Acting Strategically, Thinking Critically a Casebook for Business Students
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ACTING STRATEGICALLY, THINKING CRITICALLY A CASEBOOK FOR BUSINESS STUDENTS by Michael J. Merenda, Ph. D. University of New Hampshire Bassim Hamadeh, CEO and Publisher Michael Simpson, Vice President of Acquisitions and Sales Jamie Giganti, Senior Managing Editor John Remington, Senior Field Acquisitions Editor Monika Dziamka, Project Editor Brian Fahey, Licensing Specialist Miguel Macias, Graphic Designer Kat Ragudos, Interior Designer Copyright © 2016 by Michael J. Merenda. All rights reserved. No part of this publication may be reprinted, reproduced, transmitted, or utilized in any form or by any electronic, mechanical, or other means, now known or hereaft er invented, including photocopying, microfi lming, and recording, or in any information retrieval system without the written permis- sion of Cognella, Inc. First published in the United States of America in 2016 by Cognella, Inc. Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identi- fi cation and explanation without intent to infringe. Cover image copyright © by Depositphotos / stella_caraman. Printed in the United States of America ISBN: 978-1-63487-981-1 (pbk) / 978-1-63487-982-8 (br) CONTENTS PREFACE X ACKNOWLEDGMENTS XI PART 1 CHAPTERS 1 CHAPTER 1 STRATEGY CONCEPTS AND STRATEGIC MANAGEMENT 2 TIM COOK’S APPLE 2 1. INTRODUCTION: SOME INITIAL QUESTIONS TO THINK ON 3 1.1 WHY STUDY STRATEGIC MANAGEMENT? 4 2. WHAT IS A STRATEGIC DECISION? 5 3. WHAT IS STRATEGY? 7 3.1 WHAT IS GLOBAL STRATEGY? 9 3.2 WHAT CONSTITUTES A GOOD STRATEGY? 10 3.3 WHAT IS THE PURPOSE OF STRATEGY? 11 4. WHAT IS A BUSINESS MODEL? 11 4.1 BUSINESS MODELS AND VALUE CREATION 12 4.2 HOW DO YOU KNOW IF A COMPANY’S BUSINESS MODEL IS WORKING? 12 4.3 FIRST STEP IN EVALUATING BUSINESS MODEL EFFECTIVENESS—FINANCIAL ANALYSIS 15 5. WHAT ARE THE KEY ELEMENTS OF STRATEGIC THINKING? 22 6. WHAT IS DYNAMIC STRATEGY? 24 6.1 WHAT IS CLOSED- VERSUS OPEN-SYSTEM LOGIC? 24 6.2 EMERGENT VERSUS DELIBERATE STRATEGY 25 7. WHAT IS STRATEGIC PLANNING? 25 8. WHAT IS STRATEGIC MANAGEMENT? 26 9. WHAT IS A STRATEGY SCHOOL? 27 9.1 STYLE (DESIGN) STRATEGY SCHOOL (CHAPTER 2) 28 9.2 COMPETITIVE-FORCES STRATEGY SCHOOL (CHAPTER 3) 30 9.3 RESOURCE-BASED VIEW (RBV) (CHAPTER 3) 30 9.4 LEARNING SCHOOL (CHAPTER 4) 30 9.5 ENTREPRENEURIAL SCHOOL (CHAPTER 4) 31 10. STRATEGIC MANAGEMENT PROCESS MODEL AND STRATEGY ALIGNMENT 31 11. REFLECTION 33 CONTENTS III CHAPTER 2 THE STRATEGIC MANAGEMENT PROCESS AND STYLE STRATEGY SCHOOL 38 TOM BRADY: MANAGING ONESELF—MORE PROBABLE THAN NOT 38 1. INTRODUCTION: SOME INITIAL QUESTIONS TO THINK ON 46 2. THE STRATEGIC MANAGEMENT CONCEPTUAL MODEL 47 2.1 STEP 1: ENVIRONMENTAL SCAN—EXTERNAL (OPPORTUNITIES AND THREATS) 48 2.2 STEP 2: ENVIRONMENTAL SCANNING—INTERNAL (STRENGTHS AND WEAKNESSES) 51 2.3 STEP 3: VISION AND MISSION 55 2.4 STEP 4: GOALS AND OBJECTIVES 56 2.5 STEP 5: STRATEGY FORMULATION AND CRAFTING 58 2.6 STEP 6: STRATEGY IMPLEMENTATION AND EXECUTION 57 2.7 STEP 7: MONITOR, EVALUATE, AND CONTROL (STRATEGIC CONTROL) 58 3. STYLE STRATEGY SCHOOL 58 3.1 SWOT ANALYSIS (STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREATS) 59 3.2 HOW TO CONDUCT A SWOT ANALYSIS 61 4. COMPETING MODELS OF THE FIRM: SINGLE-SOVEREIGN AND MULTIPLE-SOVEREIGN MODELS 64 4.1 SINGLE-SOVEREIGN MODEL OF THE FIRM 64 4.2 MULTIPLE-SOVEREIGN MODEL OF THE FIRM 65 4.3 AGENCY AND STEWARDSHIP THEORY 66 4.4 STAKEHOLDER ANALYSIS 67 4.5 STEPS IN STAKEHOLDER ANALYSIS 68 5. BUSINESS ETHICS 70 5.1 WHY IS IT SO DIFFICULT TO DISTINGUISH RIGHT FROM WRONG? 71 5.2 ETHICAL UNIVERSALISM 72 5.3 ETHICAL RELATIVISM 72 5.4 UNITED NATIONS SOCIAL CONTRACT 72 5.5 ETHICAL PRINCIPLES 72 6. LEVELS OF CORPORATE SOCIAL RESPONSIBILITY 73 7. SUSTAINABLE BUSINESS DECISIONS AND BUSINESS STRATEGY 74 8. REFLECTION 75 IV ACTING STRATEGICALLY, THINKING CRITICALLY: A CASEBOOK FOR BUSINESS STUDENTS CHAPTER 3 CRAFTING STRATEGY—SITUATIONAL ANALYSIS, COMPETITIVE FORCES, AND RESOURCE-BASED VIEW STRATEGY SCHOOLS 78 SIZING UP THE PLAYERS IN MOBILE ADVERTISING 78 1. INTRODUCTION: SOME INITIAL QUESTIONS TO THINK ON 82 2. WHY UNDERTAKE AN EXTERNAL ENVIRONMENTAL ANALYSIS? 83 3. WHY UNDERTAKE AN INTERNAL ENVIRONMENTAL ANALYSIS? 83 4. COMPETITIVE-FORCES STRATEGY SCHOOL 83 5. FORCES DRIVING POSITIONING, INFLUENCING, AND EXPLOITING (PIE) 84 5.1 BARGAINING POWER OF BUYERS (AN INDUSTRY’S CHANNELS OF DISTRIBUTION AND CUSTOMERS) 87 5.2 BARGAINING POWER OF SUPPLIERS (AN INDUSTRY’S FACTOR INPUTS) 88 5.3 THREAT OF NEW ENTRANTS (POTENTIALLY NEW PLAYERS TO AN EXISTING INDUSTRY) 88 5.4 THREAT OF SUBSTITUTE PRODUCTS OR SERVICES (PRODUCTS OR SERVICES WITH A POTENTIALLY BETTER CUSTOMER-VALUE PROPOSITION) 88 5.5 INTENSITY OF RIVALRY AMONGST EXISTING COMPETITORS 89 5.6 OTHER MACROFACTORS DRIVING THE FIVE FORCES 89 6. STEPS IN CONDUCTING A COMPETITIVE-FORCES ANALYSIS 90 6.1 IDENTIFY THE “FOCAL” FIRM AND “FOCAL” INDUSTRY FOR ANALYSIS 90 6.2 IDENTIFY POTENTIAL NEW ENTRANTS 91 6.3 IDENTIFY BUYERS 91 6.4 IDENTIFY SUBSTITUTE PRODUCTS 91 6.5 IDENTIFY SUPPLIERS 91 6.6 IDENTIFY IMPACT OF NEW TECHNOLOGIES AND INNOVATION 92 6.7 IDENTIFY THE AVAILABILITY OF COMPLEMENTS 92 6.8 IDENTIFY INSTITUTIONAL, SOCIAL, LEGAL, AND POLITICAL FACTORS 92 6.9 EVALUATE AND ASSESS THE COMPETITIVE FORCES 92 6.10 DRAW CONCLUSIONS 93 7. BLUE-OCEAN STRATEGY 93 8. GENERIC STRATEGIES 96 8.1 OVERALL COST LEADERSHIP 96 8.2 OVERALL DIFFERENTIATION 96 8.3 COST-FOCUSED 97 8.4 FOCUSED DIFFERENTIATION 97 8.5 BEST-COST OR VALUE STRATEGY 98 CONTENTS V 9. RESOURCE-BASED VIEW (RBV) STRATEGY SCHOOL 98 9.1 VIRO TEST FOR ASSESSING A FIRM’S SUSTAINABLE COMPETITIVE ADVANTAGE 99 10. S-CURVE AND EXPERIENCE CURVE 101 10.1. EXPERIENCE OR LEARNING CURVES 103 11. PRODUCT-PORTFOLIO ANALYSIS 103 12. WHAT IS VALUE? 106 13. COMMONLY CONSIDERED STRATEGIES 107 13.1 MAINTENANCE OR “CONTINUE AS IS” STRATEGIES 107 13.2 OFFENSIVE OR “GROWTH STRATEGIES” 108 13.3 DEFENSIVE STRATEGIES 108 14. IS YOUR COMPANY’S COMPETITIVE ADVANTAGE SUSTAINABLE? 111 15. REFLECTION 111 CHAPTER 4 STRATEGIC LEADERSHIP AND EXECUTION: LEARNING AND ENTREPRENEURSHIP STRATEGY SCHOOLS 114 EXECUTING A KNOWLEDGE-MANAGEMENT STRATEGY AND PHILOSOPHY AT BUCKMAN LABORATORIES 114 1. INTRODUCTION: SOME INITIAL QUESTIONS TO THINK ON 116 2. STRATEGY IMPLEMENTATION, EXECUTION, AND STRATEGIC CONTROL 117 2.1 STRATEGY IMPLEMENTATION 118 2.2 STRATEGY EXECUTION 118 2.3 STRATEGIC CONTROL 118 3. CHALLENGES ASSOCIATED WITH STRATEGY IMPLEMENTATION AND EXECUTION 119 3.1 ORGANIZATIONAL SIZE 119 3.2 OPERATIONAL SCOPE AND DIVERSITY 120 3.3 COMPLEXITY OF PRODUCTS, SERVICES, AND BUSINESS MODELS 120 4. ALIGNING NEWLY CRAFTED STRATEGIES: STRATEGY IMPLEMENTATION, EXECUTION, AND CONTROL 120 5. IMPLEMENTATION—WHO, WHAT, WHY, AND WHEN? 121 5.1 WHO ARE THE LEADERS OF THE STRATEGIC CHANGE? 121 5.2 WHAT ARE THE CHANGES TO EXISTING STRATEGIES? 121 5.3 WHY ARE CHANGES NEEDED TO EXISTING STRATEGIES? 121 5.4 WHEN WILL CHANGES BE MADE? 121 6. EXECUTION: LEARNING AND LEADING 121 6.1 CHANGE CAN BE INCREMENTAL, STRATEGIC, OR TRANSFORMATIVE 122 VI ACTING STRATEGICALLY, THINKING CRITICALLY: A CASEBOOK FOR BUSINESS STUDENTS 6.2 TECHNICAL AND ORGANIZATIONAL LEARNING 122 7. STRATEGIC CONTROL: REINVEST, RENEW, RELAUNCH 123 8. WHAT NEEDS TO BE ALIGNED IN STRATEGY IMPLEMENT AND EXECUTION? 124 8.1 STRATEGIC INTENT 124 8.2 VISION 125 8.3 MISSION 125 8.4 GOALS AND OBJECTIVES 125 8.5 VALUES 125 8.6 CULTURE 126 8.7 ORGANIZATIONAL STRUCTURE—STRUCTURE “ALWAYS” FOLLOWS STRATEGY 126 9. THE LEARNING-STRATEGY SCHOOL 127 9.1 LEARNING BY DOING 127 9.2 BUILDING LEARNING COMMUNITIES BASED ON INFORMATION SUPERIORITY 127 9.3 FIVE DISCIPLINES OF A LEARNING ORGANIZATION 128 9.4 THE LEADER’S ROLE IN THE LEARNING ORGANIZATION 128 10. ENTREPRENEURSHIP-STRATEGY SCHOOL 129 10.1 THE INNOVATOR’S DILEMMA? 129 10.2 STRATEGY AS CREATIVE DESTRUCTION 130 10.3 INTUITION, IMPROVISATION, AND IMAGINATION 130 10.4 FIRST-MOVER ADVANTAGE 130 10.5 FOSTERING CREATIVITY AND ENTREPRENEURSHIP 130 11. STRATEGIC LEADERSHIP 136 11.1 TRADITIONAL LEADERSHIP DEFINED 137 11.2 TRANSACTIONAL LEADERS 138 11.3 CHARISMATIC LEADERS 138 11.4 TRANSFORMATIONAL LEADERS 139 12. WHAT DOES IT TAKE TO BE A SUCCESSFUL CEO AND LEADER? 140 13. REFLECTION 140 CHAPTER 5 CRITICAL INQUIRY AND CASE STUDY 146 JOSEPH’S GOURMET PASTA & SAUCES: AT A CROSSROADS 146 1. INTRODUCTION: SOME INITIAL QUESTIONS TO THINK ON 152 2. WHAT IS A CASE? 153 2.1 CASE PRINCIPLES 154 CONTENTS VII 2.2 ACTIVE LEARNING 154 3. CRITICAL THINKING, KNOWLEDGE, AND CASE STUDY 155 4. HOW TO APPROACH A CASE ANALYSIS 156 4.1 GENERIC CASE QUESTIONS 156 5. CASE GUIDELINES 157 5.1 EVALUATING THE QUALITY AND EFFECTIVENESS OF CRITICAL-THINKING SKILLS 157 5.2 THE STUDENT’S ROLE IN CASE STUDY 158 5.3 THE INSTRUCTOR’S ROLE IN CASE STUDY 158 6. EVIDENCE, ANALYTICAL DESIGN, AND INFOGRAPHICS 158 6.1 PRINCIPLE #1: COMPARISONS 159 6.2 PRINCIPLE #2: CAUSALITY 159 6.3 PRINCIPLE #3: MULTIVARIATE ANALYSIS 159 6.4 PRINCIPLE #4: INTEGRATION OF EVIDENCE 160 6.5 PRINCIPLE #5: DOCUMENTATION 160 6.6 PRINCIPLE #6: CONTENT COUNTS MOST OF ALL 160 7. STEPS IN CASE ANALYSIS 162 7.1 INTERNAL AND EXTERNAL SITUATIONAL ANALYSIS 162 7.2 PRESSING ISSUES, QUESTIONS, AND CENTRAL PROBLEM IDENTIFICATION 163 7.3 OFFER CREDIBLE ALTERNATIVES 164 7.4 WEIGH THE PROS AND CONS FOR EACH ALTERNATIVE 164 7.5 MAKE RECOMMENDATIONS 165 7.6 IMPLEMENTATION AND EXECUTION 166 7.7 PROVIDE SUPPORTING ANALYSIS AND EXHIBITS (INTERNAL AND EXTERNAL SITUATIONAL ASSESSMENT) 166 8. CASE PRESENTATION RUBRIC 167 9. REFLECTION: A WORD ON EVIDENCE 169 VIII ACTING STRATEGICALLY, THINKING CRITICALLY: A CASEBOOK FOR BUSINESS STUDENTS PART 2 CASES 173 1. BREWING A BETTER WORLD: SUSTAINABLE SUPPLY CHAIN MANAGEMENT AT GREEN MOUNTAIN COFFEE ROASTERS 175 By Ross Gittell, Matt Magnusson, and Michael J.