 488 Wall Street Journal, 376 Wal-Mart bargaining power over suppliers, 55 business ethics of, 399–400 business model, 157 buying power and, 54 cereal brand and, 51 chaining strategy by, 189 competitors to, 59 distinctive competencies of, 161 342927_Index_pI1-I15.qxd 9/13/07 7:06 AM Page I15 www.downloadslide.com Index distribution center of, 55 ESOP and, 369 fragmented industry and, 188 geographic structure and, 430 global sales and, 271 as innovators, 64 lower cost structure and, 121 mission statement of, 160 private label cola and, 47 Procter & Gamble and, 301 profitable growth and, strategic goal of, 92 toy sales and, 207 value frontier and, 170 value sets and, 419 values of, 15 visionary leader and, 32 Walsh, J P., 488, 489 Walt Disney Company, 79, 80 Walton, Sam, 32, 55, 156, 399 Wang, Charles, 376 Wang Labs, 102, 252 Ward, Andrew, 488 Warner, M., 481 Warner Brothers, 228, 293 Warner-Lambert, 306, 307 Waterman, R H., 418, 490 Watson Pharmaceuticals, 58 Waurzyniak, P., 481 “Way Forward” plan, 443 Wayne, K., 481 Weinhold, W A., 491 Welch, Jack, 32, 128, 343 Wells, L., 491 Wernerfelt, B., 480 Western Electric, 223 Western Union, 21, 22 Westinghouse, 223 Westley, F., 478 Westrex Corp., 223 Wheelwright, S C., 482, 487 Whirlpool Corporation, 69 White, Joseph, 486 White, M A., 491 White, R E., 490 White spaces, 334 Whitman’s candies, 152 Wholly owned subsidiaries, 290, 291, 292 Wilke, J R., 489 Willensky, D R., 488 Williams, M A., 478 Williams, Serena, 227 Williamson, Oliver E., 485, 486, 487, 488, 490 Willig, R D., 478, 479 Wilson, Charles, 374 Wilson, Kemmons, 181 Wilson, T A., 479 Windows, 48, 57, 77, 78, 265 Windows CE, 293 Windows Media Player, 233 Windows Vista, 111, 112, 240, 270 Wintel standard, 231, 232, 233 Winter, S., 480 Wipro, 269 Wireless telephone industry, 61 Womack, James, 481, 486 Wong, A., 483 Woods, Tiger, 227 Woodward, J., 490 Wookey, John, 302, 303 Woolley, S., 482 WordPerfect, 309 Work force, 85, 86, 87, 113 Working capital/Sales, 94, 95 WorldCom, 16, 49, 375 World Trade Organization, 484 World Wide Web (www) Amazon.com, 494 amdl.com, 494 aol.com, 494 AOLTimeWarner.com, 494 bankofamerica.com, 482 bloomberg.com, 490 bsa.org, 484 btechnews.com, 484 chrysler.com, 494 clearchannel.com, 494 cocacola.com, 494 cypress.com, 495 dell.com, 489, 494, 495 dolby.com, 494 etrade.com, 482 ford.com, 477, 490 globalexchange.com, 494 globalpolicy.org, 484 gm.com, 490 hp.com, 494 ibm.com, 487 ifpi.org, 484 intel.com, 494 kodak.com, 477 Landsend.com, 494 lexmark.com, 495 li&fung.com, 494 llbean.com, 493 mattel.com, 483 mcdonalds.com, 495 3M.com, 494 mellon.com, 494 monsanto.com, 487 nestle.com, 494 I15 nike.com, 483 nokia.com, 490, 494 nucor.com, 477 opportunities on the, 17 oracle.com, 486, 494 pepsico.com, 494 ryanair.com, 493 samsung.com, 483 sap.com, 486, 495 savoy.com, 483 sixcontinentalhotels.com, 493 southwest.com, 489 toyota.com, 493 toysrus.com, 494 tyco.com, 487 unilever.com, 489 unionpacific.com, 495 utc.com, 489 viacom.com, 484 walmart.com, 483, 490 westrexcorp.com, 494 yahoo.com, 483, 487 zara.com, 493 Worthen, B., 491, 494 Wrapp, Edward, 33, 478 Wright, P M., 481 Wright Brothers, 253 Wrigley, L., 490 Wylie, I., 478 Wysocki, B., 486 Xbox, 19, 20, 32, 245, 337, 340 Xbox 360, 229, 338 Xerox, 27, 61, 104, 129, 131, 135, 246, 249, 265, 282, 297, 347 Yahoo!, 17, 20, 28, 69, 261, 329 Yamaha, 144 Yamaichi Securities, 284 Yeung, B., 485 Yoon, S., 494 Zaheer, S., 485 Zara, 86, 87, 171 Zbaracki, M., 478 Zeisel, S., 479 Zeithaml, C P., 479 Zeng, M., 485 Zenger, T., 486 Zetsche, Dieter, 38 Zingales, L., 488 Zocor, 74 Zysman, J., 481 ... 342927_Ch01_p001-040.qxd PART 9/20/07 12:12 PM Page Introduction to Strategic Management Strategic Leadership, Competitive Advantage, and Superior Performance Strategic leadership is concerned with managing the strategy-making... First-Mover Advantages 246 First-Mover Advantages 247 ● First-Mover Disadvantages 247 ● Strategies for Exploiting First-Mover Advantages 248 Technological Paradigm Shifts 251 Paradigm Shifts... Strategy 291 Global Strategic Alliances 293 Advantages of Strategic Alliances 293 Strategy in Action 8.3: Cisco and Fujitsu 294 Disadvantages of Strategic Alliances 294 ● Making Strategic Alliances