Strategic Management and Business Policy ppt

Strategic Management Model
Gathering
Information
Societal
Environment:
General forces
Natural
Environment:
Resources and
climate
Task
Environment:
Industry analysis
Internal:
Strengths and
Weaknesses
Structure:
Chain of command
Culture:
Beliefs, expectations,
values
Resources:
Assets, skills,
competencies,
knowledge
External:
Opportunities
and Threats
Developing
Long-range Plans

Mission
Reason for
existence
Objectives
What
results to
accomplish
by when
Strategies
Plan to
achieve the
mission &
objectives
Policies
Broad
guidelines
for decision
making
Environmental
Scanning:
Strategy
Formulation:
Feedback/Learning: Make corrections as needed
Putting Strategy
into Action
Monitoring
Performance
Programs
Activities
needed to

accomplish
a plan
Budgets
Cost of the
programs
Procedures
Sequence
of steps
needed to
do the job
Performance
Actual results
Strategy
Implementation:
Evaluation
and Control:
THIRTEENTH EDITION
Strategic
Management
and Business
Policy
TOWARD GLOBAL SUSTAINABILITY
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THIRTEENTH EDITION
Thomas L. Wheelen
Formerly with University of Virginia
Trinity College, Dublin, Ireland
J. David Hunger
Iowa State University
St. John’s University

Strategic
Management
and Business
Policy
TOWARD GLOBAL SUSTAINABILITY
with major contributions by
Kathryn E. Wheelen
Alan N. Hoffman
Bentley University
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Library of Congress Cataloging-in-Publication Data
Wheelen, Thomas L.
Strategic management and business policy : toward global
sustainability / Thomas L. Wheelen, J. David Hunger. — 13th ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-13-215322-5
ISBN-10: 0-13-215322-X
1. Strategic planning. 2. Strategic planning—Case studies.
3. Sustainability. I. Hunger, J. David, II. Title.
HD30.28.W43 2012
658.4'012—dc22
2011013549
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ISBN 10: 0-13-215322-X
ISBN 13: 978-0-13-215322-5
Dedicated to
KATHY, RICHARD, AND TOM BETTY, KARI AND JEFF, MADDIE AND
MEGAN, SUZI AND NICK, SUMMER AND
KACEY, LORI, MERRY AND DYLAN,
AND WOOFIE (ARF!).
SPECIAL DEDICATION TO KATHRYN WHEELEN:
Kathryn has worked on every phase of the case section of this book. Until this edition, she also managed
the construction of the Case Instructor’s Manual. She has done every job with a high level of dedication
and concern for both the case authors and the readers of this book.
NOLA AKALA
DAVID ALEVY
TARA ALGEO
DAVID ARMSTRONG
MIKE ASKEW
LAURA BAILEY
NICK BAKER
ALICIA BARNES
ASHLEY BARNES
ALICE BARR
SHERRY BARTEL
KENDRA BASSI
JAY BECKENSTEIN
JOSH BECKENSTEIN

NICOLE BELL
CATHY BENNETT
KATIE BOLLIN
SCOTT BORDEN
JENNIFER BOYLE
AUNDREA BRIDGES
SUZANNE BROWN
ALEXANDRA BUEHLER
KYLE BURDETTE
WHITNEY CAMERON
RUTH CARDIFF
AMY CAREY
MEGAN CARRICO
MARTI CARTER
ANDREA CATULLO-LINN
MEREDITH CHANDLER
LUKE CLAEYS
KAYLEE CLAYMORE
BRIAN COBB
JENNIFER COLE
TARYLL CONNOLLY
THAYNE CONRAD
DONNA CONROY
CAITLIN COUTHEN
MEGAN JOY COWART
CYNDI CRIMMINS
KASEY CROCKETT
DAN CURRIER
KELLY DAN
MICHLENE DAOUD HEALY

STACY DAVIS
FRANK DEL CASTILLO
MEREDITH DELA ROSA
CHRIS DELANEY
GEORGE DEVENNEY
DANA DODGE (Frick)
KATE DOLDER
BARBARA DONLON
HEIDI DRESSLER
TRACY DYBALSKI
BRIAN DYK
KIM ECK
TRISH EICHHOLD
KRISTIN ELBER
KELSEY ELLIOTT
KATIE EYNON
GENEVA FARROW
MARIA FELIBERTY
MIKE FINER
MICHELLE FINNERTY
CANDAS FLETCHER
ROBERT FLORY
MARCIA FLYNN
BRAD FORRESTER
MARGARET FRENCH
STEPHANIE FRITSON
MARK GAFFNEY
MICHELLE GARCIA-JUCHTER
SYBIL GERAUD
AMBER GOECKE

CAROLYN GOGOLIN
ADAM GOLDSTEIN
BETH GRUNFELD
MICAELA HAIDLE
GREG HAITH
DEMETRIUS HALL
BRIDGET HANNENBERG
BRYAN HARRELL
TARA HARTLEY
KENNY HARVEY
ALISON HASKINS
CAROL HAWKS
JENNIFER HEILBRUNN
CHRISTINE HENRY
LYNN HICKS
JULIE HILDEBRAND
DAUNNE HINGLE
WENDI HOLLAND
CHRISTY HUMENIUK
GENE HUMENIUK
ANDREA IORIO
SUSAN JACKSON
PAM JEFFRIES
BRITTANY JUCHNOWSKI
ANJALI JUSTUS
CHERYL KABB
LAURA KAPPES
GIA KAUL
JULIE KESTENBAUM
KARTAPURKH KHALSA

KIM KIEHLER
AMANDA KILLEEN
WALT KIRBY
MARY-JO KOVACH
ROBYN KOVAR
GREG KRAMP
DANIEL KRAUSS
MICHAEL KRISANDA
GINA LaMANTIA
CHAFIKA LANDERS
DOROTHY LANDRY
DUSTIN LANGE
ALIX LaSCOLA
JOE LEE
APRIL LEMONS
KIMBERLY LENAGHAN
This book is also dedicated to the following Prentice Hall/Pearson sales
representatives who work so hard to promote this book:
vi
TRICIA LISCIO
BETH LUDWIG
CARY LUNA
JEMINA MACHARRY
KATIE MAHAN
LAURA MANN
PATRICIA MARTINEZ
CHRISTINA MASTROGIOVANNI
SONNY MATHARU
TONY MATHIAS
BROOK MATTHEWS

GEORGIA MAY
ALICIA MCAULIFFE
MASON McCARTNEY
KAREN McFADYEN
BRIAN McGARRY
MICHELLE McGOVERN
IRENE McGUINNESS
RYAN McHENRY
CRISTIN McMICHAEL
KEVIN MEASELLE
RAY MEDINA
KELLY MEIERHOFER
MOLLY MEINERS
MATT MESAROS
SHALON MILLER
JAMI MINARD
WILLIAM MINERICH
EMILY MITCHELL
JILINE MIX
JULIE MOREL
RAFAEL MORENO
TRACY MORSE
OLIVIA MOUG
DOLLY MUNIZ
TRICIA MURPHY
LAUREN MURROW
AMBER MYLLION (Parks)
LINDA NELSON
LYNNE NICLAIR
BOB NISBET

BETSY NIXON
TOM NIXON
LAURA NOAH
COLLEEN O’DELL
DEBBIE OGILIVE
SARI ORLANSKY
DAVE OSTROW
DARCEY PALMER
KRISTINA PARKER
TONI PAYNE
JULIANNE PETERSON
MELISSA PFISTNER
CANDACE PINATARO
BELEN POLTORAK
ELIZABETH POPIELARZ
MEGAN PRENDERGAST
NICOLE PRICE
JILL PROMESSO
LENNY ANN RAPER
JOSH RASMUSSEN
AMANDA RAY
SONYA REED
RICHARD RESCH
MARY RHODES
BRAD RITTER
DAN ROBERTSON
MATT ROBINSON
JENNIFER ROSEN
DOROTHY ROSENE
KELLEEN ROWE

RICH ROWE
PEYTON ROYTEK
SENG SAECHAO
STEVE SARTORI
LYNDA SAX
BOB SCANLON
MARCUS SCHERER
KIMBERLY SCHEYVING
HEIDI SCHICK (Miller)
BRAD SCHICK
CHRIS SCHMIDT
DEBORAH SCHMIDT
MOLLY SCHMIDT
CORRINA SCHULTZ
WHITNEY SEAGO
CHRISTIANA SERLE
MARTHA SERNAS
MARY SHAPIRO
BARBARA SHERRY
KEN SHIPBAUGH
DAVE SHULER
JESSICA SIEMINSKI
LEA SILVERMAN
AUTUMN SLAUGHTER
KRISTA SLAVICEK
SCOTT SMITH
ADRIENNE SNOW
LEE SOLOMONIDES
BEN STEPHEN
DAN SULLIVAN

JOHN SULLIVAN
LORI SULLIVAN
STEPHANIE SURFUS
AMANDA SVEC
CHRISTINA TATE
SARAH THOMAS
ABBY THORNBLADH
KATY TOWNLEY
ELIZABETH TREPKOWSKI
TARA TRIPP
CAROLYN TWIST
JOE VIRZI
AMANDA VOLZ
BRITNEY WALKER
MADELEINE WATSON
BEN WEBER
DANIEL WELLS
MARK WHEELER
LIZ WILDES
MICHELLE WILES
BRIAN WILLIAMS
ERIN WILLIAMS
CINDY WILLIAMSON
RACHEL WILLIS
SIMON WONG
KIMBERLY WOODS
JACKIE WRIGHT
HEATHER WRUBLESKY
GEORGE YOUNG
MARY ZIMMERMANN

KACIE ZIN
DEDICATION vii
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Brief Contents
PART ONE Introduction to Strategic Management and Business Policy 1
CHAPTER 1 Basic Concepts of Strategic Management 2
CHAPTER 2 Corporate Governance 42
CHAPTER 3 Social Responsibility and Ethics in Strategic Management 70
PART TWO Scanning the Environment 93
CHAPTER 4 Environmental Scanning and Industry Analysis 94
CHAPTER 5 Internal Scanning: Organizational Analysis 136
PART THREE Strategy Formulation 173
CHAPTER 6 Strategy Formulation: Situation Analysis and Business Strategy 174
CHAPTER 7 Strategy Formulation: Corporate Strategy 204
CHAPTER 8 Strategy Formulation: Functional Strategy and Strategic Choice 236
PART FOUR Strategy Implementation and Control 269
CHAPTER 9 Strategy Implementation: Organizing for Action 270
CHAPTER 10 Strategy Implementation: Staffing and Directing 300
CHAPTER 11 Evaluation and Control 328
PART FIVE Introduction to Case Analysis 363
CHAPTER 12 Suggestions for Case Analysis 364
PART SIX WEB CHAPTERS Other Strategic Issues
WEB CHAPTER A Strategic Issues in Managing Technology & Innovation
WEB CHAPTER B Strategic Issues in Entrepreneurial Ventures & Small Businesses
WEB CHAPTER C Strategic Issues in Not-For-Profit Organizations
PART SEVEN Cases in Strategic Management 1-1
GLOSSARY G-1
NAME INDEX I-1
SUBJECT INDEX I-7
ix

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Contents
Preface xxix
PART ONE Introduction to Strategic Management and Business Policy 1
CHAPTER 1 Basic Concepts of Strategic Management 2
1.1 The Study of Strategic Management 5
Phases of Strategic Management 5
Benefits of Strategic Management 6
1.2 Globalization and Environmental Sustainability: Challenges to Strategic Management 7
Impact of Globalization 8
Impact of Environmental Sustainability 8
Global Issue: REGIONAL TRADE ASSOCIATIONS REPLACE NATIONAL TRADE BARRIERS 9
Environmental Sustainability Issue: PROJECTED EFFECTS OF CLIMATE CHANGE 12
1.3 Theories of Organizational Adaptation 12
1.4 Creating a Learning Organization 13
1.5 Basic Model of Strategic Management 14
Environmental Scanning 16
Strategy Formulation 17
Strategy Highlight 1.1: DO YOU HAVE A GOOD MISSION STATEMENT? 18
Strategy Implementation 21
Evaluation and Control 22
Feedback/Learning Process 23
1.6 Initiation of Strategy: Triggering Events 23
Strategy Highlight 1.2: TRIGGERING EVENT AT UNILEVER 24
1.7 Strategic Decision Making 25
What Makes a Decision Strategic 25
Mintzberg’s Modes of Strategic Decision Making 25
Strategic Decision-Making Process: Aid to Better Decisions 27
1.8 The Strategic Audit: Aid to Strategic Decision-Making 28
1.9 End of Chapter Summary 29

APPENDIX 1.A Strategic Audit of a Corporation 34
xi
CHAPTER 2 Corporate Governance 42
2.1 Role of the Board of Directors 45
Responsibilities of the Board 45
Members of a Board of Directors 48
Strategy Highlight 2.1: AGENCY THEORY VERSUS STEWARDSHIP THEORY
IN CORPORATE GOVERNANCE 50
Nomination and Election of Board Members 53
Organization of the Board 54
Impact of the Sarbanes-Oxley Act on U.S. Corporate Governance 55
Global Issue: CORPORATE GOVERNANCE IMPROVEMENTS THROUGHOUT THE WORLD 56
Trends in Corporate Governance 57
2.2 The Role of Top Management 58
Responsibilities of Top Management 58
Environmental Sustainability Issue: CONFLICT AT THE BODY SHOP 59
2.3 End of Chapter Summary 62
CHAPTER 3 Social Responsibility and Ethics in Strategic Management 70
3.1 Social Responsibilities of Strategic Decision Makers 72
Responsibilities of a Business Firm 72
Sustainability: More than Environmental? 75
Corporate Stakeholders 75
Environmental Sustainability Issue: THE DOW JONES SUSTAINABILITY INDEX 76
Strategy Highlight 3.1: JOHNSON & JOHNSON CREDO 78
3.2 Ethical Decision Making 79
Some Reasons for Unethical Behavior 79
Strategy Highlight 3.2: UNETHICAL PRACTICES AT ENRON AND WORLDCOM EXPOSED
BY “WHISTLE-BLOWERS” 80
Global Issue: HOW RULE-BASED AND RELATIONSHIP-BASED GOVERNANCE SYSTEMS
AFFECT ETHICAL BEHAVIOR 81

Encouraging Ethical Behavior 83
3.3 End of Chapter Summary 86
Ending Case for Part One: BLOOD BANANAS 90
PART TWO Scanning the Environment 93
CHAPTER 4 Environmental Scanning and Industry Analysis 94
4.1 Environmental Scanning 98
Identifying External Environmental Variables 98
Environmental Sustainability Issue: MEASURING AND SHRINKING YOUR PERSONAL
CARBON FOOTPRINT 100
xii CONTENTS
Global Issue: IDENTIFYING POTENTIAL MARKETS IN DEVELOPING NATIONS 107
Identifying External Strategic Factors 108
4.2 Industry Analysis: Analyzing the Task Environment 109
Porter’s Approach to Industry Analysis 110
Industry Evolution 114
Categorizing International Industries 114
International Risk Assessment 115
Strategic Groups 115
Strategic Types 117
Hypercompetition 117
Using Key Success Factors to Create an Industry Matrix 118
Strategy Highlight 4.1: MICROSOFT IN A HYPERCOMPETITIVE INDUSTRY 118
4.3 Competitive Intelligence 120
Sources of Competitive Intelligence 121
Strategy Highlight 4.2: EVALUATING COMPETITIVE INTELLIGENCE 122
Monitoring Competitors for Strategic Planning 122
4.4 Forecasting 123
Danger of Assumptions 123
Useful Forecasting Techniques 124
4.5 The Strategic Audit: A Checklist for Environmental Scanning 125

4.6 Synthesis of External Factors—EFAS 126
4.7 End of Chapter Summary 127
APPENDIX 4.A Competitive Analysis Techniques 133
CHAPTER 5 Internal Scanning: Organizational Analysis 136
5.1 A Resource-Based Approach to Organizational Analysis 138
Core and Distinctive Competencies 138
Using Resources to Gain Competitive Advantage 139
Determining the Sustainability of an Advantage 140
5.2 Business Models 142
5.3 Value-Chain Analysis 143
Strategy Highlight 5.1: A NEW BUSINESS MODEL AT SMARTYPIG 144
Industry Value-Chain Analysis 145
Corporate Value-Chain Analysis 146
5.4 Scanning Functional Resources and Capabilities 147
Basic Organizational Structures 147
Corporate Culture: The Company Way 149
CONTENTS xiii
Global Issue: MANAGING CORPORATE CULTURE FOR GLOBAL COMPETITIVE
ADVANTAGE: ABB VERSUS MATSUSHITA 150
Strategic Marketing Issues 151
Strategic Financial Issues 153
Strategic Research and Development (R&D) Issues 154
Strategic Operations Issues 156
Strategic Human Resource (HRM) Issues 158
Environmental Sustainability Issue: USING ENERGY EFFICIENCY FOR COMPETITIVE
ADVANTAGE AND QUALITY OF WORK LIFE 161
Strategic Information Systems/Technology Issues 162
5.5 The Strategic Audit: A Checklist for Organizational
Analysis 163
5.6 Synthesis of Internal Factors 164

5.7 End of Chapter Summary 165
Ending Case for Part Two:
BOEING BETS THE COMPANY 170
PART THREE Strategy Formulation 173
CHAPTER 6 Strategy Formulation: Situation Analysis and Business Strategy 174
6.1 Situation Analysis: SWOT Analysis 176
Generating a Strategic Factors Analysis Summary (SFAS)
Matrix 176
Finding a Propitious Niche 177
Global Issue: SAB DEFENDS ITS PROPITIOUS NICHE 181
6.2 Review of Mission and Objectives 181
6.3 Generating Alternative Strategies by Using a TOWS Matrix 182
6.4 Business Strategies 183
Porter’s Competitive Strategies 183
Environmental Sustainability Issue: PATAGONIA USES SUSTAINABILITY
AS DIFFERENTIATION COMPETITIVE STRATEGY 187
Cooperative Strategies 195
6.5 End of Chapter Summary 199
CHAPTER 7 Strategy Formulation: Corporate Strategy 204
7.1 Corporate Strategy 206
7.2 Directional Strategy 206
Growth Strategies 207
Strategy Highlight 7.1: TRANSACTION COST ECONOMICS ANALYZES VERTICAL
GROWTH STRATEGY 210
xiv CONTENTS
Global Issue: COMPANIES LOOK TO INTERNATIONAL MARKETS
FOR HORIZONTAL GROWTH 212
Strategy Highlight 7.2: SCREENING CRITERIA FOR CONCENTRIC
DIVERSIFICATION 215
Controversies in Directional Growth Strategies 216

Stability Strategies 217
Retrenchment Strategies 218
7.3 Portfolio Analysis 220
BCG Growth-Share Matrix 221
Environmental Sustainability Issue: GENERAL MOTORS
AND THE ELECTRIC CAR 222
GE Business Screen 223
Advantages and Limitations of Portfolio Analysis 225
Managing a Strategic Alliance Portfolio 225
7.4 Corporate Parenting 226
Developing a Corporate Parenting Strategy 227
Horizontal Strategy and Multipoint Competition 228
7.5 End of Chapter Summary 229
CHAPTER 8 Strategy Formulation: Functional Strategy and Strategic Choice 236
8.1 Functional Strategy 238
Marketing Strategy 238
Financial Strategy 239
Research and Development (R&D) Strategy 241
Operations Strategy 242
Global Issue: INTERNATIONAL DIFFERENCES ALTER WHIRLPOOL’S
OPERATIONS STRATEGY 243
Purchasing Strategy 244
Environmental Sustainability Issue: OPERATIONS NEED FRESH WATER
AND LOTS OF IT! 245
Logistics Strategy 246
Human Resource Management (HRM) Strategy 246
Information Technology Strategy 247
8.2 The Sourcing Decision: Location of Functions 247
8.3 Strategies to Avoid 250
8.4 Strategic Choice: Selecting the Best Strategy 251

Constructing Corporate Scenarios 251
Process of Strategic Choice 257
CONTENTS xv
8.5 Developing Policies 258
8.6 End of Chapter Summary 259
Ending Case for Part Three: KMART AND SEARS: STILL STUCK IN THE MIDDLE? 266
PART FOUR Strategy Implementation and Control 269
CHAPTER 9 Strategy Implementation: Organizing for Action 270
9.1 Strategy Implementation 272
9.2 Who Implements Strategy? 273
9.3 What Must Be Done? 273
Developing Programs, Budgets, and Procedures 274
Environmental Sustainability Issue: FORD’S SOYBEAN SEAT FOAM PROGRAM 274
Strategy Highlight 9.1: THE TOP TEN EXCUSES FOR BAD SERVICE 277
Achieving Synergy 278
9.4 How Is Strategy to Be Implemented? Organizing for Action 278
Structure Follows Strategy 279
Stages of Corporate Development 280
Organizational Life Cycle 283
Advanced Types of Organizational Structures 285
Reengineering and Strategy Implementation 288
Six Sigma 289
Designing Jobs to Implement Strategy 290
Strategy Highlight 9.2: DESIGNING JOBS WITH THE JOB CHARACTERISTICS MODEL 291
9.5 International Issues in Strategy Implementation 291
International Strategic Alliances 292
Stages of International Development 293
Global Issue: MULTIPLE HEADQUARTERS: A SIXTH STAGE
OF INTERNATIONAL DEVELOPMENT? 294
Centralization Versus Decentralization 294

9.6 End of Chapter Summary 296
CHAPTER 10 Strategy Implementation: Staffing and Directing 300
10.1 Staffing 302
Staffing Follows Strategy 303
Selection and Management Development 305
Strategy Highlight 10.1: HOW HEWLETT-PACKARD IDENTIFIES POTENTIAL EXECUTIVES 306
Problems in Retrenchment 308
International Issues in Staffing 309
xvi CONTENTS
10.2 Leading 311
Managing Corporate Culture 311
Environmental Sustainability Issue: ABBOTT LABORATORIES’ NEW PROCEDURES
FOR GREENER COMPANY CARS 312
Action Planning 316
Management by Objectives 318
Total Quality Management 318
International Considerations in Leading 319
Global Issue: CULTURAL DIFFERENCES CREATE IMPLEMENTATION
PROBLEMS IN MERGER 321
10.3 End of Chapter Summary 322
CHAPTER 11 Evaluation and Control 328
11.1 Evaluation and Control in Strategic Management 330
11.2 Measuring Performance 332
Appropriate Measures 332
Types of Controls 332
Activity-Based Costing 334
Enterprise Risk Management 335
Primary Measures of Corporate Performance 335
Environmental Sustainability Issue: HOW GLOBAL WARMING COULD
AFFECT CORPORATE VALUATION 340

Primary Measures of Divisional and Functional Performance 342
International Measurement Issues 344
Global Issue: COUNTERFEIT GOODS AND PIRATED SOFTWARE:
A GLOBAL PROBLEM 346
11.3 Strategic Information Systems 347
Enterprise Resource Planning (ERP) 347
Radio Frequency Identification (RFID) 348
Divisional and Functional IS Support 348
11.4 Problems in Measuring Performance 348
Short-Term Orientation 349
Goal Displacement 350
11.5 Guidelines for Proper Control 351
Strategy Highlight 11.1: SOME RULES OF THUMB IN STRATEGY 351
11.6 Strategic Incentive Management 352
11.7 End of Chapter Summary 354
Ending Case for Part Four: HEWLETT-PACKARD BUYS EDS 360
CONTENTS xvii
PART FIVE Introduction to Case Analysis 363
CHAPTER 12 Suggestions for Case Analysis 364
12.1 The Case Method 365
12.2 Researching the Case Situation 366
12.3 Financial Analysis: A Place to Begin 366
Analyzing Financial Statements 369
Environmental Sustainability Issue: IMPACT OF CARBON TRADING 370
Global Issue: FINANCIAL STATEMENTS OF MULTINATIONAL CORPORATIONS:
NOT ALWAYS WHAT THEY SEEM 371
Common-Size Statements 371
Z-value and Index of Sustainable Growth 371
Useful Economic Measures 372
12.4 Format for Case Analysis: The Strategic Audit 373

12.5 End of Chapter Summary 375
APPENDIX 12.A Resources for Case Research 377
APPENDIX 12.B Suggested Case Analysis Methodology Using the Strategic Audit 380
APPENDIX 12.C Example of a Student-Written Strategic Audit 383
Ending Case for Part Five: IN THE GARDEN 391
GLOSSARY G-1
NAME INDEX I-1
SUBJECT INDEX I-1
PART SIX WEB CHAPTERS Other Strategic Issues
WEB CHAPTER A Strategic Issues in Managing Technology and Innovation
1 The Role of Management
Strategy Highlight 1: EXAMPLES OF INNOVATION EMPHASIS IN MISSION
STATEMENTS
2 Environmental Scanning
External Scanning
Internal Scanning
3 Strategy Formulation
Product vs. Process R&D
Technology Sourcing
Global Issue: USE OF INTELLECTUAL PROPERTY AT HUAWEI TECHNOLOGIES
Importance of Technological Competence
Categories of Innovation
Product Portfolio
xviii CONTENTS
4 Strategy Implementation
Developing an Innovative Entrepreneurial Culture
Organizing for Innovation: Corporate Entrepreneurship
Strategy Highlight 2: HOW NOT TO DEVELOP AN INNOVATIVE ORGANIZATION
5 Evaluation and Control
Evaluation and Control Techniques

Evaluation and Control Measures
6 End of Chapter Summary
WEB CHAPTER B Strategic Issues in Entrepreneurial Ventures and Small Businesses
1 Importance of Small Business and Entrepreneurial Ventures
Global Issue: ENTREPRENEURSHIP: SOME COUNTRIES ARE MORE
SUPPORTIVE THAN OTHERS
Definition of Small-Business Firms and Entrepreneurial
Ventures
The Entrepreneur as Strategist
2 Use of Strategic Planning and Strategic Management
Degree of Formality
Usefulness of the Strategic Management Model
Usefulness of the Strategic Decision-Making Process
3 Issues in Corporate Governance
Boards of Directors and Advisory Boards
Impact of the Sarbanes-Oxley Act
4 Issues in Environmental Scanning and Strategy Formulation
Sources of Innovation
Factors Affecting a New Venture’s Success
Strategy Highlight 1: SUGGESTIONS FOR LOCATING AN OPPORTUNITY
AND FORMULATING A BUSINESS STRATEGY
5 Issues in Strategy Implementation
Substages of Small Business Development
Transfer of Power and Wealth in Family Businesses
6 Issues in Evaluation and Control
7 End of Chapter Summary
WEB CHAPTER C Strategic Issues in Not-for-Profit Organizations
1 Why Not-for-Profit?
Global Issue: WHICH IS BEST FOR SOCIETY: BUSINESS
OR NOT-FOR-PROFIT?

CONTENTS xix
2 Importance of Revenue Source
Sources of Not-for-Profit Revenue
Patterns of Influence on Strategic Decision Making
Usefulness of Strategic Management Concepts and Techniques
3 Impact of Constraints on Strategic Management
Impact on Strategy Formulation
Impact on Strategy Implementation
Impact on Evaluation and Control
4 Not-for-Profit Strategies
Strategic Piggybacking
Strategy Highlight 1: RESOURCES NEEDED FOR SUCCESSFUL STRATEGIC
PIGGYBACKING
Mergers
Strategic Alliances
5 End of Chapter Summary
PART SEVEN Cases in Strategic Management 1-1
SECTION A Corporate Governance and Social Responsibility: Executive Leadership
CASE 1 The Recalcitrant Director at Byte Products Inc.: Corporate Legality versus
Corporate Responsibility 1-7
(Contributors: Dan R. Dalton, Richard A. Cosier, and Cathy A. Enz)
A plant location decision forces a confrontation between the board of directors and the CEO regarding
an issue in social responsibility and ethics.
CASE 2 The Wallace Group 2-1
(Contributor: Laurence J. Stybel)
Managers question the company’s strategic direction and how it is being managed by its founder
and CEO. Company growth has resulted not only in disorganization and confusion among
employees, but in poor overall performance. How should the board deal with the company’s
founder?
SECTION B Business Ethics

CASE 3 Everyone Does It 3-1
(Contributors: Steven M. Cox and Shawana P. Johnson)
When Jim Willis, Marketing VP, learns that the launch date for the company’s new satellite will
be late by at least a year, he is told by the company’s president to continue using the earlier
published date for the launch. When Jim protests that the use of an incorrect date to market
contracts is unethical, he is told that spacecraft are never launched on time and that it is common
industry practice to list unrealistic launch dates. If a realistic date was used, no one would contract
with the company.
xx CONTENTS
CASE 4 The Audit 4-1
(Contributors: John A. Kilpatrick, Gamewell D. Gantt, and George A. Johnson)
A questionable accounting practice by the company being audited puts a new CPA in a difficult
position. Although the practice is clearly wrong, she is being pressured by her manager to ignore it
because it is common in the industry.
SECTION C International Issues in Strategic Management
CASE 5 Starbucks’ Coffee Company: The Indian Dilemma 5-1
(Contributors: Ruchi Mankad and Joel Sarosh Thadamalla)
Starbucks is the world’s largest coffee retailer with over 11,000 stores in 36 countries and over
10,000 employees. The case focuses on India as a potential market for the coffee retailer, presenting
information on India’s societal environment and beverage industry. Profiles are provided for various
existing coffee shop chains in India. The key issue in the case revolves around the question: Are
circumstances right for Starbucks to enter India?
CASE 6 Guajilote Cooperativo Forestal: Honduras 6-1
(Contributors: Nathan Nebbe and J. David Hunger)
This forestry cooperative has the right to harvest, transport, and sell fallen mahogany trees in
La Muralla National Park of Honduras. Although the cooperative has been successful thus far, it is
facing some serious issues: low prices for its product, illegal logging, deforestation by poor farmers,
and possible world trade restrictions on the sale of mahogany.
SECTION D General Issues in Strategic Management
INDUSTRY ONE: Information Technology

CASE 7 Apple Inc.: Performance in a Zero-Sum World Economy 7-1
(Contributors: Kathryn E. Wheelen, Thomas L. Wheelen II, Richard D. Wheelen, Moustafa H.
Abdelsamad, Bernard A. Morin, Lawrence C. Pettit, David B. Croll, and Thomas L. Wheelen)
Apple, the first company to mass-market a personal computer, had become a minor player in an
industry dominated by Microsoft. After being expelled from the company in 1985, founder Steve Jobs
returned as CEO in 1997 to reenergize the firm. The introduction of the iPod in 2001, followed by the
iPad, catapulted Apple back into the spotlight. However, in 2011 Jobs was forced to take his third
medical leave, leading to questions regarding his ability to lead Apple. How can Apple continue its
success? How dependent is the company on Steve Jobs?
CASE 8 iRobot: Finding the Right Market Mix? 8-1
(Contributor: Alan N. Hoffman)
Founded in 1990, iRobot was among the first companies to introduce robotic technology into the
consumer market. Employing over 500 robotic professionals, the firm planned to lead the robotics
industry. Unfortunately, its largest revenue source, home care robots, are a luxury good and vulnerable
to recessions. Many of iRobot’s patents are due to expire by 2019. The firm is highly dependent upon
suppliers to make its consumer products and the U.S. government for military sales. What is the best
strategy for its future success?
CASE 9 Dell Inc.: Changing the Business Model (Mini Case) 9-1
(Contributor: J. David Hunger)
Dell, once the largest PC vendor in the world, is now battling with Acer for second place in the global PC
market. Its chief advantages—direct marketing and power over suppliers—no longer provided a
competitive advantage. The industry’s focus has shifted from desktop PCs to mobile computing, software,
and technology services, areas of relative weakness for Dell. Is it time for Dell to change its strategy?
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CASE 10 Rosetta Stone Inc.: Changing the Way People Learn Languages 10-1
(Contributors: Christine B. Buenafe and Joyce P. Vincelette)
Rosetta Stone’s mission was to change the way people learn languages. The company blended
language learning with technology at a time when globalization connected more and more individuals
and institutions to each other. How should the company move forward? Would it be appropriate for
Rosetta Stone to offer products like audio books or services in order to increase market share? Which
international markets could provide the company with a successful future?
CASE 11 Logitech (Mini Case) 11-1
(Contributor: Alan N. Hoffman)
Logitech, the world’s leading provider of computer peripherals, was on the forefront of mouse,
keyboard, and video conferencing technology. By 2010, however, Logitech’s products were threatened
by new technologies, such as touch pads, that could replace both the mouse and keyboard. As the
peripherals market begins to disintegrate, Logitech is considering a change in strategy.
INDUSTRY TWO: INTERNET COMPANIES
CASE 12 Google Inc. (2010): The Future of the Internet Search Engine 12-1
(Contributor: Patricia A. Ryan)
Google, an online company that provides a reliable Internet search engine, was founded in 1998 and soon
replaced Yahoo as the market leader in Internet search engines. By 2010, Google was one of the strongest
brands in the world. Nevertheless, its growth by acquisition strategy was showing signs of weakness. Its
2006 acquisition of YouTube had thus far not generated significant revenue growth. Groupon, a shopping
Web site, rebuffed Google’s acquisition attempt in 2010. Is it time for a strategic change?
CASE 13 Reorganizing Yahoo! 13-1
(Contributors: P. Indu and Vivek Gupta)
Yahoo! created the first successful Internet search engine, but by 2004 it was losing its identity. Was it
a search engine, a portal, or a media company? On December 5, 2006, Yahoo’s CEO announced a
reorganization of the company into three groups. It was hoped that a new mission statement and a new
structure would make Yahoo leaner and more responsive to customers. Would this be enough to turn
around the company?
INDUSTRY THREE: ENTERTAINMENT AND LEISURE

CASE 14 TiVo Inc.: TiVo vs. Cable and Satellite DVR: Can TiVo survive? 14-1
(Contributors: Alan N. Hoffman, Randy Halim, Rangki Son, and Suzanne Wong)
TiVo was founded to create a device capable of recording digitized video on a computer hard drive for
television viewing. Even though revenues had jumped from $96 million in 2003 to $259 million in
2007, the company had never earned a profit. Despite many alliances, TiVo faced increasing
competition from generic DVRs offered by satellite and cable companies. How long can the company
continue to sell TiVo DVRs when the competition sells generic DVRs at a lower price or gives them
away for free?
CASE 15 Marvel Entertainment Inc. 15-1
(Contributors: Ellie A. Fogarty and Joyce P. Vincelette)
Marvel Entertainment was known for its comic book characters Captain America, Spider Man,
the Fantastic Four, the Incredible Hulk, the Avengers, and the X-Men. With its 2008 self-produced
films, Iron Man and The Incredible Hulk, Marvel had expanded out of comic books to become a
leader in the entertainment industry. The company was no longer competing against other comic
book publishers like DC Comics, but was now competing against entertainment giants like Walt
Disney and NBC Universal. What should Marvel’s management do to ensure the company’s future
success?
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CASE 16 Carnival Corporation and plc (2010) 16-1
(Contributors: Michael J. Keeffe, John K. Ross III, Sherry K. Ross, Bill J. Middlebrook,
and Thomas L. Wheelen)
With its “fun ship,” Carnival Cruises changed the way people think of ocean cruises. The cruise
became more important than the destination. Through acquisition, Carnival expanded its product line

to encompass an entire range of industry offerings. How can Carnival continue to grow in the industry
it now dominates?
INDUSTRY FOUR: TRANSPORTATION
CASE 17 Chrysler in Trouble 17-1
(Contributors: Barnali Chakraborty and Vivek Gupta)
On April 30, 2009, Chrysler Motors, the third-largest auto manufacturer in the United States, filed
for bankruptcy protection along with its 24 wholly owned U.S. subsidiaries. As a condition of the
U.S. federal government’s loan of more than $8 billion, Fiat was given 20% of the new Chrysler
Corporation with the option of increasing its stake to 51% by 2016 after the new company had
repaid the federal government’s loan. What does Chrysler need to do to ensure the success of its
partnership with Fiat?
CASE 18 Tesla Motors Inc. (Mini Case) 18-1
(Contributor: J. David Hunger)
Tesla Motors was founded in 2004 to produce electric automobiles. Its first car, the Tesla Roadster,
sold for $101,000. It could accelerate from zero to 60 mph in 3.9 seconds and cruise for 236 miles on a
single charge. In contrast to existing automakers, Tesla sold and serviced its cars through the Internet
and its own Tesla stores. With the goal of building a full line of electric vehicles, Tesla Motors faced
increasing competition from established automakers. How could Tesla Motors succeed in an industry
dominated by giant global competitors?
CASE 19 Harley-Davidson Inc. 2008: Thriving through a Recession 19-1
(Contributors: Patricia A. Ryan and Thomas Wheelen)
Harley-Davidson 2008: Thriving Through Recession is a modern success story of a motorcycle
company that turned itself around by emphasizing quality manufacturing and image marketing. After
consistently growing through the 1990s, sales were showing signs of slowing as the baby boomers
continued to age. Safety was also becoming an issue. For the first time in recent history, sales and
profits declined in 2007 from 2006. Analysts wondered how the company would be affected in a
recession. How does Harley-Davidson continue to grow at its past rate?
CASE 20 JetBlue Airways: Growing Pains? 20-1
(Contributors: Shirisha Regani and S. S. George)
JetBlue Airways had been founded as a “value player” in the niche between full service airlines and

low-cost carriers. Competition had recently intensified and several airlines were taking advantage of
bankruptcy protection to recapture market share through price cuts. JetBlue’s operating costs were
rising as a result of increasing fuel costs, aircraft maintenance expenses, and service costs. Has
JetBlue been growing too fast and was growth no longer sustainable?
CASE 21 TomTom: New Competition Everywhere! 21-1
(Contributor: Alan N. Hoffman)
TomTom, an Amsterdam-based company that provided navigation services and devices, led the
navigation systems market in Europe and was second in popularity in the United States. However, the
company was facing increasing competition from other platforms using GPS technology like cell
phones and Smartphones with a built-in navigation function. As its primary markets in the United
States and Europe mature, how can the company ensure its future growth and success?
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