16933_00_fm3_pi-xxvii.qxd D KI IRELAN • HOS Edition 5:44 PM Page i HITT • SSON • 1/17/06 Strategic Management C OMPETITIVENESS AND G LOBALIZATION Michael A Hitt Texas A&M University SSON KI D • HOS Texas A&M University HITT • IRELAN R Duane Ireland • Robert E Hoskisson Arizona State University Copyright 2007 Thomson Learning, Inc All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Strategic Management: Competitiveness and Globalization (Concepts and Cases) Seventh Edition Michael A Hitt, R Duane Ireland, and Robert E Hoskisson VP/Editorial Director: Jack W Calhoun Sr Production Project Manager: Cliff Kallemeyn Production House: Lachina Publishing Services VP/Editor-in-Chief: Melissa Acuña Technology Project Editor: Kristen Meere Printer: Quebecor World Versailles, KY Executive Editor: John Szilagyi Art Director: Tippy McIntosh Sr Developmental Editor: Mardell Glinski Schultz Sr Manufacturing Coordinator: Doug Wilke Sr Marketing Manager: Kimberly Kanakes COPYRIGHT © 2007 Thomson South-Western, a part of The Thomson Corporation Thomson, the Star logo, and South-Western are trademarks used herein under license Printed in the United States of America 09 08 07 06 ISBN 0-324-31694-1 (Student Edition) ALL RIGHTS RESERVED No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution or information storage and retrieval systems, or in any other manner— without the written permission of the publisher Library of Congress Control Number: 2005911294 For more information about our products, contact us at: Thomson Learning Academic Resource Center 1-800-423-0563 ISBN 0-324-36432-6 (Instructor Edition) ISBN 0-324-40536-7 (Concepts) For permission to use material from this text or product, submit a request online at http://www.thomsonrights.com Thomson Higher Education 5191 Natorp Boulevard Mason, OH 45040 USA R e l eva n t Ac c u t e Co m p l e t e Strategize your students’ success with this book! In today’s competitive business world, what consistently separates successful firms from those that fail is making the right strategic decisions and actions Prepare your students for success with Strategic Management: Competitiveness and Globalization, the most accessible and practical presentation of strategic management you’ll find Up-to-date with the latest academic research and trends, this book uses hundreds of real-world examples throughout the text to highlight key concepts and put them into context An author team that’s at the head of the class This well-respected author team consists of acknowledged experts in strategic management Hitt, Ireland, and Hoskisson are active scholars and leaders in the strategy field, and they build a conceptual foundation based on proven strategic management concepts and the latest in cutting-edge research and practice Their unique approach blends the classic industrial organizational model with the resource-based view of the firm to explain the strategic management process and its application in all types of organizations Proven cases that teach and engage A wealth of compelling case studies allows students to hone their own strategic management skills as they examine dilemmas facing actual firms and learn what it takes to build and sustain a competitive advantage And the case notes for the text—prepared by leading experts in strategic management—are the most complete, accurate, and reliable on the market Also available in these split versions: Strategic Management: Competitiveness and Globalization, Concepts Seventh Edition — ISBN: 0-324-40536-7 Strategic Management: Competitiveness and Globalization, Cases Seventh Edition — ISBN: 0-324-40537-5 SUMMARY RELEVANT The strategic management process comes to life — from vision to implementation Strategic Focus Three new or updated Strategic Focus segments in every chapter showcase familiar organizations—many of which compete internationally—to emphasize applications of the chapter’s content and to increase your students’ ability to achieve higher performance Also included is additional content discussing leaders who have both succeeded or failed based on their ability to implement the right business strategy New Cases PREFACE With this edition, the authors examine more than 600 companies to describe the use of strategic management tools, techniques, and concepts This application-oriented text includes 30 all-new cases, drawing from a variety of topics, organizational settings, and industries A correlation guide matches text chapters with applicable cases These timely and intriguing cases feature a mix of well-known organizations headquartered or based in the United States and a number of other countries With each case, students have an opportunity to analyze, synthesize, and apply the parts of the strategic management process they’ve learned Cases reflect a variety of management situations to offer a well-rounded learning experience iv The case notes for the Seventh Edition are the most complete, accurate, and reliable on the market – and they have been compiled by six experts in the field of strategic management Additionally, financial analysis accompanies some of case notes with tutorials to guide students ACCURATE Insightful research and a strong application orientation help students understand what it takes to succeed in today’s—and tomorrow’s—business world Current Research with an Emphasis on Key Trends Thoroughly updated, this edition contains the most current research and findings, including references to 2004 and 2005 publications Plus, this edition expands the text’s discussion of key trends—such as ethics & social responsibility, global strategy, cultural diversity—and the impact these trends are having on the practice of strategic management Experiential Exercises In response to positive reviewer feedback, this edition includes updated Experiential Exercises Each chapter includes carefully chosen exercises, many of which are new, providing ample opportunity for hands-on learning and practice with critical concepts and tools EXPERIENTIAL COMPLETE EXERCISES Chapter Opening Vignettes Each chapter opens with a short vignette featuring an actual firm to introduce the key points of the chapter and illustrate their relevance to modern organizations These vignettes, as will the entire text, feature the authors’ live and concise writing style, which holds readers’ attention and increases their interest in strategic management A Focus on Learning The text’s student-focused approach is extended into its well-crafted pedagogy, which helps students absorb and review what they’re learning These features include knowledge objectives, a running glossary, chapter summaries, and review questions PREFACE From the authors’ engaging narrative to the text’s well-crafted pedagogy, Strategic Management sets the standard for accessibility and readability v COMPLETE We make it easy to craft a winning strategy for teaching and learning These exclusive resources will save you time and will help your students achieve success in your course and in their business endeavors INTERNET RESOURCES Strategic Management: Competitiveness and Globalization Product Support Web Site http://hitt.swlearning.com The companion web site for Strategic Management: Competitiveness and Globalization includes complete student learning and teaching resources as well as Internet activities and links to strategic management resources From a password-protected area, instructors can easily download the Instructor’s Manual, Test Bank, PowerPoint® slides, Integrated Video Guide, Case Notes, Test Bank in Word, and ExamView® Computerized Testing For students, The Strategy Suite brings together complete webbased support including links to online academic journals, professional societies, and other business resources A Case Analysis Method explains the case approach, while Your Career in Management offers a quick opportunity for students to 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This premier online business research tool allows you and your students to search thousands of periodicals, journals, references, financial information, industry reports, and more This powerful research tool saves times for students—whether they are completing a case analysis, preparing for a presentation, or writing a reaction paper You can use the BCRC to quickly and easily assign readings or research projects Visit http://bcrc.swlearning.com to learn more about packaging this powerful electronic tool with Strategic Management: Competitiveness and Globalization INSTRUCTOR RESOURCES Instructor Resource’s CD-ROM with PowerPoint® Lecture Slides 0-324-36044-4 Includes Case Notes, an Instructor’s Resource Manual and Video, Test Bank, ExamView® Computerized Testing, PowerPoint® lecture slides, and financial analysis from the Student CD-ROM Instructor’s Resource Manual with Video Guide and Transparency Masters 0-324-36043-6 This manual is organized around each chapter’s knowledge objectives and includes ideas about how to approach each chapter and how to reinforce essential principles with extra examples The support product includes lecture outlines, detailed answers to end-of-chapter review questions, instructions for using each chapter’s experiential exercise, guides to all available videos, and additional assignments Instructor Case Notes 0-324-36045-2 Move beyond the typical prepared case notes with this innovative tool! These notes are team-prepared by six leading experts in the field of strategic management to ensure usefulness and thorough coverage of case content All case notes follow a consistent framework for case analysis Complete financial analysis for selected cases is supported by Excel spreadsheets on the Product Support Web Site ExamView® Computerized Testing 0-324-36038-X Create, deliver, and customize tests and study guides (both print and online) in minutes with this easy-to-use assessment and tutorial system ExamView® offers both a Quick Test Wizard and an Online Test Wizard that guide you step-by-step through the process of creating tests You can build tests of up to 250 questions using up to 12 question types With the complete word processing capabilities of ExamView, you can enter an unlimited number of new questions or edit existing questions from the test bank ABC Videos Transparency Acetates 0-324-36040-1 Key figures from the main text have been re-created as colorful and attractive overhead transparencies for classroom use PREFACE DVD: 0-324-36271-4 / VHS: 0-324-36270-6 ABC videos feature short, high-interest clips about current news events as well as historic raw footage going back 40 years Perfect for discussion starters or to enrich your lectures Ask your Thomson South-Western representative for a complete listing vii Brief Contents Part Strategic Management Inputs CHAPTER Strategic Management and Strategic Competitiveness CHAPTER The External Environment: Opportunities,Threats, Industry Competition, and Competitor Analysis 34 CHAPTER The Internal Environment: Resources, Capabilities, and Core Competencies 72 Part Strategic Actions: Strategy Formulation 102 CHAPTER Business-Level Strategy 104 CHAPTER Competitive Rivalry and Competitive Dynamics 136 CHAPTER Corporate-Level Strategy 166 CHAPTER Acquisition and Restructuring Strategies 196 CHAPTER International Strategy 228 CHAPTER Cooperative Strategy 266 Part Strategic Actions: Strategy Implementation 298 CHAPTER 10 Corporate Governance 300 CHAPTER 11 Organizational Structure and Controls 334 CHAPTER 12 Strategic Leadership 372 Brief Contents Contents CHAPTER 13 Strategic Entrepreneurship 404 viii Part Cases NAME INDEX I-1 COMPANY INDEX I-12 SUBJECT INDEX I-16 Preface xxii Contents Part Strategic Management Inputs Strategic Management and Strategic Competitiveness Opening Case: General Motors:How Bright Is the Future? The 21st-Century Competitive Landscape The Global Economy The March of Globalization Technology and Technological Changes 10 Strategic Focus: Amazon.com: Using Technology to Create Change 12 Strategic Focus: Organizational Change: Be Ready, Because It Can’t Be Avoided! 14 The I/O Model of Above-Average Returns 15 The Resource-Based Model of Above-Average Returns 17 Vision and Mission 19 Vision 19 Mission 20 Stakeholders 21 Classifications of Stakeholders 21 Strategic Leaders 24 The Work of Effective Strategic Leaders 25 Predicting Outcomes of Strategic Decisions: Profit Pools 25 The Strategic Management Process 26 Summary 28 Review Questions 29 Experiential Exercises 29 The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis 34 Opening Case: General and Competitive Environmental Influences on U.S.Airlines 35 The General,Industry,and Competitor Environments 37 Contents Notes 31 ix Company Index Company Index A 12 I A&W, 281 Aaon, 128 Abbott Laboratories, 315 ABC, Abercrombie & Fitch Co., 13, 122 ABN AMRO, 276 Abro Industries, 387 Acer, 267 Aceraliasa SA, 204 Acme Steel, 204 Adelphia, 309, 315 Adidas, 81 Adidas-Saloman, 97 Advanced Medical Optics Inc (AMO), 207 Advanced Micro Devices, 280 Aetna, 271, 274 Air Canada, 273, 362 Air France, 267, 273, 278–279 Airborne, 238 Airbus, 57–58, 60, 63, 153, 250 AirTran Airways (ATA), 35, 38, 54, 67–68, 137–138, 197 Albertsons Inc., 13–15 Alcas Corporation, 41 Alcatel SA, 229 Alitalia, 273 All Nippon Airways, 278 Altria Group, Inc., 17, 124, 246 Amana, 131 Amazon.com, 11–12, 40, 79, 108, 235 AMD, 269 America West Airlines, 68, 138, 197 American Airlines, 35, 58, 115, 162, 267, 273 American Exchange, 314 American Express, 216 American Home Mortgage Holdings Inc (AHMH), 148 American International Group—AIG, 277, 315 American Services Group Inc (ASG), 125 AmeriSuites, 182 AMR Corp., 35 AMR Research, 364 Angiosyn, Inc., 206 Anheuser-Busch, 355 Anne Fontaine, 126, 127 Anshan Iron and Steel Group, 230 AOL, 210, 218, 277 AOL Time Warner, 184 Apple Computer Company, 42, 65, 67, 142, 267, 288, 292, 335, 398 Arbed SA, 204 Arby’s, 48 Arcelor SA, 204 Arthur Andersen, 309 Ask Jeeves, 300 AT&T, 7, 57, 59, 196–197, 199, 208 ATI Technologies, 286–287 Atlanta Bread, 412 Atlantic, 36 Au Bon Pain Co., 412 Austrian Airlines, 273 Autodesk, 82 Avenus, 206 Avis, 351 AztraZeneca, 422 B BAC International Bank, 247 Baltic Beverages Holdings, 234 Bank of America, 49, 197 Bank One, 40 Barnes & Noble, 12, 108 BASF, 236 Bavaria, 355 Bell Canada, 275 BellSouth (BLS), 292 Ben & Jerry’s, 359 Benetton, 13 BenQ Corporation, 93, 94 Berkshire Hathaway, 215 Bertelsmann, 186 Bethlehem Steel, 204 Big Bowl Asian Kitchen, 167 Big Lots Capital, 116 Big Lots Furniture, 116 Big Lots Inc., 116 Big Lots Wholesale, 116 BlackBerry, 42, 65 Blackboard, 310 Blackstone Group, 182 Blockbuster Inc., 133, 219, 420, 422 Bloomingdale’s, 105, 201 BMW, 63, 153 Body Shop, 253 Boeing Corp., 25, 57–58, 60, 63, 146, 153, 169, 250, 259, 314 Bonefish Grill, 348 Borders, 79 Bose, 122 Brinker International, 167–169, 186 Bristol-Myers Squibb, 30, 315 British Airways, 273 British Petroleum (BP), 13, 150 Brueggers, 412 Bruno Magli, 259 BT Group PLC, 276 Bucyrus-Erie, 247 Budget Rent A Car, 351 Buick, 3, Burger King, 133, 141 C Cadbury, 161 Callaway Golf Company, 122, 124 CalPERS, 67, 321 Calsberg AS, 234 Campbell Soup, 170 Canon Inc., 357 CapitaLand Ltd., 290 Carrabba’s Italian Grill, 348 Carrefour, 15, 144 Carrier Corporation, 207 Casketfurniture.com, 126, 343 Caterpillar, 84, 121, 247 CBS, CBS Records, 202, 335 CBS Television, 218–219 Cemex, 240–241 Cemex SA, 108 Cendant Corporation, 170, 351 Center for Women’s Business Research, 47 Century 21, 351 Century Pharmaceuticals, Inc., 293 Chaparral Steel, 84 CheapTickets, 351 Cheeseburger in Paradise, 348 Chery, 145 Chevrolet, Chevron, 197, 228–229, 280 Chili’s Grill & Bar, 48, 167, 281 China Construction Bank, 197 China National Offshore Oil Corporation (CNOOC), 138, 197, 228–230, 232, 249, 251, 280 Choice Hotels, 422 Chrysler, 52–53 Chubb PLC, 207 Cigna, 141 Cingular, 292 Cirque du Soleil, 271 Cisco Systems, 208, 214, 267, 269 Citibank, 210, 270 Citigroup, 270 Clear Channel Communications, 200, 217–218, 270–271 Coastal Mexican Grill, 167 Coca-Cola Company, 55, 89, 138, 147, 153–154, 159, 216 Coldwell Banker, 351 Columbia Pictures, 202 Comcast (CMCSA), 59, 133, 170 Commerzbank, 323 Companhia Siderurgic de Tubarao, 204 Compaq Computer Corporation, 153, 213–214, 373–374, 380 Computer Associates (CA), 267, 314, 340 Confederate Motor Co., 127 Consolidated International, 116 Continental Airlines, 113, 115, 138, 278 Corner Bakery, 167 Cosi, 412 Costco, 119 Crate & Barrel, 84 Credit Suisse First Boston, 210 Creo, 202 CUC International, 351 Cummins, 247 Cutco Cutlery, 41 CVS, 271 D DaimlerChrysler, 50, 53, 200 Danone, 154 Dean Witter, 217, 391 Deere & Company, 25 Delhaize Group, 15 Dell Inc., 12, 60, 84–85, 88, 93, 94, 98, 107, 130, 142, 153, 157– 158, 267–269, 271–273, 363– 364, 373–374, 388, 393, 410 Deloitte Consulting, 93, 95 Delphi, 52–53 Delta Airlines, 35, 68, 138, 162, 273, 278 Deutsche, 323 DHL Worldwide Express, 179, 238, 250 Dick’s Sporting Goods, 120 Dimension Films, 180 DirecTV, 54, 59, 185 Discover Card, 217 Dish Network, 54 Disney, 42, 288–289, 382, 398 DiversityInc., 82 Dollar General, 133 Dollar Store, 133 Dollar Tree, 119 Dover Corporation (DOV), 191–192 DreamWorks Animation, 48 DreamWorks SKG, 48 Dresdner, 323 Dunkin’ Donuts, 280–281 DuPont Corporation, 344, 405 E EarthLink, 59 Eastman Kodak Co., 13, 14, 170, 202, 366–367 eBay, 13, 82–83, 235, 383 Echostar, 54, 59 Eddie Bauer, 128 EDS, 267 Eli Lilly, 162, 315 Ellen Tracy, 110 EMC Corp., 202 Emirates Group, The, 35 Enron, 210, 308–309, 313, 315, 326 Ericsson, 214, 289 European Airlines, 36 Excel Research, 293 Expedia, 235 ExxonMobil, 148, 150 F G Galileo, 351 Gap Inc., 13, 84, 110, 127 Gateway, 153, 267 GE Capital, 36 GE Finance, 247 General Electric (GE), 8, 10, 20, 14, 27, 49, 86, 170, 172, 182, 203, 208, 329, 381–382, 385, 398–399, 415 General Mills, Inc., 278, 307, 337–339 General Motors (GM), 3–4, 23, 26, 52–53, 58, 122, 129, 142–143, 145–146, 151, 179, 235, 257, 344, 380 Georgetown Steel, 204 Georgia Pacific, 424–425 Gillette Co., 175, 186, 197, 202–203, 360 GlaxoSmithKline, 30, 396 Global Brewers Inbev, 355 Goldman Sachs, 391 Google, 12–13, 64–65, 235, 398 Goya Foods, 125 Greif & Company, 125 Greyhound Lines Inc., 115–116 Guy Laroche, 259 H Haier Group, 131, 138, 177–178, 197, 229, 237 Hamilton Sundstrand, 207 Handan Iron and Steel Group, 230 Hardee’s, 133 Harley Davidson, 56, 127 Harley-Davidson Clothes, 81 Harrah’s Entertainment, 108 Hawaiian Airlines, 35 HBO, HealthSouth Corporation, 210, 326 Heineken NV, 232, 355 Heinz, 122 Henkel KGaA, 176 Hershey, 161 Hertz, 52 Hewlett Packard Company (HP), 14, 60, 82, 93–94, 130, 157–158, 202, 213, 268, 274, 288, 314, 321, 373–374, 376–377, 379, 382, 410 HFS, 351 Hilton, 49, 247 Hilton International, 282 Hitachi, 60, 280 Hoechst, 236 Holcim, 240 Hollinger International Inc., 317 Hollywood Pictures, 180 Home Depot, 63, 98, 128, 131, 185 Honda, 52–53, 56, 177, 235, 255 Honeywell, 203 Hoover, 131 Hoovers.com, 67, 191 Horchow, 105 Hormel, 191 Howard Johnson Days Inn, 351 Hutchison Whampoa Limited (HWL), 170 Huwei Technologies Company, 229 HVB Group AG, 197, 248 Hyatt Corp., 182 Hyundai, 52, 145–146, 150–151, 232 Hyundai Heavy Industries Co., Ltd., 259 I Ikea, 125–127, 232 Imaging Solutions Inc., 94 InBevsa, 234 Infinity Broadcasting, 218 Infosys Technologies, 94 Institutional Shareholder Services, 315 Intel (INTC), 142, 267, 329, 339, 385 Interbrew SA, 234 International Business Machines Corp (IBM), 112, 152–153, 157–158, 197, 202, 229, 267–268, 273–274, 283–284, 286–287, 373–374 International Harvester, 247 International Steel Group (ISG), 204 Iowa Beef Products (IBP), 191 iPod, 42 ISG, 272 Ispat/LNM Holdings, 204 J J B Hunt Transport Services, 141 Jenn-Air, 131 JetBlue, 36, 39, 54, 67–68, 114–115, 138, 141 John Deere, 25 John Wiley & Sons, 69 Johnson & Johnson, 170, 315, 383 Jsat Corporation, 280 K Keebler Foods Company, 307, 338 Kellogg Co., 278, 300, 307, 337–339, 341 KFC, 281 Kia, 52 Kidde PLC, 207 Kimberly-Clark, 106 Kleenex, 122, 124 KLM, 267–268, 278 Kmart, 118, 185, 197 Koch Genesis Company, 425 Koch Industries, 424–425 Komatsu, 84, 247, 250 Kraft Foods Inc., 170, 386 Krispy Kreme, 282 Kroger, 14 K-Swiss, Inc., 97 L Lafarge, 240 Lands’ End, Inc., 108, 185, 243–245 Lee Roy Selmon’s, 348 Lehman Brothers, 109, 391 Lenova, 78, 158, 236 Lenovo Group, 197, 229, 267, 274 Lexmark International, 410 Lexus, 153 LG Electronics, 131, 178 Liberty Media Corporation, 218 Limited Brands, 95 Li-Ning, 81, 83 Linux, 65 LNM Holdings, 204 LNP, 20 Lockheed Martin, 203, 269 Long John Silver’s, 48 Lord & Taylor, 201 L’Oréal, 81, 359 Louis Vuitton, 122 Lowe’s, 63, 185 LTV Steel, 204 Lucent, 214 Lufthansa, 273, 278, 362 M Macy’s, 177, 201 Maersk, 268 Magang Group, 230 Maggiano’s Little Italy, 167 M&M Mars, 161 Marion Laboratory, 162 Marks & Spencer, 49 Marriott International Inc., 247, 388 Marsh & McLennan, 277 Marshall Field’s, 201 Matsushita, 60, 142 May Department Stores Co., 177, 201–202 Maytag Corporation, 130–131, 139, 177–178, 183, 197, 229, 242 McDonald’s, 9–10, 19–20, 49, 141, 281–282, 363, 412 MCI, 57, 59, 197 McKinsey & Co., 84–85, 87, 121 Medco Health, 179 Mercedes-Benz, 53, 63, 153 Merck, 30, 46, 162, 179, 315 Merck & Company, 170 Merrill Lynch, 109, 391 Company Index Family Dollar, 133 Federated Department Stores Inc., 177, 201–202 FedEx, 8, 91, 179, 238, 250 Fideling Magellan (FMAGX), 329 Fidelity, 67 Fidelity Blue Chip Growth (FBGRX), 329 Fidelity Growth and Income (FGRIX), 329 Fidelity Investments, 175–177, 329 Filene’s, 201 Finance.yahoo.com, 67 Fleet Boston Financial Corporation, 197 Fleming’s Prime Steakhouse & Wine Bar, 348 Foley’s, 177 Food and Drug Administration (FDA), 46 Ford Motor Company, 19, 40, 52–53, 58, 128, 179, 235, 380 Forth & Towne, 127 Fortune, 52 Fox, France Telecom, 276–277 Frederick Cooper Lamp Company, 104–106, 127 French Thomson-CSF, 239 Frito Lay, 387 Fujitsu, 267, 269, 280 Fujitsu AMD Semiconductor Ltd., 267 Fujitsu SiemensAdvanced Micro Devices (AMD), 267 13 I MG Rover Group, 249 MHP Enterprises Ltd., 343 Michael Graves, 128 Microsoft Canada, 276 Microsoft Corporation, 7, 12, 27, 56, 64–65, 67, 74, 78, 84, 218, 235, 255, 267, 269, 276–277, 286–287, 329, 398 Miller Brewing, 355–356 Mitsubishi, 60, 324 Mitsubishi Electric, 280 Mitsubishi Motors, 276 Mittal Steel Company, 204–205, 221, 230 MoDo Paper, 259 Monsanto, 212 Moody’s, 211 Morgan Stanley, 83, 168, 217, 315, 391–392 MortgageSelect.com, 148 Mossimo, 128 Motorola, 42, 67, 74, 93–94, 292 MSN, 277 MSNBC, MTV, 218 Company Index N 14 I National Institute Economic Review, 45 NBC, NBC Universal, 172 NEC, 60, 142, 280 Neiman Marcus, 105, 201 Nestlé SA, 147, 161 Netflix (NFLX), 133, 419–421 Netscape, 64–65 New York Stock Exchange, 314 Newcastle PLC, 234 Nickelodeon, 218 Nike, 81, 97, 283 Nissan, 52–53, 241, 248, 250, 324 Nokia, 49, 74 Nordstrom Inc., 84 Norrell Corporation, 84 Nortel, 210, 214 Nortel Networks Corp., 203 Nortel PEC Solutions, 203 Northrup Grumman, 203 Northwest Airlines, 35, 267–268, 278 Novartis AG, 30, 259, 421 Novel, 267 Nucor, 272 NutraSweet, 57 O Oldsmobile, On the Border, 167 Oneworld, 273 Oracle Corp., 267, 320–321, 340 Orbitz, 351 Organization for Economic Development and Cooperation, 30 Otis Elevator Co., 84, 207 Outback Steakhouse Inc., 167, 280–281, 348–349 P PacifiCorp., 216 Pan Am, 162 PanAmSat, 280 Panera Bread Company, 167, 411–414 Paramount Film Studios, 142, 218 Patra, 232 Paul Lee’s Chinese Kitchens, 348 PayPal, 82 PEC Solutions, 203, 210 PeopleSoft, 320–321 PepsiCo Inc., 55, 82–84, 89, 111, 138, 147, 153–154, 159, 387 Peroni, 355 Petronas, 251 PetsHotel, 73 PetsMart, 74 Petters Group, 40 Peugeot, 276 Pfizer Inc., 30, 124, 156, 162, 206–207, 315, 421 Philip Morris, 17 Philip Morris International, 246 Philip Morris USA, 124, 355 Philips Electronics NV, 182, 242, 255, 358 Pier Imports Inc., 111 Pilsner Urquell, 355 Pixar, 288–289 Pizza Hut, 412 Polaroid Corp., 40 Pollo Campero SA, 281 Polo Ralph Lauren Corp., 84, 121 Pontiac, 3–4 Porsche, 396 Post, 278 Pratt & Whitney, 207 Procter & Gamble (P&G), 83–84, 154, 170, 175, 186, 197, 202–203, 359 Prudential, 141 Pyramis Global Advisors, 175–177 Q Qantas-Air, 35 Qingdao Haier Ltd., 131 Quaker, 278 Quaker Oats, 387 Quanta, 94 Quest, 59, 197 Quest Vision Technologies, Inc., 207 R Radisson, 49 Ramada Inn, 351 Ranbaxy, 156 Reebok International, 97 Renault, 241, 248 RMC, 240 Robert Talbott, 121–122, 124 Rockfish, 167 Romano’s Macaroni Grill, 167 Royal Ahold, 393 Royal Dutch Shell, 150, 383 Roy’s, 348 S Saab, SABMiller, 355–356 Safeway, 14 St Regis, 247 Sam’s Club, 119, 345 Samsung, 60, 131, 142, 170, 178 Sanofi Synthelabo, 206 Sanofi-Avenus, 206 SAP, 340 Sara Lee Corporation, 187, 214, 217 SAS Institute, 112, 362 Save-A-Lot, 119 SBC Communications (SBC), 54, 59, 67, 185, 196–197, 199, 208, 292 Scandinavian Airlines System, 273 Schering-Plough, 315 Scottish PLC, 234 Sears Holdings Company, 185 Sears, Roebuck and Co., 185, 197, 270 Seimens AG, 253 Seminis, 212 Sesame Street Workshop, 246–247 7-Eleven, Inc., 282 Shanghai Automotive Industry Corp (SAIC), 52, 53, 235, 249 Shanghai Baosteel Group, 230 Shanghai Pudong Development Bank (SPDB), 270 Shell Petrochemicals, 280 Shenzhen International Trust & Investment Co (Szitic), 290 Sheraton, 247 ShoreBank Corporation, 277 ShoreCap International, 276 Shougang Group, 230 Shougang International Trade and Engineering Company, 229 Shrek DVD, 48 Shui On Construction, 269, 270 Sidanco, 283 Siemens AG, 182, 267, 268, 273 Sikorsky, 207 Sirius, 62–63 Six Flags Corporation, 124 Skechers USA, Inc., 97 SkyTeam, 273, 278 Solectron Corp., 179 Song, 35 Sonia Kashuk, 128 Sony, 283–285, 287, 289, 335–336, 348, 352, 382 Sony Computer Entertainment Inc., 285 Sony Corporation, 4, 7, 60, 84, 142, 202, 243, 324–325, 419 Sony Ericsson Mobile Communications, 289 South African Breweries, 355 Southwest Airlines, 24, 35–36, 38, 67–68, 87–88, 92, 112–113, 130, 137–138, 141, 144, 149, 162, 197 Sprint, 42 Standard & Poor’s, 211, 304 Stanford University, 45 Star Alliance, 273, 278, 362 Starbucks, 48, 98, 284, 409, 416 Starbucks Hear Music, 409 Starwood, 247 Stokke, 416 Storage Technology Corp., 202 Subway, 281 Sun Microsystems Inc., 202, 267 Supercenters, 345 Swift, 191 Szitic, 290 T Target Stores (TGT), 40, 127–128, 329 Tata Group, 219 TCL Corp., 229 Tencent, 235 Tesco, 15 Textron Inc., 170, 353 TH Group, 269 Thai Airlines, 362 Thales SA, 239, 250 Thermo Electron, 177 Thomson Consumer Electronics, 84 Thomson SA, 229 3M, 25 TIAA-CREF, 67, 312, 321 Tiffany’s, 98 Tim Horton’s, 187 Time Warner Inc., 25, 59, 170, 184, 210, 218 Tootsie Roll, 161 Toshiba Corporation, 27, 142, 280, 283–285, 287 Touchstone Pictures, 180 Toyota Motor Corporation, 4, 9, 10, 49, 52–53, 121, 142–143, 145–146, 243, 250–251, 257, 259, 362, 380, 411 Treo, 65 Tweedy, Browne Company, 317 Tyco, 309, 315, 326 Tyskie, 355 Tyumen Oil, 283 U UBS, 391 UniCredito Italiano SpA, 197–248 Unilever, 85, 358–360 United Airlines, 35, 39, 58, 68, 113, 138, 162, 273, 278, 279, 362, 386 United Benefits Guarantee Corporation, 35 United Parcel Service (UPS), 87, 170, 179, 238, 250 United Technologies Corp (UTC), 170, 207, 212 Unocal Corp., 138, 249, 197, 228–229, 232, 280 Upjohn, 162 U.S Airlines, 35–36 US Airways, 35, 58, 68, 113, 197 US Airways Group, 68 U.S Steel, 272 Usinor SA, 204 V Vans Inc., 112 Vector Marketing, 41 Veritas, 267 Verizon Communications, 59, 197, 273 Verizon Wireless, 273 Viacom, 217–219 Viacom Outdoor, 218 Vioxx, 46 Virgin Group Ltd., 177 Visteon, 52–53 Visx, Inc., 207 Vivendi Universal, 218 Vodafone, 240 Vodafone Group, 273 Volkswagen, 52, 63, 235 W W L Gore & Associates, 404, 406, 409, 413–414, 419 Wal-Mart, 9, 13–15, 24, 49, 84, 98, 116, 118–120, 128, 133, 144, 146, 149–150, 197, 199, 201, 216, 248, 257, 259, 270, 290, 345, 385–387, 419–421 Wal-Mart Stores, 345 Walt Disney Company, 7, 124, 142, 155–156, 180, 243 Warner Bros Pictures, 142 Washington Post Company, The, 216 Weirton Steel, 204 Wells Fargo, 216 Wendy’s International, 133, 187, 280–281, 412, 422 Westin, 247 Whirlpool Corp., 131, 177–178, 183, 241–243 Whole Foods (WFMI), 329 William Grant & Sons, 259 Williams-Sonoma, Inc., 422 Wipro Technologies, 94, 138 Wisconsin Toy, 116 Wm Wrigley Jr Company, 161, 170 Woolmark Company, The, 178 World Bank, 277, 383 WorldCom, 308–309, 313, 315, 326 Wuhan Iron and Steel Group, 230 Wyeth, 315 Wyndham International Inc., 182 X Xerox, 82, 383 XM, 62–63 Y Yahoo!, 12–13, 20, 218, 235, 277 Yahoo Finance, 191–192 Yellow Freight System, 141 Yukos, 253 Yum! Brands, 281 Company Index 15 I Subject Index Subject Index A 16 I Ability to respond, 144 Above-average returns defined, I/O model of, 15–17 resource model of, 17–19 Accuracy in service quality, 151 Acquisition strategies, 196–199 by China, 229–230 cross-border, 197–198, 203–205, 248–249 effective, 214–216 experiential exercises, 223 innovation through, 421 international, 248–249 media, 218–219 notes, 223–227 popularity of, 199–200 problems in, 208–209 debt, 211 diversification, 212–213 focus, 213–214 inefficiencies, 214 integration, 209–210 synergy, 211–212 target evaluation, 210–211 reasons for capabilities, 208 competitive scope, 207–208 diversification, 207 entry barriers, 203, 205 market power, 201–203 new product development, 205–206 risk reduction, 206 review questions, 222 summary, 222 in value-neutral diversification, 184 Actions, competitive actor reputation in, 152–153 drivers of, 143–146 market dependence in, 153 strategic and tactical, 146–147 type of, 152 Activities in business-level strategies, 112–114 in cost leadership strategies, 116–117 in value chain analysis, 89–90 in value-creating diversification, 175–176 Adaptability in acquisitions, 215 Aerospace industry, 207, 239, 250 Aesthetics in product quality, 151 Affiliation in customer relationships, 109 Age structure in demographic segment, 43–44 Agency relationships, 305–306 costs in, 308, 310–311 problem in, 306–308 Aggressiveness in entrepreneurial mindset, 390 Agility, competitive, 387 Air cargo industry, 250 Airline industry competitive rivalry and dynamics in, 137 entry barriers in, 54 environment in, 35–36 integrated activities in, 113 strategic alliances in, 267–268, 278–279 Alliance networks, 284–287 Alliances innovation through, 285–286, 419–421 international, 247–248 strategic See Strategic alliances Antitrust regulations, 183–185 Appliance industry, 131 Assessment in environment analysis, 41–42 Assets in diversification, 182–183 in I/O model, 16 Athletic shoes and apparel, 283 Attacks, competitor, 147 first-mover incentives in, 147–149 organizational size in, 149–150 quality factors in, 150–151 Automobile industry competitive actions and responses in, 145 economies of scale in, 235 global, 52–53 international diversification in, 251 Autonomous strategic behavior, 414–415 Autonomy in entrepreneurial mind-set, 390 Average returns, Awareness for competitive actions, 143–144 B Baby Boom generation, interests and needs of, 110 Baby strollers, 416 Bakeries, internal innovation in, 412 Balanced organizational controls, 394–396 Balanced scorecards, 394–396 Banks acquisitions of, 198, 248 in Germany, 323 in Japan, 324 Bargaining power in cost leadership strategies, 118 in differentiation strategies, 122, 124 in environment analysis, 56–57 Beer market, 234 Boards of directors, 312–313 and CEOs, 314–316, 380–381 classifications of, 313 effectiveness of, 316 in Germany, 323 roles of, 379–380 women on, 383 Bonds, junk, 211 Bonuses, executive, 318 Broad targets, 114–115 Bundles, 76 Bureaucratic controls in acquisitions, 214 Business-level strategies, 104–107 cooperative, 273–274, 362 assessment of, 278–279 competition-reducing, 277–278 competition response, 276 complementary alliances, 274–276 uncertainty-reducing, 276–277 cost leadership See Cost leadership strategies customers, 107–108 determining, 109–111 needs of, 111–112 relationships with, 108–109 as stakeholders, 22 differentiation See Differentiation strategies experiential exercises, 132–133 functional structure matches with, 344–347 integrated cost leadership/ differentiation, 127–130 international, 236–238 notes, 133–135 purpose of, 112–114 review questions, 132 summary, 130, 132 types of, 114–115 Buyer power in cost leadership strategies, 118 in differentiation strategies, 122 in environment analysis, 57 Buyouts, 220 C Cable service substitutes, 59 CAFTA (Central American Free Trade Agreement), 245 Capabilities acquisitions for, 208 in competitive advantage, 86 in cooperative strategies, 288 defined, 17 in internal environment, 83–84 in nonequity strategic alliances, 270 outsourcing for, 93 in resource model, 18–19 in slow-cycle markets, 155–156 Capacity in value-neutral diversification, 187 Capital and capital allocation in diversification, 181–182 as entry barrier, 55 in hostile takeovers, 322 managing, 386 in multidivisional competitive structures, 353 social capital, 271, 389, 392 Capital gains taxes, 184 Capital market stakeholders, 23 Car-buying information, 109 Cash flows in agency problem, 307 managing, 386 in value-neutral diversification, 186 Casual dining segment, 167–168, 408 Casually ambiguous competitive advantage, 87 Celebrity marketing, 283 Cell phone opportunities, 39–40 Celler-Kefauver Antimerger Act, 183 Cement companies, 240 in global automobile industry, 52–53 multimarket, 138 multipoint, 177, 179 outsourcing in, 94–95 strategic alliances for, 271 in strategic groups, 62–63 Competition-reducing strategies, 277–278 Competition response strategies, 276 Competitive advantage activities in, 114 core competencies for, 85–89 defined, development programs for, 388–389 in fast-cycle markets, 156 innovations for, 73–74 in resource model, 18 in slow-cycle markets, 155 in standard-cycle markets, 158–159 strategic alliances for See Strategic alliances Competitive aggressiveness, 390 Competitive agility, 387 Competitive behavior, 138 Competitive dynamics, 155 fast-cycle markets in, 156–158 slow-cycle markets in, 155–157 standard-cycle markets in, 158–159 Competitive form, 352–354 Competitive risk in strategies cooperative, 287–289 cost leadership, 120 differentiation, 124–125 focus, 126–127 integrated cost leadership/ differentiation, 129–130 Competitive rivalry, 136–139 actions in actor reputation in, 152–153 drivers of, 143–146 market dependence in, 153 strategic and tactical, 146–147 type of, 152 attack likelihood in, 147 first-mover incentives in, 147–149 organizational size in, 149–150 quality factors in, 150–151 competitor analysis in, 140–141 market commonality in, 141–142 resource similarity in, 142–143 in cost leadership strategies, 116, 118 in differentiation strategies, 122 in environment analysis, 58–61 experiential exercises, 161–163 model of, 139–140 notes, 163–165 responses drivers of, 143–146 likelihood of, 152–154 review questions, 161 summary, 159–160 Competitive scope acquisitions for, 207–208 in business-level strategies, 114–115 Competitor environment, 37–39 Competitor intelligence, 65 Competitors analysis, 39, 63–65 defined, 138 Complementary assets, 215 Complementary strategic alliances, 274–276 horizontal, 275–276 vertical, 274–275 Complementors, 65 Completeness in service quality, 151 Complexity capabilities from, 87 in cross-border alliances, 283 in environment analysis, 77 of executive compensation, 317–318 in international strategies, 253 Computer industry, 267 Concentration of ownership, 311–312 Conformance in product quality, 151 Conglomerate discounts, 182 Conglomerates in diversification strategies, 171 Consistency in service quality, 151 Constrained strategies, 171 Constraints in external environment, 40 Consumption factors, 110 Contingency workers, 48 Controls balanced, 394–396 corporate See Corporate governance organizational, 337–340 separation of, 304–311 Convenience in service quality, 151 Cookies, 40–41 Cooperative form, 347–350 Cooperative strategies, 266–269 business-level, 273–274, 362 assessment of, 278–279 competition-reducing, 277–278 competition response, 276 complementary alliances, 274–276 uncertainty-reducing, 276–277 competitive risks in, 287–289 corporate-level, 279–280, 362–363 assessment of, 282–283 diversifying strategic alliances, 280 franchising, 280–282 synergistic strategic alliances, 280 experiential exercises, 292–293 innovation through, 419–421 international, 283–284, 363–364 managing, 289–290 network, 284–287 network structure matches with, 360–361 notes, 293–297 review questions, 292 strategic alliances See Strategic alliances summary, 291 Cooperative structures, 349 Coordination in multidivisional structures, 350 Core competencies, 17 corporate-level, 176–177, 362–363 for customer needs, 112 exploiting and maintaining, 385, 387 in internal environment, 84–85, 95–96 in international strategies, 235 in network structures, 361 for sustainable competitive advantage, 85–89 value chain analysis in, 89–92 Core ideology, 384 Core rigidities, 95 Corporate charter amendments, 322 Corporate governance, 300–304 agency relationships in, 305–306 costs, 308, 310–311 problem, 306–308 boards of directors, 312–316 ethical behavior in, 325–326 executive compensation, 317–319 experiential exercises, 328 international, 322–325 market for corporate control, 319–322 notes, 329–333 ownership concentration in, 311–312 review questions, 327 Subject Index Central American Free Trade Agreement (CAFTA), 245 Centralization in functional structures, 344 CEOs and boards of directors, 314–316, 380–381 compensation for, 317 complexity of, 317–318 controversial, 82–83 effectiveness of, 318–319 as incentive, 301–302 in corporate governance, 379–381 leadership responsibilities of, 376 risk to, 374 succession of, 382 Cereal market, 278 Chaebols, 250 Chairpersons on boards of directors, 314–315, 380 Champions, product, 414 Change and change management for outsourcing, 93 technology for, 12, 14–15 China corporate governance in, 325 foreign acquisitions by, 229–230 intellectual property enforcement in, 255–256 Cigarette firms, 246 Code-share arrangements, 268 Codes of conduct, 393 Cohesive top management teams, 379 Collaboration on boards of directors, 316 Collectivism, 411 Collusion for competition reduction, 277–278 defined, 268 Combination structures, 357–360 Common buying factor segmentation, 110 Communication in top management teams, 379 Company standards, 303 Compensation, management, 317 complexity of, 317–318 controversial, 82–83 effectiveness of, 318–319 as incentive, 301–302 Competencies in cooperative strategies, 288 core See Core competencies in multidivisional structure, 348–349 Competition five forces model of, 16, 51, 53, 116 17 I Subject Index 18 I Corporate governance, continued separation of ownership and managerial control, 304–311 summary, 326–327 Corporate-level strategies, 166–169 cooperative, 279–280, 362–363 assessment of, 282–283 diversifying strategic alliances, 280 franchising, 280–282 synergistic strategic alliances, 280 diversification See Diversification experiential exercises, 191–192 international, 238–241 multidivisional structure matches with, 347–354 notes, 192–195 review questions, 190 summary, 190 Corporate readiness, diversification for, 174 Corporate relatedness in diversification, 176–177, 180 Corporate taxes in diversification, 184 Corporate venturing, 414 Cost leadership strategies, 115–117 bargaining power in, 118 competitive risks in, 120 countering, 118–119 focused, 125–126 functional structures for, 344–347 potential entrants in, 118 product substitutes in, 120 rivalries in, 116, 118 Cost leadership/differentiation integrated strategies, 127–130 Cost minimization management approach, 289 Costly-to-imitate capabilities, 86–87 Costs in agency relationships, 308, 310–311 diversification for, 181 as entry barrier, 55–56 Counterattack stage in fast-cycle markets, 158 in slow-cycle markets, 156–157 Counterfeiting risk, 124–125 Courtesy in service quality, 151 Crime, white-collar, 393 CRM (customer relationship management), 129 Cross-border acquisitions, 197–198, 203–205, 248–249 Cross-border strategic alliances, 283–284 Cross-functional product development teams, 417 CT scanning, 94 Cultural factors in global entrepreneurship, 411 in global markets, 50 in international strategies, 235, 257 in organizations, 24, 389–392 capabilities from, 86–87 changing, 390, 392 entrepreneurial mind-set in, 390 politics in, 391 Customer power in cost leadership strategies, 118 in differentiation strategies, 122 Customer relationship management (CRM), 129 Customer size segmentation, 110 Customers, 107–108 in balanced scorecards, 395 determining, 109–111 needs of, 111–112 relationships with, 108–109 as stakeholders, 22 D Deal making for outsourcing, 93 Debt from acquisitions, 211 Defined benefit pension systems, 35 Delivery businesses, 171–172, 179 Demand conditions in international strategies, 236–237 Demographic segment, 38, 42–43 age structure in, 43–44 in customer segmentation, 110–111 ethnic mix in, 44–45 geographic distribution in, 44 income distribution in, 45 population size in, 43 Dependability for competitive advantage, 131 Dependence in competitive response, 153 Development, product acquisitions for, 205–206 cross-functional teams for, 417 uncertainty-reducing strategies for, 277 Development programs, 388 Differentiated products, 60 Differentiation strategies, 120–122 bargaining power in, 122, 124 competitive risks in, 124–125 focused, 126 functional structures for, 345–347 potential entrants in, 124 product substitutes in, 124 rivalries in, 122 Diffusion of technology, 10–11 Digital cable service substitutes, 59 Dining segment, 167–168, 408 Direct acquisition costs, 212 Direct mail, 110 Directors, 312–313 and CEOs, 314–316, 380–381 classifications of, 313 effectiveness of, 316 in Germany, 323 roles of, 379–380 women as, 383 Discount airlines, 36 Discounts, conglomerate, 182 Disruptive technologies, 10–11 Dissimilarity of resources in competitive actions, 144 Distributed strategic networks, 363 Distribution agreements, 270 Distribution capabilities as entry barrier, 56 in internal environment, 84 Diversification, 168–169 in acquisitions, 184, 207, 212–213 in agency problem, 306–308 at GE, 172 in international strategies, 232, 251–253 levels of, 169 low, 169–171 moderate and high, 171, 173 multidivisional competitive structure for, 352–354 reasons for, 173–174 unrelated, 181–183 value-creating, 175 corporate relatedness in, 176–177, 180 market power in, 177, 179–180 operational relatedness in, 175–176, 180 value-neutral, 183 incentives for, 183–186 resources in, 187 value-reducing, 188–189 Diversified firms, balancing in, 396 Diversifying strategic alliances, 280 Diversity in human resources, 82 in leadership positions, 383 in workforce, 47 Divisions in multidivisional structures, 343–344, 347 for related constrained strategies, 347–350 for related linked strategies, 350–352 for unrelated diversification strategies, 352–354 Domestic acquisitions, 197–198 Dominant-business diversification strategies, 170–171 Downscoping, 217, 219–221 Downsizing, 217 Drivers of competitive action and response, 143–146 Duality, CEO, 380–381 Due diligence in acquisitions, 210–211, 215 Duet washers, 178, 242–243 Durability in product quality, 151 DVD rentals and sales, 420–421 Dynamic alliance networks, 286 E Economic development, strategic entrepreneurship for, 422–423 Economic risk in international strategies, 254, 256 Economic segment, 38, 45–46 Economies of scale as entry barrier, 54–55 in international strategies, 234–235 Economies of scope, 175 Efficient internal capital market allocation, 181–182 Elements in general environment, 38 Employee buyouts, 220 Employment contracts in international strategies, 233 End-use segmentation, 110 Entertainment industry, 202 Entrants new, 53–54 entry barriers to, 54–56 retaliation against, 56 potential in cost leadership strategies, 118 in differentiation strategies, 124 Entrepreneurial mind-set, 390 Entrepreneurial new ventures, 220–221 Entrepreneurship, strategic See Strategic entrepreneurship competitor analysis, 39 ethical considerations, 65 purpose, 63–65 experimental exercises, 67–68 general segments, 37–39, 42–45 economic, 45–46 global, 49–51 political/legal, 46–47 segments, 42–51 sociocultural, 47–48 technological, 48–49 in I/O model, 16 industry analysis, 51–53 buyer bargaining power, 57 interpreting, 61 new entrants, 53–57 rivalries, 58–61 substitute products, 57–58 supplier bargaining power, 56–57 notes, 68–71 review questions, 66 strategic groups, 62–63 summary, 66 External managerial labor markets, 381–382 External social capital, 389 F Factors of production in international strategies, 236 Family-controlled firms, 304–305 Fast casual dining, 408 Fast-cycle markets in competitive dynamics, 156–158 strategic alliances in, 271–273 Features for customer needs, 111 in product quality, 151 Film industry, 202 Financial capital management, 386 Financial controls, 340 Financial economies in diversification, 181–183 Financial perspective in balanced scorecards, 395 Financial resources in internal environment, 80 Financial services, acquisitions of, 198 Finger food industry, 281 First-mover incentives, 147–149 Five forces model, 16, 51, 53, 116 Fixed costs in rivalries, 60 Flexibility in acquisitions, 215 as attack factor, 149–150 in integrated cost leadership/ differentiation strategies, 128 in multidivisional competitive structures, 353 in organizational structure, 337 in product quality, 151 strategic, 13 Flexible manufacturing systems (FMS), 128–129 Focus on acquisitions, 213–214 Focus strategies, 125 competitive risks in, 126–127 cost leadership, 125–126 differentiation, 126 Food-related services casual dining, 167–168, 408 franchising in, 281 Forecasting in environment analysis, 41 Foreign-exchange reserves, 229 Foreignness, liability of, 243–244 Formalization in functional structures, 344 Franchising in cooperative strategies, 280–282 in international strategies, 247 Fraud, white-collar, 393 Free cash flows in agency problem, 307 in value-neutral diversification, 184 Friendly acquisitions, 215 Fuel costs, 35 Functional structures, 343 for cost-leadership strategies, 344–345 for differentiation strategies, 345–346 for integrated cost leadership/ differentiation strategies, 346–347 Future cash flows in diversification, 186 G Gaming companies, 108 General environment segments, 37–39, 42–45 economic, 45–46 global, 49–51 political/legal, 46–47 sociocultural, 47–48 technological, 48–49 Generation X, interests and needs of, 111 Generic strategies, 107 Geographic factors in customer segmentation, 110 in demographic segment, 44 Germany, corporate governance in, 323–324 Global economy, 7–8 Global entrepreneurship, 410–411 Global strategies and factors, 8–10 See also International strategies automobile industry, 52–53 in environment analysis, 75 in general environment, 38, 49–51 matrix design, 357–358 worldwide product divisional structure for, 356–357 Goals for ethical practices, 393 Golden parachutes, 322 Goodwill from ethical practices, 392 Governance corporate See Corporate governance in value-reducing diversification, 188–189 Government factors as entry barrier, 56 in external environment, 37, 46 in international strategies, 253–254, 257 Sarbanes-Oxley Act, 308–311 Greenfield ventures, 249–250 Greenmail strategy, 322 Growth in balanced scorecards, 395 cross-border alliances for, 283 Guanxi, 50 H Health-care expenses, 47 Health-care industry, 210 Health from ethical practices, 393 Heterogeneous top management teams, 378–379 High diversification levels, 171, 173 High strategic stakes in rivalries, 60–61 Historical conditions, capabilities from, 86 Home mortgages, 148 Horizontal acquisitions, 201–202 Horizontal complementary strategic alliances, 275–276 Horizontal organizational structures, 417 Hospitals, integration in, 210 Hostile takeovers, 215, 320–322 Household average income, 45 Human resources for competitive advantage, 74 in cost leadership strategies, 117 developing, 388–389 in differentiation strategies, 123 Subject Index Entry barriers acquisitions for, 203, 205 to new entrants, 54–56 Entry modes in international strategies, 245 acquisitions, 248–249 dynamics of, 250 exporting, 245–246 licensing, 246–247 strategic alliances, 247–248 wholly owned subsidiaries, 249–250 Environment external See External environment in I/O model, 16 internal See Internal environment in international strategies, 238, 241–245 Equally balanced competitors, rivalries between, 58 Equity alliances defined, 270 in international strategies, 248 Ethical considerations and practices in competitor intelligence, 65 in corporate governance, 325–326 strategic leadership for, 392–394 Ethnic mix, 44–45 Evolutionary patterns of strategies See Strategy patterns Excess capacity in diversification, 187 Executive compensation, 317 complexity of, 317–318 controversial, 82–83 effectiveness of, 318–319 as incentive, 301–302 in value-reducing diversification, 188–189 Exit barriers, 61 Expensing options, 301–302 Expertise in top management teams, 379 Explicit collusion, 277 Exploitation in fast-cycle markets, 158 in slow-cycle markets, 156–157 in stable alliance networks, 286 Exporting in international strategies, 245–246 External environment, 34–37 analysis, 39–42 assessing for, 41–42 forecasting for, 41 monitoring for, 41 scanning for, 40–41 19 I Human resources, continued in internal environment, 80, 82–84 in international strategies, 243 management skills for, 376, 386 in value chain analysis, 91–92 Hybrid structures, 358 Hypercompetition, Subject Index I 20 I I/O model of above-average return, 15–17 IM (instant-messaging) services, 277 Imitation, 409 Implementation of aboveaverage return models I/O, 16 resource, 18 Inbound logistics, 90, 92 Incentives compensation as, 301–302 first-mover, 147–149 for value-neutral diversification, 183–186 Income distribution, 45 Income taxes in diversification, 184 Incremental innovation, 413–414 Independence in multidivisional competitive structure, 353 India, intellectual property enforcement in, 255–256 Indirect acquisition costs, 212 Individualism in entrepreneurship, 411 Induced strategic behavior, 415 Industrial market segmentation, 110 Industrial organization (I/O) model of above-average return, 15–17 Industries analysis of, 37–39, 51–53 buyer bargaining power, 57 interpreting, 61 new entrants, 53–57 rivalries, 58–61 substitute products, 57–58 supplier bargaining power, 56–57 in I/O model, 16 market commonality in, 141–142 in resource model, 18 Inefficiencies from acquisitions, 214 Information age, 11, 13 Information networks, 129 Information technology industry innovation in, 286 strategic alliances in, 267, 273 Infrastructure in cost leadership strategies, 117 in value chain analysis, 91–92 Innovation and acquisitions, 213, 215, 421 for competitive advantage, 73–74 through cooperative strategies, 419–421 in differentiation strategies, 345 in entrepreneurial mind-set, 390 in fast-cycle markets, 157–158 internal See Internal innovation international strategies for, 232, 252–253 licensing, 246 network alliances for, 285–286 perpetual, 10–11 resources for, 80 in standard-cycle markets, 159 in strategic entrepreneurship, 408–409 from technical excellence, 405 by top management teams, 379 Insiders on boards of directors, 313–314 Instant-messaging (IM) services, 277 Institutional factors in global markets, 50 in international strategies, 257 Institutional owners, 311–312 Intangible resources, 80–83 Integrated activities, 113 Integrated cost leadership/ differentiation strategies, 127–128, 346–347 competitive risks in, 129–130 flexible manufacturing systems in, 128–129 information networks in, 129 total quality management systems in, 129 Integration in acquisitions, 209–210 in internal innovation, 417–418 Intellectual property rights in international strategies, 255–256 managing, 387 Intelligence, competitor, 63, 65 Internal business processes perspective in balanced scorecards, 395 Internal capital market allocation, 181–182 Internal competition, 353 Internal corporate venturing, 414 Internal environment, 72–75 analysis of challenges, 77–79 context, 75 capabilities in, 83–84 core competencies in, 84–85, 95–96 for sustainable competitive advantage, 85–89 value chain analysis in, 89–92 experiential exercises, 97–98 notes, 98–101 outsourcing in, 92–95 resources in, 79–83 review questions, 97 strengths and weaknesses in, 95–96 summary, 96 value creation in, 75–77 Internal innovation, 411, 413 autonomous strategic behavior in, 414–415 cross-functional product development teams for, 417 implementing, 416–417 incremental and radical, 413–414 induced strategic behavior in, 415 integration in, 417–418 success through, 412 value from, 418 Internal managerial labor markets, 381–382 International corporate governance, 322–323 in Germany, 323–324 global, 325 in Japan, 324–325 International entrepreneurship, 410–411 International strategies, 228–231, 240–241 business-level, 236–238 cooperative, 283–284, 363–364 corporate-level, 238–241 diversification and returns in, 251–253 entry modes in, 245 acquisitions, 248–249 dynamics of, 250 exporting, 245–246 licensing, 246–247 strategic alliances, 247–248 wholly owned subsidiaries, 249–250 environmental trends in, 241–245 experiential exercises, 259 franchising in, 281 incentives for, 232–233 economies, 234–235 location advantages, 235 market size, 233–234 return on investment, 234 innovation in, 232, 252–253 intellectual property in, 255–256 limits to, 256–257 notes, 260–265 outcomes, 251–253 review questions, 258 risk in, 253–257 summary, 257–258 worldwide structure matches with, 354–360 Internet acceptance of, 10 bubble burst, 212, 214 in customer relations, 108–109 as disruptive technology, 11 in international strategies, 235, 241, 243 product substitutes on, 58–59 for scanning, 40 shopping on, 13, 57, 111 and slow-cycle markets, 272 in technological segment, 48–49 in value chain, 90–92 Intraorganizational conflicts, 77 Invention vs innovation, 408–409 Investment bankers for due diligence, 210 Investments in cooperative strategies, 288 iPods, 11 IPOs, 310–311 Iraq war, economic risks in, 45 J Japan, corporate governance in, 324–325 Jia meng, 281 Job specialization, 344 Joint ventures, 267 innovation through, 419 operation of, 269–270 Judgment in environment analysis, 77–78 Junk bonds, 211 K Knowledge in autonomous strategic behavior, 415 in franchising, 282 Knowledge intensity, 13 L Labor diversity in, 47 in international strategies, 233 managerial, 381–382 Lamp company, 105 Large-block shareholders, 311–312 Late movers, 149 M M-form (multidivisional) structures, 343–344, 347 for related constrained strategies, 347–350 for related linked strategies, 350–352 for unrelated diversification strategies, 352–354 Management buyouts, 220 Management information systems, 84 Managerial and ownership control, separation of, 304–311 Managers acquisition focus of, 213–214 on boards of directors, 313–314 compensation of, 317 complexity of, 317–318 controversial, 82–83 effectiveness of, 318–319 as incentive, 301–302 in value-reducing diversification, 188–189 diversification motives of, 188–189 in internal environment, 84 in international strategies, 253, 256–257 in multidivisional structures, 349 opportunism by, 305–306 roles of, 377 and CEOs, 379–381 firm performance and strategic change, 378–379 teams, 377–378 succession of, 381–384 Managing cooperative strategies, 289–290 Manufacturing in environment analysis, 84 Maps, activity, 112–113 Market for corporate control, 319–322 segmentation of, 109–111 Market commonality, 141–142 Market dependence, 153 Market power and size acquisitions for, 201–203 international strategies for, 233–234 strategic alliances for, 273 in value-creating diversification, 177, 179–180 Marketing and sales in cost leadership strategies, 117 in differentiation strategies, 123 in internal environment, 84 in value chain analysis, 90, 92 Matrix design global, 357–358 in multidivisional structures, 349 Media acquisitions, 218–219 Medical procedures, 94 Mergers vs acquisitions, 200 Micropolitan areas, 48 Microprocessors, 285–286 Mission in strategic competitiveness, 20–21 Moderate diversification levels, 171, 173 Monitoring external environment, 41 Mortgages, 148 Motivation of competitive actions and responses, 144 MRI scanning, 94 Multidivisional (M-form) structures, 343–344, 347 for related constrained strategies, 347–350 for related linked strategies, 350–352 for unrelated diversification strategies, 352–354 Multidomestic strategies international, 239–240 worldwide geographic area structures for, 354–356 Multimarket competition, 138 Multinational firms, managing, 253 Multiple strategic alliances, 269 Multipoint competition, 177, 179 Music business, 335 Mutual forbearance, 277 Mutual fund firms, 315–316 N NAFTA (North American Free Trade Agreement), 244–245 Narrow targets, 114–115 National business interests, 303 National Innovation Initiative, 73 Needs customer, 111–112 in focus strategies, 127 Network cooperative strategies alliance types, 284–287 effectiveness of, 284 Networks and network structures cooperative strategies matches with, 360–361 distributed, 363 New entrants, 53–54 entry barriers to, 54–56 retaliation against, 56 New products acquisitions for, 205–206 uncertainty-reducing strategies for, 277 New ventures, 220–221 Noncompetitive actions from collusion, 277 Nonequity strategic alliances, 270–271 Nonsubstitutable capabilities, 87–89 North American Free Trade Agreement (NAFTA), 244–245 O Oil industry, 283 Online music business, 335 Online operations in international strategies, 243 Operational performance vs long-term vision, 373–374 Operational readiness, diversification for, 174 Operational relatedness in diversification, 175–176, 180 Operations in value chain analysis, 90 Opportunism in cooperative strategies, 287 managerial, 305–306 Opportunities in entrepreneurship, 407–408 in external environment, 39–40 Opportunity maximization management approach, 289–290 Options, stock, 301–302, 318–319 Organizational culture, 24, 389–392 capabilities from, 86–87 changing, 390, 392 entrepreneurial mind-set in, 390 politics in, 391 Organizational resources, 80 Organizational stakeholders, 23–24 Organizational structure and controls, 334–336 controls, 337–340 cooperative strategies in business-level, 362 corporate-level, 362–363 international, 363–364 evolutionary patterns of strategy See Strategy patterns experiential exercises, 366–367 notes, 368–371 review questions, 365 strategy and structure relationship, 341 structure, 337–339 summary, 364–365 Outbound logistics, 90, 92 Outsiders on boards of directors, 313–314 Outsourcing, 49 in internal environment, 92–95 Subject Index Launch stage in fast-cycle markets, 158 in slow-cycle markets, 156–157 Laws in external environment, 37, 46 tax, 183–185 Layoffs, 389 Lead independent outside directors, 315–316 Leadership, strategic See Strategic leadership Learning in balanced scorecards, 395 from failures, 388 in international strategies, 234–235 in network structures, 361 Levels, diversification, 169 low, 169–171 moderate and high, 171, 173 Leverage in value creation, 76 Leveraged buyouts, 220–221 Licensing in international strategies, 246–247 in nonequity alliances, 270 Lifetime of competitive advantage, 74 Linked strategies diversification, 171 SBU form related for, 350–352 Litigation from collusion, 277 in hostile takeovers, 322 Local repair capabilities, 233 Local telephone service substitutes, 59 Location advantages in international strategies, 235 Logistics in cost leadership strategies, 117 in differentiation strategies, 123 in value chain analysis, 90, 92 Long distance telephone service acquisitions, 197 Long-term incentive plans, 317–318 Long-term vision, 373–374 Low diversification levels, 169–171 21 I Outsourcing, continued in nonequity strategic alliances, 271 strategic, 360–361 Overdiversification, 212–213 Ownership in corporate governance concentration of, 311–312 separation from management control, 304–311 Subject Index P 22 I Partnership governance, 93 Patents for innovations, 413 in slow-cycle markets, 156 Patterns of strategy See Strategy patterns Pay, management, 317 complexity of, 317–318 controversial, 82–83 effectiveness of, 318–319 as incentive, 301–302 in value-reducing diversification, 188–189 PDAs, 11 Pensions, airline industry, 35 Perceived quality, 151 Perceptual factors, 110 Performance in horizontal acquisitions, 201 vs long-term vision, 373–374 in market for corporate control, 320 in product quality, 151 top-level manager roles for, 378–379 in value-neutral diversification, 185–186 Perpetual innovation, 10–11 Personal relationships in global markets, 50 Personnel for competitive advantage, 74 in cost leadership strategies, 117 developing, 388–389 in differentiation strategies, 123 in internal environment, 80, 82–84 in international strategies, 243 management skills for, 376, 386 in value chain analysis, 91–92 Pharmaceutical industry acquisitions in, 206 governance in, 315–316 regulations in, 46 Phone service long distance acquisitions, 197 substitutes for, 59 Photographic equipment, 40 Physical resources, 80 Poison pills, 321–322 Political/legal segment, 38, 46–47 Politics in cross-functional product development teams, 417 in external environment, 36 in international strategies, 253–254 organizational, 391–392 Population size, 43 Possibilities, 40 Potential entrants in cost leadership strategies, 118 in differentiation strategies, 124 Predictions, 25–26 Predictive knowledge, 387 Price fixing, 277–278 Pricing in differentiation strategies, 121 Primary activities in value chain analysis, 89–90 Private equity firms, 220 Private synergy, 211–212 Proactiveness, 390 Procurement in cost leadership strategies, 117 in differentiation strategies, 123 in value chain analysis, 91 Product development teams for internal innovation, 417 Product differentiation as entry barrier, 55 Product market stakeholders, 23 Product segmentation, 110 Production factors in international strategies, 236 Products in agency problem, 306–308 champions of, 414 development acquisitions for, 205–206 uncertainty-reducing strategies for, 277 in differentiation strategies, 121–122 quality dimensions of, 150–151 in slow-cycle markets, 156 substitutes in cost leadership strategies, 120 in differentiation strategies, 124 Profit pools, 25–26 Proprietary capabilities, 155–156 Psychological factors, 110 Q Quality as attack factor, 150–151 for competitive advantage, 131 for customer needs, 111 TQM for, 129 R R&D (research and development) core competencies in, 112 in internal environment, 84 internal innovation from, 411, 413 R&D-intensive industries, international strategies for, 234 Race to learn, 361 Radical innovation, 413–414 Rare capabilities, 86 Reach in customer relationships, 108 Regionalization, 244–245 Regulations in external environment, 46 in slow-cycle markets, 156 in value-neutral diversification, 183–185 Related constrained strategies diversification, 171 multidivisional structures for, 347–350 Related industries, 237 Related linked strategies diversification, 171 SBU form for, 350–352 Related outsiders on boards of directors, 313 Relationships with customers, 108–109 in social capital, 389 Reliability for competitive advantage, 131 Repair capabilities, 233 Reputation factors in competitive response, 152–153 Reputational resources, 80–81 Research and development (R&D) core competencies in, 112 in internal environment, 84 internal innovation from, 411, 413 Resource model of aboveaverage return, 17–19 Resource portfolio management, 385–389 Resources for competitive advantage, 74 in competitor analysis, 142–143 in cooperative strategies, 288 defined, 17 in internal environment, 79–83 and international strategies, 232, 240 in nonequity strategic alliances, 270 outsourcing for, 93 in value-neutral diversification, 187 Responses competitive drivers of, 143–146 likelihood of, 152–154 strategic and tactical, 146 Restaurant industry casual dining segment, 167–168, 408 franchising in, 281 Restructuring strategies, 216–217 for assets, 182–183 downscoping, 217, 219–220 downsizing, 217 experiential exercises, 223 leveraged buyouts, 220 notes, 223–227 outcomes, 220–221 review questions, 222 spin-offs, 218–219 summary, 222 Retail food industry casual dining segment, 167–168, 408 franchising in, 281 Retaliation against new entrants, 56 Retirement planning, 47 Return on investment above-average defined, I/O model of, 15–17 resource model of, 17–19 international strategies for, 234, 251–253 in multidivisional competitive structures, 353 Revenue enhancement from strategic alliances, 271 Reverse engineering, 156–157 Reward systems for ethical practices, 393 Richness in customer relationships, 109 Risk and acquisitions, 206, 421 to CEOs, 374 in cooperative strategies, 287–289 in cost leadership strategies, 120 in cross-border alliances, 283 defined, in differentiation strategies, 124–125 diversification for, 174, 307–308 in entrepreneurial mind-set, 390 in focus strategies, 126–127 in global markets, 50 in greenfield ventures, 249 in integrated cost leadership/ differentiation strategies, 129–130 in internal environment analysis, 78 in international strategies, 240, 253–257 from Iraq war, 45 in outsourcing, 93–95 in radical innovation, 414 to shareholders, 304 in value-neutral diversification, 186 Rivalries See Competitive rivalry Roles, top-level manager, 377 and CEOs, 379–381 firm performance and strategic change, 378–379 teams, 377–378 Russia, corporate governance in, 325 S in business-level cooperative strategies, 362 complementary, 274–276 cross-border, 283–284 diversifying, 280 innovation through, 419–421 in international strategies, 247–248 synergistic, 280 types of, 269–271 Strategic assets, 85 Strategic business unit (SBU) form, 350–352 Strategic center firms, 284, 360 Strategic change, 378–379 Strategic competitiveness, 1–6 above-average return models I/O, 15–17 resource, 17–19 current landscape, 6–7 global economy, 7–8 globalization, 8–10 technology, 10–15 experiential exercises, 29–30 mission in, 20–21 notes, 31–33 review questions, 29 stakeholders, 21–24 strategic leaders in, 24–26 summary, 28 vision in, 19–20 Strategic controls in balanced scorecards, 395–396 purpose of, 339–340 Strategic direction, 384–385 Strategic entrepreneurship, 404–407 entrepreneurs in, 409–410 experiential exercises, 424–425 innovation in, 408–409 through acquisition, 421 through cooperative strategies, 419–421 internal, 411–419 international, 410–411 notes, 425–428 opportunities in, 407–408 review questions, 424 summary, 423–424 value creation through, 422–423 Strategic groups, 62–63 Strategic leadership, 24–26, 372–375 for balanced organizational controls, 393–396 for ethical practices, 392–394 experiential exercises, 398–399 managerial succession, 381–384 notes, 399–403 for organizational culture, 389–392 for resource portfolio management, 385–389 review questions, 397–398 for strategic direction, 384–385 style in, 375–376 summary, 396–397 top-level manager roles, 377 and CEOs, 379–381 firm performance and strategic change, 378–379 teams, 377–378 Strategic management process, 5–6, 26–27 Strategic networks, 360–361 Strategic outsourcing, 360–361 Strategic thinking, 93 Strategies acquisition, 196–199 business-level See Businesslevel strategies cooperative See Cooperative strategies corporate-level See Corporate-level strategies cost leadership See Cost leadership strategies defined, differentiation See Differentiation strategies in I/O model, 16 international See International strategies in resource model, 18 structure relationship to, 341 Strategy patterns, 341 cooperative and network structure matches, 360–361 functional structure and business-level matches, 344–347 functional structures, 343 international and worldwide structure matches, 354–360 multidivisional structure and corporate-level matches, 347–354 multidivisional structures, 343–344 simple structures, 341–343 Strengths and weaknesses, identifying, 95–96 Strollers, 416 Structural attributes in international strategies, 238 Structures functional, 343 for cost-leadership strategies, 344–345 for differentiation strategies, 345–346 for integrated cost leadership/differentiation strategies, 346–347 Subject Index Sales in value chain analysis, 90, 92 Sarbanes-Oxley (SOX) Act, 308–311 Satellite systems joint ventures for, 280 as product substitute, 59 SBU (strategic business unit) form, 350–352 Scale economies as entry barrier, 54–55 in international strategies, 234–235 Scanning in environment analysis, 40–41 Scope economies, 175 Scorecards, balanced, 394–396 Second movers, 148 Security risk, 254, 256 Segmentation, customer, 109–111 Segments in general environment, 38, 42–45 economic, 45–46 global, 49–51 political/legal, 46–47 sociocultural, 47–48 technological, 48–49 Self-interest, managerial, 305–306 Separation of ownership and managerial control, 304–311 Service industry, vertical acquisitions in, 202 Serviceability, 151 Services in cost leadership strategies, 117 in differentiation strategies, 121–123 in international strategies, 233 quality dimensions of, 150–151 in value chain analysis, 90, 92 Shareholders, 21–22 large-block, 311–312 risk to, 304 Sharing activities, 175–176 Simple structures, 341–343 Single-business diversification strategies, 169–170 Size, organizational as attack factor, 149–150 inefficiencies from, 214 Skills in franchising, 282 in human resource management, 376, 386 in I/O model, 16 Slack, organizational, 148 Slow-cycle markets in competitive dynamics, 155–157 strategic alliances in, 271–272 Slow growing industries, rivalries in, 58, 60 Social capital from ethical practices, 392 managing, 389 in strategic alliances, 271 Social complexity, capabilities from, 87 Sociocultural attributes in global markets, 50 Sociocultural segment, 38, 47–48 Socioeconomic factors, 110 SOX (Sarbanes-Oxley) Act, 308–311 Specialization in cross-functional product development teams, 417 in functional structures, 344 Specialized demand, 237 Speed acquisitions for, 205–206 competitive, 387 in fast-cycle markets, 156 Spin-offs, 218–219 Stability in organizational structure, 337 Stable alliance networks, 286 Stakeholders classifications of, 21–24 defined, 21 Standard-cycle markets in competitive dynamics, 158–159 strategic alliances in, 271–273 Standardization corporate governance for, 303 in international strategies, 240 Standstill agreements, 322 Star Alliance, 278 Steel industry, 204 Stock options, 301–302, 318–319 Storage costs, 60 Strategic actions, 146–147 Strategic alliances, 267–269 benefits of, 271–273 23 I Subject Index Structures functional, continued multidivisional, 343–344, 347 for related constrained strategies, 347–350 for related linked strategies, 350–352 for unrelated diversification strategies, 352–354 network, 361 organizational, 337–338, 417 simple, 341–343 strategy relationship to, 341 worldwide, 354–360 Stuck in the middle firms, 130 Style, strategic leadership, 375–376 Subsidiaries, 249–250 Substitute products and services in cost leadership strategies, 120 in differentiation strategies, 120–122 threat of, 57–59 Suburban growth, 48 Succession, managerial, 381–384 Supplier power in cost leadership strategies, 118 in differentiation strategies, 122, 124 in environment analysis, 56–57 Supply contracts, 270 Support activities, 89 Supporting industries, 237 Sustainable competitive advantage, core competencies for, 85–89 Swing generation, interests and needs of, 110 Switching costs as entry barrier, 55 in rivalries, 60 Synergistic strategic alliances, 280 Synergy in acquisitions, 211–212 in value-neutral diversification, 186 24 I T Tacit collusion, 277–278 Tactical actions, 146–147 Takeovers vs acquisitions, 200 hostile, 215, 320–322 in market for corporate control, 319–322 Tangible resources in internal environment, 79–81 in value-neutral diversification, 187 Targets acquisition, 210–211 in competitive scope, 114–115 Tariffs, 246 Tax laws, 183–185 Tax Reform Act, 184 Teams, top management, 377–378 and CEOs, 379–381 for performance and strategic change, 378–379 Technology for change, 12, 14–15 in cost leadership strategies, 117 in differentiation strategies, 123 diffusion of, 10–11 in fast-cycle markets, 157 in general environment, 38, 48–49 information age, 11, 13 in internal environment, 80 international strategies for, 232 knowledge intensity in, 13 in network structures, 361 standards for, 277 in value chain analysis, 91–92 Telecommunications regulations, 46 Telephone service long distance acquisitions, 197 substitutes for, 59 Threats in external environment, 40 in global markets, 51 new entrants, 53–57 substitute products, 57–59 Time requirements for acquisitions, 213 Timeliness in service quality, 151 Top-level managers compensation of, 317 complexity of, 317–318 controversial, 82–83 effectiveness of, 318–319 as incentive, 301–302 in value-reducing diversification, 188–189 roles of, 377 and CEOs, 379–381 firm performance and strategic change, 378–379 teams, 377–378 Total quality management (TQM) systems, 129 Trade agreements, 244–245 Trade balances, 229 Training, 388 Transaction costs in acquisitions, 212 Transformational leadership, 376, 379 Transnational strategies combination structures for, 357–360 description, 241 planning, 242–243 Transportation costs, 246 Trends in global markets, 50 Trust in cooperative strategies, 290 U Uncertainty in internal environment analysis, 77 in value-neutral diversification, 186 Uncertainty-reducing strategies, 276–277 Unrelated diversification strategies, 171, 181–183 asset restructuring in, 182–183 capital market allocation in, 181–182 multidivisional competitive structure for, 352–354 V Value and value chains analysis, 89–92 in competitive advantage, 86–89 in differentiation strategies, 122 from internal innovation, 418 Value-creating diversification, 175 corporate relatedness in, 176–177, 180 market power in, 177, 179–180 operational relatedness in, 175–176, 180 Value-creation in cost leadership strategies, 116–117 in differentiation strategies, 123 in internal environment, 75–77 outsourcing for, 92 spin-offs for, 218–219 through strategic entrepreneurship, 422–423 Value-neutral diversification, 173, 183 incentives for, 183–186 resources in, 187 Value-reducing diversification, 173, 188–189 Venture capital investments, 310–311 Vertical acquisitions, 202 Vertical disintegration, 274 Vertical integration, 179–180 Vertical strategic alliances in business-level cooperative strategies, 362 complementary, 274–275 Video on demand (VoD), 420–421 Virtual integration, 180 Vision vs operational performance, 373–374 in strategic competitiveness, 19–20 in strategic direction, 384 Vision care, 207 W Wa, 50 War economic risks in, 45 instability from, 253–254 Washers, 178, 242–243 White-collar fraud, 393 White knights, 382 Whole-firm buyouts, 220–221 Wholly owned subsidiaries, 249–250 WiFi, 11 Women as managers and directors, 383 opportunities for, 386 in top management, 82 Workforce diversity, 47 Worldwide geographic area structures, 354–356 Worldwide structures divisional, 356–357 international strategy matches with, 354–360 Case Title Energy/ Manufacturing 9Live Service Consumer Goods Food/Retail X X X A G Lafley AMD in 2005 Anheuser-Busch X Bank One X China on the I-Way Citigroup Japan X CQUAY Technologies DaimlerChrysler X De Beers X Dell in China X Fiat and GM X General Motors Defense X Louis V Gerstner Jr X Humana Inc X X L’Oréal’s Business Strategy X Lucchetti X Lufthansa X MapQuest X Marks and Spencer X Mass Retailing in Asia X X X X News Corp in 2005 Nucor in 2005 X ONGC’s Growth Strategy X Porsche X Tata Steel X Viacom Shanghai Volkswagen Wal-Mart Stores Inc Whole Foods Market X X 16933_48_endsheets.qxd High Technology 1/17/06 3:31 PM Page Media/ Entertainment/ Communication International Perspective Social/ Ethical Issues Industry Perspective Chapters X X X X 2, 13 6, 12, 13 X X X 4, X X 2, 3, 6, X 1, 12 X X X 1, 8, X X 3, 7, X 7, 10, 11 X X X 2, X X 5, X 8, 5, 6, X 1, 6, 11 X X 1, 12 X 4, 13 X 6, X 6, 9, 10, 12 X X X 3, 9, 13 10, 12 X X X 3, 5, 3, X 3, 11, 12, 13 2, 3, 6, 10 X X X 1, 3, 12 X 1, 6, 12 10, 12 X 3, 5, 8, 11 X 4, 2, 3, ... disaster Mission PART / Strategic Management Inputs A mission specifies the business or businesses in which the firm intends to compete and the customers it intends to serve 20 The vision is... success with this book! In today? ?s competitive business world, what consistently separates successful firms from those that fail is making the right strategic decisions and actions Prepare your students... firm? ?s mission A mission specifies the business or businesses in which the firm intends to compete and the customers it intends to serve.90 As we will learn in Chapter 4, today? ?s customers tend