Contemporary Strategy Analysis

Preface to Tenth Edition xv

PART I INTRODUCTION 1

1 The Concept of Strategy 3

Introduction and Objectives 4

The Role of Strategy in Success 4

The Basic Framework for Strategy Analysis 9

A Brief History of Business Strategy 12

Strategy Today 15

How Is Strategy Made? The Strategy Process 21

Strategic Management of Not-For-Profit Organizations 25

Summary 28

Self-Study Questions 29

Notes 30

PART II THE TOOLS OF STRATEGY ANALYSIS 33

2 Goals, Values, and Performance 35

Introduction and Objectives 36

Strategy as a Quest for Value 37

Profit, Cash Flow, and Enterprise Value 41

Putting Performance Analysis into Practice 43

Beyond Profit: Values and Corporate Social Responsibility 51

Beyond Profit: Strategy and Real Options 55

Summary 58

Self-Study Questions 59

Notes 60

3 Industry Analysis: The Fundamentals 63

Introduction and Objectives 64

From Environmental Analysis to Industry Analysis 64

Analyzing Industry Attractiveness 66

Applying Industry Analysis to Forecasting Industry Profitability 76

Using Industry Analysis to Develop Strategy 77

Defining Industries: Where to Draw the Boundaries 80

From Industry Attractiveness to Competitive Advantage: Identifying Key Success Factors 82

Summary 86

Self-Study Questions 87

Notes 87

4 Further Topics in Industry and Competitive Analysis 90

Introduction and Objectives 91

Limits of Industry Analysis 91

Beyond the Five-Forces: Complements, Ecosystems, and Business Models 93

Competitive Interaction: Game Theory and Competitor Analysis 99

Segmentation and Strategic Groups 107

Summary 112

Self-Study Questions 113

Notes 114

5 Analyzing Resources and Capabilities 113

Introduction and Objectives 114

The Role of Resources and Capabilities in Strategy Formulation 114

Identifying Resources and Capabilities 118

Appraising Resources and Capabilities 126

Developing Strategy Implications 130

Summary 136

Self-Study Questions 137

Notes 138

6 Organization Structure and Management Systems: The Fundamentals of Strategy Implementation 144

Introduction and Objectives 145

Strategy Formulation and Strategy Implementation 146

The Fundamentals of Organizing: Specialization, Cooperation, and Coordination 149

Developing Organizational Capability 153

Organization Design 156

Summary 165

Self-Study Questions 165

Notes 166

PART III BUSINESS STRATEGY AND THE QUEST FOR COMPETITIVE ADVANTAGE 165

7 The Sources and Dimensions of Competitive Advantage 167

Introduction and Objectives 168

How Competitive Advantage Is Established and Sustained 168

Types of Competitive Advantage: Cost and Differentiation 178

Cost Analysis 178

Differentiation Analysis 186

Implementing Cost and Differentiation Strategies 197

Summary 200

Self-Study Questions 200

Notes 201

8 Industry Evolution and Strategic Change 205

Introduction and Objectives 206

The Industry Life Cycle 207

The Challenge of Organizational Adaptation and Strategic Change 216

Managing Strategic Change 221

Summary 235

Self-Study Questions 236

Notes 237

9 Technology-based Industries and the Management of Innovation 241

Introduction and Objectives 242

Competitive Advantage in Technology-intensive Industries 243

Strategies to Exploit Innovation: How and When to Enter 250

Standards, Platforms, and Network Externalities 255

Platform-based Markets 258

Implementing Technology Strategies: Creating the Conditions for Innovation 262

Accessing External Sources of Innovation 263

Summary 269

Self-Study Questions 270

Notes 271

10 Competitive Advantage in Mature Industries 273

Introduction and Objectives 274

Competitive Advantage in Mature Industries 274

Strategy Implementation in Mature Industries: Structure, Systems, and Style 280

Strategies for Declining Industries 282

Summary 286

Self-Study Questions 286

Notes 287

PART IV CORPORATE STRATEGY 289

11 Vertical Integration and the Scope of the Firm 291

Introduction and Objectives 292

Transaction Costs and the Scope of the Firm 293

The Benefits and Costs of Vertical Integration 294

The Benefits from Vertical Integration 297

The Costs of Vertical Integration 298

Applying the Criteria: Deciding Whether to Make or Buy 302

Designing Vertical Relationships 302

Different Types of Vertical Relationship 304

Choosing among Alternative Vertical Relationships 305

Recent Trends 306

Summary 307

Self-Study Questions 307

Notes 308

12 Global Strategy and the Multinational Corporation 311

Introduction and Objectives 312

Implications of International Competition for Industry Analysis 313

Analyzing Competitive Advantage in an International Context 315

Internationalization Decisions: Locating Production 318

Internationalization Decisions: Entering a Foreign Market 322

Multinational Strategies: Global Integration versus National Differentiation 324

Implementing International Strategy: Organizing the Multinational Corporation 331

Summary 337

Self-Study Questions 338

Notes 339

13 Diversification Strategy 341

Introduction and Objectives 342

Motives for Diversification 343

Competitive Advantage from Diversification 348

Diversification and Performance 352

The Meaning of Relatedness in Diversification 355

Summary 356

Self-Study Questions 357

Notes 358

14 Implementing Corporate Strategy: Managing the Multibusiness Firm 361

Introduction and Objectives 362

The Role of Corporate Management 363

Managing the Corporate Portfolio 363

Managing Linkages Across Businesses 366

Managing Individual Businesses 369

Managing Change in the Multibusiness Corporation 376

Governance of Multibusiness Corporations 381

Summary 386

Self-Study Questions 386

Notes 387

15 External Growth Strategies: Mergers,Acquisitions, and Alliances 389

Introduction and Objectives 390

Mergers and Acquisitions 391

Strategic Alliances 401

Summary 406

Self-Study Questions 407

Notes 407

16 Current Trends in Strategic Management 409

Introduction 410

The New Environment of Business 410

New Directions in Strategic Thinking 415

Redesigning Organizations 419

The Changing Role of Managers 422

Summary 424

Notes 424

CASES TO ACCOMPANY CONTEMPORARY STRATEGY ANALYSIS, NINTH EDITION 427

1 Tough Mudder Inc.: The Business of Mud Runs 435

2 Starbucks Corporation, May 2015 442

3 Kering SA: Probing the Performance Gap With LVMH 459

4 Pot of Gold? The US Legal Marijuana Industry 466

5 The US Airline Industry in 2015 472

6 Wal-Mart Stores, Inc., June 2015 487

7 Harley-Davidson, Inc., May 2015 502

8 BP: Organizational Structure and Management Systems 516

9 AirAsia: The World’s Lowest-cost Airline 523

10 Chipotle Mexican Grill, Inc.: Disrupting the Fast-food Business 533

11 Ford and the World Automobile Industry in 2015 542

12 Eastman Kodak’s Quest for a Digital Future 557

13 Tesla Motors: Disrupting the Auto Industry 576

14 Video Game Console Industry in 2015 587

15 New York Times: The Search for a New Business Model 598

16 Eni SpA: The Corporate Strategy of an International Energy Major 608

17 American Apparel: Vertically Integrated in Downtown LA 628

18 Chipotle Mexican Grill, Inc.: The International Challenge 639

19 Haier Group: Internationalization Strategy 645

20 The Virgin Group in 2015 655

21 Google Is Now Alphabet—But What’s the Corporate Strategy? 668

22 Jeff Immelt and the New General Electric 681

23 Bank of America’s Acquisition of Merrill Lynch 702

24 W. L. Gore & Associates: Rethinking Management? 718

Glossary 727

Index 735

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