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Strategic management competitiveness and globalization concepts and case 12e by hitt ireland hoskisson Strategic management competitiveness and globalization concepts and case 12e by hitt ireland hoskisson Strategic management competitiveness and globalization concepts and case 12e by hitt ireland hoskisson Strategic management competitiveness and globalization concepts and case 12e by hitt ireland hoskisson Strategic management competitiveness and globalization concepts and case 12e by hitt ireland hoskisson Strategic management competitiveness and globalization concepts and case 12e by hitt ireland hoskisson
www.downloadslide.com STRATEGIC MANAGEMENT Competitiveness & Globalization Concepts and Cases 12e Michael A Hitt Texas A&M University and Texas Christian University R Duane Ireland Texas A&M University Robert E Hoskisson Rice University Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States www.downloadslide.com Strategic Management: Competitiveness & Globalization: Concepts and Cases, 12e © 2017, 2015 Cengage Learning® Michael A Hitt, R Duane Ireland, and Robert E Hoskisson ALL RIGHTS RESERVED No part of this work covered by the copyright herein may be reproduced, transmitted, stored, or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher Vice President, General Manager, Social Science & Qualitative Business: Erin Joyner Product Director: Jason Fremder Senior Product Manager: Scott Person WCN: 01-100-101 Content Developer: Tara Singer Product Assistant: Brian Pierce Marketing Director: Kristen Hurd Marketing Manager: Emily Horowitz Marketing Coordinator: Christopher Walz Senior Content Project Manager: Kim Kusnerak For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706 For permission to use material from this text or product, submit all requests online at www.cengage.com/permissions Further permissions questions can be emailed to permissionrequest@cengage.com Manufacturing Planner: Ron Montgomery Unless otherwise noted all items © Cengage Learning Production Service: Cenveo Publisher Services Library of Congress Control Number: 2015955692 Senior Art Director: Linda May Cover/Internal Designer: Tippy McIntosh Cover Image: © RomanOkopny/Getty Images Intellectual Property Analyst: Diane Garrity Project Manager: Sarah Shainwald Strategic Focus: © RomanOkopny/Getty Images Watercolor opener: © BerSonnE/Getty Images ISBN: 978-1-305-50214-7 Cengage Learning 20 Channel Center Street Boston, MA 02210 USA Cengage Learning is a leading provider of customized learning solutions with employees residing in nearly 40 different countries and sales in more than 125 countries around the world Find your local representative at www.cengage.com Cengage Learning products are represented in Canada by Nelson Education, Ltd To learn more about Cengage Learning Solutions, visit www.cengage.com Purchase any of our products at your local college store or at our preferred online store www.cengagebrain.com Printed in Canada Print Number: 01 Print Year: 2016 www.downloadslide.com To My Family: I love each and every one of you Thank you for all of your love and support — Michael, Dad, Papa To Mary Ann: “Now everyone dreams of a love lasting and true.” This was my dream that you have completely fulfilled Thank you for all of the love, support, and encouragement throughout our life together — R Duane Ireland To Kathy: My love for you is eternal, and I hope that we can be eternally together Thanks for all the support and love you’ve given me throughout my life — Bob www.downloadslide.com Brief Contents Preface, xiii About the Authors, xx Part 1: Strategic Management Inputs Strategic Management and Strategic Competitiveness, 2 The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis, 38 The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages, 76 Part 2: Strategic Actions: Strategy Formulation 108 Business-Level Strategy, 108 Competitive Rivalry and Competitive Dynamics, 142 Corporate-Level Strategy, 172 Merger and Acquisition Strategies, 204 International Strategy, 236 Cooperative Strategy, 276 Part 3: Strategic Actions: Strategy Implementation 308 10 Corporate Governance, 308 11 Organizational Structure and Controls, 344 12 Strategic Leadership, 382 13 Strategic Entrepreneurship, 416 Part 4: Case Studies Name Index, I-1 Company Index, I-20 Subject Index, I-23 iv C-1 www.downloadslide.com Contents Preface xiii About the Authors xx Part 1: Strategic Management Inputs 1: Strategic Management and Strategic Competitiveness Opening Case: Alibaba: An Online Colossus in China Goes Global 1-1 The Competitive Landscape 1-1a The Global Economy 1-1b Technology and Technological Changes 10 Strategic Focus: Starbucks Is “Juicing” Its Earnings per Store through Technological Innovations 11 1-2 The I/O Model of Above-Average Returns 14 1-3 The Resource-Based Model of Above-Average Returns 16 1-4 Vision and Mission 18 1-4a Vision 18 1-4b Mission 19 1-5 Stakeholders 19 Strategic Focus: The Failure of BlackBerry to Develop an Ecosystem of Stakeholders 20 1-5a Classifications of Stakeholders 21 1-6 Strategic Leaders 25 1-6a The Work of Effective Strategic Leaders 25 1-7 The Strategic Management Process 26 Summary 28 • Key Terms 28 • Review Questions 29 • Mini-Case 29 • Notes 30 2: The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis 38 Opening Case: Are There Cracks in the Golden Arches? 39 2-1 The General, Industry, and Competitor Environments 41 2-2 External Environmental Analysis 43 2-2a Scanning 43 2-2b Monitoring 44 2-2c Forecasting 44 2-2d Assessing 45 2-3 Segments of the General Environment 45 2-3a The Demographic Segment 45 2-3b The Economic Segment 48 2-3c The Political/Legal Segment 49 2-3d The Sociocultural Segment 50 2-3e The Technological Segment 51 2-3f The Global Segment 52 v www.downloadslide.com vi Contents 2-3g The Sustainable Physical Environment Segment 53 Strategic Focus: Target Lost Its Sway Because Tar-zhey No Longer Drew the Customers 54 2-4 Industry Environment Analysis 55 2-4a Threat of New Entrants 56 2-4b Bargaining Power of Suppliers 59 2-4c Bargaining Power of Buyers 60 2-4d Threat of Substitute Products 60 2-4e Intensity of Rivalry among Competitors 60 2-5 Interpreting Industry Analyses 63 2-6 Strategic Groups 63 Strategic Focus: Watch Out All Retailers, Here Comes Amazon; Watch Out Amazon, Here Comes Jet.com 64 2-7 Competitor Analysis 65 2-8 Ethical Considerations 67 Summary 68 • Key Terms 68 • Review Questions 68 • Mini-Case 69 • Notes 70 3: The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages 76 Opening Case: Data Analytics, Large Pharmaceutical Companies, and Core Competencies: A Brave New World 77 3-1 Analyzing the Internal Organization 79 3-1a The Context of Internal Analysis 79 3-1b Creating Value 81 3-1c The Challenge of Analyzing the Internal Organization 81 3-2 Resources, Capabilities, and Core Competencies 84 3-2a Resources 84 Strategic Focus: Strengthening the Superdry Brand as a Foundation to Strategic Success 85 3-2b Capabilities 88 3-2c Core Competencies 89 3-3 Building Core Competencies 89 3-3a The Four Criteria of Sustainable Competitive Advantage 89 3-3b Value Chain Analysis 93 3-4 Outsourcing 96 3-5 Competencies, Strengths, Weaknesses, and Strategic Decisions 96 Strategic Focus: “We’re Outsourcing that Activity but Not That One? I’m Surprised!” 97 Summary 98 • Key Terms 99 • Review Questions 99 • Mini-Case 100 • Notes 101 Part 2: Strategic Actions: Strategy Formulation 108 4: Business-Level Strategy 108 Opening Case: Hain Celestial Group: A Firm Focused on “Organic” Differentiation 109 4-1 Customers: Their Relationship with Business-Level Strategies 112 4-1a Effectively Managing Relationships with Customers 112 4-1b Reach, Richness, and Affiliation 113 4-1c Who: Determining the Customers to Serve 114 4-1d What: Determining Which Customer Needs to Satisfy 114 www.downloadslide.com Contents 4-1e How: Determining Core Competencies Necessary to Satisfy Customer Needs 115 4-2 The Purpose of a Business-Level Strategy 116 4-3 Types of Business-Level Strategies 117 4-3a Cost Leadership Strategy 118 4-3b Differentiation Strategy 122 Strategic Focus: Apple vs Samsung: Apple Differentiates and Samsung Imperfectly Imitates 126 4-3c Focus Strategies 127 4-3d Integrated Cost Leadership/Differentiation Strategy 129 Strategic Focus: RadioShack’s Failed Focus Strategy: Strategic Flip-Flopping 130 Summary 134 • Key Terms 135 • Review Questions 135 • Mini-Case 135 • Notes 136 5: Competitive Rivalry and Competitive Dynamics 142 Opening Case: Does Google Have Competition? Dynamics of the High Technology Markets 143 5-1 A Model of Competitive Rivalry 146 5-2 Competitor Analysis 147 5-2a Market Commonality 147 5-2b Resource Similarity 148 Strategic Focus: Does Kellogg Have the Tiger by the Tail or Is It the Reverse? 150 5-3 Drivers of Competitive Behavior 150 5-4 Competitive Rivalry 152 5-4a Strategic and Tactical Actions 152 5-5 Likelihood of Attack 153 5-5a First-Mover Benefits 153 5-5b Organizational Size 155 5-5c Quality 156 5-6 Likelihood of Response 157 5-6a Type of Competitive Action 157 5-6b Actor’s Reputation 158 5-6c Market Dependence 158 5-7 Competitive Dynamics 159 5-7a Slow-Cycle Markets 159 5-7b Fast-Cycle Markets 161 5-7c Standard-Cycle Markets 162 Strategic Focus: The Ripple Effect of Supermarket Wars: Aldi Is Changing the Markets in Many Countries 163 Summary 164 • Key Terms 166 • Review Questions 166 • Mini-Case 166 • Notes 167 6: Corporate-Level Strategy 172 Opening Case: Disney Adds Value Using a Related Diversification Strategy 173 6-1 Levels of Diversification 175 6-1a Low Levels of Diversification 176 6-1b Moderate and High Levels of Diversification 177 6-2 Reasons for Diversification 178 6-3 Value-Creating Diversification: Related Constrained and Related Linked Diversification 179 vii www.downloadslide.com viii Contents 6-3a Operational Relatedness: Sharing Activities 180 6-3b Corporate Relatedness: Transferring of Core Competencies 181 6-3c Market Power 182 6-3d Simultaneous Operational Relatedness and Corporate Relatedness 184 6-4 Unrelated Diversification 185 6-4a Efficient Internal Capital Market Allocation 185 Strategic Focus: GE and United Technology Are Firms that Have Pursued Internal Capital Allocation and Restructuring Strategies 186 6-4b Restructuring of Assets 187 6-5 Value-Neutral Diversification: Incentives and Resources 188 6-5a Incentives to Diversify 188 Strategic Focus: Coca-Cola’s Diversification to Deal with Its Reduced Growth in Soft Drinks 190 6-5b Resources and Diversification 192 6-6 Value-Reducing Diversification: Managerial Motives to Diversify 193 Summary 196 • Key Terms 196 • Review Questions 196 • Mini-Case 197 • Notes 198 7: Merger and Acquisition Strategies 204 Opening Case: Mergers and Acquisitions: Prominent Strategies for Firms Seeking to Enhance Their Performance 205 7-1 The Popularity of Merger and Acquisition Strategies 206 7-1a Mergers, Acquisitions, and Takeovers: What Are the Differences? 207 7-2 Reasons for Acquisitions 208 Strategic Focus: A Merger of Equals: Making It Happen Isn’t Easy! 209 7-2a Increased Market Power 210 7-2b Overcoming Entry Barriers 211 Strategic Focus: Different Strategic Rationales Driving Cross-Border Acquisitions 212 7-2c Cost of New Product Development and Increased Speed to Market 213 7-2d Lower Risk Compared to Developing New Products 214 7-2e Increased Diversification 214 7-2f Reshaping the Firm’s Competitive Scope 215 7-2g Learning and Developing New Capabilities 215 7-3 Problems in Achieving Acquisition Success 216 7-3a Integration Difficulties 217 7-3b Inadequate Evaluation of Target 218 7-3c Large or Extraordinary Debt 219 7-3d Inability to Achieve Synergy 220 7-3e Too Much Diversification 221 7-3f Managers Overly Focused on Acquisitions 221 7-3g Too Large 222 7-4 Effective Acquisitions 222 7-5 Restructuring 224 7-5a Downsizing 224 7-5b Downscoping 224 7-5c Leveraged Buyouts 225 7-5d Restructuring Outcomes 225 Summary 227 • Key Terms 228 • Review Questions 228 • Mini-Case 228 • Notes 230 www.downloadslide.com Contents 8: International Strategy 236 Opening Case: Netflix Ignites Growth Through International Expansion, But Such Growth Also Fires Up the Competition 237 8-1 Identifying International Opportunities 239 8-1a Incentives to Use International Strategy 239 8-1b Three Basic Benefits of International Strategy 241 8-2 International Strategies 243 8-2a International Business-Level Strategy 243 8-2b International Corporate-Level Strategy 246 Strategic Focus: Furniture Giant IKEA’s Global Strategy 248 8-3 Environmental Trends 250 8-3a Liability of Foreignness 250 8-3b Regionalization 251 8-4 Choice of International Entry Mode 252 8-4a Exporting 253 8-4b Licensing 253 8-4c Strategic Alliances 254 8-4d Acquisitions 255 8-4e New Wholly Owned Subsidiary 256 8-4f Dynamics of Mode of Entry 257 8-5 Risks in an International Environment 258 8-5a Political Risks 258 8-5b Economic Risks 259 Strategic Focus: The Global Soccer Industry and the Effect of the FIFA Scandal 260 8-6 Strategic Competitiveness Outcomes 262 8-6a International Diversification and Returns 262 8-6b Enhanced Innovation 263 8-7 The Challenge of International Strategies 264 8-7a Complexity of Managing International Strategies 264 8-7b Limits to International Expansion 264 Summary 265 • Key Terms 266 • Review Questions 266 • Mini-Case 266 • Notes 268 9: Cooperative Strategy 276 Opening Case: Google, Intel, and Tag Heuer: Collaborating to Produce a Smartwatch 277 9-1 Strategic Alliances as a Primary Type of Cooperative Strategy 279 9-1a Types of Major Strategic Alliances 279 9-1b Reasons Firms Develop Strategic Alliances 281 9-2 Business-Level Cooperative Strategy 284 9-2a Complementary Strategic Alliances 284 9-2b Competition Response Strategy 286 9-2c Uncertainty-Reducing Strategy 287 9-2d Competition-Reducing Strategy 287 Strategic Focus: Strategic Alliances as the Foundation for Tesla Motors’ Operations 288 9-2e Assessing Business-Level Cooperative Strategies 290 9-3 Corporate-Level Cooperative Strategy 290 9-3a Diversifying Strategic Alliance 291 ix www.downloadslide.com x Contents 9-3b Synergistic Strategic Alliance 291 9-3c Franchising 291 9-3d Assessing Corporate-Level Cooperative Strategies 292 9-4 International Cooperative Strategy 292 9-5 Network Cooperative Strategy 293 9-5a Alliance Network Types 294 9-6 Competitive Risks with Cooperative Strategies 295 Strategic Focus: Failing to Obtain Desired Levels of Success with Cooperative Strategies 296 9-7 Managing Cooperative Strategies 297 Summary 299 • Key Terms 300 • Review Questions 300 • Mini-Case 300 • Notes 302 Part 3: Strategic Actions: Strategy Implementation 308 10: Corporate Governance 308 Opening Case: The Corporate Raiders of the 1980s Have Become the Activist Shareholders of Today 309 10-1 Separation of Ownership and Managerial Control 312 10-1a Agency Relationships 313 10-1b Product Diversification as an Example of an Agency Problem 314 10-1c Agency Costs and Governance Mechanisms 316 10-2 Ownership Concentration 317 10-2a The Increasing Influence of Institutional Owners 318 10-3 Board of Directors 319 10-3a Enhancing the Effectiveness of the Board of Directors 321 10-3b Executive Compensation 322 10-3c The Effectiveness of Executive Compensation 323 Strategic Focus: Do CEOs Deserve the Large Compensation Packages They Receive? 324 10-4 Market for Corporate Control 325 10-4a Managerial Defense Tactics 326 10-5 International Corporate Governance 328 10-5a Corporate Governance in Germany and Japan 328 Strategic Focus: “Engagement” versus “Activist” Shareholders in Japan, Germany, and China 330 10-5b Corporate Governance in China 331 10-6 Governance Mechanisms and Ethical Behavior 332 Summary 333 • Key Terms 334 • Review Questions 334 • Mini-Case 335 • Notes 336 11: Organizational Structure and Controls 344 Opening Case: Luxottica’s Dual CEO Structure: A Key to Long-Term Success or a Cause for Concern? 345 11-1 Organizational Structure and Controls 347 11-1a Organizational Structure 347 Strategic Focus: Changing McDonald’s Organizational Structure: A Path to Improved Performance? 348 11-1b Organizational Controls 350 11-2 Relationships between Strategy and Structure 351 11-3 Evolutionary Patterns of Strategy and Organizational Structure 351 11-3a Simple Structure 352 www.downloadslide.com I-19 Name Index Zhang, X., 71, 269, 340, 411, 414 Zhang, Y., 31, 102, 138, 168, 268, 270, 274, 340, 410, 411 Zhang, Z., 269 Zhao, M., 138, 169, 376, 414 Zhao, W., 339 Zhao, X., 105, 140, 304, 307, 381, 409, 438, 441, 442 Zhao, Y., 104 Zhao, Z., 30 Zhao, Z.J., 32, 412 Zhelyazkov, P., 380 Zheng, X., 411 Zheng, Y., 105, 139, 305, 307, 342, 438, 442 Zhiwei, F., 197 Zhoa, X., 200 Zhong, W., 269 Zhou, C., 170, 380 Zhou, D., 169 Zhou, J., 410, 438, 440 Zhou, J.O., 343 Zhou, K., 306 Zhou, K.Z., 33, 73, 138, 306, 378, 412 Zhou, L., 273 Zhou, L.-A., 268 Zhou, N., 231 Zhou, Y.M., 105, 232, 378, 379 Zhour, N., 376 Zhu, D.H., 198, 233, 339, 340, 410 Zhu, F., 33, 168, 170 Zhu, G., 35 Zhu, H., 72, 139, 199, 200, 230, 232, 442 Zhu, P., 230, 272 Zhu, P.-C., 272 Zhu, Y., 35 Zied, G., 101 Zigano, R., 340 Zigic, K., 304 Zillman, C., 201, 248, 266 Zimmermann, A., 378 Zimmermann, C., 33 Ziobro, P., 54 Zirpoli, F., 171 Zollo, M., 33, 139, 140, 231, 304 Zott, C., 104, 137, 377 Zou, H., 268 Zou, L., 304 Zou, S., 269, 274 Zu, D., 270 Zu, S., 441 Zutter, C.J., 232, 336 Zwillenberg, P., 72 Zyung, J., 409 www.downloadslide.com COMPANY INDEX A ABC, 173, 418 Accenture, 97 Ace Hardware, 291 Acer Inc., 113 Actavis, 325 Adidas, 123, 260 AdvancedCath, 223 Aerocrine AB, 212 AgReliant Genetics, 254 Ahold, 255 Ahold-Delhaize, 255 Airbus, 61, 92, 257 Airbus Group NV, 293 Airbus SAS, 242 AirTran, 220 Aksa Akrilik Kimya Sanayii A.S., 296 Alain Mikli, 345 Alamos Gold Inc., 207 Alcatel-Lucent, 217–218 Bell Labs, 223 Alcoa, 191 Aldi’s, 162–163 Alexion Pharmaceuticals, Inc., 207 Alibaba, 3–4, 6, 237, 421 Alibaba Group Holding Limited, 212 Allergan, 325 Alpha Beta, 255 Altice SA, 212 Altria Group, 145 Alvarez & Marsal, 193 Amazon, 3–4, 7, 12, 50, 64–65, 84, 112–113, 120, 143–144, 158–159, 210, 237, 421 Amazon Web Services (AWS), 84 American Airlines, 67, 371 American Express (AmEx), 432–433, 435 Americas Simple Meals and Beverages, 214 Amplify, 82 Angie’s List, 154–155 Anheuser-Busch, 287 Apple, 3–4, 12, 16, 18, 20–21, 62, 89, 123, 143–144, 192, 277, 281, 293–294, 326, 383–384, 386, 394, 421 fast-cycle markets, 162 Samsung, contrast, 126–127 smartphone market, 146 Titan, 288 ArcelorMittal S.A., 261 Arch Coal, 83 Arkansas Best, 148 Armani, 345 I-20 Arnette, 345 Arnott, 214 Aruba Networks, 279 Asda (Walmart), 163 AstraZeneca PLC, 97 AT&T, 144 Audi, 62, 246 AuRico Gold Inc., 207 B Bain Capital Ventures, 64 Bain Strategy Consulting, 193 Baker Hughes, 325 Banco Popular Español S.A., 212 Barnes & Noble (B&N), 64 BASF, 244, 333 Bed Bath & Beyond, Bell Helicopter, 364 Bell Labs (Alcatel-Lucent), 223 Berkshire Hathaway & Co., 182, 190 Big Heart Pet Foods, 110, 183 Big Lots, Inc., 119 Bilfinder, 330 Bing, 144 BlackBerry, 20–21 Blackboard Eats, 91 BlackRock, Inc., 319 Blackstone, 178 BluePrint, 109 BMW, 62, 246 Boeing Company, 61, 78, 92, 242, 286, 433 Borders Group, 97 Boston Scientific, 280 Bottom Dollar, 163 BP plc, 295 Brazilian Development Bank (BNDES), 330 Brilliance (BBA partnership), 291 Bristol-Myers Squibb Co., 97, 286 British Airways, 67, 371 British Telecom, 333 Brussels Airlines, 67 Bucyrus-Erie, 254 Bulgari, 345 Burberry, 345 Burger King, 61 Burger King Worldwide, Inc., 182 C Cadillac, 246 Callaway, 125 CalPERS, 327 Campbell Soup Company, 109, 177, 214–215 Cap Gemini S.A., 218–219 Cariden, 211 Carlyle Group, 178 Carnival Cruise Line, 283 Carrefour S.A., 43, 65, 241, 262 CA Technologies Fujitsu, 293 Caterpillar, Inc., 123, 151, 213, 218 CBS, 7, 173 Celesio, 330 CenturyLink, 215 Cevian Capital, 330 Changan, Ford (alliance), 131–132 China Communications Services Corporation, 333 China Merchants Group, 283 China National Tobacco Corporation (CNTC), 253 ChinaVision Media, Chipotle Mexican Grill, 39, 110, 115 Chiquita Brands International, 244–245 Choice Hotels International, 291 Chubb, 186 Circassia Pharmaceuticals PLC, 212 Cisco Cisco Systems, 211 Global Partner Network, 293 IBM, relationship, 296 Citigroup, 309, 324 CNN International, 281 Coach, 345 Coca-Cola Company, 57, 61, 65, 84, 88, 92, 148, 189–191, 242, 258, 260, 434 Cognizant, 97 Coles, 163 Colgate-Palmolive Company, 114 Comcast, 173–174, 210, 325 Computer City, 130 ConAgra Foods, Inc., 109 CONMEBOL, 261 Consumer Reports, 155 Continental Airlines, Continental Lite, 116 Con-way, Inc., 148 Costco, 432 Croatia Airlines, 67 Cummins Engine, 254 D Daimler AG, 287, 288 Danaher Corp., 187 Dana Holding Corporation, 288 Decolar.com, 282 Delhaize, 163 Ahold-Delhaize, 255 Dell, Inc., 62, 126, 158, 192 Delta Air Lines, 210 Song, 116 D.E Master Blenders, 193 Despegar.com, 282 Deutsche Bank, 97, 218 Diaper.com, 64 Dimension Films, 173, 184 Discover Communications, 173, 324 Disney Company, 417 Disney Stores, 160 Domino’s, 88 DowAksa, Ford (joint venture), 296 Dow Chemical, 296, 391 DRDGOLD, 261 DuPont, 309, 326, 354 Dyson, 193 E eBay, Economist, The, 281 Electronic Arts, Inc (EA), 111 Eli Lilly, 286 Elliott Management, 330 Ell’s, 109 Emerson, 293 Endomondo, 123 Enron, 317, 332 Ericsson, 423 Eskom Holdings Ltd., 259, 261 ESPN, 173, 418 Expedia, 282 Exxon Mobil, 383 F Facebook, 50, 113, 128, 143, 417 Family Dollar, 120–121, 131 Famous Brand Electronics, 130 Federal Express (FedEx), 183 Freight (FedEx Freight), 148 United Parcel Service (UPS), relationship, 148–149 FEMSA, 258, 263 Ferrero, 210 FIFA, 259–261 Financial Times, 281 Finnair, 67 First Solar, Inc., 296 Firth Rixson Limited, 191 Five Guys Burgers and Fries, 115 Flextronics, 184 Food Lion, 255 www.downloadslide.com I-21 Company Index Food Network, 211 Ford Motor Company, 184, 242 Changan, alliance, 131–132 DowAksa, joint venture, 296 Foxconn Technology Group, 281 Frankenman Medical Equipment Company, 280 FutureWorks (Nokia), 223 G General Electric (GE), 8, 27, 109, 174, 178, 181, 185–186, 391, 425, 434 GE Capital, 186 GE Lighting, 285 General Mills, 149, 289 General Motors (GM), 8, 87, 184, 279, 354, 394–396, 398, 402 Giant, 255 Gilead Sciences, 219 GlaxoSmithKline, 286 Global Biscuits and Snacks, 214 GM China, 298 Goldman Sachs, 64, 218, 324 Google, 20, 50, 64, 127, 143–144, 394, 421 Android system, 146 Google Ventures, 64 TAG Heuer/Intel, partnering, 162, 277–278, 287 vehicles, 423–424 Goya Foods, 127 Green Truck, 128 Groupon, 90, 91 Guardian, The, 281 Gucci Group, 434 Gulf Cooperation Council (GCC), 330 H Haier, 368 Hain Celestial Group, 109–110 Halliburton, 325 Hannaford, 255 Harley-Davidson, 87 HBO, HealthSouth, 332 Heavy Industry Co., Ltd, 177 Heinz, 125, 182 Herbalife, 310 Hershey Co., 164 Hewlett-Packard (HP), 62, 97, 158, 192 HGTV, 211 Hillshire Brands, 193 Hill’s Pet Nutrition, 114 Hilton International, 291 Hitachi, 293 Hitachi Ltd., 57 Hoechst, 244 Holcim Ltd., 208–209 Hollywood Pictures, 173, 184 Home Depot, 65, 425 HTC Corp., 43 Huawei Technologies Co Ltd., Hulu, 7, 237–238 Hulu Plus, 296 Humana, 434 Hutchison Whampoa Limited (HWL), 178 Hyundai Motor, 260 I Iberia, 371 IBM, 158, 293–295, 391, 427 Cisco, relationship, 296 iGate Corporation, 218 IKEA, 128, 129, 248, 430 IMAX Corporation, 418 Incredible Universe, 130 Infosys, 97 Insieme Metworks, 211 Instagram, 421 Intel, 66, 143, 293, 333 Google/TAG Heuer, partnering, 162, 277–278, 287 International Harvester, 254 J Jacobs Engineering Group Inc., 371 Japan Airlines, 67, 371 Japanese Government Pension Investment Fund, 330 JBS-Friboi, 330 JCPenney, 131, 133, 174, 349 JetBlue, 148, 220, 432 Jet.com, 65 J.M Smucker Company, 109, 110, 183 Johnson Controls, 280 JPMorgan Chase, 321, 324, 400 J Sainsbury, 163 Juniper, 279 K Kabel Deutschland, 330 Kellogg Company, 109, 149–150, 190, 289 KFC, 39 Kidde, 186 Kinder Morgan, 84 King Digital Entertainment, 111, 120 KKR, 178 Kleenex, 127 Komatsu Ltd., 151, 254, 257 Korea Aerospace Industries Ltd, 293 KPMG LLP, 403 Kraft Foods Group, 109, 164, 182, 190 Kroger, 110, 129 KWS, 254 L Lafarge SA, 208, 209 Laubman & Pank, 345 Lehman Brothers, 193 Lenovo, 126, 192 LensCrafters, 345 Lexus (Toyota Motor Corporation), 122–123, 245–246 Limagrain Guerra Brasil, 254 LinkedIn, 423 LivingSocial, 91 LNP, 19 Lockheed Martin, 286, 314–315 L’Oréal, 116 Lorillard, 145 Lowe’s, 65 LTL Carrier (Walmart), 148 Lucasfilm, 417, 418 Lufthansa, 67 Luxottica, 345 Luxottica Group SpA, 278 LVMH Moet Hennessy Louis Vuitton SA, 277 M Macy’s, 131 Magna International, 333 Marriott, 237, 291, 430 Mars, 164 Marvel Entertainment, 173, 417 Matsushita, 368 McDonald’s, 15, 19, 39–40, 42, 61, 91, 110, 115, 149, 260, 291, 371–372 organizational structure, 347–349, 351 McDonald’s Ventures, LLC, 296 McIlhenny Company, 176–177 McKinsey & Co., 123 Mercedes-Benz, 62, 288 Merck & Co., 115, 177 Metro, 43 Metrojet, 116 MGM Resorts International, 49 Micromax, 126, 127 Micron Technology, Inc., 283–284 Microsoft, 66, 153, 383, 431 MillerCoors, 287, 296 Minecraft, 431 Mitsubishi Heavy Industries Ltd., 57 Mojang AB, 431 Molson Coors, 287, 296 Mondelez International, Inc., 164, 249–250 Morgan Stanley, 218, 324 Moxy Hotel, 430 Mrs Fields Cookies, 291 Murray Energy Corp., 83 MyFitness Pal, 123 Mylan N.V., 210 MySpace, 113 Mytheresa.com, 80 N NantWorks LLC, 286–287 National Football League, 260 NBC News, 400, 401 Neiman Marcus Group, 79–80 Nestlé, SA, 164 Netflix, 4, 7–9, 113, 237–239, 242, 250, 251, 296, 398 News Corp., Amplify unit, 82 NGO Rainforest Alliance, 371 Nike, 123, 260 Nissan Motor Company, 291 Nokia, 43, 153, 218, 293, 400, 401 FutureWorks, 223 Nokia Technologies, 223 Norwest Venture, 64 Novartis AG, 97 O Oakley, 345 Oakley Lab, 345 OAO Rosneft, 295 Office Depot, 325 Oltan Gida, 210 OneWorld, 281 Oneworld, 66 Orbitz, 143 Orchestrate, 215 Oscar Meyer, 109 Otis Elevator, 186 Outerwall, 296 P Packaged Fresh, 214–215 Panasonic Corporation, 368 Panda Express, 115 Panera Bread, 115 Pangea, 281 Peabody Energy Corp., 83 Peapod, 255 Pearle Vision, 345 Pepperidge Farm, 109, 214 PepsiCo, 57, 61, 65, 92, 148, 242, 289 Perry Ellis International, 434 Pershing Square Capital Management LP, 309 Persol, 345 Pfizer, 89, 286 Pharmasset, 219 Philip Morris International (PMI), 253–254 Pilgrim’s Pride, 330–331 www.downloadslide.com I-22 Pixar, 417, 418 Pixar Films, 173 Polaroid Corporation, 82 Prada, Pratt & Whitney, 186 Priceline.com, 424 Procter and Gamble (P&G), 147–148, 177, 180, 183, 358, 391–392 Prosafe, 333 Publicis Groupe, 177 Q Quaker Foods North America, 289 QUALCOMM, 309 Qualcomm Atheros, Inc., 285 Qualcomm Incorporated, 285 Quirky, 425–426 R Radiant Logistics, 220 RadioShack, 129 failure, 130–131 Ralcorp Holdings, 289 Ralph Lauren, 123 Redbox, 296 Regency Electronics, 362 Renault SA, 291 Research in Motion (RIM), 20 Reynolds American, 145 Rio Tinto Group, 239–240 Royal Jordanian, 67 RTI International Metals, Inc., 191 S SABMiller, 287, 296 Safeway, 110, 129 SAIC Motor Corp., 279–280, 298 SAIC-VW, 280 Sam’s Club, 121, 163 Samsung, 62, 123, 146, 178, 184 Apple, contrast, 126–127 Samsung Electronics, 215 Samsung Group, 215 Samsung Pay, response, 143 Sam’s Warehouse, 54 Sany Heavy Industry Col, Ltd, 177, 180 SAP, 97 Sara Lee Corporation, 193 SAS Institute Inc., 115 Company Index Scale-Tronix, 214 Scripps Networks Interactive, Inc., 211 Seagate Technology LLC, 283–284 Sears Optical, 345 Sementes Guerra, 254 Shanghai GM Co., 279–280 Shanghai-Hong Kong Stock Connection program, 330 Shuanghui International, 241 Shuttle by United, 116 Siemens, 386 Sikorsky Aircraft, 186, 291 Siwei, 213, 218 SkyTeam, 281 SkyTeam Alliance, 284 Song (Delta), 116 Sony Corporation, 7, 250 362–363 Sorrento Therapeutics, Inc., 286–287 Southwest Airlines Co., 116, 148, 220 Standard Charter, 400, 401 Staples, 325 Star, 66, 281 Star Alliance, 284 Starbucks, 11, 39, 115, 434 Stop and Shop, 255 Studio Entertainment, 184 Subway, 84, 291 Suddenlink, 212 SunPower Corporation, 296 Superdry, 84–85 SuperGroup PLC, 84, 85 Swift, 330 Synageva BioPharma Corp., 207 TE Connectivity, 223 Terra, 109 Tesco Motors, 43, 163, 241 Tesco PLC, 65 Tesla Motors, 287–288 Texas Instruments, 362 Textron, 178, 364 Textron Aviation, 364 Textron Finance, 364 Textron Specialized Vehicles, 364 3G Capital Partners LP, 182, 190 ThyssenKrupp, 330, 386 TIAA-CREF, 327 Tiffany & Co., 345 Time Warner, 26, 174 Time Warner Cable, 325 Tim Hortons Inc., 182 TITAL, 191 Titan (Apple), 288 TLC, 324 Tory Burch, 345 Touchstone Pictures, 173, 184 Toyota Motor Corporation, 371, 424 Lexus, 122–123, 245–246, 250, 257 Trader Joe’s, 110, 129 Traffic Brazil, 260 Travelocity, 143 Trian Fund Management L.P., 309, 326 TripAdvisor, 143 TVN, 211 Twitter, 128 Tyson Foods, 39 T Uber Technologies, 365–366 Under Armour, 123, 357 Unilever, 371 United Airlines, 67, 148 Shuttle by United, 116 United Parcel Service (UPS), 177, 183 FedEx, relationship, 148–149 United Technologies Corporation, 178, 186–187, 291 Universal Pictures, 174 US Airways, MetroJet, 116 TAG Heuer, 143 Google/Intel, partnering, 162, 277–278, 287 Tail-F, 211 Taiyo Pacific Partners, 330 TAM Airlines, 371 Tango, 212 Taobao, Target, 53–55, 91, 131, 425 Tata Advanced Systems, 291 Tata Consultancy Services, 97 U V Vanguard Group, 118 Verizon, 144, 296 Versace, 345 Viacom, 173 Vilmorin & Cie, 254 Virgin Group Ltd., 181 Vivendi, 309 W Walgreens, 371 Walmart, 3, 43, 54, 64–65, 90, 91, 120–122, 129, 131, 152, 158–159, 257, 355, 425 Walt Disney Company, 160, 173–174, 184, 250 Warby Parker, 346, 421 Warner Bros., 174 Weighing Apparatus Group, WelchAllyn, 213–214 Wells Fargo, 324 Wendy’s, 61 Wendy’s International, 434 Wheels Group Inc., 220 WH Group, 241–242 Whirlpool, 423, 434 Whole Food Markets, 109, 129 Wild Oats Marketplace, 110 Wipro, 97, 293 Wm Morrison Supermarkets, 163 Woolworth’s, 163 WorldCom, 317, 332 X Xiamoi, 126, 127 Y Yahoo, 144 Yanfeng Automotive Interiors, 280 Yanfeng Automotive Trim Systems Co., Ltd., 280 Yelp, 143 YRC Worldwide, 148 Z Zappos.com, 25 Zara, 58, 78 Zulily, Inc., 212 Zynga, 111 www.downloadslide.com SUBJECT INDEX A Above-average returns, I/O model, 14–16, 15f resource-based model, 16–18, 17f Accounting-based measures, 350 Acquisitions, 207–208, 255–256, 290 capabilities, learning/ development, 215 cross-border acquisitions, 211, 213 debt, excess, 219–220 diversification, increase, 214–215 effectiveness, 222–224 entry barriers, overcoming, 211–213 firms, competitive scope (reshaping), 215 horizontal acquisitions, 210 managerial focus, 221–222 market power, increase, 210–211 product development cost, 213–214 risk, reduction, 214 product speed to market, increase, 213–214 reasons, 208–215, 216f related acquisitions, 211 restructuring, 224–226 size, 222 strategies, usage, 214–215 synergy, achievement (inability), 220–221 target, evaluation (inadequacy), 218–219 usage, 431–433 vertical acquisitions, 210 Acquisition success achievement, problems, 216–222, 216f attributes, 217t debt, size (problems), 219–220 diversification, excess, 221 integration, difficulties, 217–218 manager focus, excess, 221–222 size, problem, 222 synergy, achievement (inability), 220–221 target evaluation, inadequacy, 218–219 Activist pension funds, reactive nature, 326 Activist shareholders, 309–310 engagement of shareholders, contrast, 330–331 Activities, sharing, 180–181 Actors, reputation, 158 Affiliation (relationship dimension), 113 Agency costs, governance mechanisms, 316–317 Agency problem example, 314–316 free cash flow, impact, 315 Agency relationships, 313–314 example, 313f Age structure (demographic segment), 46 Airline alliances, 284 Alliances airline alliances, 284 complementary strategic alliances, 284–286 dynamic alliance networks, 294–295 network types, 294–295 stable alliance network, 294 strategic alliances, 254–255, 279–286 Analyses Strategies Performance (A-S-P) processes, 26–27 Android Pay, 143, 144 Android system, 146 Antitrust regulation, 188–189 Arab Spring revolutions, 259 Assessing (external environment), 45 Assets, restructuring, 187 Attack, likelihood, 153–157 factors, 152 Autonomous strategic behavior, 426–427 Autonomy, 401–402 Average returns, Awareness, 151 B Balanced organizational controls, establishment, 403–405 Balanced scorecard, 404–405 formation, perspectives (integration), 404 Base customer, knowledge, 123 Biases, 83 Bidding wars, 219–220 Big pharma, 77, 89 Board of directors, 319–325 compensation, modification, 321 effectiveness, enhancement, 321–322 executive compensation, 322–323 members classification, 320t diversity, increase, 321 Brand, reputation (example), 158 Brazil, Russia, India, and China (BRIC) countries, 10, 250 Bureaucratic controls, formalization, 222 Businesses privatization, increase, 331 units, sharing (corporationwide emphasis), 351 Business-level cooperative strategy, 284–290 assessment, 290 competition-reducing strategy, 287–290 competition response strategy, 286–287 complementary strategic alliances, 284–286 implementation, 370–371 types, 285f uncertainty-reducing strategy, 287 Business-level strategy, 111, 365 cost leadership strategy, 118–122 customers, relationship, 112–116 differentiation strategy, 122–127 focus strategies, 127–129 functional structure, matches, 354–357 implementation, 111 integrated cost leadership/ differentiation strategy, 129–134 international business-level strategy, 243–246 international corporate-level strategy, 246–250 purpose, 116 descriptions, 112 types, 117–134, 117f usage, 175 Buyers, bargaining powers, 60, 124 C Capability (capabilities), 16, 84, 88 absence, 432 example, 88t managerial decisions, conditions, 82f Capacity, excess (creation), 61–62 Capital distribution decisions, 185 financial capital, importance, 397 human capital, development, 398–401 intellectual capital, management, 87 internal capital market allocation, 185–187 market, stakeholders, 23–24 requirements (entry barrier), 57 social capital, development, 398–401 Causal ambiguity, 91–92 Cause/effect relationships, 327 Celler-Kefauver Antimerger Act (1950), 188 Chief Executive Officers (CEOs) changes, problems, 394 compensation packages, examination, 324–325 decision making, 388 dictatorial CEOs, 329 duality, 321, 390 dual structure, 345–346 mission, 19 pay, size (factors), 323 risk-averse CEOs, 397 succession effects, 393f example, 395 top management team power, relationship, 390–391 China corporate governance, 331–332 economy, growth, 48 engagement of shareholders, activist shareholders (contrast), 330–331 Collaborational advantage, 278 Combination structure hybrid form, usage, 368f usage, 367–369 Commodity products, 62 I-23 www.downloadslide.com I-24 Competencies, 96, 98, 370 Competition attack, likelihood, 153–157 competition-reducing strategy, 287, 289–290 direction, example, 150 existence, example, 143–144 first-mover benefits, 153–155 flowchart, 145f global competition, impact, 111 growth, impact, 237–238 impact, 161 model, forces, 55f multimarket competition, 144 multipoint competition, 182 organizational size, 155–156 quality, 156–157 response likelihood, 157–159 strategy, 286–287 Competitive action, 152 initiation, 155–156 type, 157 Competitive advantage, 4, 117 causal ambiguity, 91–92 creation, 78–79 erosion, 160f existence, 90 exploitation, 349 sources, development, 129 Competitive aggressiveness, 402 Competitive behavior, 144 drivers, 150–152 Competitive blind spots, creation, 147 Competitive dynamics, 144, 159–164, 243 fast-cycle markets, 161–162 flowchart, 145f slow-cycle markets, 159–160 standard-cycle markets, 162–164 Competitive espionage, 65 Competitive form, usage, 361–365, 363f Competitive intelligence, collection, 66 Competitive intelligence practices, legality, 67 Competitive landscape, 7–14 characteristics, Competitiveness, emphasis, 364 Competitive response, 152 Competitive risks cooperative strategies, usage, 295–297 management, 295f Competitive rivalry, 144, 152–153 model, 146–147, 146f quality, impact, 157 strategic action, 152–153 tactical action, 152–153 Subject Index Competitive scope, 117 Competitive spying, 65 Competitor analysis, 42, 65–67, 147–149 components, 66f framework, 149f market commonality, 147–148 performing, 149 resource similarity, 148–149 Competitors, 144 differentiation, absence, 62 environment, 41–42 exit barriers, high level, 62–63 fixed costs, high level, 61–62 industry growth, slowness, 61 intelligence, 65 number/balance, 61 rivalry, 120, 124 intensity, 60–63 second mover effectiveness, determination, 154 storage costs, high level, 61–62 strategic stakes, high level, 62 switching costs, low level, 62 Complementary strategic alliances, 284–286 horizontal complementary strategic alliance, 285–286 usage, 286 vertical complementary strategic alliance, 285 Complementors, 66 Controls, necessity, 403 Cooperative form, 358–360 Cooperative multidivisional structure, success, 359–360 Cooperative strategy, 278 business-level cooperative strategy, 284–290 competitive risks, 295–297 management, 295f corporate-level cooperative strategy, 290–292 formation, 278 international cooperative strategy, 292–293 management, 297–298 network cooperative strategy, 293–295 network structures, matches, 369–370 strategic alliances, primary type, 279–284 usage, 295–297, 430–431 Core competence imitation, ability, 79 obsolescence rate, environmental changes (impact), 79 substitutes, availability, 79 Core competencies, 16, 77–78, 84, 89 basis, 118 building, 89–96 corporate-level core competencies, 181 creation, 78–79 determination, 115–116 exploitation/maintenance, 397–398 managerial decisions, conditions, 82f strengths/weaknesses, 96, 98 sustainable competitive advantage, criteria, 89–92 transfer, 181–182 value chain analysis, 93–96 Corporate control, market, 194, 325–328 Corporate entrepreneurship, 419 Corporate governance, 310 board of directors, 319–325 China, 331–332 corporate control, market, 325–328 ethical behavior, 332–333 Germany, 328–331 international corporate governance, 328–332 Japan, 328–331 mechanisms, 332–333 ownership, concentration, 317–319 ownership/managerial control, separation, 312–317 Corporate-level cooperative strategy, 290–292 assessment, 292 diversifying strategic alliance, 291 franchising, 291–292 implementation, 371–372 synergistic strategic alliance, 291 types, 290f Corporate-level core competencies, 181 transfer, 180 Corporate-level strategy, 174, 365 multidivisional structure, matches, 357–365 usage, 174 Corporate raiders, 309–310 Corporate relatedness, 179–184, 180f core competencies, transfer, 181–182 Corporate social responsibility, 53 Corporate tax laws, impact, 189 Corporate watchdogs, criticisms, 390 Corrupt markets, 256 Cost-based synergies, 210 Cost disadvantages independent of scale (entry barrier), 58 Cost leadership, 117 buyers/customers, bargaining power, 120 competitors, rivalry, 120 differentiation, integration, 117, 129–134 entrants, potential, 121 product substitutes, 121 strategy, 118–122 competitive risks, 121–122 implementation, functional structure (usage), 354–355, 355f value-creating activities, examples (association), 119f suppliers, bargaining power, 120–121 Cost leaders, support activity examination, 119 Costly-to-imitate capabilities, 91–92 Cost reduction, 133 Counterfeiting, 127 Creative destruction, 419 Creativity, outcome, 424 Cross-border acquisitions, 211, 213, 255 strategic rationales, 212–213 Cross-border strategic alliance, 292, 293 Cross-functional product development teams, 428 usage, 355–356 Cross-functional teams, importance, 429–430 Culture, impact, 422 Currencies, value (differences/ fluctuations), 262 Current strategy, 65 Customer relationship management (CRM), 132 Customers, 404 attraction, loss, 54 bargaining power, 125 base customer, knowledge, 123 business-level strategies, relationship, 112–116 needs (satisfaction), core competencies (determination), 115–116 needs firms, 127–128 relationships, management, 112–113 satisfaction determination, 114–115 increase, 133 segmentation, basics, 114t service demands, 115 determination, 114 value creation, 81, 95 www.downloadslide.com I-25 Subject Index D Data analytics, 77–78 Debt, excess, 219–220 Decision making challenge/difficulty, 82 responsibility, decentralization, 356 Demographic segment, 45–48 age structure, 46 ethnic mix, 47 geographic distribution, 46–47 income distribution, 48 population size, 45–46 Deregulation, impact, 331 Differentiation, 117 absence, 62 cost leadership, integration, 117, 129–134 focused differentiation, 117 reasonableness, 357 strategy, 122–127 competitive risks, 125 implementation, functional structure (usage), 355–357, 356f value-creating activities, examples (association), 124f Diffuse ownership, impact, 318 Disruptive technologies, 10–12 Distributed strategic network, example, 372f Distribution channels, 182–193 access, entry barrier, 58 Diversification antitrust regulation, 188–189 corporate tax laws, impact, 189 example, 190–191 excess, 221 firm performance, relationship (summary model), 195f incentives, 188–192 increase, 214–215 levels, increase, 194 low performance, 189–191 managerial motives, 193–195 managerial preference, 314 managers, relationship, 315f overdiversification, 221 performance, curvilinear relationship, 189f related constrained diversification, 177, 179–180 related linked diversification, 179–180 resources, relationship, 192–193 shareholder optimal level, 315 risk, 315f tax effects, 188 tax laws, 188–189 unrelated diversification, 185–187 value-creating diversification, 179 value-neutral diversification, 179t value-reducing diversification, 179t Diversification levels, 175–178, 176f high levels, 177–178 low levels, 176–177 moderate levels, 177–178 Diversification reasons, 178–179 list, 179t Diversification strategy disadvantage, 361 dominant-business diversification strategy, 177 international diversification strategy, 262 multinational diversification strategy, 191 pursuit, 193 related constrained diversification strategy, 177 single-business diversification strategy, 176 unrelated diversification strategy, 178 usage, example, 173–174 Diversification types, 176f Diversifying strategic alliance, 291 Divestments, 221 Divisional competencies, sharing, 358 Dodd-Frank Wall Street Reform and Consumer Protection Act, 317 Dominant-business diversification strategy, 177 Downscoping, 224–225 Downsizing, 224 Due diligence efforts, 218 processes, 223 Dynamic alliance networks, 294–295 E E-commerce sales, predictions, 158 Economic environment, 48 Economic risks, 258–259, 261–262 Economic segment, 48–49 Economies of expertise, 84 Economies of learning, 242, 262 Economies of scale, 242, 262 entry barrier, 57 facing, 211 Economies of scope, 180, 187 creation, 184 Ecosystem, development failure (example), 20–21 Emerging market firms, competition, 131 Employee buyouts (EBOs), 225 Employees, incentivization, 11 Engagement of shareholders, activist shareholders (contrast), 330–331 Entrants, potential, 125 Entrepreneurial actions, taking, 433 Entrepreneurial fervor/innovation, example, 417–418 Entrepreneurial mind-set, 401–402, 421 Entrepreneurial opportunities, 419 Entrepreneurial ventures, strategic flexibility, 433 Entrepreneurs, 420–421 Entrepreneurship, 419 corporate entrepreneurship, 419 dimensions, 418–419 international entrepreneurship, 421–422 rates (differences), culture (impact), 422 strategic entrepreneurship, 419 Entry barriers, 56–58 facing, 211 overcoming, 211–213 Entry modes characteristics, 252f dynamics, 257–258 Environmental trends (international strategy), 250–252 foreignness, liability, 250 regionalization, 251–252 Equity strategic alliance, 280 Ethical behavior, 332–333 Ethical considerations, 67 Ethical organizational culture, development/support (strategic leader actions), 403 Ethical practices, emphasis, 402–403 Ethnic mix (demographic segment), 47 European Commission (EC), health care strategy development, 50 European Union (EU), 50, 251 Events, forecasting, 45 Executive compensation, 322–323 effectiveness, 323–325 Exit barriers, high level, 62–63 Expected retaliation, 59 Exporting, 253 External environment, 41f analysis, 43, 110–111 assessing, 45 forecasting, 44–45 monitoring, 44 scanning, 43–44 External investors, impact, 185 External managerial labor market, 392 External social capital, impact, 399 F Fast-cycle markets, 147, 161–162, 283–284 Financial accountability, increase (example), 362–363 Financial capital, importance, 397 Financial economies, 185 Financial resources access, 48–49 allocations, improvement, 185 Firms acquisition strategies, usage, 215 assets, involvement, 81 capabilities example, 88t exploitation, 264 learning/development, 215 competitive scope, reshaping, 215 downscoping/downsizing strategies, usage, 225 external environment, 147 financial performance, 146 industry entry, 56 internal capital allocation, pursuit, 186 Internet opportunities/threats, 51–52 learning capabilities, enhancement, 215 market position, 146 organic differentiation, 109–110 overdiversification, 221 performance ability, impact, 221 diversification, relationship (summary model), 195f enhancement, strategies, 205–206 top management teams, relationship, 389–390 resource portfolio, management effectiveness, 397–401 restructuring strategies, pursuit, 186 risk reduction, synergy (relationship), 191–192 strategic alliances, development (reasons), 281–284 synergy value overestimation, 219 value chain activities execution, evaluation, 95–96 value creation, 81 www.downloadslide.com I-26 First mover, 153 benefits, 153–155 Five forces model, 14, 55–56 analysis, 63 Fixed costs, high level, 61–62 Flexibility, requirement, 131 Flexible manufacturing systems (FMS), 131–132 Focused cost leadership, 117 strategy, 128 Focused differentiation, 117 strategy, 128–129 Focus strategies, 127–129 competitive risks, 129 failure, example, 130–131 Forecasting (external environment), 44–45 Foreign direct investment, attraction, 259 Foreignness, liability, 10, 250 Franchising, 291–292 Free cash flow, agency problem source, 315 Free-market economies, governments (impact), 289–290 Functional structure, 353 business-level strategies, matches, 354–357 usage, 354–357 Future cash flows, uncertainty, 191 Future objectives, 65 G General environment, 41–42 demographic segment, 45–48 economic segment, 48–49 elements, 42t global segment, 52–53 political/legal segment, 49–50 segments, 42t, 45–55 sociocultural segment, 50–51 sustainable physical environment segment, 53–55 technological segment, 51–52 Geographic distribution (demographic segment), 46–47 Germany corporate governance, 328–331 engagement of shareholders, activist shareholders (contrast), 330–331 Global competition impact, 111 realities, 420 Global economy, 8–10 Global inefficiencies, creation (inability), 366 Subject Index Globalization, 9–10 Global matrix design, usage, 368 Global mind-set, 80 Global segment, 52–53 Global strategy, 247–249 example, 248 implementation, worldwide product divisional structure (usage), 366–367, 367f Golden parachutes, 326, 327 Goods demand, potential, 241 differentiation, 123 Governance corporate governance, 310 international corporate governance, 328–332 mechanisms, 316–317, 332–333 systems, change, 332 Government policy (entry barrier), 58 Greed, impact, 403 Greenfield venture, 256–257 Greenmail, 309 Green strategies, 316 Growth, 404 Guanxi, 53 H Health care strategy, European Commission development, 50 Heterogeneous top management team, 389 High-risk activity, 213 High technology markets, dynamics (example), 143–144 High-velocity environments, impact, 161 Hispanic market, 47 Horizontal acquisitions, 181, 210 Horizontal alliance, usage, 370 Horizontal complementary strategic alliance, 285–286, 286f Horizontal organizational structures, 428 Host communities, representation, 24 Hostile takeovers, 208 cost, 331 defense strategies, 327t Hubris, impact, 403, 432 Human capital development, 398–401 investments, success, 399 loss, 226, 399 resource, quality, 297 Hypercompetition, I Icon, following, 383–384 Imitation, 420 cost, 17–18 example, 126–127 risk, 122 Inbound logistics, 118–119 Income distribution (demographic segment), 48 Incremental innovation, 423–426 Induced strategic behavior, 427 Industry, 55 analyses, interpretation, 63 environment, 41–42 grouping, 55f growth, slowness, 61 scandal, effect (example), 260–261 Industry environment analysis, 55–63 buyers, bargaining power, 60 competitors, rivalry (intensity), 60–63 new entrants, threat, 56–59 substitute products, threat, 60 suppliers, bargaining power, 59–60 Industry-wide differentiation strategy, 128–129 Inertia, impact, 432 Informal economy, 53 Information age, 13 Information flow, importance, 132 Information networks, 132 Information technology (IT), 13 Innovation, 420 absence, explanation (example), 432 acquisitions, usage, 431–433 cooperative strategies, usage, 430–431 core competence, 89 efforts, strategic dimension, 418–419 emphasis, 383 enhancement, 263 facilitation, 429 incremental innovation, 423–426 internal innovation, 422–427 novel innovation, 423–426 perpetual innovation, 12 portfolio, analysis, 434–435 production, 277–278 promotion, 26 quirkiness, 425 usage, 121–122 Innovativeness, 401–402 Innovative products (introduction), time (reduction), 133 Input/output (I/O) model, 14–16, 15f Insiders (active top-level managers), 320 Institutional investors, 23 Institutional owners, influence (increase), 318–319 Intangible resources, 84, 87–88 categories, 86t flexibility, 193 Integrated cost leadership/ differentiation strategy, 117, 129, 134 competitive risks, 133–134 flexible manufacturing systems (FMS), 131–132 implementation, functional structure (usage), 357 information networks, 132 total quality management (TQM) systems, 133–134 Integration difficulties, 217–218 facilitation, 429 Intellectual capital, management, 87 Intellectual property, protection, 259 Interfirm rivalry, 146–147 Internal analysis components, 80f context, 79–80 Internal business processes, 404 Internal capital allocation strategy, pursuit, 186 Internal capital market allocation, 185–187 efficiency, 361–362 Internal corporate venturing, 431 model, 426f Internal innovation, 422–427 efforts, functions (integration), 427–428 implementation, 427–430 usage, 429–430, 429f Internal managerial labor market, 392 Internal organization analysis, 79–83 challenge, 81–83 internal analysis, context, 79–80 value creation, 81 International business-level strategy, 243–246 International cooperative strategy, 292–293 implementation, 372 International corporate governance, 328–332 www.downloadslide.com I-27 Subject Index International corporate-level strategy, 246–250 global strategy, 247–249 mapping, 246f multidomestic strategy, 246–247 transnational strategy, 249–250 International diversification, returns (relationship), 262–263 International diversification strategy, 262–263 International entrepreneurship, 421–422 engagement, 421 International entry mode acquisitions, 255–256 dynamics, 257–258 exporting, 253 licensing, 253–254 modes/characteristics, 252f new wholly owned subsidiary, 256–257 selection, 252–258 strategic alliances, 254–255 International environment economic risks, 259, 261–262 political risks, 258–259 risks, 258–262 list, 258f International expansion example, 237–238 limits, 264–265 International geographic diversification, 263 International markets, access, 79–80 International opportunities identification, 239–243 International strategy, 239, 243–250 benefits, 241–243 challenge, 264–265 economies of scale/learning, 242 environmental trends, 250–252 implementation, 264 location advantages, 243 management, complexity, 264 market size, increase, 241–242 opportunities/outcomes, 239f strategic competitiveness outcomes, 262–263 usages, incentives, 239–241 worldwide structure, matches, 365–369 Internet, effects, 52 Invention, 420 Investment capital, 430 J Japan corporate governance, 328–331 engagement of shareholders, activist shareholders (contrast), 330–331 working age population, reduction, 46 Joint venture, 279 Judgment, exercise, 83 Junk bonds, 219 K Keiretsu, 329 Knowledge, 193 intensity, increase, 13–14 tacit knowledge, learning, 280 transfer, 421 L Large-block shareholders, 317 positions, control, 318 Late mover, 155 Lead director role, creation, 321 Leadership cost leadership, 117 focused cost leadership, 117 style, usage, 386–387 supportive leadership, requirement, 424 Lean production system, 371 Learning, 404 Leveraged buyouts (LBOs), 225 Licensing, 253–254 Lifestyle changes, 51 Local brands, 249 Location, advantages, 243 Long-term incentive plans, 322 Long-term investments, expense, 221 Long-term strategic direction, parts, 396–397 M Management buyouts (MBOs), 225 Managers control, ownership (separation), 312–317 decisions, factors, 388f defense tactics, 326–328 employment risk, 314 opportunism, 314 succession, 391–396 top-level managers, role, 387–391 Manufacturer costs, information, 60 Market attack, likelihood, 153–157 change, example, 163 characteristics, differences (agreement), 148 commonality, 147–148, 151 corrupt markets, 256 dependence, 158–159 entry barriers, 56 external managerial labor market, 392 fast-cycle markets, 161–162, 283–284 foothold, 125 growth, 61 internal capital market allocation, 185–187 internal managerial labor market, 392 niches, 59 power, 182–184 increase, 210–211 response, likelihood, 157–159 segmentation, 114 size, increase, 241–242 slow-cycle markets, 159–160, 283 standard-cycle markets, 162–164, 284 Marketing space, usage, 90–91 Matrix organization, evolution, 359 Mergers, 207–208 disallowance, 58 example, 209 Mergers and acquisitions (M&A), 145, 205–206 differences, 207–208 strategies, popularity, 206–208 M-form (multidivisional) structure, 353–354 Mind-set entrepreneurial mind-set, 401–402, 421 global mind-set, 80 Mission, 18, 19 Monitoring (external environment), 44 Motivation, 151 Movers first mover, 153 late mover, 155 second mover, 154 Multidivisional (M-form) structure, 353–354 competitive form, usage, 361–365, 363f cooperative form, usage, 358–360, 359f corporate-level strategies, matches, 357–365 strategic business unit (SBU) form, usage, 360–361, 360f variations, 358f Multidomestic strategy, 246–247 implementation, worldwide geographic area structure (usage), 365–366, 366f Multi-industry company, example, 363–364 Multimarket competition, 144 Multinational corporations (MNCs), 8, 111 Multinational diversification strategy, 191 Multinational enterprises (MNEs), 251 Multipoint competition, 182 Mutual and exchange-traded fund (ETF), low-cost strategy (example), 118 Mutual forbearance, 289 N National advantage, determinants, 243–245 Network cooperative strategy, 293–295 complexity, demonstration, 293–294 Network structures, cooperative strategies (matches), 369–370 New entrants entry barriers, 56–58 expected retaliation, 59 threat, 56–59 New products development cost, 213–214 risk reduction, comparison, 214 speed to market, increase, 213–214 New wholly owned subsidiary, 256–257 Nonequity strategic alliance, 280, 297 Nonsubstitutable capabilities, 92 North American Free Trade Agreement (NAFTA), 251, 253 Novel innovation, 423–426 O Offshoring, 96 Online news publishers, partnership, 281 Operational economies, 180 Operational relatedness, 179, 180f activities, sharing, 180–181 corporate relatedness, combination, 184 Operations (integration), pressure (increase), 240–241 Opportunity, 43 Opportunity-maximization approach, 298 Organic differentiation, 109–110 www.downloadslide.com I-28 Organizational controls, 347, 350–351 balanced organizational controls, establishment, 403–405 Organizational culture, 25 change, 402 emergence, 91 sustaining, 401–402 Organizational processes, 217 Organizational size, 155–156 factor, complexity layer, 156 Organizational stakeholders, 24 Organizational structures, 347–350 evolutionary patterns, 351–370 example, 362–363 Organization of American States (OAS), 251 Outbound logistics, 118–119 Outcomes, 404 forecasting, 45 Out-focus, 129 Outsiders, 320 Outsourcing, 94, 96 arrangements, 281 example, 97 risk, 297 strategic outsourcing, 370 Ownership concentration, 317–319 diffuse ownership, impact, 318 managerial control, separation, 312–317 P Partner trustworthiness, perception (falsity), 295, 297 Patent laws, impact, 160 Performance, expectations, 21 Perpetual innovation, 12 Personal computer (PC), replacement, 192 Pharmaceutical companies, status, 77–78 Poison pills, 194, 326–327 Political/legal segment, 49–50 Political risks, 258–259 Population distributions, patterns, 47 size (demographic segment), 45–46 Power brands, 249 Principals, psychological ownership (development), 328 Private synergy, 220 Proactiveness, 402 Product development cross-functional product development teams, 428 Subject Index risk reduction, comparison, 214 Product differentiation entry barrier, 57 example, 126–127 Production factors, 244–245 Products champion, 426 development, cost, 213–214 differentiation, 211 diversification, agency problem example, 314–316 innovation, 122 development, 154 innovative products (introduction), time (reduction), 133 market, stakeholders, 24 production, collaboration (example), 277–278 quality dimensions, 156t R&D, emphasis, 354, 356 speed to market, increase, 213–214 substitutes, 125 Profitability, 62 Profit-maximizing behaviors, 14 Proprietary content, Proxy voting, SEC requirements, 309 Pyramid scheme, 310 Q Quality, 156–157 impact, 157 R Race to learn, strategy, 370 Rare capabilities, 91 Reach (relationship dimension), 113 Regionalization, 250–252 Regulation Fair Disclosure (Reg-FD), 289–290 Regulations, formation, 49 Regulatory requirements, impact, 160 Related acquisitions, 211 Related constrained diversification, 179–184 strategy, 177 implementation, structures (characteristics), 364t Related constrained strategy (implementation), multidivisional structure cooperative form (usage), 358–360, 359f Related linked diversification strategy, 178–184 implementation, structures (characteristics), 364t Related linked strategy (implementation), multidivisional structure SBU form (usage), 360–361, 360f Related outsiders, 320 Relational advantage, 278 Relationships management, 112 reach/richness/affiliation, 113 Reputation, 158 Reputational resources, 87 Research and development (R&D), 12, 115, 154, 423 investments, risks, 263 product R&D, emphasis, 354, 356 Resource, 16, 84–89 allocations, 83 focus, example, 362–363 dissimilarity, 151–152 diversification, relationship, 192–193 imitation cost, 17–18 intangible resources, 84, 87–88 managerial decisions, conditions, 82f non-substitutability, 18 portfolio, management (effectiveness), 397–401 resource-based model, 16–18, 17f similarity, 148–149 tangible resources, 84, 86 value, 17–18 Response, likelihood, 157–159 actor, reputation, 158 competitive action, type, 157 market dependence, 158–159 Restructuring, 224–226, 402 downscoping, 224–225 downsizing, 224 outcomes, 225–226, 226f strategies, pursuit, 186 Retailers, competition, 64 Return on assets (ROA), 350 Return on investment (ROI), 221, 350 Returns, international diversification (relationship), 262–263 Revenue-based synergies, 210 Richness (relationship dimension), 113 Risk, hedge, 287 Risk averse managers, 192 Risk taking, 402 excess, Rivalry, degree, 120 S Sarbanes-Oxley Act (SOX) implementation, 317 Scale, cost disadvantages (independence), 58 Scandal, effect (example), 260–261 Scanning, 43–44 opportunities, Internet (usage), 44 Second mover, 154 Services demand, potential, 241 differentiation, 123 quality dimensions, 156t Shareholders, 22 activism, 309–310 large-block shareholders, 317 rights, conversion, 327 risk, 315 riskier strategies, preference, 316 Short-term profits, generation, 221 Short-term returns, achievement, 192 Silent giant, 319 Simple structure, 352–353 Single-business diversification strategy, 176 Slack, 154 Slow-cycle markets, 147, 159–160, 282–283 Social capital creation, 402 development, 398–401 loss, 401 Social complexity, 92 Sociocultural segment, 50–51 Software-defined networking (SDN) space, 211 Stable alliance network, 294 Stakeholders, 19–24 capital market stakeholders, 23–24 classifications, 21–24 ecosystem, development (failure), 20–21 groups, 22f organizational stakeholders, 24 product market stakeholders, 24 Standard-cycle markets, 147, 162–164, 284 State-owned enterprises, privatization, 187 Steward, CEO action, 391 Storage costs, high level, 61–62 Strategic action, 152 content, focus, 404 www.downloadslide.com I-29 Subject Index Strategic alliances, 254–255, 279 complementary strategic alliances, 284–286 cooperative strategy, primary type, 279–284 cross-border strategic alliance, 292 design, 290 development, reasons, 281–284 diversifying strategic alliance, 291 equity strategic alliance, 280 example, 288 firms development, reasons, 281–284 formation, reasons, 281–282 nonequity strategic alliance, 280 reasons, market type, 282f synergistic strategic alliance, 291 types, 279–281 Strategic behavior autonomous strategic behavior, 426–427 induced strategic behavior, 427 Strategic business unit (SBU) form, usage, 360–361, 360f Strategic center firm, 294, 369 Strategic change, 384 top management teams, relationship, 389–390 Strategic competitiveness, achievement, 43 innovation, enhancement, 263 international diversification, returns (contrast), 262–263 outcomes, 262–263 Strategic decisions, 96, 98 Strategic direction, determination, 396–397 Strategic entrepreneurship, 418 usage, 433–435 Strategic flexibility, 13–14 Strategic groups, 63–65 implications, 65 notion, usefulness, 63 Strategic leaders, 25–26, 83 identification, 25 impact, 385–386 responsibility, 24 work, 25–26 Strategic leadership, 384, 385f actions, 396–405 exercise, 396f failure, example, 400 managerial succession, 391–396 style, 384–387 top-level managers, role, 387–391 Strategic management process, 5f, 6, 26–27, 385f Strategic network distributed strategic network, example, 372f example, 369f Strategic perspective, usage, 433 Strategic response, 152 Strategic stakes, high level, 62 Strategic success, brands (strengthening), 85 Strategy, 4, CEO succession, effects, 393f evolutionary patterns, 351–370 growth pattern, 352f international strategy, worldwide structure (matches), 365–369 structure, relationships, 351 top management team composition, effects, 393f Strengths, Weaknesses, Opportunities, and Threats (SWOT) analyses, 26 Structural flexibility, 347 Structural stability, 347 Structure characteristics, 364t combination structure, usage, 367–369 functional structure, 353 growth pattern, 352f multidivisional (M-form) structure, 353–354 simple structure, 352–353 strategy, relationships, 351 worldwide structure, international strategies (matches), 365–369 Structuring, leveraged buyouts (impact), 225 Substitute products, threat, 60 Success levels (failure), cooperative strategies (usage example), 296 preparation, 83 Suppliers bargaining power, 59–60, 125 dependencies, creation, 121 Supply chains, management, 132 Support functions, 94 performing, failure, 133 usage, 95f Supportive leadership, requirements, 424 Sustainable advantage (creation), temporary advantages (development), 162f Sustainable competitive advantage costly-to-imitate capabilities, 91–92 criteria, 89–92, 90t combinations, outcomes, 93t nonsubstitutable capabilities, 92 rare capabilities, 91 valuable capabilities, 90–91 Sustainable physical environment segment, 53–55 Sustained competitive advantage, erosion, 160f Switching costs entry barrier, 58 low level, 62 Synergistic strategic alliance, 291 Synergy, 191 achievement, inability, 220–221 cost-based synergies, 210 creation, 371–372 firm risk reduction, relationship, 191–192 private synergy, 220 revenue-based synergies, 210 value, firm overestimation, 219 T Tacit collusion, 289 Tacit knowledge, learning, 280 Tactical action, 152 Tactical response, 152 Takeovers, 207–208 hostile takeover defense strategies, 327t Tangible assets, restructuring, 187 Tangible production assets, 86 Tangible resources, 84, 86 categories, 86t impact, 192–193 Target, breadth, 128 Tax laws (diversification), 188–189 Tax Reform Act (1986), 188–189 Team members, frames of reference, 428 Technological segment, 51–52 Technology, 370 See also Disruptive technologies changes, 10–14 diffusion, 10–12 innovations, earnings per share, 11 Technology-based strategic focus, 161 Threat, 43, 51–52 Top-level managers compensation, 323 discipline, 325 information gathering, 221–222 role, 387–391 Top management positions, changes (importance), 394 Top management teams, 387–391 characteristics, 389 composition, effects, 393f firm performance, relationship, 389–390 heterogeneous top management team, 389 power, CEO (relationship), 390–391 strategic change, relationship, 389–390 Total quality management (TQM) systems, 133 Trade-off decisions, 23 Transaction costs, 220–221 Transformational leadership, consideration, 387 Transnational strategy, 249–250 implementation, combination structure hybrid form, usage, 368f usage, 367–369 Trends, assessment, 45 Trust, psychological state, 298 U Uncertainty, hedge, 287 Uncertainty-reducing strategy, 287 Unique historical conditions, 91 United States, population (shift), 46–47 Unrelated diversification, 185–187 assets, restructuring, 187 internal capital market allocation, 185–187 Unrelated diversification strategy, 178 implementation multidivisional structure, competitive form (usage), 361–365, 363f structures, characteristics, 364t usage, 187 V Valuable capabilities, 90–91 Value addition, diversification strategy (usage), 173–174 measurement, 81 Value chain activities, 93–94 usage, 94f analysis, 93–96, 123–124 model, 93f Value-chain activities, performing (failure), 133 Value-creating diversification, 179–184, 179t www.downloadslide.com I-30 corporate relatedness, 184 core competencies, transfer, 181–182 market power, 182–184 operational relatedness, 184 activities, sharing, 180–181 strategies, operational/ corporate relatedness, 180f Value creation, 81 activity, 95 examples, cost leadership strategy (association), 119f diversification, impact, 178 internal innovation, usage, 429–430, 429f Subject Index strategic entrepreneurship, usage, 433–435 support functions, usage, 95f value chain activities, usage, 94f Value-neutral diversification, 179t diversification incentives, 188–192 incentives, 188–193 resources, 188–193 diversification, relationship, 192–193 Value-reducing diversification, 179t diversification, managerial motives, 193–195 Vertical acquisitions, 210 Vertical complementary strategic alliance, 285, 286f, 370, 371 Vertical integration, 183 reduction, 183–184 Vietnam, Indonesia, South Africa, Turkey, and Argentina (VISTA) countries, 10 Vision, 18–19 W Wealth distribution, 48 Whole-firm buyouts, 225 Whole-firm LBOs, 226 Wholly owned subsidiaries, impact, 256 Workforce changes, 51 Worldwide geographic area structure, usage, 365–366, 366f Worldwide product divisional structure, usage, 366–367, 367f Worldwide structure, international strategies (matches), 365–369 www.downloadslide.com www.downloadslide.com www.downloadslide.com Want to turn C’s into A’s? Obviously, right? But the right way to go about it isn’t always so obvious Go digital to get the grades MindTap’s customizable study tools and eTextbook give you everything you need all in one place Engage with your course content, enjoy the flexibility of studying anytime and anywhere, stay connected to assignment due dates and instructor notifications with the MindTap Mobile app and most of all…EARN BETTER GRADES TO GET STARTED VISIT WWW.CENGAGE.COM/STUDENTS/MINDTAP ...www.downloadslide.com Strategic Management: Competitiveness & Globalization: Concepts and Cases, 12e © 2017, 2015 Cengage Learning® Michael A Hitt, R Duane Ireland, and Robert E Hoskisson ALL RIGHTS... www.downloadslide.com Strategic Management and Strategic Competitiveness 1-1 Define strategic competitiveness, strategy, competitive advantage, above-average returns, and the strategic management process... Authors xx Part 1: Strategic Management Inputs 1: Strategic Management and Strategic Competitiveness Opening Case: Alibaba: An Online Colossus in China Goes Global 1-1 The Competitive Landscape 1-1a