Strategic Management Concepts & Cases
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D AN •HO L S E K R I I S • S T O T N I H Strategic Management Concepts & Cases Competitiveness and Globalization 8th Edition Michael A. Hitt Texas A&M University R. Duane Ireland Texas A&M University Robert E. Hoskisson Arizona State University Brief Contents copyright page Preface, iii Part 1: Strategic Management Inputs 1 1. Strategic Management and Strategic Competitiveness, 3 2. The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis, 21 3. The Internal Environment: Resources, Capabilities, and Core Competencies, 39 Part 2: Strategic Actions: Strategy Formulation 71 4. Business-Level Strategy, 63 5. Competitive Rivalry and Competitive Dynamics, 85 6. Corporate-Level Strategy, 241 7. Acquisition and Restructuring Strategies, 261 8. International Strategy, 283 9. Cooperative Strategy, 299 Part 3: Strategic Actions: Strategy Implementation 289 10. Corporate Governance, 314 11. Organizational Structure and Controls, 317 12. Strategic Leadership, 339 13. Strategic Entrepreneurship, 363 Pics/Corbis Part 4: Cases 316 Name Index, I-1 Hammond/Design Company Index, I-12 Don © Subject Index, I-16 iii Contents To all of my current and former students. I am blessed to have the opportunity Preface xxii to teach and learn from you; there is a little piece of each of you in this book. —Michael A. Hitt Part 1: Strategic Management Inputs 1 To Jackson Blair Funkhouser, my wonderful new grandson. My hopes for your 1: Strategic Management and Strategic Competitiveness 2 are that you will always smile, that you will open your heart to those who Opening Case: E-Commerce Strategy: Changing the love you, that you will keep the fire burning, and that you will never forget to Nature of Competition 3 dream, baby, dream. I love you, Jackson. The Challenge of Strategic Management 7 —R. Duane Ireland Strategic Management and Strategic Competitiveness 2 The 21st Century Competitie Landscape To my dear wife, Kathy, who has been my greatest friend and support through Strategy Right Now: The Impermanence of Success 10 life, and I hope will remain so into the eternities. The Global Economy 12 —Robert E. Hoskisson Technology and Technological Changes 17 Strategic Focus: Compaq is Flailing against Internet Technological Trends 19 The I/O Model of Aboe-Aerage Returns 21 The Resource-Based Model of Aboe-Aerage Returns 23 Strategic Intent and Strategic Mission 26 Strategic Intent 26 Strategic Mission 27 Stakeholders 28 Classification of Stakeholders 28 Strategic Focus: Both Qwest Communication and Global Crossing Make Offers for U.S. West 32 Images Organizational Strategists 34 Getty The Work of Effective Strategists 36 side: Organizational Strategists 34 The Strategic Management Process 37 Pics/Corbis, Summary 39 • Reiew Questions 40 • Experiential Exercises 41 Graph 42 • Notes 43 2: The External Environment: Opportunities, Threats, Hammond/Design Industry Competition, and Competitor Analysis 34 Don © Organizational Strategists 34 top: vi vii The Work of Effective Strategists 36 Strategic Focus: Both Qwest Communication and Global Crossing Contents Organizational Strategists 34 Make Offers for U.S. West 32 Organizational Strategists 34 Contents The Strategic Management Process 37 Summary 39 • Reiew Questions 40 • Experiential Exercises 41 The Work of Effective Strategists 36 Graph 42 • Notes 43 Summary 39 • Reiew Questions 40 • Experiential Exercises 41 Graph 42 • Notes 43 3: The Internal Environment: Resources, Capabilities, and Core Competencies 45 The Challenge of Strategic Management 7 Part 4: Cases Strategic Management and Strategic Preparing an Effectie Case Analysis C-iii Competitiveness 2 Case 1: 9Lie: Birth of a TV Channel 1 The 21st Century Competitie Landscape Case 2: A. G. Lafley: Innoating P&G’s Innoations 10 Strategy Right Now: The Impermanence of Success 10 Case 3: AMD in 2005: Coming Out of Intel’s Shadow? 18 The Global Economy 12 Case 4: Anheuser-Busch and Harbin Brewery Group of China 30 Technology and Technological Changes 17 Case 5: Bank One’s Response to the Mutual Fund Scandal 45 Strategic Focus: Compaq is Flailing against Internet Technological Trends Case 6: China on the I-Way 53 19 Case 7: Goernance Problems in Citigroup Japan 60 The I/O Model of Aboe-Aerage Returns 21 Case 8: CQUAY Technologies Corp. 71 The Resource-Based Model of Aboe-Aerage Returns 23 Case 9: DaimlerChrysler: Corporate Goernance Dynamics in a Global Company 90 Strategic Intent and Strategic Mission 26 Case 10: De Beers: End of Monopoly? 96 Strategic Intent 26 Strategic Mission 27 Case 11: Dell in China: The Strategic Rethinking 110 Stakeholders 28 Case 12: Fiat and GM: The Troubled Alliance 116 Classification of Stakeholders 28 Case 13: General Motors Defense 125 Strategic Focus: Both Qwest Communication and Global Crossing Case 14: Louis V. Gerstner Jr.: The Man Who Turned IBM Around 133 Make Offers for U.S. West 32 Case 15: Humana Inc.: Turnaround of a Health Insurer 141 Organizational Strategists 34 Case 15: L’Oreal’s Business Strategy 158 The Work of Effective Strategists 36 Case 16: Lucchetti 166 Summary 39 • Reiew Questions 40 • Experiential Exercises 41 Case 17: Lufthansa 2003: Energizing a Decade of Change 185 Graph 42 • Notes 43 Case 18: MapQuest 207 Case 19: Marks and Spencer: The Downfall and Leadership Vacuum 220 Part 2: Strategic Actions: Strategy Formulation 33 Case 20: Mass Retailing in Asia 227 Case 21: News Corp. in 2005: Consolidating the DirecTV Acquistion 237 4: Business-Level Strategy Case 22: Nucor in 2005 246 The Challenge of Strategic Management 7 Case 23: ONGC’s Growth Strategy 269 Strategic Management and Strategic Case 24: Implementation of the Balanced Scorecard as a Means of Corporate Learning: Competitiveness 2 The Porsche Case: 277 The 21st Century Competitie Landscape Case 25: Tata Steel: A Century of Corporate Secial Responsibilities 285 Strategy Right Now: The Impermanence of Success 10 Case 25: Succession Battles at Viacom 299 The Global Economy 12 Case 26: Shanghai Volkswagen: Implementing Project Management in the Electrical Technology and Technological Changes 17 Engineering Diision 308 Strategic Focus: Compaq is Flailing against Internet Technological Trends 19 Case 27: Wal-Mart Stores Inc.: Dominating Global Retailing 320 The I/O Model of Aboe-Aerage Returns 21 Case 28: Whole Foods Market 2005: Will There Be Enough Organic Food to Satisfy the The Resource-Based Model of Aboe-Aerage Returns 23 Growing Demand? 334 Strategic Intent and Strategic Mission 26 Name Index I-1 Strategic Intent 26 Strategic Mission 27 Company Index I-12 Stakeholders 28 Subject Index I-16 Classification of Stakeholders 28 ix Nonsecte mod dolore feugait, sum dignit el dolobore euguero dit elenism odolent ad Preface modolesenibh. Wis aciduis nos aut lore digniate miniam, voloborpero odio do euisi bla cor sectem Preface et ut iuscili quismol orpercip euissit at la accumsandrem dipit eu feuisci ncilit ing ex erit. Although both apprenticeship programs and factory schools provided training for skilled workers, very few companies during this time offered training programs for unskilled or semiskilled workers. This changed after two significant historical events. The first was the introduction of the Model T by Henry Ford in 1913. The Model T was the first car to be mass-produced using an assembly line, in which production required only the training of semiskilled workers to perform several tasks. Resources Another significant historical event was the outbreak of World War I. To meet the huge demand for military equipment, many factories that produced nonmilitary goods had to retool their machinery and retrain their workers, including the semiskilled. For instance, the U.S. Shipping Board was responsible for coordinating the training of shipbuilders Resources, Capabilities and Core Competencies to build warships. To facilitate the training process, Charles Allen, director of training, instituted a four-step instructional method referred to as “show, tell, do, check” for all of Although both apprenticeship programs and factory schools provided training for skilled the training programs offered by the Shipping Board. workers, very few companies during this time offered training programs for unskilled or semiskilled workers. This changed after two significant historical events. The first was the Mose Alison Charles Mingus introduction of the Model T by Henry Ford in 1913. The Model T was the first car to be Drexel University Columbia University mass-produced using an assembly line, in which production required only the training Wendell Berry David Quammen of semiskilled workers to perform several tasks. University of Kentucky Montana University Lester Bowie John Sayles Resources Art Ensemble of Chicago Newark University Another significant historical event was the outbreak of World War I. To meet the huge Annie Dillard Loudon Wainwright III demand for military equipment, many factories that produced nonmilitary goods had to Carnegie-Mellon University City College New York retool their machinery and retrain their workers, including the semiskilled. For instance, the U.S. Shipping Board was responsible for coordinating the training of shipbuilders Frank Miller Bill Watterson to build warships. To facilitate the training process, Charles Allen, director of training, Gotham City University College of Calvin & Hobbes instituted a four-step instructional method referred to as “show, tell, do, check” for all of Cras dictum vestibulum erat. Morbi rutrum dolor eget turpis. Vivamus fringilla sol- the training programs offered