Understanding Strategic Management

Title Page
Copyright page
Dedication page
List of Cases
Acknowledgements
About the Author
About the Book
How to Use this Book
	Learning objectives
	Strategy in Focus boxes
	Case Studies
	Extension Material signposts
	Working through Strategy signposts
	Review and discussion questions
	Research topics
	Recommended reading
	Glossary
How to Use the Online Resources
Part One What is Strategy?
	Chapter 1 What is Strategy?
		Introduction
		1.1 What Is Strategy?
		1.2 Defining Strategy
			1.2.1 Using Strategy to Overcome Challenges
		1.3 Types of Strategy
			1.3.1 Corporate Strategy
			1.3.2 Business Strategy
			1.3.3 Functional or Operational Strategy
		1.4 Strategic Management
			1.4.1 Strategy Analysis
			1.4.2 Strategy Formulation
			1.4.3 Strategy Implementation
		1.5 Values, Vision, and Mission
			1.5.1 Values
			1.5.2 Vision
			1.5.3 Mission
		1.6 The Theory of the Business
			1.6.1 Four Characteristics of an Organization’s Theory of the Business
		1.7 Business Models
		1.8 The Development of Strategic Management
		1.9 Different Perspectives on Strategy Formulation
			1.9.1 The Rationalist School
			1.9.2 The Learning School
		1.10 A Strategic Management Framework
		Summary
		Research Topic
		Recommended Reading
		References and Notes
Part Two Strategic Analysis
	Chapter 2 Evaluating the Macro-environment
		Introduction
		2.1 The Macro-environment
		2.2 Scanning, Monitoring, and Forecasting Changes in the Environment
			2.2.1 Scanning the Environment
			2.2.2 Monitoring the Environment
			2.2.3 Forecasting Changes in the Environment
		2.3 PESTLE Analysis
			2.3.1 Political Factors
			2.3.2 Economic Factors
			2.3.3 Social Factors
			2.3.4 Technological Factors
			2.3.5 Legal Factors
			2.3.6 Environmental Factors
			2.3.7 How to Undertake PESTLE Analysis
			2.3.8 Limitations of PESTLE Analysis
		2.4 Scenario Planning
			2.4.1 How to Build Scenarios
		2.5 An Introduction to SWOT Analysis
		2.6 The Macro-environment and Industry Analysis
		Summary
		Research Topics
		Recommended Reading
		References and Notes
	Chapter 3 Industry Analysis
		Introduction
		3.1 The Background to Porter’s Five Forces Framework
		3.2 Porter’s Five Forces Framework
			3.2.1 What Determines the Threat of New Entrants
				Economies of Scale
				Capital Requirements
				Product Differentiation
				Access to Distribution Channels
				Cost Advantages Independent of Size
			3.2.2 What Determines the Bargaining Power of Buyers
				Concentration of Buyers and High Volumes
				Purchases are Standard or Undifferentiated
				Switching Costs are Low
				There is a Threat of Backward Integration
			3.2.3 What Determines the Bargaining Power of Suppliers
				Concentration of Suppliers
				Suppliers are Faced with Few Substitutes
				Differentiated Products and High Switching Costs
				Threat of Forward Integration
			3.2.4 What Determines the Threat of Substitute Products and Services
				The Price–Performance Ratio
			3.2.5 What Determines the Intensity of Rivalry among Competitors in an Industry
				Numerous or Equally Balanced Competitors
				Industry Growth Rate
				High Fixed Costs
				Lack of Differentiation
				High Exit Barriers
			3.2.6 How to Compete Using the Five Forces Framework
		3.3 The Limitations of Porter’s Five Forces
		3.4 The Value Net
			3.4.1 A Complementary Sixth Force
		3.5 The Industry Life Cycle
			3.5.1 Introduction Stage
			3.5.2 Growth Stage
			3.5.3 Maturity Stage
			3.5.4 Decline Stage
		3.6 Strategic Group Analysis
			3.6.1 Strategic Maps
			3.6.2 Mobility Barriers
		3.7 Hypercompetition and Disruptive Innovation
			3.7.1 Hypercompetition
			3.7.2 Disruptive Innovation
		Summary
		Research Topic
		Recommended Reading
		References and Notes
	Chapter 4 The Organization: Value-creating Activities
		Introduction
		4.1 Background to Differential Firm Performance
		4.2 Value Chain Analysis
			4.2.1 Primary Activities
			4.2.2 Support Activities
		4.3 Evaluating the Value Chain
			4.3.1 The Importance of Linkages within the Value Chain
			4.3.2 Managing Linkages within the Value Chain System
			4.3.3 Transaction Costs—‘Make or Buy’ Decision
		4.4 SWOT Analysis
			4.4.1 How to Undertake a SWOT Analysis
			4.4.2 Limitations of SWOT Analysis
		4.5 The TOWS Matrix
		4.6 Organizational Performance
			4.6.1 Maximizing Shareholder Value
			4.6.2 Meeting the Needs of Stakeholders
				How Should an Organization Respond to Different Stakeholders?
				High Power and High Interest Stakeholders
				High Power and Low Interest Stakeholders
				Low Power and High Interest Stakeholders
				Low Power and Low Interest Stakeholders
			4.6.3 Performance Measurement
		4.7 The Balanced Scorecard
			The balanced scorecard approach looks at an organization from four perspectives.37
			Criticisms of the Balanced Scorecard
		4.8 The Triple Bottom Line
			Limitation of the Triple Bottom Line
		4.9 Benchmarking
		Summary
		Research Topic
		Recommended Reading
		References and Notes
	Chapter 5 The Internal Environment: A Resource-based View of Strategy
		Introduction
		5.1 The Resource-Based View of Strategy
			5.1.1 Resources
				Tangible Resources
				Intangible Resources
			5.1.2 Organizational Capabilities
				Architecture
				Reputation
				Innovation
		5.2 The VRIO Framework and Sustainable Competitive Advantage
			5.2.1 Valuable Capabilities
			5.2.2 Rarity
			5.2.3 Imitability
				Unique Organizational Conditions
				Causal Ambiguity
				Social Complexity
			5.2.4 Organization
			5.2.5 Make-or-Buy Decision
		5.3 Criticisms of the Resource-Based View
		5.4 A Knowledge-Based View of the Organization
		5.5 Dynamic Capabilities
			5.5.1 What are Dynamic Capabilities?
			5.5.2 Dynamic Capabilities vs Operational Capabilities
			5.5.3 Dynamic Capabilities and Competitive Advantage
			5.5.4 Challenges for Dynamic Capabilities
		Summary
		Research Topic
		Recommended Reading
		References and Notes
Part Three Strategy Formulation
	Chapter 6 Business Strategy
		Introduction
		6.1 What is Business Strategy?
		6.2 Generic Competitive Strategies
			6.2.1 Overall Cost-Leadership Strategies
				The Experience Curve
				Economies and Diseconomies of Scale
				Advantages of Cost-Leadership Strategies
				The Risks of Following an Overall Cost-Leadership Strategy
			6.2.2 Differentiation Strategies
				Advantages of Differentiation Strategy
				Risks of Following a Differentiation Strategy
			6.2.3 Focus Strategies
				Cost-Focus Strategy
				Differentiation-Focus Strategy
				Advantages of Focus Strategies
				The Risks of Following a Focus Strategy
			6.2.4 Stuck in the Middle
				Criticisms of Generic Strategies
		6.3 A Resource-Based Approach to Strategy Formulation
			6.3.1 Appraising Capabilities
			6.3.2 Implications for Strategy Formulation
		6.4 Blue Ocean Strategy
			6.4.1 Value Innovation
			6.4.2 The Strategy Canvas
				The Four Actions Framework
				The Eliminate-Raise-Reduce-Create Grid
			6.4.3 The Blue Ocean
				Blue Ocean Idea (BOI) Index
		6.5 Strategy Formulation in Turbulent Markets
		6.6 Disruptive Innovation and Strategy Formulation
			6.6.1 How to Respond to Disruptive Innovation
			6.6.2 Limitations of Disruptive Innovation
		Summary
		Research Topic
		Recommended Reading
		References and Notes
	Chapter 7 Corporate Strategy
		Introduction
		7.1 Corporate Strategy
		7.2 Growth Strategies
			7.2.1 Market Penetration
			7.2.2 Product Development
			7.2.3 Market Development
			7.2.4 Diversification
		7.3 Related Diversification
			7.3.1 Vertical Integration
			7.3.2 Horizontal Integration
			7.3.3 Transaction-Cost Analysis
		7.4 Unrelated or Conglomerate Diversification
			7.4.1 Can Conglomerate Diversification Succeed?
		7.5 Implementing Growth Strategies
			7.5.1 Mergers and Acquisitions
			7.5.2 Internal Development
			7.5.3 Joint Ventures and Strategic Alliances
				Joint Ventures
				Strategic Alliances
		7.6 Portfolio Analysis
			7.6.1 Boston Consulting Group Matrix
				Criticisms of the BCG Matrix
			7.6.2 The General Electric–McKinsey Matrix
		7.7 Corporate Parenting
			7.7.1 Parenting Opportunities
			7.7.2 The Heartland Matrix
				Heartland Businesses
				Edge-of-Heartland Businesses
				Ballast Businesses
				Value Trap
				Alien Territory
		7.8 Strategic Evaluation
			7.8.1 Suitability
			7.8.2 Feasibility
			7.8.3 Acceptability
		Summary
		Research Topic
		Recommended Reading
		References and Notes
	Chapter 8 International Strategy
		Introduction
		8.1 Globalization or Localization
		8.2 International Diversification
			8.2.1 Organizational Factors
				The Role of the Management Team
				Firm-Specific Factors
			8.2.2 Environmental Factors
				Unsolicited Proposals
				The ‘Bandwagon’ Effect
				Attractiveness of the Host Country
		8.3 A Globalization Framework
			Strategic Objectives of a Multinational Enterprise
			Sources of Competitive Advantage for a Multinational Enterprise
		8.4 Types of International Strategy
			8.4.1 Multidomestic Strategy
			8.4.2 Global Strategy
			8.4.3 International Strategy
			8.4.4 Transnational Strategy
			8.4.5 The Uppsala Model
				Criticisms of the Uppsala Model
		8.5 Entry Mode Strategies
			8.5.1 Exporting
			8.5.2 Licensing
			8.5.3 International Franchising
			8.5.4 Joint Ventures and Strategic Alliances
			8.5.5 Wholly Owned Subsidiaries
		8.6 Porter’s Diamond of National Advantage
			8.6.1 The Diamond of National Advantage
			8.6.2 Criticisms of Porter’s Diamond
		8.7 The Myths of Global Strategy
		8.8 The Challenge of Globalization
		Summary
		Research Topic
		Recommended Reading
		References and Notes
Part Four Strategy Implementation
	Chapter 9 Organizational Structures and Strategic Change
		Introduction
		9.1 Organizational Structures
			9.1.1 The Entrepreneurial Structure
			9.1.2 The Functional Structure
			9.1.3 The Divisional Structure
			9.1.4 The Matrix Structure
			9.1.5 The Network Structure
		9.2 Organizational Processes
		9.3 Strategic Control Systems
			9.3.1 Single and Double-Loop Learning
			9.3.2 Employee Commitment and Strategy Implementation
		9.4 Strategic Change
			9.4.1 The Five Phases of Growth
				Phase 1: Creativity
				Phase 2: Direction
				Phase 3: Delegation
				Phase 4: Coordination
				Phase 5: Collaboration
			9.4.2 Integrative Change
			9.4.3 Strategic Drift
			9.4.4 What Determines a Visionary Organization
			9.4.5 Good to Great Companies
		Summary
		Research Topic
		Recommended Reading
		References and Notes
	Chapter 10 Strategic Leadership
		Introduction
		10.1 Leadership vs. Management
		10.2 The Learning Organization
			10.2.1 Building the Learning Organization
			10.2.2 Leadership Roles
			10.2.3 Leadership Skills
				Criticisms of the Learning Organization
			10.2.4 Why Organizations Don’t Learn—Problems with Bias
		10.3 Emotional Intelligence and Leadership Performance
		10.4 Narcissistic Leaders and Leadership Capabilities
			10.4.1 Leadership Capabilities
		10.5 The Impact of Leadership on Values and Culture
			10.5.1 Leadership and Values
			10.5.2 Leadership and Culture
			10.5.3 Rethinking Culture, Leadership, and Change
		10.6 Leading Strategic Change
			10.6.1 Transformational Leadership
			10.6.2 Theory E and Theory O Leaders
			10.6.3 Can Leaders Deal With Chaos?
				Chaos Theory and Innovation
		Summary
		Research Topic
		Recommended Reading
		References and Notes
	Chapter 11 Corporate Governance and Corporate Social Responsibility
		Introduction
		11.1 What is Corporate Governance?
		11.2 The Origins of Corporate Governance
		11.3 The Growth of Modern Corporations
			11.3.1 Limited Liability
			11.3.2 Transferability
			11.3.3 Legal Personality
			11.3.4 Centralized Management
		11.4 The Purpose of Corporations
			11.4.1 The Principal–Agent problem
			11.4.2 Is the Purpose of Corporations to Maximize Shareholder Value?
				The American Business Model (ABM) or Washington Consensus
			11.4.3 The Agency Problem
			11.4.4 Is the Purpose of Corporations to Meet the Needs of Stakeholders?
			11.4.5 Enlightened Value Maximization
		11.5 Corporate Social Responsibility (CSR)
			11.5.1 Environmental, Social, and Governance (ESG)
			11.5.2 Business ethics
		11.6 Corporate Governance Codes
			11.6.1 The Cadbury Committee
			11.6.2 The Hampel Committee
			11.6.3 Other Corporate Governance Codes
			11.6.4 The Role of Non-Executive Directors
			11.6.5 The Sarbanes–Oxley Act
		11.7 Excessive Executive Pay
		11.8 Is Reform to Corporate Governance the Answer?
		11.9 The Pursuit of Greed
			11.9.1 Moral Hazard: Are Some Companies Too Big to Fail?
		Summary
		Research Topic
		Recommended Reading
		References and Notes
Glossary
Name Index
Subject Index