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Giáo trình Quản trị Chiến lược Strategic management text and cases 7th by dess lumpkin Giáo trình Quản trị Chiến lược Strategic management text and cases 7th by dess lumpkin Giáo trình Quản trị Chiến lược Strategic management text and cases 7th by dess lumpkin Giáo trình Quản trị Chiến lược Strategic management text and cases 7th by dess lumpkin Giáo trình Quản trị Chiến lược Strategic management text and cases 7th by dess lumpkin Giáo trình Quản trị Chiến lược Strategic management text and cases 7th by dess lumpkin SEVENTH EDITION strategic management Gregory G Dess University of Texas at Dallas G T Lumpkin Syracuse University Alan B Eisner Pace University Gerry McNamara Michigan State University text and cases STRATEGIC MANAGEMENT: TEXT AND CASES, SEVENTH EDITION Published by McGraw-Hill Education, Penn Plaza, New York, NY 10121 Copyright © 2014 by McGraw-Hill Education All rights reserved Printed in the United States of America Previous editions © 2012, 2010, and 2008 No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning Some ancillaries, including electronic and print components, may not be available to customers outside the United States This book is printed on acid-free paper DOW/DOW ISBN 978-0-07-786252-7 MHID 0-07-786252-X Senior Vice President, Products & Markets: Kurt L Strand Vice President, Content Production & Technology Services: Kimberly Meriwether David Managing Director: Paul Ducham Executive Brand Manager: Michael Ablassmeir Executive Director of Development: Ann Torbert Development Editor II: Laura Griffin Editorial Coordinator: Claire Wood Marketing Manager: Elizabeth Trepkowski Lead Project Manager: Harvey Yep Senior Buyer: Michael R McCormick Design: Matt Diamond Cover Image: Getty Images Senior Content Licensing Specialist: Jeremy Cheshareck Senior Media Project Manager: Susan Lombardi Typeface: 10/12 Times Roman Compositor: Laserwords Private Limited Printer: R R Donnelley Photo Credits: page C180: © Niels Poulsen DK / Alamy (left) and © epa european press photo agency b.v / Alamy (right) All credits appearing on page or at the end of the book are considered to be an extension of the copyright page Library of Congress Cataloging-in-Publication Data Dess, Gregory G Strategic management : text and cases / Gregory G Dess, G.T Lumpkin, Alan B Eisner, Gerry McNamara.—Seventh edition pages cm Includes bibliographical references and index ISBN 978-0-07-786252-7 (alk paper)—ISBN 0-07-786252-X (alk paper) Strategic planning I Lumpkin, G T II Eisner, Alan B III Title HD30.28.D4743 2014 658.4’012—dc23 2013029306 The Internet addresses listed in the text were accurate at the time of publication The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites DEDICATION To my family, Margie and Taylor; my parents, Bill and Mary Dess; and Walter Descovich –Greg dedication To my lovely wife, Vicki, and my students and colleagues –Tom To my family, Helaine, Rachel, and Jacob –Alan To my wonderful wife, Gaelen; my children, Megan and AJ; and my parents, Gene and Jane –Gerry iii ABOUT THE AUTHORS about the authors Gregory G Dess G T (Tom) Lumpkin is the Andrew R Cecil Endowed Chair in Management at the University of Texas at Dallas His primary research interests are in strategic management, organization–environment relationships, and knowledge management He has published numerous articles on these subjects in both academic and practitioneroriented journals He also serves on the editorial boards of a wide range of practitioner-oriented and academic journals In August 2000, he was inducted into the Academy of Management Journal’s Hall of Fame as one of its charter members Professor Dess has conducted executive programs in the United States, Europe, Africa, Hong Kong, and Australia During 1994 he was a Fulbright Scholar in Oporto, Portugal In 2009, he received an honorary doctorate from the University of Bern (Switzerland) He received his PhD in Business Administration from the University of Washington (Seattle) and a BIE degree from Georgia Tech is the Chris J Witting Chair and Professor of Entrepreneurship at Syracuse University in New York Prior to joining the faculty at Syracuse, Tom was the Kent Hance Regents Endowed Chair and Professor of Entrepreneurship at Texas Tech University His research interests include entrepreneurial orientation, opportunity recognition, strategy-making processes, social entrepreneurship, and innovative forms of organizing work He has published numerous research articles in journals such as Strategic Management Journal, Academy of Management Journal, Academy of Management Review, Journal of Business Venturing, and Entrepreneurship: Theory and Practice He is a member of the editorial review boards of Strategic Entrepreneurship Journal, Entrepreneurship Theory & Practice, and the Journal of Business Venturing He received his PhD in management from the University of Texas at Arlington and MBA from the University of Southern California iv Alan B Eisner Gerry McNamara is Professor of Management and Department Chair, Management and Management Science Department, at the Lubin School of Business, Pace University He received his PhD in management from the Stern School of Business, New York University His primary research interests are in strategic management, technology management, organizational learning, and managerial decision making He has published research articles and cases in journals such as Advances in Strategic Management, International Journal of Electronic Commerce, International Journal of Technology Management, American Business Review, Journal of Behavioral and Applied Management, and Journal of the International Academy for Case Studies He is the former Associate Editor of the Case Association’s peer reviewed journal, The CASE Journal is a Professor of Management at Michigan State University He received his PhD from the Carlson School of Management at the University of Minnesota His research focuses on strategic decision making, organizational risk taking, and mergers and acquisitions His research has been published in numerous journals, including the Academy of Management Journal, Strategic Management Journal, Organization Science, Organizational Behavior and Human Decision Processes, Journal of Management, and Journal of International Business Studies His research on mergers and acquisitions has been abstracted in the New York Times, Bloomberg Businessweek, The Economist, and Financial Week He is currently an Associate Editor for the Academy of Management Journal v PREFACE Welcome to the Seventh Edition of Strategic Management: Text and Cases! preface We are all very pleased with the positive market response to our previous edition Below is some of the encouraging feedback we have received from our reviewers: The text is thorough and all-inclusive I don’t need to refer to another book as a back-up It addresses all aspects of strategic management from the initial inspiration of a vision to the nuts and bolts of putting the plan to work It is well structured; it is clear how each chapter not only builds on the previous ones, but also how analysis, formulation, and implementation are interrelated Lois Shelton, California State University, Northridge I use Strategic Management in a capstone course required of all business majors, and students appreciate the book because it synergizes all their business education into a meaningful and understandable whole My students enjoy the book’s readability and tight organization, as well as the contemporary examples, case studies, discussion questions and exercises William Sannwald, San Diego State University It is very easy for students to read because it presents strategy concepts in a simple but comprehensive manner It covers important developments in the strategic management field that are usually ignored by other textbooks (e.g., concepts like social networks and social capital, the balanced scorecard, and new forms of organizational structure) Moses Acquaah, University of North Carolina at Greensboro Content is current and easy for students to grasp; good graphs and charts to illustrate important points in the chapter Book is well organized around the AFI framework Lise Anne D Slatten, University of Louisiana at Lafayette It is the best written textbook for the undergraduate course that I have come across Application materials tie concepts to real-world practice Justin L Davis, University of West Florida The Dess text takes a practical/easy approach to explain very difficult subject matter It integrates a number of real-life scenarios to aid the student in their comprehension of key concepts The standout of the text is the Reflecting on Career Implications These end-of-chapter questions aid the student in applying their learning to their workplace in a manner that promotes career success Amy Patrick, Wilmington University The Dess book overcomes many of the limitations of the last book I used in many ways: (a) presents content in a very interesting and engrossing manner without compromising the depth and comprehensiveness, (b) inclusion of timely and interesting illustrative examples, (c) includes an excellent array of long, medium, and short cases that can be used to balance depth and variety, and (d) EOC exercises an excellent job of complementing the chapter content Sucheta Nadkami, Drexel University We are always striving to improve our work, and we are most appreciative of the extensive and constructive feedback that many strategy professionals have graciously given us As always, vi we have worked hard to incorporate their ideas into the Seventh Edition—and we acknowledge them by name later in the Preface We believe we have made valuable improvements throughout our many revised editions of Strategic Management At the same time, we strive to be consistent and “true” to our original overriding objective: a book that satisfies three R’s: relevant, rigorous, and readable That is, our tagline (paraphrasing the well-known Secret deodorant commercial) is: “Strong enough for the professor; made for the student.” And we are pleased that we have received feedback (such as the comments on the previous page) that is consistent with what we are trying to accomplish To continue to earn the support of strategy instructors (and students!) we try to use an engaging writing style that minimizes unnecessary jargon and covers all of the traditional bases We also integrate some central themes throughout the book—such as globalization, technology, ethics, environmental sustainability, and entrepreneurship—that are vital in understanding strategic management in today’s global economy We draw on short examples from business practice to bring concepts to life by providing 85 Strategy Spotlights (more detailed examples in sidebars) Unlike other strategy texts, we provide three separate chapters that address timely topics about which business students should have a solid understanding These are the role of intellectual assets in value creation (Chapter 4), entrepreneurial strategy and competitive dynamics (Chapter 8), and fostering entrepreneurship in established organizations (Chapter 12) We also provide an excellent set of cases to help students analyze, integrate, and apply strategic management concepts In developing Strategic Management: Text and Cases, we certainly didn’t forget the instructors As we all know, you have a most challenging (but rewarding) job We did our best to help you We provide a variety of supplementary materials that should help you in class preparation and delivery For example, our chapter notes not simply summarize the material in the text Rather (and consistent with the concept of strategy!), we ask ourselves: “How can we add value?” Thus, for each chapter, we provide numerous questions to pose to help guide class discussion, at least 12 boxed examples to supplement chapter material, and three detailed “teaching tips” to further engage students Also, the author team completed the chapter notes—along with the entire test bank—ourselves That is, unlike many of our rivals, we didn’t simply farm the work out to others Instead, we felt that such efforts help to enhance quality and consistency—as well as demonstrate our personal commitment to provide a top-quality total package to strategy instructors With the seventh edition, we also benefited from valued input by our strategy colleagues to further improve our work Let’s now address some of the key substantive changes in the Seventh Edition Then we will cover some of the major features that we have had in previous editions What’s New? Highlights of the Seventh Edition We have endeavored to add new material to the chapters that reflects both the feedback that we have received from our reviewers as well as the challenges that face today’s managers Thus, we all invested an extensive amount of time carefully reviewing a wide variety of books, academic and practitioner journals, and the business press We also worked hard to develop more concise and tightly written chapters Based on feedback from some of the reviewers, we have tightened our writing style, tried to eliminate redundant examples, and focused more directly on what we feel is the most important content in each chapter for our audience The overall result is that we were able to update our material, add valuable new content, and—at the same time—shorten the length of the chapters vii PREFACE Here are some of the major changes and improvements in the Seventh Edition: • • • • • All of the 12 opening “Learning from Mistakes” vignettes that lead off each chapter are totally new Unique to this text, they are all examples of what can go wrong, and they serve as an excellent vehicle for clarifying and reinforcing strategy concepts After all, what can be learned if one simply admires perfection! Well over half of our “Strategy Spotlights” (sidebar examples) are brand new, and many of the others have been thoroughly updated Although we have reduced the number of Spotlights from the previous edition to conserve space, we still have a total of 85—by far the most in the strategy market We focus on bringing the most important strategy concepts to life in a concise and highly readable manner And we work hard to eliminate unnecessary detail that detracts from the main point we are trying to make Also, consistent with our previous edition, many of the Spotlights focus on three “hot” issues that are critical in leading today’s organizations: ethics, environmental sustainability, and crowdsourcing We have added a new feature—Issue for Debate—at the end of each chapter We have pretested these situations and find that students become very engaged (and often animated!) in discussing an issue that has viable alternative points of view It is an exciting way to drive home key strategy concepts For example, in Chapter 1, Seventh Generation is faced with a situation that confronts their values, and they must decide whether or not to provide their products to some of their largest customers In Chapter 3, some interesting tradeoffs arose when The World Triathlon Corporation expanded their exclusive branding of Ironman to products that didn’t reflect the “spirit” of the brand And, in Chapter 6, Delta Airlines’ diversification into the oil business via their acquisition of an oil refinery poses an issue for some interesting alternative points of view Throughout the chapters, we provide many excerpts from interviews with top executives from Adam Bryant’s The Corner Office Such viewpoints provide valuable perspectives from leading executives and help to drive home the value and purpose of key strategy concepts For example, we include the perspectives of Tim Brown (CEO of IDEO) on employee empowerment, John Stumpf (CEO of Wells Fargo) on strategy implementation, and Gordon Bethune (former CEO of Continental Airlines) on the importance of incentive systems We have completely rewritten the “Reflecting on Career Implications . . .” feature that we introduced in the Sixth Edition of Strategic Management Based on reviewer feedback, we directed our attention to providing insights that are closely aligned with and directed to three distinct issues faced by our readers: prepare them for a job interview (e.g., industry analysis), help them with current employers or their career in general, or help them find potential employers and decide where to work We feel this feature is significantly improved and should be of more value to students’ professional development Key content changes for the chapters include: • viii Chapter makes a strong business case for environmental sustainability and draws on Porter’s concept of “shared value” that was initially introduced in the Sixth Edition Such issues advance the notion that firms should go far beyond a narrow focus on shareholder returns Further, shared value promotes practices that enhance the competitiveness of the company while simultaneously advancing the social and economic conditions in which it operates • • • • • • • Chapter makes the distinction between “hard trends” and “soft trends” that was articulated by Dan Burrus in his recent book Flash Foresight This distinction is important in determing the importance of current trends and their evolution over time Soft trends are something that might happen and a probability with which it might happen can be assigned In contrast, hard trends are based on measurable facts, events, or objects—they are something that will happen We provide the example of how the identification of hard trends (in technology) led the renowned Mayo Clinic to develop a CD to help customers to access useful medical information This initiative provided the Mayo Clinic with significant financial and nonfinancial benefits! Chapter addresses two issues that are important to not only developing human capital in organizations but also for students entering—or enhancing their success in—an organization: mentorship versus sponsorship and the “trap” of ineffective networks Knowing the distinction between mentors and sponsors has valuable implications for one’s career Mentors may provide coaching and advice, and prepare one for the next position Sponsors, on the other hand, are typically somebody in a senior position who can advocate and facilitate career moves We also draw on research that suggests three types of “network traps” that professionals should work hard to avoid: the wrong structure, the wrong relationship, and the wrong behavior Chapter discusses when actions taken to change the scope of businesses in which a corporation competes lead to positive outcomes for the firm We highlight the characteristics of both acquisitions and divestitures that lead to positive outcomes With acquisitions, we focus on how the characteristics of the acquiring firm as well as the acquisition itself lead to positive reactions by the stock market to the announcement of the deal With divestitures, we draw on the work by the Boston Consulting Group to highlight seven principles for effective divestitures Chapter looks into the hidden costs of offshoring In recent years, many firms have moved parts of their operations to lower wage countries In many cases, they have found that the expected cost savings were illusory We discuss seven reasons why firms would not achieve the anticipated savings through offshoring and provide examples of firms that have benefited by bringing their operations back home Chapter includes an examination of crowdfunding, a rapidly growing means to finance entrepreneurial ventures Crowdfunding involves drawing relatively small amounts of funding from a wide net of investors to provide potentially large pools of capital for entrepreneurial ventures We discuss both the tremendous potential as well as the pitfalls of crowdfunding for entrepreneurs Knowing that some of our students may want to be investors in these ventures, we also discuss issues that crowdfunding investors should consider when looking into these investment opportunities Chapter addresses how firms can build effective boards of directors We identify how firms need to go beyond standard categories, such as insider versus outsider board members, to develop favorable board dynamics We also discuss how the structure of boards has changed over the past 25 years Chapter 10 examines the costs and benefits of nurturing strong relationships to ensure cooperation and achieve high levels of performance Over the past 30 years, many scholars have argued that relational systems, where decisions regarding how to facilitate control and coordination are driven by relationships rather than bureaucratic systems and contracts, are superior to more traditional control systems We examine this issue and discuss how relational systems have both advantages and disadvantages We conclude with a brief discussion of when managers may want to rely more on relationship systems and when they may want to rely more on formal structure and reward systems ix Flexibility reduced, 147 at Weight Watchers, C33 Flexible manufacturing, 154–155 Focused approaches to corporate entrepreneurship, 390 autonomous work groups, 390 business incubators, 390–391 new venture groups, 390 Focus strategy, 152 at BMW, 153 cost focus, 153 differentiation focus, 153 effects of Internet, 161–162 examples of success, 153 and five-forces model, 153 for new ventures, 261–262 pitfalls erosion of cost advantage, 153 imitation and competition, 154 too focused on buyer needs, 154 Food and Drug Administration, 240, 344–345, C120, C121 Forbearance, 276 Forbes, Formalists, 125 Fortified drink market, 240 Fortune, 38 Fortune, 4, 111, 165, 181, 196, 300, C17 Fortune 500, 276 membership changes, Forward integration, threat of, 53 France antitrust law, 271 tax increases, Franchise Times, C111 Franchising, 236 benefits, 236 by Dippin’ Dots Inc., C110 ice cream makers, C113 by Jamba Juice, C39–C40 McDonald’s, C89–C92 risks and limitations, 236–237 Fraud at United Way, C252 Free agents, 118, 281 Frontal assaults, 267 Frozen dairy industry consolidation in, C108–C109 consumer spending, C108 franchises in 2013, C113 industry giants, C108 overview, C107–C109 segmentation, C109 top ten brands in 2012, C108 Functional benchmarking, 363 Functional division, worldwide, 313 Functional organizational structure, 313, 314, 336 advantages, 315 characteristics, 315 disadvantages, 315–316 organizational chart, 315 Funding by business incubators, 390 Future of Work (Malone), 120 G Game developers, C181 Game theory, value net concept, 59–60 General administration, 79 General Agreement on Tariffs and Trade, 46 I-36 Subject Index General environment, 42 crowdsourcing, 46–48 demographic segment, 42, 43 economic segment, 32, 45–46 effects of changes on CEOs, 5–7 elements of, 11–12 global segment, 43, 46 political/legal segment, 32, 44–45 relationship among elements of, 46, 47 sociocultural segment, 42–44 technological segment, 42, 45 trends in, 47 General knowledge, 111 Generation Y, 112 Generic strategies, 142 differentiation strategy, 142, 147–152 effects of Internet combination strategies, 162 differentiation strategy, 161 focus strategy, 161–162 overall cost leadership, 160–161 for entrepreneurs combination strategies, 262 differentiation strategy, 260–261 focus strategy, 261–262 overall cost leadership, 260 focus strategy, 142, 152–154, 154–157 combination strategies, 142 overall cost leadership, 142, 143–147 to overcome five-forces model, 142 Geographic-area division structure, 313, 322 Geographic boundaries, 325 Getting from College to Career (Pollack), 110 Glass-Steagall Act of 1933, repeal of, 45–46 Global capitalism, 212 Global customer segments, 226 Global economy bottom of the pyramid population, 212–213 comparisons of GDP per capita, 214 emerging markets, 212 global capitalism, 212 growth in trade, 212 rise of globalization, 212 varying income levels, 212 Global Entrepreneur, C237 Globalization, 212 of beer industry, C59–C60 cross-cultural dialogue, 356 effects on organizational structure, 314n meaning for firms, 233–234 opportunities and risks in, 46 versus regionalization, 234 Global market ranking, Samsung Electronics, C192 Global markets achieving competitive advantage cost reduction vs adaptation, 225–228 global strategy, 228–230 global vs regional strategy, 229–230 international strategy, 228 multidomestic strategy, 230–232 transnational strategy, 232–233 challenges in, 4–5 Global segment of the general environment, 43, 46 Global start-ups, 322 circumstances for, 323 environmental sustainability, 323 examples, 323, 332 management challenges, 323 Global strategy, 228 cost-reduction pressures, 229 economies of scale, 229 risks and challenges, 229–230 standardized level of quality, 229 strengths and limitations, 230 Global trends, 47 Going green, 110 as marketing ploy, 366 Golden parachute, 202, 298 Good Morning America, 379, C42 Goods and services, demand in China, 11 Good to Great (Collins), 256 Gorillas in the Mist, 22 Government request for proposals from, 386–387 support for start-ups, 255 Government bailout(s) in financial crisis of 2008, C4 rejected by Ford, C220 Government contracting, 255 Government regulation as control mechanism, 299–300 effect on mergers and acquisitions, 194 impact on economy, 44–45 Great Law of the Haudenosaunee, 28 Greece bankruptcy, C162 economic crisis, Green employment, 110 Green Lantern, C96 Green marketing, 21 Green movement, 21 Green plastics, 251 Greenmail, 202, 298 Greenwashing, 366 Gresham’s law of planning, 351 Grocery industry; see Online grocery industry; Retail grocery industry Gross domestic product health care spending percent of, C30 knowledge-based, 106 Gross domestic product per capita, global comparisons, 214 Gross margin, packaged-food industry, C240 Groupthink, 125 characteristics, 428 symptoms and prevention, 428–430 Growth as challenge for Southwest Airlines, C141 of eBay, C77 slowed at Procter & Gamble, C199 sources for casino industry, C13 strategy at Keurig, C266 Growth for growth’s sake, 201 Growth/share matrix, 190–192 classifications, 191 strategic business units in, 191–192 Growth stage, 165 factors in, 164 lack of repeat purchasers, 165 requirements, 165 revenue increase, 165 selective demand, 165 Guerrilla offensives, 267–268 H Hacker News, C126 Hard trends, 37 benefit at Mayo Clinic, 38 Hardball tactics deceive competitors, 265 devastate rivals’ profit sanctuaries, 265 massive overwhelming force, 265 plagiarize, 265 raising competitors’ costs, 265 Harvard Business Review, 10, 19, 108–109, 354 Harvesting strategy, 168 Headhunters, 152 health care spending, C30 Health claims, 239–240 Health warnings, 63 Healthy Living Council, C44 Heroes-and-drones syndrome, 361 Hierarchical relationships, 181–182, 189 Hierarchy of goals, 23 High-definition TV, C101 High exit barriers, 54 High-tech industries, effects of legislation, 45 Hiring by Apple Inc., C26 for attitude, training for skill, 111 and behavioral control, 287 bozo filter, 111 at Jamba Juice, C44 matching approach, 110–111 poor practices, 109–110 referrals, 111 at Southwest Airlines, C139 via personal networks, 120 Hispanic Americans number of, 118 Weight Watchers customers, C36 Hispanics, targeted by Heineken, C61 Hoarding barrier, 123 Hobbit, The, C103 Holding company structure, 314, 319 advantages, 319 disadvantages, 319 at Heineken, C60 for unrelated diversification, 319 Home brewing, C132–C133 Home viewing content availability and timing, C102 technology, C102 H1B visas, 45 Horizontal boundaries, 325 Horizontal organizational structures, 333 Horizontal relationships, 181 Horizontal systems and processes, 333 Hostile takeovers, 202, 298 Hours of work, at Southwest Airlines, C140 Human capital, 108 attracting talent by going green, 110 hire for attitude, 111 input control, 110–111 millennials, 112 by networking, 111 recruiting approach, 111 creating sustainable advantages, 356 developing, 111–116 encouraging widespread involvement, 113 evaluations, 116–117 mentoring and sponsoring, 113–114 monitoring progress, 114–116 tracking development, 114–116 entrepreneurial resource, 254 free agents, 118 lost by Bank of America, 105 retaining challenging work, 117 identifying with mission and values, 116–117 rewards and incentives, 117 technology for leveraging, 126–129 three-way leveraging process, 109–110 value creation through, 130 and workforce diversity, 117–118 Human capital mobility, 120 Human Equation (Pfeffer), 325 Human resource departments, and LinkedIn, 152 Human resource management, 78 differentiation strategy, 148 overall cost leadership, 144 Human resource practices Bank of America, 105 of boundaryless organizations, 333 to capture value from innovation, 386 dysfunctional, 125 Procter & Gamble, C198 Human resource professionals, lock and key mentality, 110 Human resources, 83 Hurricane Katrina, Hypercompetition (D’Aveni), 347 I Ice Age 4, 217 Idea generation from customers of Procter & Gamble, C199 Samsung Electronics, C194 Identification and combination activities, 128 Illegal activities, 344–345, 349 examples, 289–290 intensified by competition, 369–370 Ponzi scheme, 365 at United Way, C252–C253 at Zynga, C126–C127 Illegal cooperation, 271 Illusion of control, 397–398 Illusion of invulnerability, 428 Imitation of business model, 403 of differentiation, 151 in focus strategy, 153–154 in social media, 246–247 of strategy, 146–147 threat for low-cost leaders, 160–161 Imitative new entry, 258 by established company, 258–259 Improper conduct, minimizing, 286 Inbound logistics, 74 differentiation strategy, 148 overall cost leadership, 144 Incentive programs; see Reward systems Income statement Ann Taylor, C50 Beiersdorf AG, C161 Boston Beer Company, C130 Campbell Soup Company, C243 eBay, C75 Ford Motor Company, C221 General Motors, C214 Green Mountain Coffee Roasters, C257 Heineken, C58 Jamba Juice, C40 Johnson & Johnson, C116 McDonald’s, C88 Nintendo, C178 Procter & Gamble, C197 QVC, C63 Samsung Electronics, C191 Weight Watchers, C33 World Wrestling Entertainment, C71 Yahoo!, C269 Zynga, C124 Incremental innovation, 379, 380 project time line, 385 Incremental management, Incremental vs preemptive launch, 382 India middle class, 217 PepsiCo in, 239 software industry, 216 Indian Gaming and Recreation Act of 1988, C15 Indirect costs, 225 Individual ethics, 365–366 Industry analysis caveats on, 59–60 critical issues in root causes of profitability, 61 time horizon, 59–60 understand underpinnings of competition, 61 information resources, 452 not avoiding low-profit industry, 59 by start-ups, 256–257 as static analysis, 59 strategic groups, 61–63 unassailable assumptions, 61 value net, 59–60 variety of information needed, 59 zero-sum game assumption, 59 Industry consolidation, promoted by mergers and acquisitions, 195 Industry environment, 12 Industry/Industries, 48; see Five-forces model of industry competition differing financial ratios, 94 effect of demographic trends, 42 information sources business websites, 450 competitive intelligence, 447 guidelines and tutorials, 449 industry research analysis, 452 search engines, 452 strategic and competitive analysis, 450–452 low-profit, 59 primary value-chain activities, 74–76 strategic groups, 61–63 structure in beer industry, C131–C132 trends in general environment, 47 unimportant to suppliers, 53 Industry life cycle, 162 decline stage strategies, 166–169 growth stage strategies, 165 illustrated, 164 and international expansion, 218 introduction stage strategies, 164–165 limitations of concept, 163 maturity stage strategies, 165–166 and process innovation, 379 reasons for importance, 162–163 turnaround strategies, 169–171 Industry norms, 93–94 Industry-specific factors of production, 214 Industry-specific standards, 363 Inexperience, value of, 22 Influencers, 221 Infomediary services, 58 Subject Index I-37 Information from customers, 363 from Internet, 56 sharing on social networks, 126 from traditional sources, 362 Informational control, 14, 279 responding to environmental change, 278–280 Information power, 353 Information technology in boundaryless organizations, 333 to extend value chain, 155 Inherent morality of the group, 428 Inimitability of Amazon Prime, 88 of core competencies, 183 of resources, 86 Initial public offering Ann Taylor, C48 Boston Beer Company, C129 eBay, C77 JetBlue Airways, C148 and microfinance, C86 Pixar Animation Studios, C8 by Zynga, C123 In-lobby dining, C103–C104 Innovation, 83, 378; see also Corporate Entrepreneurship at Apple Inc., C20–C26 attempts at Procter & Gamble, 383 at Beiersdorf AG, C157–C158, C158–C159 challenges of, 380–381 resistance by companies, 381 uncertain outcomes, 381 company dilemmas building capabilities vs collaboration, 382 experience vs initiative, 382 incremental vs preemptive launch, 382 internal vs external staffing, 382 seeds vs weeds, 382 crowdsourcing for ideas, 389 defining scope of focus on common technology, 385 focus on market theme, 385 questions about efforts, 385 strategic envelope, 384–385 disruptive, 380 at Dutch Boy, 379 at Edward Marshall Boehm Inc., C3 and entrepreneurship, 378 in external environment, 380 flexibility for, 364 human resource practices potentially counterproductive practices, 386 staffing to capture value, 386 incremental, 379–380 in internal environment, 380 at Louis Vuitton, C173 managing pace of, 385–386 at Microsoft, 405 mistake by Google, 376–378 need for entrepreneurial orientation, 389–404 new industries from, 45 perspective in balanced scorecard, 95 at Pixar Animation Studios, C7–C10 process innovation, 379 at Procter & Gamble, C199 product innovation, 378–379 radical, 379–380 reverse, 218–219 I-38 Subject Index single-server coffee brewing, C260–C263 sustaining, 380 technology as source of ideas for, 378 timing of, C45 Weight Watchers, C35–C37 Innovation and Entrepreneurship (Drucker), 404 Innovation and learning perspective, 95 Innovation Jam at IBM, 389 Innovation partners Coca-Cola Company and DEKA Research, 388 competencies, 387 identifying strengths and weaknesses, 387 sharing of rewards, 387 universities, 386–387 Innovation skills associating, 383, 384 creative intelligence, 382–383 discovery skills, 382 experimenting, 383, 384 networking, 383, 384 observing, 383, 384 patterns of action, 383–384 questioning, 383, 384 Innovativeness, 400 departure from existing practices, 400 major pitfalls, 400 risks, 400 techniques continuous improvement, 401 foster creativity and experimentation, 401 investment in new technology, 401 research and development, 401 Innovator’s DNA, 384 Inputs, increased costs, 146 Insider information, 300 Institutional investors, 295 Intangible assets, critically important, 95 Intangible resources, 84 Dell Inc., 90 types of, 83 Integrated Workforce Experience, 126 Integration, in boundaryless organizations, 332 Integrative thinking, 425, 425–427 architecture, 426 causality, 426 at Red Hat, Inc., 427 resolution, 426 salience, 426 Integrity-based ethical programs, 366–367 Intellectual assets in case analysis, 433 protecting, 129–132 in strategy analysis, 12–13 Intellectual capital, 107 based on human capital, 109–118 Intellectual property, 106 components, 130 contrasted with physical property, 131 development and costs, 131 patent battles, 131 protection of, 131, C264 Intellectual property rights, 131 as cost in offshoring, 225 and counterfeiting, 220, 222 and piracy, 220 and Zynga, C126–C127 Intended strategy, 10 versus realized strategy, 10–11 Intensity of rivalry among competitors in an industry, 53 advertising battles, 53 and competitive dynamics, 262 in five-forces model, 53–55 high vs low, 56 impact of Internet, 58 in India, 216 at Pfizer, Inc., 55 price competition, 53 result of interacting factors, 54 in search for new markets, 215 Interaction effect, 358 Interdivisional coordination, 326 Interest rates, 43 Internal analysis, for turnaround strategy, 169 Internal benchmarking, 362 Internal business perspective, 95 Internal constituencies, 326 Internal development, 200 at Apple Inc., C21 at Biocom, 200 disadvantages, 200 means of diversification, 193, 200 at 3M Corporation, 200 value creation, 200 Internal environment in case analysis, 433 performance evaluation balanced scorecard, 94–96 financial ration analysis, 92–94 resource-based view of the firm, 82–92 in strategy analysis, 12 value-chain analysis, 72–82 Internal information, 361–362 Internal networkers, 21, 22 Internal relationships, of boundaryless organizations, 333–335 Internal staffing, 382 International Association of Machinists, C150 International Chamber of Commerce, 220 International Civil Aviation Organization, 362 International division, 313 International division structure, 322 International expansion Amazon, C83 Beiersdorf AG, C155–C156 Campbell Soup Company, C235 by eBay Asia Pacific, C81 Europe, C81–C82 global start-ups, 322–323 by Heineken, C58 Jamba Juice, C43 JetBlue Airways, C149 modes of entry, 234–237 exporting, 234–236 franchising, 236–237 joint ventures, 237–238 licensing, 236–237 strategic alliances, 237–238 wholly owned subsidiaries, 238 motivations arbitrage, 217 explore reverse innovation, 218–219 increase market size, 217 optimize value-chain locations, 218 product growth potential, 217–218 outsourcing and offshoring, 223–225 potential risks currency risk, 222–223 economic risk, 220–222 management risks, 223 political risk, 220–222 by QVC, C67 International operations implications for structure, 321–322 contingencies, 322 global strategy, 322 multidomestic strategy, 322 types of organizational structure, 313 International strategy, 228 achieving competitive advantage, 225–234 basis of, 228 Beiersdorf AG, C156–C157 Campbell Soup Company, C236–C237 in case analysis, 434 country risk ratings, 221–223 diamond of national advantage, 214–215 dispersal of value-chain activities, 223–225 distinctive competencies, 228 ethics for, 239–240 Ford Motor Company, C226 global economy, 212–213 global strategy, 229–230 growth of GDP per person 2001–2011, 213 international strategy, 228 Jamba Juice, C43 lack of local adaptation, 228 modes of expansion, 234–238 motivations for expansion, 217–219 multidomestic strategy, 230–232 and organizational structure, 313 PepsiCo in India, 239 potential risks of expansion, 220–223 problems for SAIC, 210–212 purpose, 13 risks and challenges, 228 transnational strategy, 232–233 International trade agricultural exports, C239 benefits of increase in, 46 currency risk, 222–223 increase in, 212 Internationalization of movie content, C97 Internet, 55 for comparison shopping, 162 for crowdfunding, C185–C189 for crowdsourcing, 46–48 impact on five-forces model bargaining power of buyers, 55–57 bargaining power of suppliers, 57–58 intensity of rivalry, 58 threat of new entrants, 55 threat of substitutes, 58 legal services, 57, 163 online auctions, C78 popularity of e-commerce, C78–C79 for price comparisons, 58 for tracking information, 362 Internet browsers, C25 Internet gambling, C15 Internet marketing, Internet Retailer Top 500 Guide, C203 Internet usage Africa, C76 Asia Pacific, C83 Australia, C76 Europe, C76 Latin America, C76 Middle East, C76 North America, C76 Interrelationships, 79–80 among value chain activities, 79–80 In-theater dining, C104 Intrapreneuring, 388 Introduction stage, 164 challenge of, 164 factors in, 164 first-mover advantage, 165 late-mover benefits, 165 Inventory, increase in, 225 Inventory turnover ratio, 93, 443 Investment crowdfunding, 253–254 at Pixar Animation Studios, C8 transaction-specific, 188, 189 Investment decisions agency problems, 397 and corporate governance, 288 Investors angel investors, 252 institutional, 295 perception of value in acquisitions, 197 venture capitalists, 252–253 Investors Business Daily, 300 Involvement of employees, 113 Ironman, 97 Iroquois Confederacy, 28 Irrational escalation of commitment, 398 Israel’s shekel, 222–223 Italian Job, 153 Italy economic crisis, footwear industry, 215 J Japan business groups, 303 earthquake and tsunami of 2011, 5–6 origin of just-in-time systems, 214 Jeopardy, 184 Job Corps, C44 Job losses Beiersdorf AG, C155 Ford, C223 JOBS Act of 2012, 253, C189 Jobs added overseas, 46 Job security, at Southwest Airlines, C140 Joint ventures, 199 benefits, 237 to develop and diffuse technologies, 200 eBay, C79, C81 eBay in China, C74 to enter new markets, 199 means of diversification, 199 potential downsides, 200 to reduce value chain costs, 199–200 risks and limitations, 237–238 and virtual organizations, 331 Jumpstart Our Business Start-ups Act of 2012, 253, C189 Just-in-time inventory systems, 8, 75, 158, 214 K Key trends, 36 Knowledge codified for competitive advantage, 128–129 critical role in economy, 106–109 crowdsourcing for, 129 firm-specific, 214 redistributing external, 362–363 internal, 361–362 from socially complex processes, 108 technology for leveraging, 126–129 types of, 108 Knowledge-based GDP, 106 Knowledge economy, 107 attracting top talent, 106 examples, 106 human capital, 108–118 intellectual capital, 107–108 protection of intellectual assets, 129–132 social capital, 108, 118–126 technology for leveraging human capital and knowledge, 126–129 Knowledge organization, Mayo Clinic, 38 Knowledge stocks, 129 Knowledge transfer, 233 Knowledge workers, 109 and social capital, 118–119 Kung Fu Panda, C100 L Labor abuses, China, C22 Labor costs, rising in China, 146 Labor unions and Fresh Direct, C210 and JetBlue Airways, C150 and Southwest Airlines, C141–C142 Large-volume buyers, 51 Las Vegas, casino industry, C11–C16 Late-mover benefits, 165 Latin America, population and Internet usage, C76 Leaders change agents, 347 collaborative, 116 development of vision, 23 executives, 21 four-step cross-training process, 359 interaction effect, 358 internal networkers, 21, 22 local line, 21 Leadership, 346 accumulating and sharing internal information, 361–362 challenging status quo, 363–364 to correct unethical behavior, 371 creating ethical organization codes of conduct, 368–369 corporate credos, 368–369 integrity-based vs compliance-based programs, 366–368 policies and procedures, 372 reward and evaluation systems, 369–370 role models, 368 creating learning organization, 357–364 developing competency companions, 357–364 doing the right thing, 346–347 effective uses of power, 351–353 Subject Index I-39 Leadership—Cont emotional intelligence, 354–357 empowering employees, 360–361 enabling creativity, 363–364 entrepreneurial, 255–256 ethical orientation, 365 external control view of, failure at AIG, C4–C6 gathering and integrating external information, 362–363 motivating, 360 overcoming barriers to change, 350–351, 352 Pixar Animated Studios, C7–C10 primary activities designing the organization, 348–349 organizational culture, 349–350 setting direction, 347–348 Responsible Corporate Office Doctrine, 345 Robin Hood, C2 role in strategy implementation, 13 romantic view of, 4–5 at Southwest Airlines, C138–C141 successes and failures, 407 Leadership Challenge (Kouzes & Posner), 360 Leadership traits, 354 Learning, 358–359 perspective in balanced scorecard, 95 Learning from mistakes Bank of America, 104–106 Boeing Company, 311 control problems at Hewlett-Packard, 276–277 Daimler AG, 70–71 demise of Borders, 3–4 entrepreneurial strategies at Digg, 246–247 innovation problem at Google, 376–378 JetBlue Airways, C151–C153 SAIC in China, 210–212 Salemi Industries, 31–35 survival rate of companies, 2–4 Synthes leadership problems, 344–346 United Way, C252–C254 Learning organization, 14, 358, 360 accumulating and sharing internal information, 361–362 benchmarking, 362, 363 in case analysis, 435–436 challenging status quo, 363–364 critical requirement, 350 culture of dissent, 363–364 customer information, 363 empowering employees, 360–361 enabling creativity, 363–364 gathering and integrating external information, 362–363 key elements, 360 risk-taking culture, 364 using employee wisdom, 361 Legal services, on Internet, 57, 163 Legitimate power, 351–353 Leonardo Live, C103 Leverage ratios, 442 Leveraging core competencies, 182–184, 195 Licensing, 236 benefits, 236 Jamba Juice, C43, C44 Keurig, C265 risks and limitations, 236–237 Licensing Letter, C92 Linux operating system, 48 Liquidity ratios, 93 I-40 Subject Index Litigation against Johnson & Johnson, C121 over patents, C112 Southwest Airlines, C137 against Zynga, C123, C126, C127 Loan guarantee programs, 255 Loans by Banco Compartamos, C86 traditional vs microfinance, C85–C86 Location decisions for casino industry, C13–C14 Jamba Juice, C42–C44 value-chain activities, 232 for value-chain activities, 218 Lock-in effects, 335 Logistics; see also Inbound logistics; Outbound logistics at QVC, C65 tightly controlled, 158 Long-term perspective, 8–9 Long-term solvency ratios, 93 cash coverage ratio, 442 times interest earned, 442 total debt ratio, 442 Los Angeles Times, C101 Losses, JetBlue Airways, C149 Low-cost leadership strategy JetBlue Airways, C148 Southwest Airlines, C141 Low-fare airlines, C147 Low profits, 52 Luxury goods industry in China, C167–C168 customer segments absolute, C168 accessible, C168 aspirational, C168 changing demographics, C169 differing behavior across markets, C169 distribution, C169 estimated growth, C168 in Europe, C168 growth rate, C167 market share by region, C168 pricing, C169 projected revenue 2012, C167 suppliers, C169 in United States, C168 M Machine age, 106 Main Event, C69 Making the Grass Greener on Your Side (Melrose), 360 Management Beiersdorf AG, C157, C164 in corporate governance, 14–15 diversion of profits to, 91 at Heineken, C60–C61 incremental vs strategic, innovations in, overhaul ay Yahoo!, C270–C271 at Pixar Animation Studios, C7–C10 reconfigured at Ann Taylor, C56 reorganization at Ford, C224, C232–C233 of World Wrestling Entertainment, C69–C71 Management change; see also CEO change Dippin’ Dots Inc., C106–C107 rejected by Samsung Electronics, C195 Management restructuring, 190 Management risk, 223 Management talent development, 294 Manager bargaining power, 91 Managerial conceit, 397 at AIG, C4 illusion of control, 397–398 irrational escalation of commitment, 398 overconfidence, 397–398 Managerial models, and behavioral control, 288 Managerial motives, 201 Managerial rewards and incentives, 295–296 Managers; see also CEO entries adaptability, 336 and alignment, 336–337 ambidexterity, in ambidextrous organizations, 336–337 assumptions and biases, 35 balanced scorecard use, 95–96 caveats on industry analysis include low-profit industry, 59 static analysis, 59–60 value net, 59–60 zero-sum game assumption, 59 CEO duality, 297 challenge of cultural differences, 223 challenges from globalization and technology, 120 credibility, ego, and sound decisions, 196 erosion of valuation by motives of egotism, 201–202 growth for growth’s sake, 201 examples of self-interest, 291 excessive product-market diversification, 298 golden parachutes, 202 making transformational change, 22 and market for corporate control, 298 monitoring behavior of by board of directors, 292–294 primary means, 291 rewards and incentives, 295–296 shareholder activism, 295 on-the-job consumption, 298 opportunistic behavior, 298 opportunity recognition, 35 reward and evaluation systems, 369–370 shirking, 298 training at Campbell Soup Company, C238 view of control systems, 280 in virtual organizations, 330 Managing change, 378 Manufacturing automated and flexible, 154–155 Campbell Soup locations, C236 cost reductions, 199–200 environmentally-friendly, 75 at Louis Vuitton, C172 mass customization, 154 offshoring, 223–225 outsourcing, 223–225 reshoring, 226 Manufacturing alliances, 255 Market capitalism, 212 Market capitalization Apple Inc., C17 Campbell Soup Company, C240 decline at Procter & Gamble, C198 packaged-food industry, C240 Samsung Electronics, C191 Market commonality, 266 Market dependence, 276 Market diversification, 221 Market environment, Beiersdorf AG, C161–C164 Market for corporate control, 298 Market niche at BMW, 153 in focus strategy, 152 Market power, 185 from related diversification, 182 from unrelated diversification pooled negotiating power, 185–186 vertical integration, 186–189 Market pruning, 169 Market responsiveness, reduced, 225 Market saturation, 165 Market segments Beiersdorf AG, C162 casino industry, C13 entered by mergers and acquisitions, 202 undefined in introduction stage, 164 Weight Watchers, C29–C30 Market share, 143 auto industry, C227 Beiersdorf AG, C163–C164 Boston Beer Company, C129 cell phones, C23 General Motors, C214, C216 ice cream brands, C108 in online gaming, C124 personal computers, C23 smartphones, C24 Yahoo!, C271 Market size motive for international expansion, 217 online gaming, C123–C124 Market theme, 385 Market-to-book value/ratio, 93, 446 and intellectual capital, 107–108 in knowledge-intensive corporations, 107 Market value measures market-to-book ratio, 446 price-earnings ratio, 445–446 Marketing and sales activities, 75 to bottom of the pyramid, 212–213 differentiation strategy, 148 by Dippin’ Dots Inc., C110–C112 at Edward Marshall Boehm Inc., C3 Fresh Direct, C203, C210–C211 increased efforts in, 268 by McDonald’s, C92 overall cost leadership, 144 prosumer concept, 80–81 unethical or illegal activities, 76 Marketing argument, 118 Marketplace, viability in, 250 Martial arts, C72 Mass customization, 154 enabled by Internet, 161 Massive overwhelming force, 265 Matching approach to hiring, 110–111 Matrix organizational structure, 319 advantages, 320 disadvantages, 320–321 multinational firms, 319–320 organizational chart, 320 Procter & Gamble, C200 worldwide, 313, 322 Maturity stage, 165 aggregate demand softens, 165 strategies breakaway positioning, 166 reverse positioning, 166 underidentification of rivalry, 165–166 Media, as control mechanism, 300–301 Men, Weight Watchers customers, C36 Mentoring benefits of, 113–114 by business incubators, 391 compared to sponsoring, 114 Mercosur, 234 Mergers, 193 in airline industry, C147 means of diversification, 193–194 as strategic actions, 268 Mergers and acquisitions; see also Acquisitions and antitakeover tactics, 202 Bank of America and Merrill Lynch, 104–106 in casino industry, C14 and currency fluctuations, 194 versus divestment, 196–199 global value 2000–2012, 194 and government regulation, 194 Louis Vuitton and Moët Hennessy, C167 motives and benefits attaining synergies, 194 industry consolidation, 195 new market segments, 195 obtaining valuable resources, 194 potential limitations cultural differences, 196 imitation by competitors, 196 manager credibility and ego, 196 takeover premium, 195 recent, 193 value perceived by investors, 197 well-know blunders, 180 worldwide volatility, 193–194 Metropolitan Opera, C103 Mexico, microfinance in, C86 M-Form structure, 316 Microfinance, case Banco Compartamos, C86 Bank Rakyat Indonesia, C86 definition, C85 Equity Bank, Kenya, C86 Grameen Bank, C85, C87 growth of, C86–C87 initial public offerings, C86 origin of, C85 pressure from nongovernmental organizations, C87 profit, C85 social collateral, C85 successful use of, C86 Microloans by Boston Beer Company, C136 Middle class in China, 11 in emerging economies, 46 emerging in Asia, 217 Middle East, population and Internet usage, C76 Millennials attracting, 112 social and environmental impact, 110 Mindguards, 430 Minority shareholders expropriation of, 303 principal-agent conflicts, 302 principal-principal conflicts, 302 Mission employee relationship with, 116–117 United Way Worldwide, C253 Mission Impossible: Ghost Protocol, 75–76 Mission statement, 25 effective, 25–26 examples, 24 redefined, 26 Southwest Airlines, C139 stakeholder management in, 24 Mobile communication devices, C23–C24 Modular organization, 324, 328 apparel industry, 328 conditions for success, 328–329 outsourcing noncore functions, 328 pros and cons, 330 risks from outsourcing loss of control over suppliers, 329 loss of critical skills, 329 loss of cross-functional skills, 329 Monitoring programs, 114–115 in vertical integration, 188 Mortgage-backed securities, 104 Motivation, 355 Movie exhibition industry in 2013, case audience demographics, C97 box office receipts 1980–2012, C95 challenges for exhibitors benefits from digital investments, C100–C101 declining allure of theaters, C101 home viewing, C101–C102 domestic receipts 2000–2011, C97 International receipts 2000–2011, C97 leading U.S theater chains, C98 number of screens 2000–2011, C95 opening weekend receipts, C100 recent initiatives advertising, C104 alternative content, C103 on concessions, C103–C104 dynamic pricing, C103 expanded in-lobby dining, C103–C104 in-theater dining, C104 technological innovations, C103 traditional innovations, C102 upscale in-theater dining, C104 revenue generation box office receipts, C99 concessions, C99 pre-movie ads, C99–C100 revenues and expenses for 8-screen theater, C99 ticket prices 1980–2012, C95 top 25 releases in 2012, C94 top studios and distributors, C96 value chain activities, C96–C99 Movie exhibitors, theater chains, C97 Movie goers appeal of theaters for, C101 demographics, C96 Movie industry computer-animated films, C7–C10 international sales, 217 World Wrestling Entertainment in, C72 Movie theaters declining allure of, C101 MP3 market, C22–C23 Subject Index I-41 Multichannel marketing by Keurig, C263 Multichannel sales approach, C54 Multidivisional structure, 316 Multidomestic strategy, 230 decentralized decisions, 230 geographic area divisions, 322 international divisions, 322 Procter & Gamble, 231 product names, 230 risks and challenges, 231–232 strengths and limitations, 232 worldwide matrix structure, 322 Multinational firms, 217 modes of international expansion, 234–239 monitored by nongovernmental organizations, 17 options in global strategy, 212 Multitiered department stores, C51 N Nairobi Stock Exchange, C86 Nanotechnology, 45 National Aeronautics and Space Administration, 168, 361 National competitiveness; see Diamond of national advantage National Hiring Day, C44 National Mediation Board, C150 Native American casinos as competition, C15 federal law on, C15 by state, C12 Natural disasters, 5–6 impact on JetBlue Airways, C151–C152 Negotiating costs, 188 Net income decline at Procter & Gamble, C196 General Motors, C216 JetBlue Airways, C146 packaged-food industry, C240 Net revenue, eBay 2010–2012, C80 Network lever, 123 Networking by business incubators, 391 innovation skill, 383, 384 for recruiting, 111 Neuroscience, 384 New competitive action, 264 bases of, 264 hardball strategies, 265 reasons for, 263–264 New entrants; see also Threat of new entrants and competitive dynamics choosing not to react, 270 likelihood of competitive reaction, 269–270 motivation and ability to respond, 266–267 new competitive action, 263–264 threat analysis, 264–266 types of actions, 267–269 reactions from competitors, 262–266 New markets entering, 199, 268 search intensified by rivalry, 215 New product development, Samsung Electronics, C193 New product launch, 268 Apple Inc., C19, C21, C22–C26 at Dippin’ Dots Inc., C112–C114 failure at McDonald’s, C90 I-42 Subject Index by McDonald’s, C91–C92 Nintendo, C177 Samsung Electronics, C191 New product lines, Samsung Electronics, C192 New product search, by QVC, C66 New venture group, 390 WD-40 Company, 391 New ventures; see also Start-ups exit champions, 394–395 factors determining pursuit of, 388–389 idea sources, 392 measures of success, 394 Pixar Animation Studios, C7–C9 product champions, 394 project definition, 393 project impetus, 393 strategic decisions, 395–396 strategic reasons for undertaking, 394 Weight Watchers, C30 New York Institute of Technology, C7 New York Times, C42 Niche-differentiation strategy, 152, 153 Niche strategy JetBlue Airways, C146 at Southwest Airlines, C140–C141 Nikkei, Nineteen Eighty-Four (Orwell), C20 Nonfinancial rewards, 117 Nongovernmental organizations and microfinance, C87 monitoring of multinational firms, 17 Non-invented-here barrier, 123 Nonprofit sector strategic priorities, 285 watchdog agencies, C253 Nontraditional store locations, C43–C44 North America, population and Internet usage, C76 North American Free Trade Agreement, 46, 234 Norway, litigation against Zynga, C127 O Obama, Barack, C189 Obama administration, C44, C217 Obesity, 44, C30–C31, C36, C37 Observing, 383, 384 Off-screen advertising, C104 Offshoring, 224; see also Outsourcing coordination costs, 225 easily visible savings from, 224–225 hidden costs, 225 from increased inventory, 225 indirect costs, 225 wage inflation, 225 intellectual property rights, 225 recent explosion in volume of, 224 reduced market responsiveness, 225 versus reshoring, 226 by service sector, 224 wage inflation and, 225 Oil spill of 2010, Online auctions in China, C74 eBay, C77 strategic advantage, C76 Online brokers, 146–147 Online gaming competitors, C124–C126 market size, C123–C124 number of daily users, C124 Zynga, C123–C124, C126–C127 Online grocery industry competitors, C206–C209 price comparison, C207 price-sensitive customers, C205–C206 profiles, C207 sales, C205 types of shoppers, C206 Online marketing at Dippin’ Dots Inc., C114 Fresh Direct, C203–C204 by QVC, C64, C67 Online procurement, 57 Online travel agents, 337–338 On-screen advertising, C104 On-the-job consumption, 298 Open-sourcing model for talent, 117 Operating expenses, at Southwest Airlines, C142 Operational effectiveness, Operational efficiency and effectiveness, 285 Operations, 75 Ann Taylor, C54–C55 Apple Inc., C21–C22 differentiation strategy, 148 Fresh Direct, C201–C202, C203 JetBlue Airways, C150 overall cost leadership, 144 QVC, C64–C66 Southwest Airlines 2008–2012, C138 Weight Watchers, C33–C37 World Wrestling Entertainment, C69–C72 Opportunistic behavior, 298 Opportunities in crowdfunding, 254 in entrepreneurial cultures, 392 for entrepreneurs, 248–251 recognizing, 35 in retailing from obesity, 44 Opportunity evaluation, 249–250 Opportunity recognition, 249 Options, 395 Oral case presentation, 422 Order processing time, 158 Organizational bases of power, 351 coercive power, 352–353 information power, 353 legitimate power, 351–353 reward power, 352 Organizational boundaries, 14 Organizational buying, 57 Organizational capabilities, 84; see also Capabilities Organizational conflicts, 335 Organizational culture, 281 in boundaryless organizations, 330–333 change at Procter & Gamble, C198 committed to excellence and ethical behavior, 349–350 culture of dissent, 363–364 entrepreneurial, 392 example, 282 Heineken, C62 Jamba Juice, C44 Pixar Animated Studios, C7–C10 rallies, 282 for risk-taking, 364 role in organizations, 282 self-governing, 280 setting boundaries, 282 Southwest Airlines, C138–C141 storytelling for, 282 studies on, 281 sustaining, 282 wolf culture, 349 Organizational design, 14 in case analysis, 435 leadership task, 348–349 Organizational ethics, 365, 365–366 compliance-based programs, 366–368 integrity-based programs, 366–368 Organizational flexibility argument, 118 Organizational goals and objectives, Apple Inc., C26 Boston Beer Company, C129 in case analysis, 432–433 Edward Marshall Boehm Inc., C3 Jamba Juice, C39 Samsung Electronics, C195 in strategy analysis, 11 Organizational learning, experience curve, 143 Organizational resources, 83, 84 Organizational structure, 312 ambidextrous design, 336–337 boundaryless organizational design, 324–335 Cisco Systems, 179 divisional structure, 313, 316–317, 320 dominant growth patterns, 312–314 effect of globalization, 314n effect of lower transaction costs, 314n functional structure, 313, 314–316 global start-ups, 322–323 Green Mountain Coffee Roasters, C267 holding company at Heineken, C60–C61, C62 holding company structure, 319 influence on strategy formulation, 324 for international markets, 313 international operations, 321–322 matrix structure, 319–321 online travel agents, 337–338 Robin Hood, C2 simple structure, 313, 314 strategic business unit structure, 318–319 strategy relationships, 312 types, 313–314 United Way Worldwide, C249 Organizational vision, 23–25 Organizational vs individual rationality, Organization for Economic Cooperation and Development, study on Asian Middle classes, 217 Organizations; see also Corporations; Environmentally aware organizations; Firms barriers to change in, 350–351, 352 core values and performance evaluation, 115 diversity management, 118 hierarchy of goals, 23 integrative view of, 20–22 isolated departments, 315 key stakeholders and claims, 16 shared value concept, 18–19 situational factors in behavioral control, 286–287 social responsibility, 17–18 stakeholder management, 15–17 structural holes, 122 tribal loyalty, 116 triple bottom line, 19–20 Orphan Drug Act of 1983, 228 Outbound logistics, 75 differentiation strategy, 148 overall cost leadership, 144 Outlets of McDonald’s cutbacks, C90 number of, C90 revamping plan, C92 worldwide distribution, C91 Outside consultant, 416 Outside the Ring, C68 Outsourcing, 8, 224; see also Offshoring by Ann Taylor, C55 by Apple Inc., C22 benefits and challenges, 312 by Boeing, 310–312 by modular organizations noncore functions, 328 strategic risks, 329 recent explosion in volume of, 224 reversed at Louis Vuitton, C171 by service sector, 224 Overall cost leadership, 143 bases of, 142 competitive parity, 143–144 effects of Internet, 160–161 examples, 145 experience curve, 143 and five-forces model, 145 integrated with differentiation strategies, 154–157 interrelated tactics, 143 JetBlue Airways, C148 for new ventures, 260 pitfalls to easily imitated, 146–147 increased cost of inputs, 146 lack of parity in differentiation, 147 obsolescence of basis of cost advantage, 147 reduced flexibility, 147 summary, 152 too much focus on too few value-chain activities, 146 and process innovation, 379 Renault, 146 Southwest Airlines, C141 value-chain activities, 144 Vizio, Inc., 261 Overconfidence, 397–398 P Packaged-food industry discount sellers, C239 downsizing, C239 market capitalizations, C240 in United States, C238–C239 Parenting advantage, 189 from unrelated diversification, 182 Partnerships Dippin’ Dots Inc and McDonald’s, C110–C111 eBay and Yahoo!, C81 Keurig and Green Mountain, C265 Yahoo! and Microsoft, C271 Patent litigation by Dippin’ Dots Inc., C112 Samsung Electronics, C191 Patent protection, Keurig, C264 Patents battles over, 131 litigation by Apple, C22 Path dependency, 86 Pension Rights Center, 300 Pentagon attack of 2001, C147 People for the Ethical Treatment of Animals, 301 People lever, 123 Performance appraisals, 112 Performance enhancement, from location of valuechain activities, 218 Performance evaluation balanced scorecard, 94–96 and core values, 115 financial ratio analysis, 92–94 360-degree evaluation and feedback system, 115–116 Performance materials, 78 Permeable internal boundaries, 325–326 Personal agendas, 125–126 Personal bases of power, 353 expert power, 353 referent power, 353 Personal computers competitors for Apple Inc., C22 market shares, C23 Personal digital entertainment devices, C22–C23 Personal risk taking, 404 Personal time constraints, 351 Physical resources, 83 Physical space, 390 Physical uniqueness of resources, 86 Piecemeal productivity improvements, 169 Pied Piper Effect, 120 Pioneering new entry, 257 disruptive of status quo, 257–258 Pandora, 258 pitfalls, 257 sustaining advantage, 257 Piracy by counterfeiting, 220 of software, 220 Pirates of the Caribbean, C100 Plagiarize, 265 Plant closings at Ford, C223 Poison pill, 202, 298 Policies, ethical, 370 Political barriers, 351 Political barriers to change, overcoming, 352 Political/legal segment of the general environment, 43, 44–45 Political/legal trends, 47 Political risk, 220 country risk ratings, 220, 221 examples, 220 managing by identifying key influencers, 221 by market diversification, 221 by stakeholder coalitions, 221 by stakeholders on boards, 221 Ponzi scheme, 365 Pooled negotiating power, 185 potential downside, 186 Population African Americans, 118 aging in United States, 42 Asian Americans, 118 Hispanic Americans, 117–118 and Internet usage worldwide, C76 of world in 2013, 217 Porter’s five-forces model of industry competition; see Five-forces model of industry competition Subject Index I-43 Portfolio management, 190 Campbell Soup Company, C28 description and benefits, 190–192 growth/share matrix approach, 190–192 at Johnson & Johnson, C121 limitations, 192 Portfolio of businesses, 189 Portugal economic crisis, emigration from, Positioning strategies breakaway positioning, 166 reverse positioning, 166 Poverty extent of, C85 microfinance solution, C85–C87 Power, 351 effective uses of, 351–353 organizational bases, 352–353 personal bases, 353 from private information, 124–125 Preannouncements, 403 Preemptive launch, 382 Price(s) Apple computers, C20 competition not based on, C22 of online grocers, C207 Price comparison, on Internet, 58 Price cutting, 268 automobile industry, 270 Price-earnings ratio, 93, 445–446 packaged-food industry, C240 Price increases, 268 Price-performance relationship, 53 Price-performance trade-off, 169 Price premium, 148 too high, 151 Pricing policy Louis Vuitton, C169, C171 in luxury goods industry, C169 by McDonald’s, C88–C89 by movie exhibitors, C103 Primary activities, 72 differentiation strategy, 148 inbound logistics, 74–75 marketing and sales, 75–76 operations, 75 outbound logistics, 75 overall cost leadership, 144 service, 76 in service organizations, 81–82 upstream, 232 Prime Time Live, 300 Principal-agent conflicts, versus principal-principal conflicts, 301–302 Principal-principal conflicts, 301 conditions for, 303 versus principal-agent conflicts, 301–302 Principals, 397 in agency theory, 290–291 Private information, 123 access to diverse skill sets, 124 power from, 124–125 Proactiveness, 401 examples of failure, 401–402 first-mover advantage, 401 pressure on competitors, 401 techniques new product introduction, 402 new service offerings, 402 I-44 Subject Index Problem identification, 418 Problem-solving argument, 118 Procedures, ethical, 370 Process for change, 346 Process innovation, 379 Process loss, 128 Procurement, 76–78 differentiation strategy, 148 at LG Electronics, 79 online, 57 overall cost leadership, 144 Product(s) in breakaway positioning, 166 commoditized, 58 complementors, 60 counterfeit, 220 in decline stage, 16–169 Dippin’ Dots Inc., C107 in reverse positioning, 166 stabilizing demand for, 188 standardized or undifferentiated, 52 unimportant to buyers, 53 unimportant to quality, 52 Zynga, C123–C124 Product categories eBay, C78–C79 Yahoo!, C81 Product champion, 393 contrasted with exit champion, 395 Product design, Louis Vuitton, C173 Product development, General Motors, C218 Product differentiation, 50 access to distribution channels, 51 capital requirements, 51 cost disadvantages independent of scale, 51 in five-forces model, 50–51 lack of, 54 switching costs, 51 Product division, worldwide, 313 Product growth potential, motive for international expansion, 217–218 Product innovation, 378 Product line Apple Inc., C17, C19, C21, C22–C26 at Jamba Juice, C39, C41–C42 reinvention at Campbell Soup, C236 Samsung Electronics, C191 Product line extension Boston Beer Company, C129 dilution of brand identity, 151 Product markets, separate divisions for, 316–317 Product names, 231 Product placement, 75–76 by Dippin’ Dots Inc., C111–C112 in movies, 153 Product portfolio, change at Porsche, 171 Product pruning, 169 Product recall, by Johnson & Johnson, C116 Production capacity changes, 268 customers included in, 80 lowering unit costs, 228 mass customization, 154 process at Edward Marshall Boehm Inc., C3 Productivity, piecemeal improvements, 169 Profit centers, film studios, C96 Profit concentration, 155 Profit margin ratio, 93, 444–445 Profit pool, 155 for combination strategies, 155 in electronics retailing, 156 miscalculating sources of, 157 Profit sanctuaries, 265 Profits diverted to top management, 91 and employee bargaining power, 91 and employee exit costs, 91 and employee replacement costs, 91 generation and distribution of, 90–91 of Johnson & Johnson by segment, C117 low, 52 manager bargaining power, 91 of online grocers, C207 for vendors to QVC, C66 Profitability Louis Vuitton, C166 of new ventures, 394 underpinnings of, 80–81 Profitability measures profit margin, 444–445 return on assets, 445 return on equity, 445 Profitability ratios, 93 Project definition, 393 Project impetus, 393 Property rights, intellectual vs physical property, 131 Proprietary information systems, 80 Proprietary software, 57 Prosumer concept, 80–81 at Procter & Gamble, 81 Public activists, as control mechanism, 300–301 Public Company Accounting Oversight Board, 299 Public company information, 448 Public information, 123 Purchases, buyer bargaining power and size of, 51 Q Quality in global strategy, 229 versus growth, C10 problems at Johnson & Johnson, C118–C120, C121 Quality assurance, at QVC, C66 Quality control Fresh Direct, C201 Keurig, C265 Louis Vuitton, C173 Question marks, 191–192 Questioning, 383, 384 Quick ratio, 93, 441 R Racetrack gaming, C15 Radical innovation, 379, 380 project time line, 385 Radio advertising, 376–378 Rare resources, 85 Ratatouille, C104 Ratio analysis asset management measures, 443–444 categories, 440 long-term solvency measures, 442–443 market value measures, 445–446 problems with, 438–440 profitability measures, 444–445 questions about, 440 short-term solvency measures, 440–442 summary of, 446 Rationality, Raw, C68 Raw Is War, C69 RBV; see Resource-based view of the firm Real estate boom, Spain, Real estate options, 395 Real options analysis, 395 applications to strategic decisions, 395–396 applied to entrepreneurs, 395 at Intel, 397 pitfalls agency theory and back-solver dilemma, 396–397 and managerial conceit, 397–398 wit property, 395 Reality-based TV shows, C68 Realized strategy, 11 versus intended strategy, 10–11 Receivables turnover, 93, 444 Recession, effect on Procter & Gamble sales, C196 Recognition programs, 284 Recommendations, in case analysis, 421 Recruiting, 111 at Fresh Direct, C201 Robin Hood, C2 at Southwest Airlines, C139 Reengineering, successful, 333 Reengineering the Corporation (Hammer & Champy), 333 Referent power, 353 Referrals, 111 Regional airlines, C147 Regionalization, 234 versus globalization, 234 Reimaging, by McDonald’s, C92 Reintermediation, 58 Related and supporting industries, 215 Related diversification, 182 by Apple Inc., C20 deriving cost savings, 184–185 eBay, C79 economies of scope, 182 economies of scope from, 182 enhancing revenue and differentiation, 185 examples of success, 181 leveraging core competencies, 182–184 market power from, 182 pooled negotiating power, 185–186 vertical integration, 186–189 sharing activities, 184–185 value creation by, 181–182 Rents, 90 Repeat purchasers, 165 Replacement cost of employees, 91 Replacement demand, 171 Repositioning by Weight Watchers, C29–C30 Reputation, 83 of competitors, 270 damaged at JetBlue Airways, C151–152 damaged by competitive aggressiveness, 403 Request for proposals, 386–387 Research and development by Apple Inc., C22 at Beiersdorf AG, C158 for innovativeness, 401 for internal development, 200 at Johnson & Johnson, C118, C120 by Microsoft, 405 Samsung Electronics, C193 at Samsung Electronics, C193 Reshoring, 226 by Apple Inc., C22 Resource acquisition argument, 118 Resource-based view of the firm, 82 erosion of competitive advantage at Dell Inc., 89–90 external analysis, 82 generation and distribution of profits, 90–92 internal analysis, 82 and social capital, 119 for sustainable competitive advantage causal ambiguity, 87 inimitable resources, 86 path dependency, 86 physical uniqueness, 86 rare resources, 85 readily available resources, 87–89 social complexity, 87 valuable resources, 85 types of resources, 83–84 Resource similarity, 266 Resources attributes for comparative advantage, 85 without available substitutes, 87–89 causal ambiguity, 87 of competitors, 270 criteria for assessing sustainability, 85 inimitability, 86 intangible, 84 obtained by mergers and acquisitions, 194 organizational capabilities, 84 path dependency, 86 physical uniqueness, 86 rarity, 85 social complexity, 87 tangible, 83–84 valuable, 85 Responsible Corporate Office Doctrine, 345 Restructuring, 189 in airline industry, C147 by Ann Taylor, C54–C55 at Apple Inc., C26 asset restructuring, 190 at Beiersdorf AG, C155, C164–C165 capital restructuring, 190 drawback at Ford, C232–C233 Ford Motor Company, C220–C233 by Ford Motor Company, 170 General Motors, C216 Loews Corporation, 190 management restructuring, 190 at Procter & Gamble, C198 from unrelated diversification, 182 Retail alliances, 255 Retail grocery industry inventories, C205 online segment, C206–207 sales in 2013, C205 top ten chains, C205 Retailers/Retailing Apple Stores, C21 at Edward Marshall Boehm Inc., C3 electronics, 156 by Jamba Juice, C40 nontraditional store locations, C43–C44 opportunities from obesity, 44 used by Samsung Electronics, C192 women’s apparel, C47–C56 Retention bonuses, C4–C6 Retreating to more defensible ground, 168–169 Return on assets ratio, 93, 445 Return on book assets, 445 Return on book equity, 445 Return on equity ratio, 93, 445 Return on investment, 143 Return on sales, historical trends, 94 Revenue Boston Beer Company, C129 of casinos by state, C11 decline at Yahoo!, C268 eBay in 2011, C74 enhanced by related diversification, 185 increase in growth stage, 165 Jamba Juice, C40 Louis Vuitton, C171 miscalculating sources of, 157 packaged-food industry, C240 Pixar Animated Studios, C7 from pre-show ads, C100 QVC, C63 Southwest Airlines, C141 U.S casino industry 2000–2012, C11 Weight Watchers, C29, C33 World Wrestling Entertainment, C71, C72 of Zynga, C123 Revenue generation by eBay, C80–C81 for Johnson & Johnson, C118 movie exhibitors advertising, C99–C100 box office sales, C99 concessions, C99 Reverse innovation, 218 in developing countries, 219 examples, 219 from international expansion, 218–219 motivation and implications, 219 products for emerging markets, 218–219 Reverse positioning, 166 Commerce Bank, 167 Reward and compensation agreements, 291 Reward power, 352 Reward system, 283 and behavioral control, 287, 288 characteristics for effectiveness, 283–284 as control mechanism, 283 financial and nonfinancial, 117 for innovation, 387 potential downsides, 283 problems across organizational units, 283 at Southwest Airlines, C139–C140 Risk minimization, 404 Risk reduction goal of diversification, 192–193 from location of value-chain activities, 218 Risk sharing, and agency theory, 291 Risk taking, 403 potential pitfalls, 404 techniques from other domains, 404 research and assessment, 404 types of, 404 Risk-taking culture, 364 Risks in exporting, 236 in global economy, 46 in international expansion currency risk, 222–223 Subject Index I-45 Risks—Cont economic risk, 220–222 management risks, 223 political risk, 220–222 in joint ventures, 237–238 in licensing and franchising, 236–237 in strategic alliances, 236–237 in wholly owned subsidiaries, 238 Rivalry, 215 intensifying in maturity stage, 165–166 Riverboat gambling, C15 Role models, 368 Role playing, in case analysis, 415–418 Romantic view of leadership, Rule of law, 220 Russia, Campbell Soup Company in, C236–C237 S Sales Ann Taylor, C49 auto industry 2012–2013, C227–C229 of beer in United States, C133 of beer in U.S 2007–2012, C132 Campbell Soup Company, C235 decline at McDonald’s, C88 Ford Motor Company, C226 General Motors in 2011–2012, C216 Green Mountain Coffee Roasters, C259 Heineken, C59 ice cream brands, C108 of imported beers, C134 of Johnson & Johnson by segment, C117 by QVC, C63 Sales and leaseback, 169 Sales commission, 132 Sarbanes-Oxley Act, 45 and boards of directors, 294 on corporate governance, 300 protection of whistle-blowers, 370 Scenario analysis, 40 context for, 40–41 at PPG, 41 Scent of Mystery, 257 Search barrier, 123 Search costs, 160 in vertical integration, 188 Search engines, 452 Securities and Exchange Commission Bank of America fine, 104 as control mechanism, 299–300 on crowdfunding, 253 EDGAR database, 449 filings, 449–450 Seeds vs weeds, 382 Self-awareness, 354 Self-censorship, 428 Self-governing culture, 280 Self-regulation, 354–355 Sellers, perception of differentiation, 151 Sell-offs, 197n Semiconductor business, 397 Separation of ownership and management, 290–291 Service organizations offshoring by, 224 value chain applied to, 81–82 Services, 76 differentiation strategy, 148 overall cost leadership, 144 I-46 Subject Index Procter & Gamble expansion into, C199–C200 Setting a direction, 347–348 Shared value concept, 18–19 Shareholder activism, 291, 295 institutional investors, 295 Shareholders, in corporate governance, 14, 15 Shareholder value, destroyed by acquisitions, 197 from diversification, 181 generating, 15–16 Sharing activities, 184 attained by mergers and acquisitions, 195 differentiation by means of, 185 synergies from, 184–185 Shark Tank, C41 Shirking, 298 Shopping bots, 58 Shopping infomediaries, 58 Shopping malls, C43 Short-term objectives and action plans, 285 Short-term perspective, 8–9 Short-term solvency/liquidity measures, 440–442 cash ratio, 442 current ratio, 441 quick/acid-test ratio, 441 Short-term solvency ratios, 93 Silos, 122, 315 Simple organizational structure, 313, 314 advantages, 313 disadvantages, 313 Single-serving coffee-brewing competition, C263–C264 European roots, C260–C261 Keurig, C256–C267 pod-brewing market, C261–C263 Situational factors in organizational control, 286–287 Skilled human resource pool, 214 Skills lost in outsourcing, 329 training for, 111 Skill sets, access to, 124 Skunkworks, 399, 400 Skyfall, 217, C94, C96 Slow industry growth, 54 Smackdown, C68, C69 Small Business Administration, 255, C109 Small Business Development Center, 255 Smartphone market, C23–C24 competitors, C191 Soap opera origin, C198 Social capital, 108 attracting and retaining talent, 120 boundaryless organizations, 335 entrepreneurial resource, 254 example, 119 generated by electronic teams, 126 implications for career success, 122 interdependence among group members, 121 overcoming barriers to collaboration, 123 Pied Piper Effect, 120 potential downsides cost of socialization process, 125 dysfunctional human resource practices, 125 groupthink, 125 not enough closure relationship, 126 pursuit of personal agendas, 125–126 and resource-based view of the firm, 119 social networks for, 120–125 tying knowledge workers to firms, 118–119 value creation through, 130 Social complexity, 87 Social media imitation, 246–247 LinkedIn, 152 Social network analysis, 121 bridging relationships, 121–122 closure relationships, 121–122 communication patterns, 121 Social networks analysis of, 121–122 brokers, 124–125 connectors, 120–121 implications for career success, 123 network traps wrong behavior, 125 wrong relationships, 125 wrong structure, 125 public vs private information, 123–125 for sharing information, 126 structural holes, 122 Social responsibility, 17–18; see also Corporate social responsibility Apple Inc., C22 demand for, 18 Jamba Juice, C44 shared value concept, 18–19 triple bottom line, 19–20 Social skills, 356–357 Socialization process, costs of, 125 Socially complex processes, 108 Socially responsible investing, 20 Sociocultural segment of the general environment, 42–44 Sociocultural trends, 47 Soft power, 353 Soft trends, 37 example, 37 Software market, C25 Software piracy, 220 Southeast Asia, poverty in, C85–C86 South Korea business groups, 303 Gmarket, C82 Spain, economic crisis, Specialty coffee industry, C259–C260 Specialty store chains, C51 Spin-offs, 197n Split-ups, 197n Sponsoring, advice on, 114 Staffing to capture value from innovation, 386 for innovation success, 387 internal vs external, 382 Stakeholder coalitions, 221 Stakeholder management, 15 generating shareholder value, 15–16 key groups and claims, 16 in mission statements, 26 zero-sum vs symbiosis, 16–17 Stakeholders, and balanced scorecard, 94–96 benefits from antitakeover tactics, 203 on board of directors, 221 in boundaryless organizations, 333–335 and corporate governance, 288n in decision making, impact of vertical integration, 188 key groups, 16 in Procter & Gamble, 17 retention of profits, 92 source of new venture ideas, 391 in Walmart, 16 Standard and Poor’s 500 index, 20 Standard financial statements, 437 Standardization, 226–227 Standardized products, 52 Stars, 191–192 Start-ups; see also Corporate Entrepreneurship; Entrepreneurs; New ventures capital sources, 252 costs for ice cream franchises, C113 criteria for viability, 250 crowdfunding, 253–254 Edward Marshall Boehm Inc., C3 emigration of talent for form, 120 entry strategies, 257–260 financial resources, 251–254 generic strategies, 260–262 global, 322–323 government contracting, 255 government support, 255 human capital, 254 and JOBS Act of 2010, C189 leadership in, 255–256 in mature industries, 262 opportunity evaluation, 249–250 QVC as, C64 social capital, 254–255 sources of opportunities, 248–249 strategic thinking for, 247–248 threat of retaliation by incumbents, 257 using microfinance, C85–C87 Static analysis, 59 Status quo challenging, 363–364 dissatisfaction with, 346 questioning, 358–359 vested interests in, 350 Stereotyping, 428 Stock analysts, as control mechanism, 299 Stock market, 43 Stock options, 296, 395 Stock price performance Campbell Soup Company, C240, C241, C245 changes at Apple Inc., C17 decline after acquisition notice, 195 of financial stocks, 15 JetBlue Airways, C146, C152 Stock repurchase, General Motors, C219 Stockholders, 290 Storage costs, 54 Store-within-a-store, C43 Storytelling, in animated films, C9 Stove pipes, 122, 315 Strategic actions, 267 types of, 268 Strategic alliances, 199 Apple and Microsoft, C20 benefits, 237 crowdsourcing in, 199 to develop and diffuse technologies, 200 to enter new markets, 199 JetBlue Airways and Aer Lingus, C149 means of diversification, 193, 199–200 potential downsides, 200 to reduce value chain costs, 199–200 risks and limitations, 237–238 for start-ups, 254–255 manufacturing, 255 pitfalls, 255 retailing, 255 technology, 255 as strategic actions, 268 Strategic analysis, 11, 419 information resources, 450–452 Strategic business unit structure, 314, 318 advantages, 319 Apple Inc App Store, C25–C26 computers, C22 iPad, C24–C25 iPhone, C23–C24 iPod, C22–C23 iTunes, C25 software, C25 Campbell Soup Company, C236 disadvantages, 319 in growth/share matrix cash cows, 191–192 dogs, 191–192 question marks, 191–192 stars, 191–192 Johnson & Johnson, C117–C118 Procter & Gamble, C196 Strategic control, 278 alternative approaches, 287 aspects of behavioral control, 278, 279 corporate governance, 278 informational control, 278, 279 attaining behavioral control, 281–288 based on feedback loop, 278 in case analysis, 435 contemporary approach, 279–280 ensuring informational control, 278–280 problems at Hewlett-Packard, 276–277 role of corporate governance, 288–303 traditional approach, 278–279 types of, 14 views of managers and employees, 280 Strategic decision makers, 415 Strategic decisions applications of real options analysis, 395–396 embedded options, 396 at Johnson Controls, 396 tollgates, 396 Strategic direction creating sense of mission, 22–23 hierarchy of goals, 23 mission statements, 25–26 strategic objectives, 26–27 vision, 23–25 Strategic envelope, 384–385 Strategic groups, 61 automobile industry, 62–63 charting future strategies, 62 classifying, 61–62 identifying barriers to mobility, 62 identifying competitive position, 62 implications of each industry, 62 Strategic management, corporate governance, 14–15 to create competitive advantage, 7–8 decision dilemma, 28 ensuring coherence in direction, 22–27 hierarchy of goals, 23 mission statement, 25–26 strategic objectives, 26–27 vision, 23–25 integrative view of organization, 20–22 key attributes efficiency-effectiveness trade-off, goals and objectives, short-term or long-term perspective, 8–9 stakeholders in decision making, shared value concept, 18–19 social responsibility, 17–18 stakeholder management, 15–17 triple bottom line, 19–20 Strategic management process, analyses, decisions, and actions, intended vs realized strategy, 10–11 ongoing, strategy analysis, 11–13 strategy formulation, 13–14 Strategic objectives, 26 Strategic partnering, 387 Strategic plan, in virtual organizations, 331 Strategic priorities, 284–285 at Jamba Juice, C39 Strategic resources, 84 Strategic thinking, 162 for start-ups, 247–248 Strategic vs financial goals, 394 Strategically equivalent valuable resources, 87 Strategy analysis, 11–13 Robin Hood, C2 Strategy formulation, 13 effect of organizational structure, 324 summary of steps, 13 Strategy implementation, 13 summary of steps, 13–14 Strategy objectives criteria for appropriate, 27 measurable, 27 realistic, 27 specific, 27 timely, 27 financial, 26–27 lack of focus from too many, 27 nonfinancial, 26–27 Strategy/Strategies, at Apple Inc., C17 Campbell Soup Company, C238 change at Procter & Gamble, C200 change at United Way Worldwide, C247 charting future direction of, 61 cross-selling, 105 failure at Borders, 3–4 going astray, 36 intended vs realized, 10–11 overemphasis on single dimension of, 73 reasons for failure, 10–11 reinvention at Weight Watchers, C29 requiring multiple types of resources, 85 sources of implementation problems, 348–349 too easily imitated, 146–147 for turnaround at Ford, 170 value of inexperience, 22 Weight Watchers, C30 Strikes General Motors in 1970, C216 United Food and Commercial Workers, 28 Subject Index I-47 Structural holes, 122 Structure of Corporation Law (Eisenberg), 290 Stuck-in-the-middle problem, 142, 156 Subprime mortgage market, 371 Subsidiaries of Beiersdorf AG, C156 Boston Beer Company, C129 and corporate parenting, 189 wholly owned, 238 Substitute products and services, 53 Substitutes available for resources, 86–88 threat of, 53 Succession planning, 293 and duality of command, 297 Super Bowl Apple’s commercial of 1984, C20 TV commercials, 77 Superficial networks, 125 Supplier base, 215 India, 216 Suppliers; see also Bargaining power of suppliers to Apple Inc., C22 disintermediation by, 58 for General Motors, 59 long-term relationships with, 59 loss of control over, 329 in luxury goods industry, C169 problems for Boeing, 311 to QVC, C66 web-based purchasing arrangements, 57 Supply chain Apple Inc., C17 potential problem for Boston Beer Company, C131 Support activities, 72 differentiation strategy, 148 general administration, 79 human resource management, 78 overall cost leadership, 144 procurement, 76–78 technological development, 78 Sustainability, Campbell Soup Company, C241–C242 Sustainable competitive advantage, 8; see also Competitive advantage criteria for, 89 no longer possible, 347 resources for, 85–89 Sustainable global economy, 19 Sustaining competitive advantage, innovation for, 381 Sustaining innovation, 380 Switching costs, 51 barrier to entry, 51 built up for buyers, 53 and buyer bargaining power, 52 and intensity of rivalry, 58 lack of, 54 on web businesses, 56 SWOT analysis, 41, 85 and competitive aggressiveness, 402 limitations one-shot view of moving target, 73 overemphasis on single dimension of strategy, 73 strengths not leading to competitive advantage, 73 too narrow a focus on external environment, 73 not primary basis for internal analysis, 72 I-48 Subject Index for strategy, 42 unpopularity of, 42 Symbiosis, role of stakeholders, 16–17 Synergies, 181 core competencies as basis for, 183 deriving cost savings, 184–185 financial, 182 imitated by competitors, 196 main sources of, 189 obtained by mergers and acquisitions, 195 from sharing activities, 184–185 Systemic barriers, 351 T Tablet computer market, C24–C25 Tacit knowledge, 108, 128 Tactical actions, 267 for overall cost leadership, 143 types of, 268 Takeover constraint, 298 Takeover premium, 195 Talent attracted and retained by social capital, 119 attracting, 106, 110–112 attracting and retaining, C10 emigration to form start-ups, 120 open-sourcing model for, 117 role of empathy in retailing, 356 Tangible resources, 83 Dell Inc., 90 types of, 83 Target market of film studios, C96 Teams autonomous, 399 autonomous work groups, 390 in barrier-free organizations, 325–326 in boundaryless organizations, 324, 332 for case analysis, 429–430 cross-functional, 336 electronic vs traditional, 127–128 good vs mediocre, 326 Technological resources, 83 Technological segment of the general environment, 43, 45 Technological trends, 47 Technology contribution to decline stage, 168 cutting edge at Pixar, C9 developed and diffused by strategic alliances, 200 focus for innovation, 385 for hiring prepuces, 111 for home viewing, C102 investment in, 401 for leveraging human capital and knowledge codifying knowledge, 128–129 electronic teams, 127–128 social networks, 126 as source of new ideas, 378 value creation through, 130 Technology advance digital projection techniques, C100–C101 by movie exhibitors image quality, C103 IMAX, C103 sound systems, C103 at Nintendo, C177, C180–C181 Technology alliances, 255 Technology development, 78 Apple Inc., C17, C20–C26 computer-animated films, C7–C10 differentiation strategy, 148 overall cost leadership, 144 Pixar Animation Studios, C8–C9, C10 Ted, C97 Teleconferencing, 53 Television cable networks, C102 home shopping by, C64 reality-based shows, C68 set sizes and features, C101 Television commercials Apple Inc Super Bowl 1984, C20 costs for Super Bowl, 77 Television industry, 381 Terrorist attack of 2001, 18, C147 Theater chains, C97 Theater screens in U.S 2000–2012, C95 Theory of the business, 36 Threat analysis, 264, 264–266 market commonality, 266 resource similarity, 266 strength of response based on, 266 Threat of new entrants, 50, 56 in five-forces model, 50 impact of Internet, 55 by start-ups, 256–257 Threat of retaliation, Robin Hood, C2 Threat of retaliation for start-ups, 257 Threat of substitute products and services, 53, 56 in five-forces model, 53 impact of Internet, 58 360-degree evaluation and feedback system, 115 at General Electric, 115 at HCL, 116 Ticket prices, C95 Ticket sales increase vs volume, C94 in U.S 1980–2012, C95 Time horizon in industry analysis, 60–61 Time pacing of innovation, 385–386, C45 of production at Pixar, C9–C10 Times interest earned ratio, 93, 442 Tipping Point (Gladwell), 120 Tollgates, strategic decision makers, 396 Top-level executives, 21 Total asset turnover, 93, 444 Total debt ratio, 93, 442 Total performance indicators, 96 Total quality management, Total wage costs, 225 Tourism, decline in European Union, Trademark protection, Keurig, C264 Trade-offs efficiency-effectiveness, price-performance, 169 Trading blocs, 46, 234, 234 Traditional approach to strategic control, 277–279, 278 Training and behavioral control, 288 Campbell Soup Company, C238 for skill, 111 and technology changes, 113 Transaction cost perspective, 188 Transaction costs, 334 effects on organizational structure, 314n lowered by disintermediation, 160 types of, 188 Transaction-specific investments, 188, 189 Transfer barrier, 123 Transformational change, 22 Transnational strategy, 232 by Asea Brown Boveri, 232–233 enhanced adaptation, 232 location decisions for value chain, 232 risks and limitations, 233 strengths and limitations, 233 value-chain activities, 232 Travel and Leisure, C149 Trend analysis, 36–38 Samsung Electronics, C194 Trends in dietary eating, C31 emerging, 36–37 in general environment, 47 hard, 37–38 key, 36 return on sales, 94 weight-management industry, C29 Tribal loyalty, 116 Triple bottom line, 19 and environmental revolution, 19 environmental sustainability, 19–20 T-shaped management, 123 Turnaround strategy, 169 asset and cost surgery, 169 Dippin’ Dots Inc., C106–C107 external analysis for, 169 Ford Motor Company, C220–C233 at Ford Motor Company, 170 at General Motors, C214, C217–C219 internal analysis for, 169 at Intuit, 169–170 Jamba Juice, C45 McDonald’s, C88, C90–C92 piecemeal productivity improvements, 169 product and market pruning, 169 and replacement demand, 171 rescuing pockets of profit, 171 Samsung Electronics, C191–C192 at Yahoo!, C268–C273 Turnover measures, 443–444 Turnover ratios, 93 U Uncertainty, underestimating, 40 Undifferentiated products, and buyer bargaining power, 52 Unemployment, in Spain, Unethical behavior, 365 in housing market, 371 intensified by competition, 369–370 minimizing, 286 Unification lever, 123 Uniqueness not valuable, 150 Unit costs, lowering, 228 United Auto Workers, 170, C216 United Food and Commercial Workers Union, 28, C210 United States aging population, 42 Beiersdorf AG in, C150 coffee consumption, C259–C260 history of gambling, C12–C13 leading agricultural exports, C239 number of franchisers, 236 packaged-food industry, C238–C239, C240 United States Bureau of Statistics, 42 United States Consumer Product Safety Commission, C263–C264 United States Supreme Court, ruling against film studios, C98 United States v Paramount Pictures, C98 Unity of command, 297 Universities, as innovation partners, 387 Unrelated diversification, 189 corporate parenting, 189 Delta Air Lines, 203–204 eBay, C79 failure at Cisco Systems, 178–180 hierarchical relationships, 189 portfolio management, 190–192 restructuring, 189–190 risk reduction by, 192 synergies from, 189 value creation by, 181–182 Unsupported teams, 336 Upscale within-theater dining, C104 Upstream activities, 232 U.S News & World Report, 369, C31 USA Today, 379, C42, C149 USA Today Super Bowl Ad Meter, 77 Using the new to improve the old, 169 Utility companies, greenwashing, 366 V Valuable resources, 85 Value captured from innovation, 386 definition, 72 Value chain, 72 cost reductions, 199–200 extended, 155 global dispersal of, 223–225 global dispersion of decline in transportation costs, 224 example, 224 offshoring, 224–225 outsourcing, 224–225 by service sector, 224 integration at multiple points along, 149 and reintermediation, 58 Value-chain activities at Campbell Soup, 75 in decline stage, 168 differentiation strategy, 148 film studios distribution, C97–C98 exhibition, C98–C99 production, C96–C97 for firms to consider primary activities, 74 support activities, 76 location in transnational strategy, 232 optimizing location of, 218 outsourced, 187 overall cost leadership, 144 primary, 72, 74–76 source of competitive advantage, 392 support, 72, 76–79 too much focus on few, 146 underestimating challenges, 156 Value-chain analysis, 72 interrelationships among, 79–80 primary activities, 72, 74–76 prosumer concept, 80–81 for service organizations, 81–82 support activities, 72, 76–79 Value creation activities, 72 from core competencies, 183 from human capital, 130 from intellectual processes, 106 by internal development, 20 from opportunities, 250 from related diversification, 181–182 from social capital, 130 from technology, 130 from unrelated diversification, 181–182, 189–190 Value net, 59–60 Value of the firm in financial statements, 107 market-to-book value, 107–108 Values in boundaryless organizations, 330–333 decision dilemma, 28 Variance, estimation of, 396 Vehicle dependability rankings, C237 Venture capital, 253 Venture capitalists, 253 for start-ups, 252–253 Vertical boundaries, 325 Vertical integration, 185, 186 administrative costs, 188–189 benefits and risks, 186–188 issues to consider, 186–188 market power, 186–189 at Shaw Industries, 187 transaction cost perspective, 188–189 Vested interest in the status quo, 350 Video game industry competitors, C177–C178, C181–C183 game developers, C181 Nintendo Wii, C177–C181, C183–C184 Video on demand, C102 Video rental business decline, 168 Vietnam, Procter & Gamble in, 231 Virtual organization, 324, 329, 329–331 challenges and risks, 330–331 collaboration in, 330, 331 compared to modular type, 330 pros and cons, 332 Visas for high-tech workers, 45 Vision, 23, 346 anchored in reality, 24–25 developed by leaders, 23 downside, 24 of entrepreneurs, 256 of environmental sustainability, 348 examples, 24 Ford Motor Company, C220 idealistic, 24 irrelevant, 24 setting a direction, 347–348 sloganeering campaign, 24 sources of implementation problems, 348–349 Vision statements, 24, 26 Subject Index I-49 W Wage inflation, 225 Wall Street Journal, 38, 120, 196, 266, 300, C42, C101, C173 Water purification system, 387 Watson supercomputer, 184 Websites business, 450 for competitive intelligence, 38–39 crowdfunding, 253 for eBay, C74 Weight Watchers, C30 World Wrestling Entertainment, C70 West Side Story, C103 Wholly owned subsidiary, 238 benefits, 238, 239 risks and limitations, 238 I-50 Subject Index Wisdom of Teams (Smith), 332 Wolf culture, 349 Women driving force in economy, 44 educational attainments, 44 involvement in microfinance, C85, C86 in workforce, 42–44 Women’s specialty retail stores, C52–C54 Women’s Wear Daily, C48, C51 Work, challenging, 117 Workforce aging population of, 42 changes at Procter & Gamble, C198 diversity in, 117–118 millennials in, 112 women in, 42–44 Working Knowledge, 369 Working with Emotional Intelligence (Goleman), 354 Workplace, stimulating environment, 117 World Health Organization, C31 World Trade Center attack of 2001, C147 Worldwide functional divisions, 313 Worldwide functional structure, 322 Worldwide matrix structure, 313, 322 Worldwide product division, 313 Worldwide product division structure, 322 Wrestling Perspective, C69 Wright amendment, C142 Written case analysis, 425 Z Zero-sum game, 59, 317 Zero-sum role of stakeholders, 16–17 ... Cataloging-in-Publication Data Dess, Gregory G Strategic management : text and cases / Gregory G Dess, G.T Lumpkin, Alan B Eisner, Gerry McNamara.—Seventh edition pages cm Includes bibliographical references and index... EDITION strategic management Gregory G Dess University of Texas at Dallas G T Lumpkin Syracuse University Alan B Eisner Pace University Gerry McNamara Michigan State University text and cases STRATEGIC. .. in strategic management, technology management, organizational learning, and managerial decision making He has published research articles and cases in journals such as Advances in Strategic Management,
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