What is the competitive strategy used by Tesla Motors company?? Use the five forces of the M. Porter matrix to describe the

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Strategic Management and business Policy Globalization, Innovation, and Sustainability FoURTeenTH edITIon

Thomas L. Wheelen • J. David Hunger Alan N. Hoffman • Charles E. Bamford

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Strategic Management

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GLOBALIZATION, INNOVATION, AND SUSTAINABILITY

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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

GLOBALIZATION, INNOVATION, AND SUSTAINABILITY

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Authorized adaptation from the United States edition, entitled Strategic Management and Business Policy, 14th edition, ISBN 978-0-13-312614-3, by Thomas L. Wheelen, J. David Hunger, Alan N. Hoffman, and Charles E. Bamford, published by Pearson Education © 2015.

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ISBN 10: 1-292-06081-6 ISBN 13: 978-1-292-06081-1

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Brief Contents

PART ONE Introduction to Strategic Management and Business Policy 35

C H A P T E R 1 Basic Concepts of Strategic Management 36

C H A P T E R 2 Corporate Governance 74

C H A P T E R 3 Social Responsibility and Ethics in Strategic Management 102

PART TWO Scanning the Environment 123

C H A P T E R 4 Environmental Scanning and Industry Analysis 124

C H A P T E R 5 Internal Scanning: Organizational Analysis 160

PART THREE Strategy Formulation 195

C H A P T E R 6 Strategy Formulation: Situation Analysis and Business Strategy 196

C H A P T E R 7 Strategy Formulation: Corporate Strategy 218

C H A P T E R 8 Strategy Formulation: Functional Strategy and Strategic Choice 248

PART fOUR Strategy Implementation and Control 277

C H A P T E R 9 Strategy Implementation: Organizing for Action 278

C H A P T E R 1 0 Strategy Implementation: Staffing and Directing 308

C H A P T E R 1 1 Evaluation and Control 336

PART fIVE Introduction to Case Analysis 365

C H A P T E R 1 2 Suggestions for Case Analysis 366

PART SIx Cases in Strategic Management 393

GLOSSARY 803

NAmE INDEx 815

SUBJECT INDEx 820

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Contents

Preface 23 About the Authors 31

PART ONE Introduction to Strategic Management and Business Policy 35

C H A P T E R 1 Basic Concepts of Strategic Management 36

The Study of Strategic Management 38

Phases of Strategic Management 38

Benefits of Strategic Management 39

Globalization, Innovation, and Sustainability: Challenges to Strategic Management 41

Impact of Globalization 42

Impact of Innovation 43

Global Issue: REGIONAL TRADE ASSOCIATIONS REPLACE NATIONAL TRADE BARRIERS 43

Impact of Sustainability 44

Theories of Organizational Adaptation 45

Creating a Learning Organization 46

Basic Model of Strategic Management 47

Environmental Scanning 48

Strategy Formulation 50

Strategy Implementation 53

Evaluation and Control 55

Feedback/Learning Process 55

Initiation of Strategy: Triggering Events 56

Strategic Decision Making 57

What Makes a Decision Strategic 57

Mintzberg’s Modes of Strategic Decision Making 58

Strategic Decision-Making Process: Aid to Better Decisions 59

The Strategic Audit: Aid to Strategic Decision Making 60

End of Chapter Summary 61

APPENDIx 1.A Strategic Audit of a Corporation 66

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C H A P T E R 2 Corporate Governance 74

Role of the Board of Directors 77

Responsibilities of the Board 78

Members of a Board of Directors 80

Innovation Issue: JCPENNEY AND INNOVATION 81

Strategy Highlight: AGENCY THEORY VERSUS STEWARDSHIP THEORY IN CORPORATE GOVERNANCE 83

Nomination and Election of Board Members 86

Organization of the Board 87

Impact of the Sarbanes–Oxley Act on U.S. Corporate Governance 88

Global Issue: GLOBAL BUSINESS BOARD ACTIVISm AT YAHOO! 90

Trends in Corporate Governance 91

The Role of Top Management 92

Responsibilities of Top Management 92

Sustainability Issue: CEO PAY AND CORPORATE PERfORmANCE 93

End of Chapter Summary 96

C H A P T E R 3 Social Responsibility and Ethics in Strategic Management 102

Social Responsibilities of Strategic Decision Makers 104

Responsibilities of a Business Firm 104

Sustainability 107

Corporate Stakeholders 108

Sustainability Issue: mARKS & SPENCER LEADS THE WAY 108

Strategy Highlight: JOHNSON & JOHNSON CREDO 111

Ethical Decision Making 111

Some Reasons for Unethical Behavior 112

Global Issue: HOW RULE-BASED AND RELATIONSHIP-BASED GOVERNANCE SYSTEmS AffECT ETHICAL BEHAVIOR 113

Innovation Issue: TURNING A NEED INTO A BUSINESS TO SOLVE THE NEED 115

Encouraging Ethical Behavior 116

End of Chapter Summary 118

PART TWO Scanning the Environment 123

C H A P T E R 4 Environmental Scanning and Industry Analysis 124

Environmental Scanning 126

Identifying External Environmental Variables 126

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Sustainability Issue: GREEN SUPERCARS 128

Global Issue: SUVs POWER ON IN CHINA 136

Identifying External Strategic Factors 137

Industry Analysis: Analyzing the Task Environment 138

Porter’s Approach to Industry Analysis 138

Industry Evolution 142

Innovation Issue: TAKING STOCK Of AN OBSESSION 143

Categorizing International Industries 143

International Risk Assessment 144

Strategic Groups 144

Strategic Types 146

Hypercompetition 146

Using Key Success Factors to Create an Industry Matrix 147

Competitive Intelligence 148

Sources of Competitive Intelligence 149

Strategy Highlight: EVALUATING COmPETITIVE INTELLIGENCE 150

Monitoring Competitors for Strategic Planning 151

Forecasting 152

Danger of Assumptions 152

Useful Forecasting Techniques 152

The Strategic Audit: A Checklist for Environmental Scanning 154

Synthesis of External Factors—EFAS 154

End of Chapter Summary 156

C H A P T E R 5 Internal Scanning: Organizational Analysis 160

A Resource-Based Approach to Organizational Analysis 162

Core and Distinctive Competencies 162

Using Resources to Gain Competitive Advantage 163

Determining the Sustainability of an Advantage 164

Business Models 166

Value-Chain Analysis 167

Industry Value-Chain Analysis 168

Corporate Value-Chain Analysis 169

Scanning Functional Resources and Capabilities 170

Basic Organizational Structures 171

Corporate Culture: The Company Way 172

CONTENTS 9

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Global Issue: mANAGING CORPORATE CULTURE fOR GLOBAL COmPETITIVE ADVANTAGE: ABB VS. PANASONIC 174

Strategic Marketing Issues 174

Innovation Issue: DOCOmO mOVES AGAINST THE GRAIN 176

Strategic Financial Issues 177

Strategic Research and Development (R&D) Issues 178

Strategic Operations Issues 180

Strategic Human Resource (HRM) Issues 181

Sustainability Issue: THE OLYmPIC GAmES—SOCHI 2014 AND RIO 2016 184

Strategic Information Systems/Technology Issues 185

The Strategic Audit: A Checklist for Organizational Analysis 187

Synthesis of Internal Factors 187

End of Chapter Summary 189

PART THREE Strategy Formulation 195

C H A P T E R 6 Strategy Formulation: Situation Analysis and Business Strategy 196

Situational Analysis: SWOT Approach 198

Generating a Strategic Factors Analysis Summary (SFAS) Matrix 198

Finding a Propitious Niche 199

Review of Mission and Objectives 202

Business Strategies 203

Porter’s Competitive Strategies 203

Global Issue: THE NIKE SHOE STRATEGY VS. THE NEW BALANCE SHOE STRATEGY 205

Innovation Issue: CHEGG AND COLLEGE TExTBOOKS 208

Cooperative Strategies 209

Sustainability Issue: STRATEGIC SUSTAINABILITY—ESPN 210

End of Chapter Summary 214

C H A P T E R 7 Strategy Formulation: Corporate Strategy 218

Corporate Strategy 220

Directional Strategy 220

Growth Strategies 221

Strategy Highlight: TRANSACTION COST ECONOmICS ANALYZES VERTICAL GROWTH STRATEGY 225

International Entry Options for Horizontal Growth 226

Global Issue: GLOBAL ExPANSION IS NOT ALWAYS A PATH TO ExPANSION 226

Controversies in Directional Growth Strategies 230

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Stability Strategies 231

Retrenchment Strategies 232

Portfolio Analysis 234

BCG Growth-Share Matrix 234

Sustainability Issue: GENERAL mOTORS AND THE ELECTRIC CAR 236

Advantages and Limitations of Portfolio Analysis 237

Managing a Strategic Alliance Portfolio 238

Corporate Parenting 239

Innovation Issue: TO RED HAT OR NOT? 239

Developing a Corporate Parenting Strategy 240

Horizontal Strategy and Multipoint Competition 241

End of Chapter Summary 241

C H A P T E R 8 Strategy Formulation: Functional Strategy and Strategic Choice 248

Functional Strategy 250

Marketing Strategy 250

Financial Strategy 251

Research and Development (R&D) Strategy 253

Operations Strategy 254

Global Issue: WHY DOESN’T STARBUCKS WANT TO ExPAND TO ITALY? 255

Purchasing Strategy 256

Sustainability Issue: HOW HOT IS HOT? 257

Logistics Strategy 258

Innovation Issue: WHEN AN INNOVATION fAILS TO LIVE UP TO ExPECTATIONS 258

Human Resource Management (HRM) Strategy 259

Information Technology Strategy 259

The Sourcing Decision: Location of Functions 260

Strategies to Avoid 263

Strategic Choice: Selecting the Best Strategy 263

Constructing Corporate Scenarios 264

The Process of Strategic Choice 269

Developing Policies 270

End of Chapter Summary 271

PART fOUR Strategy Implementation and Control 277

C H A P T E R 9 Strategy Implementation: Organizing for Action 278

Strategy Implementation 280

Who Implements Strategy? 281

CONTENTS 11

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What Must Be Done? 282

Developing Programs, Budgets, and Procedures 282

Sustainability Issue: A BETTER BOTTLE—ECOLOGIC BRANDS 283

Achieving Synergy 286

How Is Strategy to Be Implemented? Organizing for Action 287

Structure Follows Strategy 287

Stages of Corporate Development 288

Innovation Issues: THE P&G INNOVATION mACHINE STUmBLES 289

Organizational Life Cycle 292

Advanced Types of Organizational Structures 294

Reengineering and Strategy Implementation 297

Six Sigma 298

Designing Jobs to Implement Strategy 299

International Issues in Strategy Implementation 300

International Strategic Alliances 300

Stages of International Development 301

Global Issue: OUTSOURCING COmES fULL CIRCLE 302

Centralization Versus Decentralization 302

End of Chapter Summary 304

C H A P T E R 1 0 Strategy Implementation: Staffing and Directing 308

Staffing 310

Staffing Follows Strategy 311

Selection and Management Development 313

Innovation Issue: HOW TO KEEP APPLE “COOL” 313

Problems in Retrenchment 315

International Issues in Staffing 317

Leading 319

Sustainability Issue: PANERA AND THE “PANERA CARES COmmUNITY CAfÉ” 319

Managing Corporate Culture 320

Action Planning 324

Management by Objectives 326

Total Quality Management 326

International Considerations in Leading 327

Global Issue: CULTURAL DIffERENCES CREATE ImPLEmENTATION PROBLEmS IN mERGER 329

End of Chapter Summary 330

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C H A P T E R 1 1 Evaluation and Control 336

Evaluation and Control in Strategic Management 338

Measuring Performance 338

Appropriate Measures 338

Types of Controls 339

Innovation Issue: REUSE Of ELECTRIC VEHICLE BATTERIES 340

Activity-Based Costing 341

Enterprise Risk Management 342

Primary Measures of Corporate Performance 342

Balanced Scorecard Approach: Using Key Performance Measures 345

Sustainability Issue: E-RECEIPTS 345

Primary Measures of Divisional and Functional Performance 347

Responsibility Centers 348

Using Benchmarking to Evaluate Performance 349

International Measurement Issues 350

Global Issue: COUNTERfEIT GOODS AND PIRATED SOfTWARE: A GLOBAL PROBLEm 352

Strategic Information Systems 352

Enterprise Resource Planning (ERP) 353

Radio Frequency Identification (RFID) 353

Divisional and Functional is Support 354

Problems in Measuring Performance 354

Short-Term Orientation 354

Goal Displacement 356

Guidelines for Proper Control 357

Strategic Incentive Management 357

End of Chapter Summary 359

PART fIVE Introduction to Case Analysis 365

C H A P T E R 1 2 Suggestions for Case Analysis 366

The Case Method 368

Researching the Case Situation 368

Financial Analysis: A Place to Begin 369

Analyzing Financial Statements 369

Common-Size Statements 373

Z-Value and the Index

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