J&S_Text&Cases_ppr 9/17/06 12:56 PM Page Over 600,000 students worldwide have used this best-selling book to understand and explore strategic management through their academic and professional careers SEVENTH EDITION The seventh edition builds on these strengths with the introduction of a new author, Richard Whittington The enhanced coverage of international strategy and the resource-based view, as well as improved visual presentation, ensure that this book continues to lead the way in exploring strategic management ‘Exploring Corporate Strategy is strong at integrating theory and practice … has an international perspective both in its theoretical coverage and its empirical illustrations and cases … is comprehensive and easy to combine with further theoretical readings.’ Professor Leif Melin, Jonkoping International Business School, Sweden Professor Andrew Pettigrew, School of Management, University of Bath, UK ‘The seventh edition of this textbook offers yet another step in improvement both in the area of student support and its overall coverage In particular the website is easily accessible, user-friendly and provides a range of supplementary resources to engage and reinforce students’ understanding of this complex area of study.’ ‘Exploring Corporate Strategy strikes a balance because it provides sound methodology and analysis, cleverly combined with a well-reasoned introduction to more contemporary paradigms Thoughtful use of figures and tables provides clarity for students; the detailed cases are ideal for teaching purposes.’ Gerard Betros, University of Southern Queensland, Australia John Toth, Leeds Business School, Leeds Metropolitan University, UK An imprint of Additional student support at www.booksites.net/ecs www.pearson-books.com Exploring Corporate Strategy Text and Cases Text and Cases Exploring Corporate Strategy ‘Exploring Corporate Strategy is one of the outstanding texts in international management education It combines clarity of structure and presentation with topical and enduring examples It also has a depth of synthesis and critical reflection based on relevant research which is rare in textbooks.’ E D I T I O N Johnson Scholes Whittington Exploring Corporate Strategy has established a reputation as a pre-eminent textbook in its field, based upon the expertise of authorship, range of cases, depth of commentary and wealth of supporting resources S E V E N T H Gerry Johnson Kevan Scholes Richard Whittington ECSC_A01.qxd 9/20/04 08:50 Page i Exploring Corporate Strategy Visit the Exploring Corporate Strategy, seventh edition Companion Website at www.booksites.net/ecs to find valuable student learning material including: l l l l l l l Learning objectives and key concepts for each chapter Interactive multiple choice questions to help test your learning Five full-length cases Case updates Links to relevant sites on the web An online glossary to explain key terms Flashcards to test your knowledge of key terms ECSC_A01.qxd 9/20/04 08:50 Page ii Gerry Johnson BA, PhD (left) is Professor of Strategic Management at the University of Strathclyde Graduate School of Business and a fellow of the UK Advanced Institute of Management Research He is the author of numerous books, has published in many of the foremost management research journals and is a regular speaker at academic conferences throughout the world He serves on the editorial boards of the Strategic Management Journal and the Journal of Management Studies His research is in the field of strategic management practice in relation to strategy development and change in organisations As a consultant he applies many of the concepts in Exploring Corporate Strategy to help management teams challenge and develop the strategies of their organisations Kevan Scholes MA, PhD, DMS, CIMgt, FRSA (centre) is Principal Partner of Scholes Associates – specialising in strategic management He is also Visiting Professor of Strategic Management and formerly Director of the Sheffield Business School, UK He has extensive experience of teaching strategy to both undergraduate and postgraduate students at several universities In addition his corporate management development work includes organisations in manufacturing, many service sectors and a wide range of public service organisations He has regular commitments outside the UK – including Ireland, Australia, New Zealand and Singapore He has also been an advisor on management development to a number of national bodies and is a Companion of the Chartered Management Institute Richard Whittington MA, MBA, PhD (right) is Professor of Strategic Management at the Saïd Business School and Millman Fellow at New College, University of Oxford His main research interests are in the practice of strategy and comparative international management and he works with many organisations in consulting and executive education roles in the UK and elsewhere He has published seven books and many articles in journals such as Organization Science, the Strategic Management Journal and Strategic Organization He serves on eight journal editorial boards, including the Academy of Management Review, and is a regular keynote speaker at conferences internationally He has directed MBA programmes at the Universities of Oxford and Warwick, and teaches strategy at both undergraduate and postgraduate levels ECSC_A01.qxd 9/20/04 08:50 Page iii Exploring Corporate Strategy Gerry Johnson University of Strathclyde SEVENTH EDITION Kevan Scholes Sheffield Hallam University Richard Whittington Saïd Business School, University of Oxford ECSC_A01.qxd 9/20/04 08:50 Page iv Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk Fifth edition published under the Prentice Hall imprint 1998 Sixth edition published under the Financial Times Prentice Hall imprint 2002 Seventh edition published 2005 © Simon & Schuster Europe Limited, 1998 © Pearson Education Limited 2002, 2005 The rights of Gerry Johnson, Kevan Scholes and Richard Whittington to be identified as authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP All trademarks used herein are the property of their respective owners The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners ISBN 273 68739 (text only) ISBN 273 68734 (text and cases) British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalogue record for this book is available from the Library of Congress 10 08 07 06 05 Typeset in 9.5/13pt Stone Serif by 35 Printed and bound by Mateu Cromo, Spain The publisher’s policy is to use paper manufactured from sustainable forests ECSC_A01.qxd 9/20/04 08:50 Page v Brief Contents Part I • INTRODUCTION Introduction to Part I Chapter Introducing Strategy Commentary on Part I • Strategy Lenses 41 Part II • THE STRATEGIC POSITION 59 Introduction to Part II Chapter The Environment Chapter Strategic Capability Chapter Expectations and Purposes Commentary on Part II • Coping with Complexity: The ‘Business Idea’ 61 63 115 163 223 Part III • STRATEGIC CHOICES 233 Introduction to Part III Chapter Business-Level Strategy Chapter Corporate-Level and International Strategy Chapter Directions and Methods of Development Commentary on Part III • Strategy Selection 235 239 279 339 383 Part IV • STRATEGY INTO ACTION 391 Introduction to Part IV Chapter Organising for Success Chapter Enabling Success Chapter 10 Managing Strategic Change Commentary on Part IV • Strategy into Action 393 395 445 503 551 Part V • HOW STRATEGY DEVELOPS 559 Introduction to Part V Chapter 11 Understanding Strategy Development Commentary on Part V • Strategy Development in Organisations 561 563 603 ECSC_A01.qxd 9/20/04 08:50 Page vi ECSC_A01.qxd 9/20/04 08:50 Page vii Detailed Contents List of Illustrations List of Exhibits Preface Getting the Most from Exploring Corporate Strategy Guided Tour of the Book Guided Tour of the Companion Website Acknowledgements Part I xvii xix xxii xxvi xxx xx xxxiv INTRODUCTION Introduction to Part I Introducing Strategy 1.1 What is strategy? 1.1.1 The characteristics of strategic decisions 1.1.2 Levels of strategy 1.1.3 The vocabulary of strategy 1.2 Strategic management 1.2.1 The strategic position 1.2.2 Strategic choices 1.2.3 Strategy into action 1.2.4 Strategy development processes 1.3 Strategy as a subject of study 1.4 Strategic management in different contexts 1.4.1 The small business context 1.4.2 The multinational corporation 1.4.3 Manufacturing and service organisations 1.4.4 Strategy in the public sector 1.4.5 The voluntary and not-for-profit sectors 1.5 The challenges of strategic management 1.5.1 Strategic drift 1.5.2 Contemporary themes affecting strategy development 1.5.3 The strategy lenses Summary Recommended key readings References Work assignments Case example: Electrolux Commentary on Part I Strategy Lenses 6 11 12 15 17 18 19 19 20 21 22 22 23 23 26 26 27 28 31 34 35 35 36 37 41 ECSC_A01.qxd 9/20/04 08:50 Page viii viii Detailed Contents Part II THE STRATEGIC POSITION Introduction to Part II 61 The Environment 63 2.1 2.2 Introduction The macro-environment 2.2.1 The PESTEL framework 2.2.2 Key drivers of change 2.2.3 Porter’s Diamond 2.2.4 Building scenarios 2.3 Industries and sectors 2.3.1 Sources of competition – the five forces framework 2.3.2 The dynamics of competition 2.4 Competitors and markets 2.4.1 Strategic groups 2.4.2 Market segments 2.4.3 Identifying the strategic customer 2.4.4 Understanding what customers value – critical success factors 2.5 Opportunities and threats 2.5.1 Strategic gaps 2.5.2 SWOT Summary Recommended key readings References Work assignments Case example: Global forces and the European brewing industry Strategic Capability 3.1 3.2 3.3 3.4 3.5 3.6 Introduction Foundations of strategic capability 3.2.1 Resources and competences 3.2.2 Threshold capabilities 3.2.3 Unique resources and core competences Cost efficiency Capabilities for sustainable competitive advantage 3.4.1 Value of strategic capabilities 3.4.2 Rarity of strategic capabilities 3.4.3 Robustness of strategic capabilities 3.4.4 Non-substitutability 3.4.5 Dynamic capabilities Organisational knowledge Diagnosing strategic capability 3.6.1 The value chain and value network 3.6.2 Activity maps 64 65 65 69 71 76 77 78 87 89 89 91 96 96 98 99 102 103 104 104 106 108 115 116 117 117 119 121 121 124 125 125 127 132 132 133 136 136 141 ECSC_A01.qxd 9/20/04 08:50 Page ix Detailed Contents 3.6.3 Benchmarking 3.6.4 Strengths and weaknesses 3.7 Managing strategic capability 3.7.1 The limitations of managing strategic capabilities 3.7.2 Stretching and adding capabilities 3.7.3 Managing people for capability development 3.7.4 Building dynamic capabilities Summary Recommended key readings References Work assignments Case example: Listening at eBay Expectations and Purposes 4.1 4.2 Introduction Corporate governance 4.2.1 The governance chain 4.2.2 Corporate governance reforms 4.2.3 The role of the governing bodies 4.2.4 Rights of creditors and lenders 4.2.5 Relationships with customers and clients 4.2.6 Forms of ownership 4.2.7 Mergers and acquisitions 4.3 Stakeholder expectations 4.3.1 Stakeholder mapping 4.3.2 Power 4.4 Business ethics and social responsibility 4.4.1 The ethical stance 4.4.2 Corporate social responsibility 4.4.3 The role of individuals and managers 4.5 The cultural context 4.5.1 National and regional cultures 4.5.2 The organisational field 4.5.3 Organisational culture 4.5.4 Functional and divisional subcultures 4.5.5 The cultural web 4.6 Communicating organisational purposes 4.6.1 Corporate values 4.6.2 Mission statements 4.6.3 Objectives Summary Recommended key readings References Work assignments Case example: Manchester United, brand of hope and glory Commentary on Part II Coping with Complexity: The ‘Business Idea’ 144 148 150 150 151 152 153 156 157 157 159 160 163 164 165 165 170 171 175 176 178 179 179 181 184 188 189 191 195 195 197 197 199 201 201 207 207 209 209 211 212 212 215 217 223 ix ECSC_Z38.qxd 9/18/04 15:10 Page 1019 General Index break-even analyses 371 brewing industry 107–13 bribery 194 ‘bricks and clicks’ 459 brokering skills 305 budgetary processes 572 budgets 168, 412 building dynamic capabilities 153–6 building scenarios 74–7 bureaucracies 305, 423, 431–2, 464, 607 business environment see environment business ethics see ethics business idea 62, 223–31, 433 business-level competition 18 business-level strategy 239–41 competition and collaboration 261–4 competitive advantages see competitive advantages game theory see game theory hypercompetition see hypercompetition meaning 11 business models 13, 15, 81, 462–4 business policies 20 business units 304, 310 see also strategic business units business–university collaboration 263 buyers chains of 99–100 competition with suppliers 84, 85 concentration 84 power of 84–5, 246, 465, 470, 480 suppliers, acquisition of 84 buying power, collaboration to increase 262 C capabilities acquisitions, motives for 350–1 change management and 517 development 152–4 external development 152 internal development 348 logistics of supply and distribution chains 459 managing change 510 mergers, motives for 350–1 motives based on 340 new 345 new markets and 346 organisationally specific 253–4 of parents 312 product development 344–5 productive 300 redundancy of 120 threshold 119–21, 122 unique 298 see also dynamic capabilities; strategic capabilities capacity-fill 123 capacity for change 510 CAPEX (capital expenditure) 470 capital expenditure (CAPEX) 470 intensity 470 markets 29, 66 requirements of entry 81 return on capital employed 361, 364 –5 sources 470 structures 370 working capital 470 car industry 244, 287 cash cows 315–17, 473–4 causal ambiguity 128, 131, 134, 461 caveat emptor 176 ceasing activities 152 ceding responsibilities 572 central resources 304 central services 304 centralisation 422 centrally important activities 141 chaebol 288 chains of buyers 99–100 chains of governance 165–70 challenges 52, 227 rites 529 strategic management see strategic management strategy development see strategy development challenging received wisdom 570 change 11, 19 agents 454, 504, 519, 528 behaviour 451–2 big bang approach 506 commitment to 580 continual 229 cultural processes 581–2 cultures 451 drivers 65, 69–71 environment 358 environmental 28, 581–2 five forces 86 gradual 580 hijacked processes 539 incremental 27, 28, 506 key drivers 65, 69–71 managing 41, 452 markets 356 operational 504 power of effecting 510 relayers, middle managers as 455 resistance to see resistance to change resources ritualisation 539 speed of 64, 420 of strategy 581 structures and 409 technological 583 transformational 27, 28, 507 see also strategic change change and performance J-curves 433– changing activities 151 channels 241, 371, 413 chaos, edge of 557 character-based trust 357 characterisation 197 characteristic ambiguity 131 charismatic leaders 519 charitable organisations 191 chief executives 522 citizen activism 70 Citizen’s Charter Initiative 176 clarity 304 clients see customers closed corporate governance models 173 clues 201 clusters of organisations 76 coaching 304 co-determination 172 coercion 516, 517 cognitive bias 46 cognitive models 46 cohesiveness 433 collaboration business-level strategy 261–4 change management 515–16 corporate parents 304 platforms 463 collective behaviours 196 collective experiences 45, 47–8, 196, 200 combinations 17, 20, 154, 437 combined effects 69 command and control systems 427, 428 commercial freedom 346 commodity-like products and services 245 commodity trading 122–3 communicating purposes 207–11 communication analytic tools 608 bottom-up business planning 415 of change 505, 515, 516, 534–5, 540 diffusion of innovation 482 global 69 infrastructures 295 of strategy 571 communities of interest 134, 389 communities of practice 416 community activities 193 compatibility 357, 481, 482 competences 49 boards 175 building on complementary 120 complexities 130 configuration culture, lodged in 227 deploying resources to create 128 external interconnectedness 130 HR processes 456–7 information management 459 levels 132 linked 134 1019 ECSC_Z38.qxd 9/18/04 15:10 Page 1020 1020 General Index competences (continued) meaning 119 not valued 151 of parents 311 rare 125, 461 recognised, valued and understood 151 robustness 458 situation dependency 127 strategic capabilities 13, 117–19 strategic position and 17 stretching 151–2 synergy 310 threshold 119, 120 tradable 254–6 transferability 125–7 trust based on 357 valued but not understood 150–2 unique 406 see also core competences competition barriers see barriers at business level 18 business-level strategy 261–4 cycles of 65, 87–9 direct, avoidance 260 dynamics 87–9 environmental influences 67 global 71, 72 globalisation 70, 291 hypercompetition see hypercompetition public sector 26 sources 78–87 competitive advantages 7, 18 cross-subsidisation and 284 differentiation 243, 246–8 durable core competences 133 dynamic capabilities 132, 484 failure strategies 243, 252 focused differentiation 243, 251–2 hybrid strategies 243, 248–50 hypercompetition see hypercompetition IT and 459 low price strategy 243, 246 no frills strategy 243, 245, 259 temporary 87, 261 through people 456 price-based strategies 245–6 resource-based views 155 strategic capabilities and 118 strategy clock 242–52 supply costs 123 sustainable 124–5, 241, 252 differentiation-based advantages 254–6 dynamic capabilities 132–3 lock-in 256–8 non-substitutability 132 price-based advantages 252–4 rarity of strategic capabilities 125–7 robustness of strategic capabilities 127–31 value of strategic capabilities 125 competitive bidding 419 competitive disadvantages 343 competitive performance, information management 459–60 competitive positions 123 competitive power, collaboration to gain 264 competitive rivalries 85, 122, 465, 480 competitive situation, technology 479–81 competitive strategies 87, 242, 258–61, 461–2 competitive strengths 14 competitiveness, maintenance of 445 competitors 65 direct 90 five forces and 87 imitation 259 market-based moves, overcoming 259 and markets 89–98 outperforming 458 as stakeholders 180 strategic business units 241 weaknesses, attacking 261 complacency of market leaders 344 complementary competences 120 complementary product and service offerings 101 complementary resources 120 complementors 82 complex combinations 20 complexities 28 business idea 223–31 business models 462 competences 130 core competences 461 design 225–6 dynamism 591 environment 64, 564 experience 226–8 ideas 228–9 imitation difficulties 254 learning to cope with 592 managing 44 robustness of strategic capabilities 128 strategic capabilities 134 strategic decisions 10 strategy development 590–2 technology 481 complexity theory 557 compliance 531, 540 computer games 475 concepts, strategic 16 conceptualisation 15–16 conditioning 608 configurations 396–7, 431 dilemmas 435–7 reinforcing cycles 433–5 stereotypes 431–3 strategy development 587 conflicting ideas 153 conflicting objectives 194 conflicts 404 of expectations 180–1 of interest 168, 169, 179 reduction, rites of 529 conglomerates 288–90, 402, 474 connections 80 consensus building 608 consistency 143 internal 360–1 consolidation 342–3, 359, 540 consortia 356 constant scanning 230–1, 578 consultants 522, 564, 576–7, 604 consumers homogenous tastes and needs 293 protection 176 see also customers contemporary themes affecting strategy development 28–31 contexts 425 creating 51–3, 55 shaping 413, 451 strategic change 504, 506, 508–11 strategic management see strategic management strategy development 586 technology 478 continua 422 continual change 229 continuous growth 351 continuity 27 contributors 406 control 13, 53 change management 519 direct 411 distributors 470 exercising 44 financial see financial control indirect 411 mechanisms 551 middle managers 521 operational 15 planning processes 412–13 processes 410–11 strategic 15 structures and 409 suppliers 470 systems 44, 203, 205, 206, 551 value creation 471 see also strategic control convergence 77–8, 79 cooperation 52, 427 coordination 304, 399, 406, 570, 608 co-production 264, 356 copying, imperfect 556 core competences 13, 17, 358 acquisitions 350 causal ambiguity 131 complexity 461 definition 119, 121 durability 133 ECSC_Z38.qxd 9/18/04 15:10 Page 1021 General Index core competences (continued) embedded 461 linked activities or processes 128 market analysis 345 networks 430 performance levels 128 potential 248 robustness 128, 461 strategic capabilities 121 technology 482–4 value criteria 128 core rigidities 127, 156, 527 core values 207–9 corporate centres 401 corporate governance 17, 30, 164–5 acquisitions 179 Anglo-Saxon model 174 audits 176–7 clients, relationships with 176–7 closed models 173 creditors’ rights 175–6 customers, relationships with 176–7 governance chains 165–70 governance framework 165 governing bodies, roles 171–5 inspections 176–7 Japanese model 174 Latin model 174 lenders’ rights 175–6 mergers 179 ownership forms 178 reforms 170–1 Rhine model 174 shareholders 168–9, 171–2 systems 174 corporate irresponsibility 191–2 corporate-level strategy 11, 18 corporate managers 406 corporate parents 281, 303, 309–14 corporate planning 20 corporate portfolios 282, 314–15 directional policy matrix 319–22 growth share matrix 315–17 management trends 327–9 parenting matrix 322–6 public sector, balance in 317–18 corporate social responsibility 30, 165, 188, 191–5 corporate strategy 6, 280–2 international diversity and international strategy 291–303 portfolios 311–28 product/market diversity 282–91 value creation and parents 303–14 corporate turnaround 345 corruption risks 295 co-specialisation 130, 256, 353 cost–benefit 361, 366, 367 costs activities 139–40 advantages 297–8 country-specific 69 creation 141 development 348–9 drivers 122, 469–71 efficiency 350 experience 122, 123 strategic capabilities 121–4 of entry 81 excessive 310 financing 469 fixed 85 globalisation 69, 70, 72 leadership 253, 433 low 256 product development 69 reduced 470 reduction 124, 523 social 477 spread over time 348 structures 470 sunk 127 of supply 122–3 switching 84, 246, 256 tangible 366 unit 471 counter-challenge, rites of 529 country managers 406 country-specific costs 69 creation costs 141 knowledge 154, 305, 420 value 141 credibility 415–16 credible players 344 creditors’ rights 175–6 crime, strategies against 24 crisis 523, 536 critical improvement area prioritisation 524 critical mass, alliances 353 critical success factors (CSF) 65, 143 customer values 96–8 innovation and 482 parents and business units 323 product development 345 cross-border acquisitions 349 cross-channel mergers 198 cross-cutting teams 408 cross-pollination 406 cross-selling 430 cross-subsidisation 284 ‘crown jewel’ problem 312 CSF see critical success factors cultural configurations of strategy development 587 cultural explanation of strategy development 581 cultural fit 353 cultural influences 17–18 cultural norms 295, 427 cultural processes 41, 385–6, 416–17, 564, 581–3, 605 cultural webs 165, 201–7, 358, 511–13 cultures 14, 52, 165, 195 analyses 507 assimilation after mergers 353 business unit systems and 310 changes 451 competences embedded in 227 context 165, 195–207 differences, exploiting 292 divisional subcultures 201 frames of reference 196 functional subcultures 201 mergers 11, 353 national 165, 197, 198 organisational see organisational cultures organisational fields 197–9 regional 197 robustness of strategic capabilities 128, 130–1 Specialised Cultures Test 410 subcultures 165, 201 subnational 197 supranational 197 of trust 134 understanding 541 cumulative experience 123 currency trading 122–3 current position, protecting and building on 341–4 customers care 452–3 change of emphasis 345 differences 482 expectations 65, 147 following in internationalisation 291–2 global 69 identification 248 loyalty 81, 270 needs 91, 345 preferred access to 127 price-sensitive 245 relationships with 176–7 sharing work with, collaboration in 264 as stakeholders 183, 477 strategic 96, 98, 248 strategic business units 241 value 96–8, 122, 248, 458, 482 see also consumers customisation 462 cycles of competition 65, 87–9 D data mining 345, 459–60 DCF see discounted cash flow debate 386 debtor reduction 471 decentralisation 422 decisions influencing 41 levels of 580 making 404 operational 10–11 prior 564, 567 strategic see strategic decisions trees 360, 363 1021 ECSC_Z38.qxd 9/18/04 15:10 Page 1022 1022 General Index declining markets 344 deep pockets 260 degradation, rites of 529 degrees of improvement 481 de-layering 536–7 delays to entry 81 delegation of strategic management 174 delta model 256–8 demand conditions 73 demand-side issues 481–2 demographics, environmental influences 66 de-mutualisation 178 deregulation 350 design organisational 592 planning systems 572 processes 122, 123 products 122, 123 strategy as 32, 41–5 structural 397 see also design lens design lens 3, 33, 41–5, 608–9 complexity 225–6 organisational politics 606 resource allocation routine 605 strategic action 551–2 strategic leadership 606 strategic planning systems 603 strategy consultants 604 strategy selection 383–4 strategy workshops 604 determination 311 determination of strategy 569 developing solutions 386 development 406, 458 directions 340 internal 340, 348–9, 359 technology see technology see also strategic developments; strategy development deviance, tolerating 229 devolution 421–2 diagnosing strategic capabilities see strategic capabilities different processes for different purposes 593–4 different providers 97 differential impacts 65 differentiation 82, 85, 243, 246–8 competitive advantage based on 254–6 focused 243, 251–2 hypercompetition 258 profitability and 271 sustainable 254 diffusion of innovation 481–2 digital radio 483 dilemmas, organisational 435–7 direct controls 411 direct supervision 411–12 directional policy matrix 319–22 directions change management 516–17 of development see strategy development long-term 6, strategic 567 strategic choices and 19 directors 168–70, 171–2, 179 see also boards disadvantages, competitive 343 discounted cash flow (DCF) 361, 364–5, 366, 368 discussion 386 disruption 80, 261 dissipative structures 557 distribution chains 459 distribution channels 69, 81, 260 distributors 180, 426, 470 diversification 282, 285–8, 346–7, 359, 474, 568 diversity 64, 398, 510, 517 see also international diversity; product/market diversity divisional cultures 201 divisionalisation 399–402, 432 dogs 315–17, 473, 474 dominance, size or market 256 dominant general management logic 284 dominant logic 284, 288 dominant strategies, game theory 266–7 dominated strategies, game theory 266–7 downsizing 343 drivers change 65, 69–71 costs 122 globalisation 70 value 468, 469–71 drugs 355 dualities 435 durability 133 dynamic capabilities 132–3, 134, 153–6, 484, 490 dynamic conditions 591 dynamic environments 556, 564 dynamic interaction 433 dynamics, competition 87–9 dynamism, complexity 591 E e-auctions 463 e-businesses, diversification into 288 e-commerce 29–30, 344, 371, 460 enterprise resource planning 412 models 462–4 one-stop shops 429 strategy selection 384 e-malls 462 e-procurement 462 e-shops 462 earnings stabilisation across markets 293 economic benefits 293 economic environment 65 economic factors 68, 292 economies, knowledge-based 133 economies of scale 69, 81, 122, 282, 293, 343 economies of scope 282 economy, environmental influences 67 edge of chaos 557 edicts, change management 516, 517 education 515, 516, 608 efficiency 69, 123, 282 costs see costs electronic point of sale (EPOS) 412 elites 531 embeddedness 227, 461 emergent configurations 431 emergent strategies 20, 564–8 development see strategy development emotions 535 employees liquidity concerns 477 welfare 192, 193 see also human resources employment, corporate social responsibility 193 empowerment 540 enabling success 19, 445–7 integrating resources 488–9 managing finance 467–77 managing information 457–66 managing people 447–57 managing technology 478–88 enhancement, rites of 529 enlightened self-interest 190 enterprise resource planning (ERP) 262, 412, 414, 427, 489 entry barriers 81–2 collaboration to build 262 IT 465 technology 479 collaboration to gain 264 delays to 81 international diversity 293–7 strategies 250 threat 81–2 environment 9, 64–5 boundaries between organisations and 51 changes 350, 358, 581–2 changing 52 competitors and markets 89 identifying strategic customers 96 market segments 91–5 strategic groups 89–93 understanding what customers value 96–8 e-commerce 29–30 industries and sectors 65, 77–8 dynamics of competition 87–9 hypercompetition 89 sources of competition 78–87 ECSC_Z38.qxd 9/18/04 15:10 Page 1023 General Index environment (continued) internal development 348–9 macro 65 building scenarios 74–7 key drivers of change 69–71 PESTEL framework 65–8 Porter’s Diamond 71–6 underlying forces 86 markets see competitors and markets above motives based on 340 opportunities and threats 98 chains of buyers 99–100 complementary product and service offerings 101 new market segments 102 strategic gaps 99–102 strategic groups 99 substitute industries 99 SWOT 102 time 102 scanning 487–8 sectors see industries and sectors above strategic fit with strategic position and 17 threats see opportunities and threats above environmental changes 28, 284 environmental environment 65 environmental influences 67, 68 environmental issues 193 environmental sensitivity 55 envisioning 303 EPOS (electronic point of sale) 412 equilibrium 28, 266–7 equity/debt ratios 175–6 erosion 539 ERP see enterprise resource planning ethics 18, 30, 165 dilemmas 194 ethical stance 188–91 individual level 188, 196 macro level 188 managers’ roles 195 stakeholder mapping 183 see also corporate social responsibility European brewing industry 107–13 evidence 20 evolution 387–90, 507 excessive costs 310 exchanges of knowledge 134 exemplars 226 exit barriers 85 expectations 7–9, 17, 164–5 acquisitions 349, 351 alliances 356 corporate governance see corporate governance corporate parents 304 cultural context see culture customers 65, 147 development directions 340 ethics see ethics motives based on 340 new markets 346 normative 199 product development 345 stakeholders see stakeholders experience barriers to entry 81 change management 510 collective 45, 47–8, 196, 200 cost efficiency 122, 123 cumulative 123 curve 123–4 diversity 510 globalisation 69 individual 45, 46–7 information, making sense of 386 sharing 134 strategic competence based on 592 strategy as 32, 45–9 see also experience lens experience lens 3, 33, 608–9 collective experience 47–8 complexity 226–8 cultural processes 605 individual experience and bias 46–7 logical incrementalism 604–5 management, implications for 48–9 meaning 45 organisational culture 47–8, 226–7 organisational politics 606 resource allocation routine 605 strategic action 552–5 strategic leadership 606 strategic planning systems 603–4 strategy consultants 604 strategy selection 384–7 experimentation 52, 153, 231, 481, 554, 578, 590 expertise 305, 519 experts, federations of 429 explicit knowledge 134, 154 exploitation 286, 288, 292 exporting 295, 296 exports 71 external development, capabilities 152 external interconnectedness of competences 130 external linkages 287 external networks 305 external stakeholders 180, 304 externalisation 154 externally imposed strategy 564, 577 financial control 424–5, 432, 464 financial feasibility 371 financial management 30, 467–77 financial motives for acquisitions 350 financial performance, acquisitions 351 financial ratios 361, 370 financial resources 118 financial restructuring 524 financial safety nets 305 financing costs 469 firm strategy 73 first mover advantages 124, 258, 259 fit 61, 388 cultural 353 parents and business units 323–6 public sector 326 strategic technology development 487 five forces framework 65, 78–87, 358, 465, 479–81 fixed costs 85 flexibility 130 Flexibility Test 410 flux 27, 554 focus 304, 312 focused differentiation 243, 251–2 forcefield analyses 514–15 forces blocking or facilitating change 504, 506 foreign direct investment (FDI) 295, 296, 297 form 388 formal dynamic capabilities 133 formal expectations 164 formal social and political processes 578 forward integration 285–6 foundations of strategic capabilities see strategic capabilities franchising 295, 356 freedom, commercial 346 function managers 406 functional boundaries 11 functional cultures 201 functional silos 399 functional structures 398–9, 409 functions 388 funds flow forecasting 371, 374 future, interpretation in terms of past 47 future impact of environmental factors 68 F facilitators 182 factor conditions 71–3 failure strategies 243, 252 FDI see foreign direct investment feasibility 357, 371–5 Feasibility Test 410 federations of experts 429 feedback 534–5, 551, 557 feel 314, 323 G game theory 261, 264–5, 371, 384 changing rules 270 dominant strategies 266–7 dominated strategies 266–7 equilibrium 266–7 repeated games 269 sequential games 268–9 simultaneous games 265–7 1023 ECSC_Z38.qxd 9/18/04 15:10 Page 1024 1024 General Index gate-keepers 454, 466 gearing 305, 474, 477 general managers’ tasks 20 generalised views 578 generate strategy 574 generating options 576 generic descriptions of activities 138–9 generic substitution 82–4 geographic diversity see international diversity geographical divisions 401, 404 geographical spread 346 geographically specific differences 292 global businesses 405–6 global communication 69 global competition 71, 72 global customers 69 global distribution channels 69 global–local dilemmas 300 global organisations see multinational corporations global products 405–6 global reach 260 global sourcing 297 global strategies 291, 300–1 globalisation 69–72, 81, 291, 346, 397, 409 goals 13, 357, 449 goodwill 118 governance chains 165–70, 476 framework 165 see also corporate governance governing bodies, roles 171–5 governments agencies 23–6 competition action 82 environmental influences 66 globalisation, policies driving 70 trade policies 70 greenfield investments 295 growth 123 continuous 351 rates, industries 85 share matrix 315–17 guidelines, need for 556 H hard side of human resource management 449, 452 healthcare 204–5 heartland businesses 322, 323 hierarchies 43, 165–70, 306, 437, 517 Redundant Hierarchy Test 410 high growth, high-risk investments 474 higher order strategic themes 143 hijacked change processes 539 historical benchmarking 145 history, robustness of strategic capabilities 128, 130–1 holding company structures 402, 409 home market limitations 292 homogeneity 183 homogenous tastes and needs of consumers 293 horizontal integration 285–6 host governments 70 HR see human resources human assets approach to change management 519 human resources 118 advisory role 454 change agents 454 function 452–4 management 138, 447–8 middle managers 454–5 hard side 449, 452 organising people 452–5 people as a resource 448–51 performance management 449 processes 455 recruitment 449 roles 454–5 soft side 451 structures 455 policies 153 service providers 454 human rights 193 hybrid chief executives 522 hybrid competitive strategies 243, 248–50 hypercompetition 89, 132, 241, 258–61 I Icarus Paradox 582 ideas conflicting 153 new, generating 574 release 556 stifling 573 strategy as 32, 49–55 see also ideas lens ideas lens 3, 33, 609 adaptive tension 53–5 complexity 228–9 context creating 51–3 logical incrementalism 604–5 management implications 55 organisational politics 606 resource allocation routine 605 simple rules 53–5 strategic action 555–7 strategic change 557 strategic leadership 606–7 strategic planning systems 604 strategy selection 387–90 variety, importance 50–1 identification customers 248 market segments 94 strategic business units 241–2 ideology 190–1 imitation 136, 143, 228, 254, 259, 261 impacts, differential 65 imperfect copying 556 imperfect mobility 254–6 imperfections 50–1, 55 implementation 521, 574 implications for strategy development see strategy development imports 71 imposed configurations of strategy development 587 imposed strategy 564, 577 improvement area prioritisation 524 degrees of 481 in-house development of technology 484 inbound logistics 136 incremental changes 27, 28, 506 incremental configurations of strategy development 587 incremental fashion of strategy development 45–6, 568 incrementalism, logical see logical incrementalism incrementalist view of strategic management 579 independence, networks 427–9 indicators of power 185–6 indirect controls 411 individual experiences 45 individual level ethics 188, 195 industries environment see environment growth 85 organisational performance 100 standards 256–8 industry benchmarking 145 inertia 504, 541, 553–4, 583 influence 87 informal dynamic capabilities 133 information brokerage 463 experience, making sense through 386 gate-keepers, middle managers as 454 gathering 386, 607 management 457–8 business models, changing 462– competence 459 competitive performance 459–60 competitive strategy 461–2 managers, implications for 466 product features 458–9 robustness 461 service features 458–9 strategic capability 458–62 structuring 464–6 overload 573 pre-purchase 458 real-time 463–4 ECSC_Z38.qxd 9/18/04 15:10 Page 1025 General Index information (continued) straight-through 464 strategy and 457 information-intensive developments 479 information technology see IT infrastructures 138, 295 initiative overload 539 innovation 31, 49, 130, 133, 387–8 business models 462 champions of 406 complexity 229 cultural processes 416 dampening capacity for 573 diffusion of 481–2 finance 474–6 fostering 41, 556 products 406 technological developments 481–2, 483 inspections, corporate governance 176–7 institutional shareholders 476–7 institutionalisation 386–7, 540 instrumental leaders 519 intangible assets 255 intangible resources 117–19 integrated approach 11 integrating resources 488–9 integration 285–7, 529 integrity 195 intellectual capital 118, 125, 126 intellectual exercise, strategic planning as 572 intellectual property 193, 295 intelligent systems 461 intended strategies 20, 564–8, 572 interaction 21, 52, 154, 556 interconnectedness of competences 130 interdependence 71 interest, communities of 389 interest, conflicts of 168, 169, 179 interest/power matrices 181–5 intermediaries, middle managers as 455 internal consistency 360–1 internal development 340, 348–9, 359 internal markets 418–20 internal ‘venturing’ business units 154 internalisation 154 international diversity 280, 282, 291 international strategies 300–1 international value networks 297–300 market selection and entry 293–7 performance and 301–3 reasons for 291–3 international risks 295 international strategies 300–1 corporate governance 171–2 international value networks 297–300 internationalisation 28–9 Internet commerce see e-commerce inter-organisational relationships 298 intervention 304, 516, 534 intra-organisational relationships 298 intuition 153 intuitive capacities 52 investments in assets 469 corporate parents 304 high-growth, high-risk 474 invisible dynamic capabilities 133 involvement 534, 555 involving people 541 issue formulation 386 IT capability 123 e-commerce see e-commerce five forces framework 465 full potential 466 information management see information: management knowledge-sharing systems 134 –6 laggards 462 systems 24 ivory tower changes 539 J J-curves 433–4 Japanese governance model 174 job design 193 job losses 536–7 joint developments 359 joint ventures 295, 296, 297, 354–6 K key drivers of change 65, 69–71 Key Performance Indicators (KPI) 417 key players 182 key value and cost drivers 469–71 knowledge 31 bases, enhancing by internationalisation 293 carriers 576 creation 154, 305, 420 definition 133 exchanges of 134 explicit 134, 154 organisational 133–6, 461 perfect 226 resources underpinning 134 sharing 134–6, 305, 420 spreading 449 structures and 409 tacit 134, 154, 461 knowledge-based economies 133 KPI (Key Performance Indicators) 417 L labour markets, environmental influences 67 labour productivity 123 language used by change agents 528–9 used by organisations 206 Latin governance model 174 LEA (Local Education Authorities) 307 leaders 406, 415 leadership styles 415–16 see also strategic leadership learning 31, 350–1, 353, 354, 426, 589–90, 591, 592 learning bases from acquisitions 133 learning organisations 153, 507, 556, 564, 588, 589–90 legal environment 65 legal influences 68 legal risks 295 legitimacy 199 legitimation 389 lenders’ rights 175–6 lenses 3, 31–3, 41–57 see also design lens; experience lens; ideas lens levels of competences 132 levels of strategy 11–12 leverage 305, 474, 477 levers for change management see strategic change licensing 295, 296, 356 life cycles 85, 86, 258, 485 limitations home market 292 strategic capabilities 150–1 line managers see middle managers linear processes 43 linkages 131, 287 linked activities or processes 128 linked competences 134 linking technologies 484 links 456 Difficult Links Test 410 liquidity 370, 477 lobbying 182 local conditions, variations 311 Local Education Authorities (LEA) 307 local–global dilemmas 300 local resources 295 location 122, 297–300 lock-in 256–8, 259 logic 284, 288, 551 logical incrementalism 384–5, 564, 578–80, 587, 604–5 logistics 136, 137, 459 long-term direction 6, long-term scope long-term view of strategy 570 low-cost bases 246 low cost probes 53 1025 ECSC_Z38.qxd 9/18/04 15:10 Page 1026 1026 General Index low price competitive advantage 252–4 low price competitive strategy 243, 246 loyalty 81, 270 M machine bureaucracies 431–2, 433, 607 macro-economic conditions 293 macro-environment see environment macro level ethics 188 major resource changes major studies 607 ‘make or buy’ decisions 141 see also outsourcing management boards’ independence of 175 changes 524 control 165–6 delegation of strategic management to 174 experience lens implications for 48–9 ideas lens implications for 55 new, from outside organisations 522 political aspects 532–4 strategic see strategic management top roles 594 trends, corporate portfolios 327–9 managers ambition 306, 351 capabilities 282, 304 corporate 406 of countries 406 ethics roles 195 of functions 406 HR implications 455–7 information management implications for 466 middle see middle managers networks 11 perceptions of strategy development processes 588 power 172 processes 21 relationships 11 technology management implications 488 of territories 406 managing changes 452 managing for value (MFV) 369, 468–71, 472 managing strategic capabilities see strategic capabilities managing strategy development processes 593–4 manufacturing organisations 23, 122 margin reduction 246, 253 Market-Advantage Test 409 market analysis 345 market-based reasons for international diversity 291–2 market coverage 340 market development 346, 359 market dominance 256 market globalisation 70, 72 market growth 315–17, 344 market knowledge 30 market leaders’ complacency 344 market niches 260 market penetration 344, 359, 360 market power 284 market processes 418–20 market selection, international diversity 293–7 market share gaining see market penetration growth share matrix 315–17 maintenance 343 relative 94, 123 in static markets 371 marketing 137, 139 corporate social responsibility 193 expenditure 343 transference 69 markets 65, 89 awareness 481 capital, environmental influences 66 changes 356 corporate social responsibility 193 customer value 96–8 declining 344 diversity see product/market diversity earnings stabilisation across 293 entry see entry globalisation 291 internal 418–20 labour 67 life cycles 258 new 346, 348 segmentation 65, 91–5, 102, 251–2, 254, 346 size, broadening 292 static 344, 371 strategists 406 see also entries beginning with market mass customisation 462 master planners 423, 451 matrix structures 402–4, 409 mechanisms, organisations as 43–4 media for communicating change 534 ‘medium’ intensity studies 607 mental models 46 mergers 260, 371, 375 corporate governance 179 cross-channel 198 cultural fit 11, 353 methods of development 349–53, 359 motives for 350–1 messages, strategic 148 methods of development see strategy development MFV (managing for value) 369, 468–71, 472 middle managers as advisors 521 human resources management 454 –5 strategic change 521 strategy into action 554–5 milestones, strategic 571 mimicry 386–7 misleading signals 261 mission-driven organisations 30 mission statements 209 missionary organisations 432 missions 13, 14 mixed parenting 312–13 MNC see multinational corporations mobile phones 24–5, 83 mobility 93, 254–6 monitoring change 534–5, 540–1 monitoring progress of strategy 574 motivation 413–16, 470 motives for acquisitions 350–1, 476 capability-based 340 environment-based 340 expectations-based 340 for mergers 350–1 for strategic alliances 353–4 strategy development 340 multidivisional structures 399–402, 409 multi-domestic strategies 300 multinational corporations (MNC) culture 197 strategic management 22–3 strategy selection 384 multiple processes, strategy development 564, 586–8 multiple strategy development processes 587 mutual ownership 178 N national cultures 165, 197, 198 needs customers 91, 345 substitution of 82 negotiation 47 net present values (NPV) 364 networks 11, 356, 417 change, overcoming resistance to 532 co-operation 427 external 305 independence 427–9 nodal positions 430 one-stop shops 429–30 organisational dilemmas 437 professional 416 relationships 427–30 service networks 430 ECSC_Z38.qxd 9/18/04 15:10 Page 1027 General Index networks (continued) skills 430 social 589 new businesses 474–6 new chief executives 522 new ideas see ideas new markets 346, 348 new product development see products: development new ventures 251 newspapers 198 no frills competitive strategy 243, 245, 259 nodal positions, networks 430 non-executive directors 172, 175 non-imitability 127 non-substitutability 132 non-tariff barriers 295 normative expectations 199 norms 295, 416, 427 not-for-profit sector 26, 30 NPV (net present values) 364 O objectives 13, 14, 18, 43, 194, 209–11, 571, 578 observability 481 one-stop shops 429–30 operational boundaries 11 operational change 504 operational control 15 operational decisions 10–11 operational management 15 operational strategies 12 operationalisation 415 operations 137, 139, 469 opportunistic alliances 356 opportunities 17, 347–8, 536 see also environment: opportunities and threats; SWOT option theory 384 options 43, 576 order-generating rules 53 organic development 348–9, 359 organisation 15 organisational activities 555–6 organisational arrangement, alliances 357 organisational behaviours 200 organisational cultures 47–8, 196, 199–200, 226–7, 511–13 organisational design 592 organisational dilemmas 435–7 organisational fields 197–9, 261–4 organisational inertia 583 organisational knowledge 133–6, 461 organisational learning 353, 426, 589–90, 591 organisational policies 426 organisational politics 584–6, 606 organisational realities 555, 573 organisational resources 531 organisational routines 504 organisational structures 203, 205, 206 organisationally specific capabilities 253– organisations 43–4 organising for success 395–7 configurations 431–7 dilemmas 435–7 processes 410–20 relationships 421–30 structural types 397–410 organising people 452–5 orthodox language of strategy 44 outbound logistics 137 outcomes social importance, public sector 26 strategic decisions as 386 outperforming competitors 458 outputs 26, 411, 417 outsiders’ roles, strategic change 522 outsourcing 29, 124, 141, 142, 397, 426–7 ownership 165–6, 178, 287, 476, 571, 573 P paradigms 47–8, 581–2 change 582 cultural web 205, 206 meaning 200 taken-for-granted assumptions 200 parental developers 309, 311–14, 322–3, 423 parenting 18, 280, 282, 311, 312–13, 322–6 Parenting Advantage Test 409 partial implementation 516 participation, change management 515–16 passages, rites of 529 path dependency 130 patterns, recognition 55 payback period 361, 364–5 pay-offs 172 people 396, 448–51 see also employees; human resources People Test 409 perceived customer value 96–8 perceptions of strategy development 586–7 perfect knowledge 226 performance assessment 304, 449 change and performance J-curves 433– data 194 diversification and 290–1 expectations, alliances 357 improving 304 indicators (PI) 418 international diversity and 301–3 levels, core competences 128 management 449, 450 strategic control 426 targeting processes 417–18 personal motivation 413–16 personalised products 459 persuasion 551, 608 PESTEL framework 65–8, 293, 358 PFI (Private Finance Initiative) 354 pharmaceuticals 262, 486 philanthropy 190 physical aspects 528 physical resources 118 PI (performance indicators) 418 the plan 572 planning 16 configurations of strategy development 587 corporate 20 formal, limitations 556 incrementalism 587 processes 412–13 succession 449 systems 572 see also strategic planning pluralism 590 political activities 505, 584 political agenda 370 political configurations of strategy development 587 political environments 65, 180, 293 political influences 68 political mechanisms 531–2 political processes 385–6, 531–4, 564, 578 political risks 295 political view of strategy development 584–6 politics 25 organisational 584–6, 606 population ecologists 228 Porter’s Diamond 71–6 portfolios conglomerate strategies 474–6 corporate strategy 280, 311–28 managers 308–9 positioning repositioning 182, 258–9 strategic position 16, 17–18, 43 power 7, 584, 606 bases, building 531, 532 of buyers see buyers change, of effecting 510 competitive, collaboration to gain 264 groupings 532 hierarchical structures 517 indicators 185–6 of managers 172 market 284 meaning 185 sources 185–6 of stakeholders 17, 185–8, 532 strategic change 531–4 structures 203, 205, 206, 531 of suppliers see suppliers symbols of 185, 188 1027 ECSC_Z38.qxd 9/18/04 15:10 Page 1028 1028 General Index power/interest matrices 181–5 PPP (public/private partnerships) 354 predictability 261 preferred access to suppliers 127 preferred access to customers 127 pre-purchase information 458 preservation 510 price-based competitive advantage 252–4 price-based competitive strategies 245–6 price-sensitive customers 245 price wars 253 prices 254, 471 pricing transparency 270 principal–agent model 168–70, 171, 175, 210 prior decisions 564, 567 prioritisation 343 of critical improvement area 524 options 576 Prisoner’s Dilemma 265–6 private companies 22 Private Finance Initiative (PFI) 354 private ownership 178 privatisation 23, 24, 178 problem children 315–17, 471–3 procedural rationality 42 processes 397, 410–11 budgetary 572 cultural 41, 416–17, 564, 581–3 design 122, 123 different processes for different purposes 593–4 direct supervision 411–12 emphasising most important 594 human resources management 455 linear 43 linked 128 managerial 21 market 418–20 performance targets 417–18 personal motivation 413–16 planning 412–13 political 564 procurement 137 resource allocation 564 self-control 413–16 strategy development see strategy development symbolic significance embedded in 528 technology development 487–8 procrastination 608 procurement 137 product/market diversity 280, 281–2, 282–5 performance, diversification and 290–1 related diversification 285–8, 290 unrelated diversification 288–9, 290 productive capabilities 300 productivity, labour 123 products commodity-like 245 complementary offerings 101 corporate social responsibility 193 design 122, 123 development 69, 341, 344–5, 359 diversification 284, 303 diversity see product/market diversity features 97, 458–9, 470 global 405–6 innovation 406 launches 489 life cycles 81, 98, 260, 343, 345 low benefits 254 new markets 346 new uses 346 personalised 459 ranges 82 reliability 458 strategists 406 substitution 82, 132 professional bureaucracies 431–2, 607 professional networks 416 profit-driven organisations 30 profit-maximisation 29 profit pools 141 profitability analyses 361, 364–6 differentiation and 271 new product development and 345 progress of strategy, monitoring 574 project-based structures 408, 409 projects 364 groups 564, 573–6 teams 574 prototypes 226 public endorsement 183 Public Interest Disclosure Act 1998: 195 public ownership 178 public/private partnerships (PPP) 354 public sector 23–6 collaboration 264 competitive strategies 246, 248 corporate governance audits 177 financial control 425 fit 326 local government changes 512–13 parental developers 312 portfolio managers 309 portfolios, balance in 317–18 privatisation 178 purposes 30 rationing 194 stakeholders’ financial expectations 476 strategic alliances 354 strategic business units 242 value-destroying parents 307 see also public services public services 23–6, 124 co-production 356 competition 81 competitive strategies 242 governing bodies 173 performance targeting 418 punctuated equilibrium 28 purchasing processes 458 purposes 17, 164–5 changing 30 communicating 207–11 cultural context see culture different processes for different purposes 593–4 not-for-profit sector 30 of planning systems 572 public sector 30 strategy workshops and project groups 574 symbolic 608 Q quality 343 quasi-markets 428 question marks 315–17, 471–3 questioning 52, 227 questioning received wisdom 570 R R&D see research and development radio, digital 483 railways 427, 428 ranges, products 82 ranking 360, 362 rapid strategy reconstruction 523–6 rare competences 125, 461 rare resources 134, 461 rarity of strategic capabilities 125–7 rational systems, organisations as 43 rationale 358 rationality 42, 44–5, 270 rationing 194 RBV see resource-based views REACH 67 reach, global 260 reactiveness 28 readiness for change 510, 517 real options 361, 366–8 real-time information 463–4 realignment of strategy 507 realised strategy 565–6, 572 realities, organisational 555, 573 reasoning, systematic 43 recipes 199 recognised competences 151 reconciliation 413, 415 reconsidering strategy 574 reconstruction 507, 523–6 recruitment 449 redeployment 449 reduction, costs 124, 523 redundancy of capabilities 120 planning 449 ECSC_Z38.qxd 9/18/04 15:10 Page 1029 General Index re-focusing 524 refreezing 554 regional cultures 197 regulation 199, 295, 413 regulators 176, 454 regulatory frameworks 164 reinforcement 143 reinforcing cycles 433–5 reinterpretation, middle managers 521 reinvention 539 reinvestment 246 related diversification 285–8, 290 related industries 73 relationships 11, 141, 397, 421 centralisation vs devolution 422 corporate governance and 172 external 426–30 financial control 424–5 internal 421–6 inter-organisational 298 intra-organisational 298 management of 287, 481 networks 427–30 outsourcing 426–7 stakeholders 190 strategic alliances 427 strategic control 425–6 strategic planning 423–4 suppliers 122 virtual organisations 430 see also boundaries relative market share 94, 123 relative suitability 360 relevance bridges 521 reliability 458 renewal, rites of 529 reorganisations 437 repeated games 269 replication of activities 389 repositioning 182, 258–9 representation 185 reputations 190 research and development 345 international networks 298–9 strategies 24 resistance to change 416, 504, 531, 532 resource-based views (RBV) 61, 116, 133, 155 resources additional 532 allocation formulae 413 allocation processes 564 allocation routines 580–1, 605 building on central 304 changes, major claims on 185 commitment 90 competences, deploying to create 128 complementary 120 configuration dependence 186 deployment 371–2 financial 118 human see human resources inputs 26 intangible 117–19 integrating 488–9 intellectual capital 118 knowledge, underpinning 134 local 295 major changes market penetration 344 new markets, products and services 282 organisational 531 physical 118 political mechanisms 531–2 rare 134, 461 required 551 strategic capabilities 13, 117–19 strategic position and 17 tangible 117–18, 127–8 technology developments 488 threshold 119–20 tradable 254–6 unique see unique resources respect 430 responsibilities 182, 572 see also corporate social responsibility retaliation 81–2 retention 389 return on capital employed (ROCE) 361, 364–5 returns 361–9, 474 revenue generation 523 revolution 507 rewards 168, 449 Rhine governance model 174 rigidities 127, 156, 416, 527 ‘right’ strategy 572 risks 345, 361, 477 acceptability 369–71 assessments 369–70 corruption 295 diversification to spread 284–5 international 295 investments 474 legal 295 management 170 political 295 regulation failures 295 returns and 474 security 295 sovereign 295 strategic drift 27 substitution 132 ritualisation 539 rituals 202–3, 205, 528–9 rivalries 73–4, 80 robustness 127–31, 433, 458, 461 ROCE (return on capital employed) 361, 364–5 routes, strategy development 566 routine behaviours 202 routines 202, 203, 205, 504, 527–8, 530 routinisation 462 rules 54, 55, 229, 556 Russia 509 S sales 137, 139, 471 satisfaction 183 satisficing 45 SBU see strategic business units scale advantages 304 scale economies see economies of scale scale-intensive developments 479 scale of operations see economies of scale scanning business environment 487–8 constant 230–1, 578 scenarios 65, 74–7, 358, 360, 384, 591 schools 307 science-based developments 479 scope of activities economies of 282 long-term of organisations 280 of strategic change see strategic change of strategic management 15 sector benchmarking 145 sectors 77 environment see environment: industries and sectors security 295, 572 segmentation of markets see markets: segmentation selecting solutions 386 selective attention 226 self-control 413–16 self-interest 190, 310 self-managed teams 408 self-reinforcement 258 selling power, collaboration to increase 262 senior management support, alliances 357 sense making, rites of 529 sense of security 572 sensitisation 608 sensitivity analyses 361, 370, 372–3, 383–4 environmental 55 sensors 406 sequential games 268–9 service-level agreements (SLA) 419 services 137 central 304 commodity-like 245 complementary offerings 101 corporate parents 305 departments 399 diversification 284, 303 features, information management 458–9 1029 ECSC_Z38.qxd 9/18/04 15:10 Page 1030 1030 General Index services (continued) low benefits 254 networks 430 organisations 23, 147 reliability 458 substitution 132 servicing market segments 94 shapers of context 451 of society 190–1 share issues 370 shareholder value analyses (SVA) 361, 368–9 shareholders 168–9, 171–2, 180, 189–90, 476–7 shareholdings 171–2 sharing experience 134 sharing knowledge see knowledge ‘short’ studies 607 short-term wins 537–8, 540 short-termism 171, 181, 189–90, 425 side payments 183 signals, misleading 261 simple conditions 590–1 simple configurations 431–2 simple rules 54, 55, 229 simplification 226 simultaneous games 265–7 single technologies, tying developments to 484 situation dependency 127 size dominance 256 skills 310, 401–2, 430 see also competences; core competences SLA (service-level agreements) 419 small businesses 22 social auditing 191 social costs 477 social environment 65, 180 social interaction 21 social legitimacy 180 social networks 589 social processes 578 social responsibility 165, 188, 191–5 social structures 295 socialisation 154 socially responsible investment (SRI) 190 sociocultural influences 66, 68 soft side of human resource management 451 solutions 386, 574 sourcing efficiencies 69 global 297 sovereign risks 295 spaces, strategic 91 specialisation 446 Specialised Cultures Test 410 specific views 578 speculation 343 speculative motives for acquisitions 351 speed 89 speed of change 64, 420 spirals of interaction 154 sponsorship 190 spreading knowledge 449 SRI (socially responsible investment) 190 stable environments 564 stage-gate processes 488 staged international expansion 297 stakeholders 7–8, 61, 165 accountability to 168 definition 179 expectations 17, 9, 30, 44, 179–81, 343, 585 acquisitions 351 conflicts of 180–1 diversification and 285 ethics 190 financial 468, 476–7 focus strategies conflicting with 251 power 185–8 power/interest matrices 181–5 stakeholder mapping 181–5 external 304 influence 584 interests 190, 585 mapping 181–5, 358, 370 power 17, 185–8, 532 reactions, strategy development 361, 370–1 status 584 strategic change 522 theory 210 turnaround strategies support 524 standardisation 70, 256–8, 300–1, 412, 416 standards, corporate parents 304 stars 315–17, 473 state-controlled enterprises 23–6 static conditions 590–1 static markets 344, 371 status 185, 186 stereotypes 189, 431–3 stifling ideas 573 stock reduction 471 stockouts 412 stories 203, 205, 529 straight-through information 464 strategic advantage through technology development 478 strategic alliances 340, 359, 397 forms 354–6 motives for 353–4 public sector 354 relationships 427 successful, ingredients of 357 trust 357 strategic ambitions 304 strategic business units (SBU) 11–12, 78–9, 240, 241–2, 461–2 strategic capabilities 13, 17, 30, 61, 97–8, 116–17, 292 advantages over time 133 alliances 356 causally ambiguous 134 competitive advantages and 118 complex 134 cost efficiency 121–4 definition 119 diagnosing 136 activity maps 141–4 benchmarking 144–8 strengths 148–50 value chains 136–40 value networks 140–1 weaknesses 148–50 durability 133 feasibility 357 foundations 117 resources and competences 117–19 threshold capabilities 119–21 unique resources and core competencies 121 information management 458–62 managing 150 building dynamic capabilities 153–6 limitations 150–1 people for capability development 152–4 stretching and adding capabilities 151–2 organisational knowledge 133–6 rarity 125–7 suitability 358 sustainable competitive advantages 124–5 dynamic capabilities 132–3 non-substitutability 132 rarity of strategic capabilities 125–7 robustness of strategic capabilities 127–31 value of strategic capabilities 125 technology 482–5 terminology 119 value 125 strategic change 49, 503–5 blockages 574 consultants 522 context 504, 506, 508–11 diagnosing situation 504, 505–15 forcefield analyses 514–15 forces blocking or facilitating 504, 506 ideas lens 557 implementing 577 incremental 588 key elements in managing 505 levers for management 522–3 challenging the taken-forgranted 526 change tactics 535–8 communicating change 534–5 job losses and de-layering 536–7 monitoring change 534–5 organisational routines 527–8, 530 potential pitfalls 539–41 power and political processes 531– ECSC_Z38.qxd 9/18/04 15:10 Page 1031 General Index strategic change (continued) symbolic processes 528–30, 532, 539 timing 536 turnaround 523–6 visible short-term wins 537–8 middle managers 521 outsiders’ roles 522 roles in management 519–22 scope 507, 510, 517 stakeholders 522 strategic leadership 504, 519–20 styles of management 515–18 types 506–7 strategic choices 3, 16, 18–19, 235–7 behaviour and 451 business-level strategy 239–77 corporate strategy 280–337 directions and methods of development 339–81 see also strategy selection strategic competence based on experience 592 strategic concepts 16 strategic control 15, 425–6, 432, 464–6 strategic customers 96, 98, 248 strategic decisions 6–11, 42, 576–7 strategic developments 6, 14, 468, 471–6 strategic direction 567 strategic drift 27–8, 48, 127, 227, 433, 539, 564, 582, 588–9 strategic fit 7, 116 strategic focus 366 strategic gaps 99–102 strategic groups 65, 89–93, 99, 358 strategic intent 13, 303, 534 see also vision strategic issues, thinking through 41 strategic leadership 504, 519–20, 564, 606–7 strategic management 6, 42 challenges 26–7 changing purposes 30 contemporary themes affecting strategy development 28–31 e-commerce 29–30 internationalisation 28–9 knowledge and learning 31 strategic drift 27–8 strategy lenses 31–3 contexts 21–2 manufacturing organisations 23 multinational corporations 22–3 not-for-profit sector 26 public sector 23–6 service organisations 23 small businesses 22 voluntary sector 26 incrementalist view 579 meaning 15–20 scope 15 strategic choices 18–19 strategic position 17–18 strategy development processes 19–20 strategy into action 19 strategic messages 148 strategic milestones 571 strategic planning 423–4, 464, 564, 566–7, 568–73, 603–4 strategic position 3, 16, 17–18, 43, 48 strategic shapers 425 strategic spaces 91, 93 strategic themes, higher order 143 strategy in annual reports 14 definition 9, 13–15 as design 32, 41–5 determination 569 emergent 20 as experience 32, 45–9 as ideas 32, 49–55 intended 20 levels 11–12 nature 6–15 orthodox language of 44 planning 45 reviewing 608–9 structure following 436 as study subject 20–1 thinking through 45 vocabulary of 12–15 in websites 14 strategy approach to change management 519 strategy clock 242–52, 461–2 strategy consultants 564, 576–7, 604 strategy development 564 Bower–Burgelman explanation 580 challenges and implications learning organisations 588, 589–90 managing strategy development processes 593–4 strategic drift 588–9 uncertain and complex conditions 590–2 cultural explanation 581 directions 340–1, 340–1, 360 consolidation 342–3, 359 current position, protecting and building on 341–4 diversification 346–7, 359 market development 346, 359 market penetration 344, 359 product development 344–5, 359 TOWS matrix 347–8 emergent strategy 564–8, 578 cultural processes 581–3 logical incrementalism 578–80 organisational politics 584–6 resource allocation routines 580–1 intended strategy 564–8 levels 594 methods 19, 340, 348, 360 acquisitions 349–53, 359 internal development 348–9, 359 joint developments 359 mergers 349–53, 359 strategic alliances 353–7, 359 motives 340 multiple processes 564, 586–8 perceptions of 586–7 political view 584–6 processes 19–20, 565 configurations 587 learning organisations 589–90 logical incrementalism 578–80 managing 593–4 multiple processes 564, 586–8 organisational politics 606 strategic leadership 606–7 strategic planning systems 568–73, 603–4 roles 594 routes 566 success criteria 19, 340 acceptability 357, 361–71 cost-benefit 361, 366, 367 feasibility 357, 371–5 financial feasibility 371 financial ratios 361, 370 profitability analyses 361, 364–6 real options 361, 366–8 resource deployment 371–2 return 361–95 risk 361, 369–71 sensitivity analyses 361, 370 shareholder value analyses (SVA) 361, 368–9 stakeholder reactions 361, 370–1 suitability 357, 358–61 in uncertain and complex conditions 590–2 strategy implementation 574 strategy into action 3, 16, 19, 391–4 designing strategic action 551–2 enabling success 445–502 experience and strategic action 552–5 ideas 555–7 inertia 553–4 managing strategic change 503–50 middle management 554–5 organising for success 395–444 strategy lenses see design lens; experience lens; ideas lens; lenses strategy project groups 564, 573–6 strategy selection cultural processes, role of 385–6 design view 383–4 by doing 384–5 experience and 384–7 evolution and 387–90 ideas lens 387–90 institutionalisation of strategies 386–7 logical incrementalist view 384–5 mimicry 386–7 political processes, role 385–6 see also strategic choices 1031 ECSC_Z38.qxd 9/18/04 15:10 Page 1032 1032 General Index strategy workshops 384, 386, 564, 573–6, 604 strengths 17, 49, 148–50, 347–8 stretch 8–9 stretching 116, 151–2 strongholds 260 structural design 397 structures costs 470 designing 551 human resources management 455 industries 73–4 power, reconfiguration 531 strategy and 436 types 397–8 choosing 408–10 functional 398–9, 409 holding company 402, 409 matrix 402–4, 409 multidivisional 399–402, 409 project-based 408, 409 team-based 406–8, 409 transnational 404–6, 409 structuring 19, 464–6 subcontracting 356 subcultures 165, 201 subdividing 437 subnational cultures 197 subsidisation 284 substantive rationality 42 substitute industries 99 substitution 78, 82–4, 132, 262, 465, 479–80 subsystems 531, 578, 580 subversion 527 success alliances 357 competitive 156 criteria see strategy development enabling see enabling success factors see critical success factors hypercompetitive strategies 260–1 organising for see organising for success succession planning 449 ‘sufficient feel’ 314 suitability 357, 358–61 sunk costs 127 suppliers accredited 262 buyers, acquisition by 84 competition with buyers 84, 85 concentration 84 control 470 corporate social responsibility 193 environmental influences 67 liquidity concerns 477 loyalty 81 motivation 470 power of 84–5, 465, 470, 480 preferred access to 127 relationships 122, 426 selection 470 as stakeholders 180 technological developments dominated by 478–9 supply chains 459 supply channels 81 supply costs 122–3 supply-side issues 481 support 389, 413–15 support activities 137 supporting industries 73 supranational cultures 197 survival 389 sustainability of competitive advantage 241, 252–8 sustainable differentiation 254 sustained advantages 124 SVA (shareholder value analyses) 361, 368–9 switching 84, 186, 246, 256 SWOT 102, 148–50, 347, 359, 362 symbolic processes 528–30, 532, 539 symbolic purposes 608 symbolic signalling of time frames 536 symbols 504 cultural web 203, 205, 206 definition 528 political mechanisms 531, 532 of power 185, 188 synergistic-related diversification 568 synergies 133, 282, 287, 310 synergy managers 309, 310–11, 423 systematic thinking and reasoning 43 systems 528, 531 T tacit knowledge 134, 154, 461 tactics 505, 535–8 take-overs see acquisitions; mergers taken-for-grantedness 45, 196, 200, 202, 227, 527, 581 talent spotters 406 tangible costs 366 tangible resources 117–18, 127–8 target audiences 482 target markets 524 targets 168, 417–18 tariff barriers 295 taskforces 408 team-based structures 406–8, 409 teams 452 technical standardisation 70 techniques 43 technological change 583 technological environment 65, 180 technological paths 478–9 technology acquiring 484–5 competitive situation 479–81 convergence 79 core competences 482–4 development 137, 478–9, 484–8 environmental influences 66, 68 implications to managers 488 innovation 133, 481–2, 483 life cycles 485 strategic capability 482–5 see also IT telecommunications 475 teleworking 427–9 temporary competitive advantages 87, 261 tension, adaptive 53–5, 229, 557 territory managers 406 thinking 43, 569 third-party marketplaces 463 threats 17, entry 81–4, 347–8 threshold capabilities 119–21, 122 threshold competences 119, 120 threshold product features 97 threshold resources 119–20 threshold technologies 484 threshold values 209 time available for change 510 costs spread over 348 frames, symbolic signalling of 536 pacing 52 strategic change 517 strategy development processes differing over 586 timing, strategic change 536, 551 tipping points 482 tools 43, 44, 607–8 top-down strategic change 504, 540–1 top management roles 594 Total Shareholder Returns (TSR) 369 TOWS matrix 347–8, 359 trade creditors 176 trade-offs 120, 143–4, 152 training 304 training and development 152–3, 416, 449 transactional leaders 519 transfer prices 419 transferability, competences 125–7 transferable managerial capabilities 304 transformational change 27, 28, 507 transformational models 463–4 transformations 455, 466 transnational structures 404–6, 409 transport infrastructures 295 triggering points 386 trust 134, 357, 430 trust services 463 TSR (Total Shareholder Returns) 369 turnaround strategies 504, 507, 522, 523–6 turnkey contractors 429 two-tier boards 172 U uncertainty 10, 28, 397, 578, 590–2 see also causal ambiguity ECSC_Z38.qxd 9/18/04 15:10 Page 1033 General Index uncontrolled and uncoordinated efforts 540 understanding the whole 572 understood competences 151 unfreezing 553, 556 unique capabilities 298 unique competences 406 unique resources 13, 119, 121, 125, 126, 430 uniquely competent individuals 449 unit costs 123–4, 471 university–business collaboration 263 unprofitability, product development 345 unrealised strategy 566 unrelated diversification 288–9, 290 unsuitability 359–60 urgency 540 V value 343 activities 139–40 benchmarking 147–8 creation 141, 468 customers see customers drivers 468, 469–71 managing for 369, 468–71, 472 supply costs 122 value added 280, 282 acquisitions 353 internationalisation 292, 295, 313–14 value-adding corporate parents 303–5 value chains 136–40, 358, 462 importance of concept 469 integration 463 international locations 297 service specialists 463 value criteria core competences 128 value-destroying corporate parents 305–8 value networks 140–1, 180 international 297–300 value of strategic capabilities 125 value trap businesses 322 valued competences 151 values 7–9, 199, 207–9 variety, importance 50–1 vertical integration 285–6 vicious circles 433 virtual communities 463 virtual organisations 430 virtuous circles 433 visible backing 522 visible dynamic capabilities 133 visible short-term wins 537–8 vision 13, 229 change 534, 540, 541 networks 430 statements 209 see also strategic intent vocabulary of strategy 12–15 volatility 368, 557 voluntary sector 26 W ‘watchdogs’ 176 weaknesses 17, 148–50, 152, 347–8 welfare provisions 190 what if? analyses 361, 370, 383–4 whistleblowing 195 windows of opportunity 536 wine industry 255 withdrawal 343 work processes, standardisation 412 working capital 123, 470 working conditions 193 workshops see strategy workshops Y yield 123 1033 ... Balogun and V Hope-Hailey with G Johnson and K Scholes, Exploring Strategic Change, 2nd edition, 2004; ISBN: 0-273-68327-6 l G Johnson and K Scholes (editors), Exploring Public Sector Strategy,. .. Ambrosini with G Johnson and K Scholes, Exploring Techniques of Analysis and Evaluation in Strategic Management, 1998; ISBN: 0-13-570680-7 l T Grundy with G Johnson and K Scholes, Exploring Strategic... regularly for updates and additional material and ask if your tutor has a copy of the Exploring Corporate Strategy videos (see details below) Teaching and learning resources Exploring Corporate Strategy