Strategic Management This Page Intentionally Left Blank Strategic Management From theory to implementation Fourth edition David Hussey Visiting Professor in Strategic Management, Nottingham Business School, Nottingham Trent University OXFORD BOSTON JOHANNESBURG MELBOURNE NEW DELHI SINGAPORE Butterworth-Heinemann Linacre House, Jordan Hill, Oxford OX2 8DP 225 Wildwood Avenue, Woburn, MA 01801-2041 A division of Reed Educational and Professional Publishing Ltd A member of the Reed Elsevier plc group First published by Pergamon Press 1974 Second edition 1982 Reprinted 1984 Third edition 1994 Fourth edition 1998 © David Hussey 1998 All rights reserved No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1P 9HE Applications for the copyright holder’s written permission to reproduce any part of this publication should be addressed to the publishers British Library Cataloguing in Publication Data Hussey, David, 1934– Strategic management: from theory to implementation – 4th ed Strategic planning I Title 658.4Ј012 ISBN 7506 3849 Composition by Genesis Typesetting, Laser Quay, Rochester, Kent Printed and bound in Great Britain Contents The structure of the book Introduction Acknowledgements Part The Concept and the Need From planning to strategic management and beyond Strategic management: success or failure? A look at the total process Part The Changing Environment The challenge of the future The environment: assumptions in planning Forecasting Techniques for assessing the environment Business philosophy (ethics and morality) and strategic management Part The Making of Strategy The corporate appraisal – assessing strengths and weaknesses 10 Analysing the industry and competitors 11 Analysing the UK management development and training industry: a case history 12 The search for shareholder value 13 Vision and objectives 14 Strategy 15 Strategic portfolio analysis 16 Portfolio analysis in practice 17 Strategic planning – a second look at the basic options 18 Multinational and global strategy 19 Technology and manufacturing 20 Financial planning 21 Strategic planning for human resources 22 Preparing the strategic plan 23 Evaluating a business plan 24 Operating plans vii xvii xxi 26 45 75 77 96 107 125 139 161 163 190 237 254 277 296 309 325 351 380 403 419 432 462 477 487 v CONTENTS Part vi Implementation and the Management of Change 509 25 Project planning and appraisal 26 From plans to actions 27 Management of change 511 527 547 Part 567 Introducing Strategic Management to an Organisation 28 Introducing strategic management 29 Why planning sometimes fails 30 Strategic management to strategic change? 569 588 599 Part 603 Case Studies 31 SWK Zimbabwe Ltd (D E Hussey) 32 Colgate–Palmolive Oral Care Division in the Italian market (R J Mockler) 33 Ratner/Signet Group plc: 1984–7 (D E Hussey) 34 AGIP Petroli entering the Indian market (R J Mockler) 35 Xerox: Transforming the corporation (F Hewitt and G Bounds) 605 Index of names and organisations Index of subjects 693 699 617 631 649 671 The structure of the book To write about any subject, however complex, it is necessary to follow a linear path This has its limitations, in describing strategic management, as the connections between the subtopics are not linear, and resemble a plate of spaghetti where most strands are connected to many others Perhaps a can of worms might be a better analogy, as the subject is continually moving and developing One result of this is that many different choices could be made for the structure of the book, and for the cross-referencing inside the chapters For this reason it is worth exploring how the parts fit together, to help readers who might come to the book with a different mindset The first three chapters set the scene for a study of the subject Chapter traces its evolution from the mid-1960s to date, showing the different schools of thought that have developed, and trying to help the reader put them in context This is important because too many writers who develop a new slant to the subject overemphasise their own views at the expense of the existing body of knowledge In reality, much that is new should supplement, instead of attempting to replace, that which already exists Other chapters discuss the issues in achieving strategic success, and examine the concept of strategic management Part of the book consists of five chapters which deal specifically with one aspect of strategy, the relation of the business with the external environment Chapter presents a way of thinking about the external environment which is more complete and integrated than the PEST approach (Political, Economic, Social and Technology) recommended in many books This model lies behind some of the detailed techniques which are discussed later It is also used again when industry analysis is considered later in the book Chapter is about the need for setting common assumptions about the external environment by all those contributing to the development of a strategy Chapter has a broader scope than the business environment, and is about forecasting It is positioned here because it is a key element of the discussion about external issues and trends, but the concepts it covers are applicable to other analytical aspects of strategic decision making Chapter provides some techniques and methods for ensuring that issues from the external environment are considered when strategies are being made It includes discussion of scenario planning as a method of doing this In Chapter the subject of ethics and morality is introduced This is one of those chapters that could have been placed elsewhere in the book It is in its present position because there is a close connection with what is considered to be ethical behaviour and the legal and social environment in which an organisation operates A discussion on pressure groups shows how the business environment vii THE STRUCTURE OF THE BOOK can be changed The chapter also includes a discussion of the stakeholder concept, which if followed would link the internal elements of the organisation to the external in all its decision making Because the stakeholder concept is not universally accepted an alternative approach is discussed, and this too requires a consideration of various elements in the business environment In Part the emphasis is on a number of other aspects of the formulation of strategy It has sixteen chapters which cover all the main concepts behind the making of strategy, and many of the techniques that can be used in analysis In all cases the explanations are in depth, and emphasis is given to applying what is discussed to real situations There is a research-based chapter on the use of a shareholder value approach in decision making We look at concepts of vision and objectives, and start an exploration of the nature of strategy and the broad options that are available (for example, the virtual organisation, acquisition and alliances) There are specific chapters dealing with global strategies, technology, manufacturing, financial and human resource strategy Finally in this part there are some chapters covering plan preparation and evaluation By this point in the book we have covered three of the five elements of the model presented in Chapter There has been a lot on analysis, some emphasis on creative decision making and leadership, and we have started a consideration of strategic management as a process In Part full attention is given to the fifth element of this model, implementation, although one can argue that it has already received some attention in the emphasis I have given throughout to the application of concepts The three chapters in this part cover both the system/ administrative aspects of implementation and the behavioural issues, and include a way of thinking about transformational leadership In the final part of the book we return to complete the discussion of strategic management as a process, looking at the particular issues which arise when introducing such a process into an organisation, and examining the research evidence on the pitfalls of planning The final chapter offers some brief thoughts on the future direction of strategic management A chapter analysis is provided below to help the reader see where particular concepts are covered Chapter From planning to strategic management and beyond viii Main concepts covered Some key authorities discussed Evolution of the subject and main modern schools of thought, against an increasingly turbulent and global environment Comparison of many of the views The chapter includes a five-point model showing the critical factors for strategic success, and ends by suggesting that a contingency approach may be more valuable than searching for the one right answer Ansoff (1965), foundation of the subject, and later (1972), the concept of strategic management The Boston Consulting Group contribution to analytical thinking The PIMS database Global strategy thinking of Prahalad and Doz (1987), Yip (1992) and Ohmae (1990) Ohmae (1982) (strategic thinking) McKinsey 7S model THE STRUCTURE OF THE BOOK Chapter Main concepts covered Some key authorities discussed Porter industry analysis, competitor analysis, the value chain The incremental/emergent strategy views of Lindblom, Quinn, and Mintzberg Core competency approach of Hamel and Prahalad, Ansoff’s modern views of a contingency approach, and related concepts from others Strategic management: success or failure? An analysis of the research evidence of the success of strategic management, contrasted with some obvious failings by some who claim to practise it Failure of many acquisitions, and most BPR initiatives The research quoted is from a wide range of studies Part of this chapter is based on the experience of the author The warnings about the things that can cause strategy to fail Reference is made to the contingency/situational factors emphasised by Ansoff in his recent thinking, and Goold and Campbell’s work on strategies and styles Both authorities are treated more thoroughly in the next chapter A look at the total process The elements that must be covered when a strategy is considered (e.g the effect of a marketing strategy on structure and processes, etc.) The importance of vision and leadership, and the brief discussion of an approach to transformational leadership Styles of strategic management, a contingency approach to strategic management, research on the evolution of strategic management from long-range planning, description of strategic management, with illustrations of a planning process Scenario planning as a process Elements of a business plan Much of this chapter is original to the author, although debts are acknowledged to various authorities in the thinking behind some of the conceptual models Ansoff’s scales of turbulence are discussed, and his recommendations are used to examine the findings of Gluck et al on the evolution of planning Strategy and styles relationships found by Goold and Campbell are explored The main scenario planning authority referred to is van der Heijden The challenge of the future This chapter argues that organisations must heed the trends and forces in the environment, and discusses the need for creative thinking, and some of the things that block it Most of The issue of relating to the business environment is a commonplace in the literature of strategic management The model presented here was developed by the author, and offers a ix Figure 35.7 The Xerox Management Model Despite the fact that the Xerox model has six elements rather than nine, the similarities between the two models are obvious It is the differences, however, which give particular insight into Xerox’s unique approach to the development of a holistic process-oriented organisation First, in the XMM the ‘Customer and market focus’ element of the model becomes the engine driving the model It links directly with all but one of the other model elements Second, the EFQM’s ‘Processes’ become, in XMM, ‘Business Process Management’ and are associated more closely with ‘Business Results’ Third, the very title of Xerox Management Model, as opposed to Quality Management Model, is meant to indicate the total pervasiveness of the model and its incorporation of both Allaire’s software and hardware elements In the supporting literature provided to Xerox employees as part of the extensive XMM deployment process stress is laid upon the fact that although the Xerox 2000 XMM has its roots deeply embedded in the earlier programmes it is, in contrast to them, a toolbox for all Xerox employees containing everything needed to run the company Dick Leo, a Xerox vicepresident heavily involved in the deployment, stresses that XMM is ’a holistic management model because it addresses every aspect of Xerox work: planning, creating, leading, managing, changing, organizing [sic], communicating, learning, and rewarding.’ XMM deployment The deployment of XMM began with the creation of the simple block diagram as a means of bringing together the Xerox 2000 concepts Behind the six boxes, however, lie more than sixty process improvement tools, interlinked to provide a self-assessment tool kit which is both process-oriented and customer-focused During the self-assessment exercise Xerox organisational entities are led through a series of steps which analyse their performance in thirty-five business 690 practices linked to seven specific, quantified business results Desired process states are defined and feedback loops ensure that weaknesses are identified, both in the ‘software’ and the ‘hardware’ of the entity; process-improvement activities are generated and resources for improvement projects are put in place Involved employees claim that during the deployment process over the last four years twoto ten-fold performance improvements in process performance have become commonplace After self-assessment, entities have their analyses and results validated by Xerox employees from another part of the corporation This includes a final agreed rating against model practices on a seven-point scale and an agreed level of ‘Certification’ This in turn leads to an agreed set of improvement initiatives, again encompassing both ‘soft’ and ‘hard’ activities Furthermore, since the process measures improvement in terms of both productivity and customer value, investments of both time and capital are targeted towards the longer-term objective of market leadership as well as the short-term imperative of cost effectiveness In effect, what Xerox is attempting to accomplish with the deployment of XMM, based upon its long-established benchmarking, TQM, Customer Focus, Business Process Management experience, is the creation of a working environment in which all processes are continuously scrutinised for their relevance to the customer and for their inherent process efficiency Given the heavy emphasis on Allaire’s ‘software’ and the explicit recognition of the role of individuals within the process, it may also be described as a brave attempt to establish the learning organisation, which focuses externally on the customer and internally on a holistic set of business processes operating at benchmark levels of efficiency On the basis of a compendium of measures Xerox continues to prosper in the late 1990s The share price, which was $29 in 1990, reached $150 in 1996 before a three-for-one split, and has subsequently risen from the $50 split price to over $80, an eightfold increase in less than seven years During the same period Customer Satisfaction and Retention rates have improved significantly, a plethora of new products has been introduced, and Xerox has gained market share in all continents, including a significant improvement in Japan, the home of its only significant copier competitors after its main Western rivals IBM and Kodak have both pulled out of the market Clearly, to claim that Xerox’s commercial success is directly attributable to its deployment of a succession of change initiatives is overly simplistic On the other hand, the fact remains that it is now fifteen years since the Japanese Ministry for International Trade and Industry (MITI) formally targeted the office equipment market for exploitation and the president of Canon famously declared his company’s goal as to ‘Kill Xerox’; and yet Xerox has not only survived, it has prospered in an extremely difficult market At the very least it is valid to speculate that the willingness of Xerox’s leadership and other employees to accept the need for change has been a critical if not necessarily sufficient factor in the story of the last fifteen years The extent to which Xerox has now created the holistic, process-oriented learning organisation which it would like to be will presumably be evident in another fifteen years’ time 691 This Page Intentionally Left Blank Index of names and organisations Abbey life, 269 Abell, D F., 405, 406 Abernathy, W J., 415 Ackoff, R L., 7, 281, 300, 301 Acrow, 208 Afuah, A., 382 Air Libert´e, 375 Aiwa, 377 Alahuhta, M., 386 Alexander, L D., 14, 528, 558, 559, 561 Alexander, M., 38 Allis Chalmers, 355 Allstate Insurance, 210 Americam Airlines, 375 Andrews, K R., 8, 17 Ansoff, H I., 4, 5, 6, 7, 11, 12, 19, 20, 21, 36, 38, 45, 52, 53, 54, 55, 135, 155, 281, 296, 301, 302, 305, 368, 437, 459, 512, 547, 599, 601 Anthony, R N., 530 Apple, 20 Argenti, J., 155, 156, 281 Argyll Group, 223 Armstrong, Elswick Works, 109 Ascher, K., 439 ASDA, 222 Avon Rubber, 157 Bailey, J., 50 Barham, K A., 121 Barker, R M., 280 Barksdale, H C., 310 Bassam, C., 121 BAT Industries, 255, 266 Bata Shoe Co., 101 Bate, P., 14 Baynes, P., 66 BBC, 152 Bernal, J D., 89 Black Horse Life, 269 Blanchard K., 49 Body Shop, The, 154, 157 Bolt, J F., 433 Bonoma T V., 14, 527 Boston Consulting Group, The, 8, 9, 309, 310, 413 Bower, J L., 8, 17 Bracker, J S., 280 Bramham, J., 433 British Airways, 38, 134, 374, 375 British East India Co., 380 British Oxygen Co., 90 British Petroleum, 215, 263, 431, 451, 547, 556–7 British Rail, 294 British South Africa Co., 380 British Telecom, 451, 547, 555–6 Brooke, M Z., 13 Buckner, H., 40, 41 Butcher, H., 126 Buzzell, R D., 10, 255, 256, 310, 376, 483 Cadbury, Sir A., 156 Campbell, A., 38, 51, 52, 215, 255 Canada Dry, 360 Canon, 277, 407 Carlesen, J., 451 Carnivale, N M., 375, 376 Carr, A C., 143, 146 Cartwright, S., 368 Casio Computers, 407 Caterpillar, 277 Centre for Tomorrow’s Company, 154 Champion, J R., 32 Chandler, J., 71 Channon, D E., 13, 40 Christensen, C R., 8, 17 Ciapolla, J A., 363 Clark, K B., 8, 14, 415, 416, 417 Clarks Shoes, 101 Club of Rome, 10 Cockle, P., 71 693 INDEX OF NAMES AND ORGANISATIONS Comair, 375 Conference Board, 28 Connor Periphals, 384 Constable, J., 445 Cooper, C L., 368 Co-operative bank, 154 Coopers & Lybrand, 50 Coulsen-Thomas, C J., 41 Coutie, G A., 110 Coyne, K P., 21, 22 CP International, 97 CPC Europe, 32, 33 Crawshaw, H S., 207 Crocker bank, 39 Crown Cork, 207 Cvar, M., 384, 385 Dauman, J., 127, 141, 157 D’Aveni, R., 21 de Jong, K., 27 de Meuse, K., 41 DeClerk, R P., 11 Defence Research Agency, 294 Denning, B W., 28, 31, 35, 60, 61, 182, 184 Department of Health, 192 Deutsche BA, 375 Devanna, M A., 5, 14 Dinlelspiel, J., 50 Distillers, 223 Dixons group, 271–6 Dologite, D G., 375, 376 Dooley, J I., 363 Doz, Y L., 8, 13, 183, 256, 385 Drucker, P F., 6, 7, 9, 81, 153, 156, 171, 177, 281, 380 Du Pont, 179, 361 Dunphy, D C., 548, 549, 550, 554 Economist Intelligence Unit, 100 EDS, 183 Eppink D J., 28 ETA, 39 Farmer, D H., 192 Federal Express, 183 Fiat, 355 Fisons, 284 Fleisher, C., 220 Ford, 277, 382 Ford, D., 409, 410 Ford, Henry, 415 Friedman, A., 355 Fuld, L M., 226 Fyffes Group Ltd, 171, 204, 532 694 Galbraith, J K., 142 Galbraith, J R., 46 Gale, B T., 10, 255, 256, 310, 376, 483 Geest, 204 General Electric, 9, 256, 309, 451, 547 General Motors, 146, 157 Glover, Webb & Liversedge, 78 Gluck, F W., 4, 9, 54, 55 Goffee, R., 436 Goold, M., 38, 51, 52, 215, 255 Goyder, M., 154 Guinness, 223 Gulliver, J., 223 Hamel, G., 5, 7, 8, 15, 17, 18, 20, 59, 183, 185, 188, 189, 277, 405 Hamilton, R T., 101 Handler, S., 254, 257, 258–76 Handy, C B., 452 Hanson Trust, 183, 215, 254 Harbridge Consulting Group Ltd, 127, 128, 209, 212, 237–53, 254, 255, 257, 356, 434, 439, 448, 449, 563, 597, 600 Harbridge House Inc, 50, 311, 452 Harfield, T., 101 Hargreaves, D., 305 Hargreaves, J., 127, 141, 157 Harris, C E., 310 Hartley, R F., 136 Harvard Business School, 9, 10 Hayes, R H., 8, 14, 415, 416, 417 Hayes, R L., 11 Hedley, B., 413 Henley Centre for Forecasting, 100 Henry, J P., 404, 405, 408 Herold, D M., 35 Hersey, P., 49 Hewkins, J W M., 28, 30 Hill, T., 415 Hinterhuber, H H., 186, 187, 188, 279 Hiscocks, P G., 186, 187 Ho, S K., Hofer, C W., 127, 310 Hoffmann La Roche, 361 Hofstede, G., 458 Honda, 277, 382 Horton, R., 556 House, R J., 35 Hoylake, 266 Hudson’s Bay Co., 380 Humble, J W., 292, 541, 542 Hussey, D E., 66, 67, 87, 321, 433 Hutchinson, S., 40 IATA, 151 IBM, 361 ICI, 354 INDEX OF NAMES AND ORGANISATIONS Imperial Foods, 254 INFACT, 136 Interstate Commerce Commission, 374 IRIC, 458 Irving, P., 30, 33, 589 ITIM, 458 ITT, 353 Jacoby, N H., 391 James, B., 483 Jantch, E., 7, Japan Strategic Management Society, 407 Jeannet, J P., 386 Jennings, D., 355 Jet Airways, 375 Jethro, 564 Johannson, 217 John Lewis Partnership, 154 Johnson, G., 12 Johnson, S D., 280 Jolly, V., 386 Kami, M J., 299 Kaplan, R., 528 Karger, D W., 37 Karlof, ă B., 221, 278 Kaufman, S P., 4, 9, 54, 55 Kay, J., 18, 19 Kempner, T., 28, 30 Kennedy, C., 354 Keuning, D., 28 Kidel, A K., 58 Kingfisher, 272 Kinnie, N., 40 Kitching, J., 41, 368, 484 KKR, 266 Klein, J A., 186, 187 Kleinwort Benson, 154 Komatsu, 277 Komo, T., 28 Kotler, P., 109 Krausher, Andrews & Eassie Ltd, 363 Laker, F., 196 Lander,, K E., 61, 70, 589 Lasa, 384 Leavitt, H J., 45 Lehr M E., 28, 31, 35 Leontieff, W W., 115 Levi Strauss, 220 Levitt, T., 34, 79, 108 Lewin, K., 554 Lewis, D., 554 Lindblom, C E., 15, 16 Lloyds Bank, 267–71 Logitech, 384, 386 Longley, M., 134 Lorange, P., 66 Loverage, R., 403 Lowe, P., 563, 564 Lynch, J L., 433 McBeath, G., 433 McCarthy, E J., 304, 495 McCormick, R., 445 McDonnell, E., 4, 20, 437, 459, 512, 547 McGee, J., 216, 246 McHugh, 216 McKinsey & Co., 8, 9, 14, 21, 45 McNamee, P., 127, 216, 246 Magill, S L., 280 Mainelli, M., 126 Malasca, P., 135 Malik, A., 37 Management Charter Initiative (MCI), 445, 448 Management Consultancies Association, 242 Marks & Spencer, 151 Marshall, A., 107, 484 Merrit A J., 7, 8, 518 Midland Bank, 39 Miller, J., 413 Mintzberg, H., 5, 16 Mockler, R J., 375, 376 MORI, 262 Moroney, M J., 111 Moses, 563 Motorola, 183 Murdoch, R., 554 Nader, R., 146 Nathanson, D A., 46 National Freight Corporation, 353 National Health Service, 134, 459 National Institute of Economic & Social Research, 100 Nestl´e, 136 Neubauer, F.-F., 127, 130, 131, 132, 133, 158, 408, 409 Nicholls, J., 49 Nielson, 363 Nilsson, W P., 433 Northumberland County Council, 149 Norwood, G J., 362 OECD, 401 Ohmae, K., 5, 13, 14, 17, 59, 384 Oliffe, M D., 158 Otis Elevators, 410, 412 Owen, Robert, 141, 144 695 INDEX OF NAMES AND ORGANISATIONS Pappas, N., 459 Parker, G G C., 114 Pavitt, K., 364, 365 Penn Central Railroad, 373 Pennington, M W., 58 Perkins, 353 Perrin, H F R., 592 Peters, T J., 5, 14, 45 Petrocan, 353 Pitman, B., 268 Pitt, M., 403 Plastow, Sir D., 319 Popp, W., 279 Porter, M E., 5, 8, 13, 15, 16, 17, 18, 21, 59, 192, 193, 216, 217, 218, 219, 222, 240, 246, 255, 256, 305, 314, 319, 483 Post Office, 294 Prahalad, C K., 5, 7, 8, 13, 15, 17, 18, 20, 59, 183, 185, 188, 189, 256, 277, 385, 405 Pratt & Whitney, 444 Preece, S., 220 Price Waterhouse, 69, 70 Project on Corporate Responsibility, 157 Prudential Insurance, 40, 257 Public Interest Research Centre, 157 Purcell, J., 40 Qantas, 375 Quinn, J B., 5, 15, 16, 19, 362 Rajan, A., 437 Rance, H., 362 Rank–Xerox, 92 Rappaport, A., 259 Redwood, H., 284 Reed International, 71 Reimann, B C., 261 Ringbakk, K A., 29, 30, 31, 527, 589, 590, 592 Ritenberg, D T., 393, 400 RJR Nabisco, 266 Rolls Royce, 78, 319, 352, 481 Rostow, W W., 395 Royal Institute of International Affairs, 123 Royal Society of Arts (RSA), 154 Ruhli, E., 21 Sabi-Limpopo Authority, 58, 105 Sainsbury, 222 St Thomas Aquinas, 140 Saunders, A., 109 Sawayama, A., 377, 407 Scandinavian Airline Systems, 47, 451 Scase, R., 436 Schendel, D., 127, 310 Schoemaker, P J H., 71 696 Scholes, K., 12 Scott, B W., 96, 102, 281, 294 Sears Roebuck, 210 Segura, E L., 114 Shell, 70, 71, 311, 313, 314, 321 Sillapanăaaă , M., 92, 150, 153, 154, 157 Simon Engineering, 410 Skinner, W., 8, 411, 412, 417 Smalter, D J., 593 SMH Group, 39 Smith M C., 362 Smith, N J., 109 Social Audits Ltd, 157 Society for Long Range Planning, 28, 30 Sohio, 431 Solomon, N B., 130, 131, 132, 133, 158 Sony, 137, 183 Stace, D A., 548, 549, 550, 554 Stanat, R., 126 Standard Oil Co., 353 Stanford Research Institute, 5, 6, 8, 28, 34, 68 STC, 410 Steiner, G A., 66, 361, 362, 363, 588 Stonich, P J., 14 Stopford, J M., 319, 481 Strategic Planning Institute, 10, 310 Strategic Studies Institute, 122 Subrananiam, S., 21, 22 Sullivan, P A., 20, 21, 38, 122 Sun Tzu, 5, 6, 59 Swatch, 39 Sykes, A., 7, 8, 518 Syrius, Publius, 535 Tate & Lyle, 360, 375 Taylor, B., 30, 33, 192 Taylor, C W., 122, 123 Teeling-Smith, G., 117 Tesco, 222 Texaco, 150 Thomas, H., 216, 246 Thomke, E., 39 Thompson, Sir P., 353 Thune, S S., 35 Tichy, N.M., 5, 14 Tobin, J., 261 Toccacelli, J., 220 Toffler, A., 8, 10 Tovey, L., 437, 439, 444, 449 Toyota, 92, 382 Trompenaars, F., 458 TSB, 263 Tube Investments, 157 Union Carbide, 10, 361 Unipart, 154 INDEX OF NAMES AND ORGANISATIONS United Airlines, 375 University of Louisville, 280 Urwick Orr & Partners, 69, 70, 543, 544, 545, 589 van Beusekom, M., 13 van Dam, 97, 395 van der Heijden, C A., 71 van der Heijden, K., 71, 134 Vancil, R F., 37, 66, 301 Vandermerwe, S., 158 Vickers 319, 352, 353, 481 Vickers Armoured Fighting Vehicles, 210 von Allmen, E., 591, 592 Wates, N., 145 Wayne, K., 415 Wee, C H., Welch J., 59, 256, 451 Wells Fargo, 40 Wheeler, D., 92, 150, 153, 154, 157 Wheelwright, S C., 8, 14, 415, 416, 417 Willett International, 154 Wills, G., 404 Woodward, W J., 149 Wrapp, H E., 589 Wyatt Co., 41 Xerox Corporation, 15, 277 Waitrose, 222 Walleck, A S., 4, 9, 54, 55 Wal-Mart, 183 Wander Ltd, 172 Warburg S G., 354 Warner, M., 134 Warren, E K., 29, 58, 588, 589, 590, 594 Waterman, R H., 5, 14, 15, 45 Waters, J., 16 Wates Ltd, 149 Yahagi Consultants, 377 Yip, G S., 8, 13, 381 Yorkshire Bank, 269 Young, R., 66, 67 Zenecca, 354 Zurich Insurance, 577 697 This Page Intentionally Left Blank Index of subjects Bold denotes main reference to a subject Acquisition/merger, 10, 63, 122, 164, 224, 225, 262, 263, 266, 307, 364–74, 409, 428, 477 and planning, 36–7 failure rates, 40, 41, 368, 369, 484, 600 Activating, 49, 551–2 Adaptivising, 300, 301 Administration, 63, 434 Alternatives, 55, 64, 263, 297, 305, 306, 307, 424, 489, 491, 518, see also Options Analysis 13, 14, 22, 42, 56, 97, 98, 185, 305, 307, 528 Analysis of capital projects, 7, see also Appraisal Analytical approach, 5, 168–82 Annual budget, 9, 65, 531, 534–5 Annual operating plans, 65, 531–3, 535 Ansoff matrix, 301–5 Appraisal of capital expenditure, 518–24 Assumptions, 71, 72, 96–106, 126, 296, 355, 405, 464, 489, 493, 519, 538 Backwards integration, 103 Behavioural 14, 527, 528 Benchmarking, 14, 177, 191, 192, 217, 221–2, 239 Boston Consulting matrix, 309–10 Brainstorming meetings, 307 Budgetary control, 534–5 Budgeting systems, 33, 176 Bureaucratic processes, 11 Business definition matrix, 405, 406 Business ethics, 139 Business process re-engineering, 14, 17, 41, 42, 221 Buyers, 192, 193, 194, 196–8, 201, see also Customers Capabilities of business leaders, 22 Capabilities of firm, 17, 18, 72 Capital asset pricing model, 259 Capital budgeting procedure, 512–15 Capital intensity, 31 Capital investment decisions, 116 Capital rationing, 424 Change, 79, 80, 81, 547, 548 Change, rate of, 78 Change, types of, 548 Change and people, 557–9 Change management, 14, 51, 278, 547–65 Changing trends, 135 City pressures, 121 Climate, organisational, 451–2, see also Culture Commitment, 549 Communication, 32, 56, 557, 559 Community, 139, 145–8 Comparative studies, 111, 217 Competencies, individual, 440, 441, 445–50, 458 Competencies, organisational, 8, 17, 482, see also Core competencies Competition, 10, 211, 367 Competitive advantage, 5, 13, 21, 211, 218, 222–3, 252–3, 410 Competitive arena, 48, 177, 193, 208, 353 Competitive environment, 83 Competitor: alliances, 211 analysis, 8, 13, 177, 183, 190–253 groups, 216–17, 243 profiling, 191, 210–16, 246–7 special studies, 191 Competitors, 147, 165, 169, 183, 192, 210, 602 Computer aided design (CAD), 415 Computer aided manufacture (CAM), 415 Conglomerate discount, 255 Constituents, 130 Constraints, 155–7, 279, 281, 297, 487 Consumer demands, 122 Contingency plans/planning, 30, 103, 104 Contingency strategies, 467 Contract manufacture, 360 Control, 61, 524–6, 529, 530 Control systems, 46, 47 Core competencies, 8, 17, 18, 183–9, 214, 340, 405, 602 Corporate appraisal, see Strengths and weaknesses 699 INDEX OF SUBJECTS Corporate identity, 164 Corporate planning, 7, 9, 28, 29, 30, 32, 62, 65 and performance, 34–7 approach to 62–70 Corporate renewal, 283 Cost benefit analysis in HRM, 443 Cost cutting strategies, 40 Cost leadership, 13, 222 Cost of capital, 259–60, 368 Cost reduction, 165, 362 Cost to customers, 218 Costs, basis of calculation, 170–2 Creative thinking, 288, 443 Creativity, 13, 22, 35, 81, 306, 307, 341, 532 Critical skills, see Critical success factors Critical success factors, 182–3, 184, 191, 209, 215 Culture, organisational, 14, 46, 48, 51, 264, 265, 266, 341, 368, 369, 451–2, 528, 550, 555–7 Cultures, national, 85, 457–8 Customer satisfaction, 272, 274, 275 Customers, 139, 150–1, 165, 192, 256, 368, 376 Cycle time, 218 Data bases, 191 Data support systems, 263 DCF, see Discounted cash flow Decision processes, 46, 47 Deliberate strategies, Delphi technique, 116 Demerger, 354 Demographic trends, 122 Depreciation, 425, 522 Desk research, 191 Differentiation, 13, 194, 196, 197, 222, 483 Directional policy matrix, 190, 311–21 scoring rules, 313–17, 329–33, 342–50 Disciplined entrepreneurship, 12 Discontinuities, 12, 21 Discount rate, 259–60 Discounted cash flow, 7, 8, 285, 286, 287, 519, 520, see also Shareholder value Diversification, 30, 38, 40, 263, 303–5, 306, 361, 365 Diversified organisations and value, 254–7 Diversity, of population, 85, 437 Divestment, 30, 63, 352–6 Dividends, 424 Down-sizing, 40, 41, 149, 436 Earnings per share, 258, 284, 286, 427 Economic models, 114 Economic value, 258 Economic value added, 261 700 Economies of scale, 195, 302, 382, 413 Educational programme, 584–7 Emergent strategies, 5, 15, 16, 17, 18 Employees, 139, 148–50 Empowerment, 549, 558, 563–5 Ensuring, 50, 553–4 Entry barriers, 192, 194, 199 Environment, business 11, 38, 48, 64, 77–137, 169, 307, 382, 430,437–8, 454, 478, 495 demographic, 46, 82, 83–5, 194 ecological, 46, 82, 91–3, 194 economic, 46, 82, 85–7, 194 infrastructure, 46, 82, 90–1, 194 legal, 46, 64, 82, 87–8, 194 political, 46, 64, 82, 94, 194 social, 46, 82, 93–4, 194 technical/technology, 46, 64, 82, 88–90, 194, 383 techniques for assessing, 125–38, 321–3 Environmental impact, 101 Environmental information, 100 Environmental turbulence, see Turbulence Envisioning, 49, 550–1 Equilibrium approach, 167–168 Equity sources of finance, 427–8 Equity spread approach, 261, 262 Excellence, in search of, Exit barriers, 192, 194, 199 Experience curve, 195, 382, 413, 414, see also Learning curve Exponential smoothing, 110 Extended budgeting, 6, 20, 30, 54, 60 External changes, 77–95 External factors, 82, see also Environment External forces, 21 Externally based planning, 55 Extrapolative budget, Extrapolative techniques (technological forecasting), 118 Facing up to change method, 127–30 Financial planning, see Planning, financial Financial resources, 175 Financial strategy, 419, 420 Five forces analysis, 135, see Industry analysis Fixed capital, 424 Flat organisations, 122 Flexible manufacturing systems, 415 Flexible plans, 105 Focus, 13, 222 Focused factory, 411–12 Forecasting models, 114–15 Forecasting techniques, 82 Forecasting/forecasts 7, 37, 54, 59, 60, 64, 72, 98, 100, 107–44, 120, 489, 493, 519 Formal planning, 6, 26, 28, 35 INDEX OF SUBJECTS Four Ps approach, 495 Fragmented industry, 194, 199, 367 Franchising, 137 Future environment, 96 Futures, 116–119 Gap analysis, 7, 71, 284, 294, 298–300, 301 Gearing, 426 Generic strategies (Porter), 13, 222 Geographical issues in industry analysis, 193, 312, 313 Global competition, 10, 42, 122, 383, 384 Global industry, 193 Global organisation, 13, 256, 381, 387 Global strategy, 8, 13, 177, 380–402, 414 Globalisation, forces for, 381 Goals, 279, 282, 287, 290–1, 535, 536 definition, 281 Good citizen philosophies, 144, 391–3, 396 Government interference, 144, 152 Hedging actions, 103, 105, 133 Human factors, 373, 376 Human resource planning, 432–61 and the environment, 437–8 management development, 439–45 overall framework, 433–6 Hypercompetition, 21 Impact analysis, 118 Implementation of strategies, 12, 13, 14, 22, 42, 65, 468, 478, 485, 514, 520, 524, 527–65 Improvement, 63 Incentive systems and value, 264 Incremental growth, 10 Industrial espionage, 147 Industry analysis, 4, 8, 13, 134, 191, 192–210, 227–36, 240–5, 483 and portfolio analysis, 311–17 Industry firms, 194–6, see also Competitors Industry mapping, 191, 201–8, 240–4 Industry questionnaire, 227–36 Industry structure, 21 changing power balance, 200 Inertia, 79 Inflation, 10, 86–7, 285, 523 Inflexibility, 79 Influencers, 192, 193, 240 Information for competitor analysis, 223–6, 238, 248–52 Information systems, 46, 47, 126 Information technology, 121, 122 Innovate/innovation, 17, 18, 19, 81, 257 Input/output analysis, 115 Installing, 48, 552–3 Intensification of competition, 121 Intention to buy surveys, 112 Internal rate of return, 286, 524 International trades unions, 401 Investment intensity, 378 Involvement, 488, 532, 557 Ivory tower planning, 592 Job titles, 4, 6, 11 Joint ventures, 14, 360, 374, 477 Just in time production, 415 Laws of planning, 479 Leadership: EASIER approach, 49–50 macro, 49 micro, 49 of strategic change, 13 transformational, 5, 14, 48–51, 278 Leading indicators, 112 Learning curve, 413, 414 Learning organisation, 13, 19 Licensing, 357–9 Life styles, 93 Loan finance, 428–30 Logical incrementalism, 5, 15 Long range planning, 6, 29, 30, 53, 56 Management buy out, 353 Management by exception, 12 Management by objectives, 70, 281, 292, 530, 541 Management development and corporate strategy, 433 Management development audit, 440–1, 446–7 Management in the 1990s, 121 Manufacturing, 97, 173 Manufacturing strategy, 8, 410–18 Market definition, 304 Market focus, 121, 122 Market forces, 64 Market imperfections, 199 Market place, 38 Market segmentation, 208 Market share, 169, 194, 196, 208, 377, 384, 483 Market value multiples, 261, 262 Marketing, 63, 111 Marketing plans, 492–501 Marketing research, 111–13, 147, 167, 191, 201, 222, 307, 493, 521 Markets, 93 Mathematical trends, 111 Merger/acquisition, see Acquisition/merger 701 INDEX OF SUBJECTS Mission, 130, 278, 280, 288 Monitoring and controlling, 65, 524–6, 535–8 Morphological analysis, 119 Motivation, 56 Moving average, 110 Multidomestic organisations, 381, 382, 387 Multinational businesses, 287, 308, 422, 430 Multinational strategy, 380–402 Multinationals and third world countries, 395–8 Negative value business unit, see Positive/negative Net present value, 286 Network analysis, 514, 516, 525 Neubauer/Solomon approach, 130–3 New product planning, 517 Objectives, corporate, 9, 10, 11, 32, 64, 65, 72, 81, 142, 277–95, 427, 463, 479, 487, 536, 537 bottom up process, 280 definitions, 279, 281–2 Objectives, personal, 65, see also Management by objectives Oil price rise, 1973, 10 Operating management, 63, 296, 302 Operating plans, 62, 64, 65, 420, 487–507 Operational research, 7, 55 Opportunities, 64, 77, 90, 102, 133, 289, 306, 307, 390 Optimising, 300, 301 Options, 301, 462, see also Alternatives Organisational behaviour, 600 Organisational change, 32 Organisational leadership, 50 Outsourcing, 355–6 People, 46, 368, 461, 462, 495, 522 Performance management, 292 Perishable products, 196 Personnel policies, 215 Plan, business, elements of, 71–3 Plan, business, evaluating, 477–86 Planner(s), 27, 94, 96, 130, 168, 307, 422, 456, 488, 490, 491, 492, 531, 532, 570–7, 589, 590, 591, 592, 593–594, 601, see also Planning manager; Planning staff/units Planning: approach to, 62–70 benefits of, 27–42 costs of, 27 strategic, see Strategic planning externally oriented, failure, 588–97 financial, 4, 419–31 702 how far ahead, 56–60 manpower, 30, 433, 453–6 operational/operating, 9, 36, 60, 65 organisation, 30, 433 process, 8, 10, 22, 27, 32, 34, 37, 42, 45, 56, 64, 66, 82, 164, 296, 297, 307, 364, 390, 404, 487, 488, 512, 527 systems 5, 8, 32, 33, 56, 63, 64, 65, 66, 68, 69, 70, 306, 492, 530 procedures, 27 Planning manager, 81 Planning staff/units, 27, 29, 126, see also Planner(s) Plans, types of, 62, 64 Policies, 61, 423, 456 Pollution, 92, 144, 146 Portfolio, technology, see Technology portfolio Portfolio analysis, 4, 8, 9, 55, 190, 308, 309–50, 352, 354, 378, 410, 459, 464, 467, 524, see also Directional policy matrix Portfolio of core competencies, 188 Position audit, see Strengths and weaknesses Positive/negative value business unit approaches, 261 Pressure groups, 136, 140 Price earnings ratio, 286 Price/equity ratio, 259 Primary objectives, 279, 282–7, 288, 293 Probabilities, 103 Procedures, 61 Procurement, 10 Product failure 362–3 Product life cycle, 108, 303, 310, 383 Production, 63, see also Manufacturing Production plans, 502–5 Production strategy, see Manufacturing strategy Profit objective, 285, 286, see also Primary objective Project appraisal, 60, 61, 511–26 Project evaluation, 515–17, 518 Project plans, 61, 462, 463, 511–26 Projects, 64, 65, 512 Protecting against take-over, 266–7 Psychological contract, 558 Psychological security, 80 Public affairs, 147 Public sector, 57, 293–4 Q-ratio approach, 261 Quality, 121, 218, 376, 392 Rationalising resources, 174 Recognising, 50, 554 INDEX OF SUBJECTS Regression analysis, 114 Research & development, 60, 63, 116, 177, 307, 357, 358, 361–4, 365, 404, 463 Residual value, 260, 262, 520 Resource allocation, 55, 529 Resource availability, 72, 300, 357 Resources, 18 Return on capital employed, 259, 285 Return on investment, 286 Return on shareholders’ funds, 285 Review of plans, 506 Reward systems, 46, 47 Risk analysis, 102 Risk balance, 302, 305 Risk matrix, 311, 321–3, 336–41 Risk(s), 71, 72, 80, 97, 98, 102, 103, 137, 172, 285, 303, 304, 305, 320, 321–3, 352, 357, 358, 366, 374, 399–400, 426, 466, 481, 519, 523 Road blocks to new ideas, 80 ROI chart, 179–80 Sales analysis, 166 Satisficing, 300 Scenario planning, 53, 70–1, 134–5 Scenarios, 60, 105, 117, 118, 123, 134, 263 Secondary objectives, 279, 287, 288–90 Sensitivity analysis, 102, 466, 519, 523 Service, 218 Seven S framework, 8, 14 Shareholder value, 122, 143, 254–76, 282, 285, 340, 352, 427, 481 Shareholders, 64, 139, 142, 283, 284, 285 Social audit, 137, 157–9 Social responsibility, 92, 137, 141, 142, 292 Speed, 122, 256, see also Cycle time Stages of national economic growth, 395 Stakeholder concept, 139, 153–4, 279 Standards of performance, personal, 279, 282, 292, 535, 536 Statistical projections, 109–11 Strategic alliances, 14, 122, 185, 356, 369, 374–6 Strategic analysis, 6, 12 Strategic architecture, 18, 185 Strategic assets, 18 Strategic business units, 9, 11, 179, 309, 313, 320, 409 Strategic change, 599–602 Strategic choice, 12, 16 Strategic decisions, 22, 103, 137 Strategic direction, 10 Strategic failings, 40 Strategic information audit, 126 Strategic information unit, 125–7 Strategic intent, 17, 277, 278 Strategic management 3, 4, 6, 12, 13, 14, 20, 21, 22, 26, 27, 28, 38 45–74, 48, 63, 64, 66, 70, 72, 77, 96, 127, 284, 296, 381, 489, 527, 599–602 business ethics and morality, 139–59 components of, 45–7 concept, conflicting views, 5, 14, 38 contingency view, 4, 5, 20–1, 22, 52–4 definition, 11–13, 47 development/evolution, 4, 5, 7, 54–5 introducing to organisation, 569–87 process/system, 56, 70 success and failure, 26–44 Strategic plan/planning, 9, 11, 12, 36, 53, 97, 181, 278, 279, 296, 302, 306, 351–79, 420, 462–86, 487, 511 Strategic planning, definitions, 59, 60, 61 Strategic review, 11, 66, 67 Strategic segmentation, 208 Strategic thinking, 3, 4, 5, 13, 17, 23, 60, 65, 192, 266, 341, 385, 420, 477, 483 Strategy, 6, 9, 12, 19, 20, 38, 45, 46, 64, 65, 66, 85, 292, 296–308, 466, 527 definitions, 59 fashions in, 39–40 formulation, 12 matrix, 209 process, 19 Strategy global, see Global strategy Strengths and weaknesses, 32, 64, 65, 71, 163–89, 296, 298, 340, 465 Structure, 46, 48, 174–5, 265, 495, 528 Styles of strategic management (Goold et al.), 38, 51–2, 256 Substitutes, 192, 198 Succession planning, 452–3 Suppliers, 139, 151–152, 192, 197, 198, 376 Supporting, 50, 552 Surprise management, 53 SWOT method, 165–7 Synergy, 176, 255, 263, 303, 304, 305, 367, 400 Task, 46 Taxation, 426 Techniques, 65, 66 Technological change, 31 Technological forecasting, 7, 8, 116–19, 404 Technological obsolescence, 122, 513 Technology, 77, 78, 89, 214, 341, 358, 437 Technology analysis, 406, 407 Technology audit, 404–5, 407 Technology portfolio, 408–9 703 INDEX OF SUBJECTS Technology strategy, 364, 403–10 Terminal value, 260, 262 Testing a planning process, 597 Think tank meetings, 98, 391 Threats, 64, 77, 133 Total quality management, 122, 192, 549 Training, 265, 436, 437, 439–45, 552, 561–3 Turbulence 10, 20, 51–4, 55, 56, 135, 189, 437, 459, 512, 601 Uncertainty, 21, 21, 96, 107, 373 Underdeveloped countries, 78 Value, shareholder, see Shareholder value Value adding, 18, 51, 187 704 Value chain, 8, 18, 191, 213, 217 primary activities, 219, 220 support activities, 219 Value drivers, 266 Value metrics, 217–18, 221 Value sharing, 265 Values, 278 Vertical integration, 378 Virtual organisation, 356 Vision, 10, 12, 17, 38, 48–51, 64, 116, 277–95, 387, 528 Vision statement, 277 Weighted cost of capital, 259, 260 Working capital, 423–4 World class manufacturing, 8, 14, 416 World class performance 14 ... appraisal– assessing strengths and weaknesses It is much harder to define strengths and weaknesses than much of the literature implies Five methods of assessment are discussed: polling managers,... always implemented effectively, and discusses ways of ensuring that strategy is implemented This chapter is biased towards the systems and processes issues, and most of the behavioural matters are... business environment, markets and competitors, the most common process was still based on the preparation of corporate-wide plans, with submissions from the various business units being discussed