There’s a different look and feel to this edition of the book. It starts with a more descriptive and contemporary title—Crafting and Executing Strategy: The Quest for Competitive Advantage—that conveys the central thrust of basic courses in Strategic Management and Competitive Strategy as well as the changing paradigms in the discipline. The new face of this edition includes modified chapter organization, streamlined chapter presentations, more coverage of some topics and less coverage of others, and an all-new and timely addition of the chapter titled, “Strategy, Ethics, and Social Responsibility.” The fundamental character that has driven the text’s success over the years remains firmly intact. The treatment of basic concepts and analytical tools is solidly mainstream, very much in step with theory and practice, and exemplified with appropriate examples for the fresher and the experienced. Additionally, there is a fresh line-up of the best and most current cases available within the context in which this course shall be delivered and absorbed. Strategy is much context-specific, and understanding its multi-faceted nuances requires that students relate to the environment in which it is created. For the exclusive needs of Indian and SAARC students, there is an altogether new collection of cases in Part 3. There is now a comprehensive package of support material for working in the classroom. It also provides flexibility to the instructors in custom-tailoring their courses to particular needs and preferences. A Text with On-Target Content
In our view, for a senior/MBA-level strategy text to qualify as having on-target content, it must:
explain core concepts and provide examples of their relevance and use by actual companies.present understandable explanations of essential analytical tools, how they are used, and where they fit into the managerial process of crafting and executing strategy. be up-to-date and comprehensive, with solid coverage of the landmark changes in competitive markets and company strategies being driven by globalization and Internet technology. focus squarely on what every student needs to know about crafting, implementing, and executing business strategies in today’s market environments. contain fresh, value-adding cases that feature interesting products and companies, illustrate the important kinds of strategic challenges managers face, embrace valuable teaching points, and spark student interest. This new edition measures up on all five of the above criteria. Chapter discussions go straight to what students really need to know. Despite addition of a new 33-page chapter, the 13 chapters of this edition are 50 pages shorter than the 13 chapters of the previous edition. Our explanations of core concepts and analytical tools are, however, covered in enough depth to make them understandable and usable, the rationale being that a shallow explanation carries little punch and has almost no pedagogical value. We have chosen current examples to which students can easily relate. We have striven to incorporate all relevant state-of-the-art research that is pertinent in a good and solid course in Strategic Management. We are fortunate in assembling a fine lineup of interesting, relevant, and challenging cases to drive home valuable lessons in the whys and hows of successfully crafting and executing strategy. Organization, Content, and Features of the Text Chapters The 13 chapters in this edition reflect not only the normal updating and shifts in topical emphasis and coverage but also a modestly different organization of chapters and topics. There’s a much improved two-chapter introduction to the concept of strategy and the managerial process of crafting and executing strategy. Chapters 3 and 4 lay out the concepts and tools of analyzing a company’s external environment and internal resources and capabilities. There is a four-chapter module on a single-business company’s strategy alternatives and a single chapter (condensed from two chapters in prior editions) covering multibusiness diversification. The chapter on Internet strategy that was a prominent feature in the 12th and 13th editions has been dropped; now that Internet technology and use of the Internet have become standard strategy components at most companies worldwide, we think Internet strategy no longer justifies separate chapter-length treatment. However, the material in this deleted chapter that continues to be relevant has been included as prominent parts of Chapters 3, 4, and 6. The all-new Chapter 10, “Strategy, Ethics and Social Responsibility,” fills a much-needed gap in coverage and can be assigned at any of several places in the course. We continue with our three-chapter coverage of what managerial actions underlie effective strategy execution. In all the chapters, we have diligently kept the presentations aligned with latest developments in the theory and practice of strategic management. We have incorporated the latest advances in the conceptual underpinning of strategic management, clearly describing the changes in business strategies, value chain operations, business practices, and competitive conditions under conditions of globalization and Internet technology applications by companies worldwide. The chapter discussions mirror the growing scope and strategic importance of collaborative alliances, the continuing spread of high-velocity change to more industries and company environments, and the recently heightened imperatives of linking strategy and operating practices to what is ethically and socially acceptable. Much is made of the need to match a company’s strategy both to its external market circumstances and to its internal resources and competitive capabilities. The resource-based view of the firm is prominently integrated into the discussion of crafting both single-business and multibusiness strategies. The three-chapter module on executing strategy embraces a strong resource-based perspective, stressing the importance of intellectual capital, core competencies, and competitive capabilities. The following rundown summarizes the noteworthy chapter features and topical emphasis in this edition: Chapter 1 has been extensively rewritten and revised to focus on the central questions of “What is strategy?” and “Why is it important?” It defines what is meant by the term strategy and describes the identifying elements of a company’s strategy, why a company’s strategy tends to change and evolve over time, why a company’s strategy is partly planned and partly reactive, and why management efforts to craft a company’s strategy entail a quest for competitive advantage. In addition, there are sections discussing the importance of ethical considerations in crafting strategy, how a company’s strategy relates to its “business model,” and why good strategy+good strategy execution=good management. The role of this first chapter is to give readers a solid grasp of what the term strategy means, pique their interest, and convince them that the ins and outs of crafting and executing a winning strategy are things every business student should know. We intend for this chapter to be a perfect accompaniment for a first day’s lecture on what the course is all about and why it matters.
Chapter 2 delves into the managerial process of actually crafting and executing a strategy—it makes a great assignment for the second day of class. This chapter is structured around the five-step managerial process of crafting and executing strategy: (1) forming a strategic vision of where the company is headed and why, (2) setting objectives and performance targets that measure the company’s progress, (3) crafting a strategy to achieve these targets and move the company toward its market destination, (4) implementing and executing the strategy, and (5) monitoring progress and making corrective adjustments as needed. This chapter is also introductory in nature and presents such core concepts as strategic visions and business missions, strategic versus financial objectives, strategic plans, and strategic intent. There’s a section underscoring that a company’s strategic plan is a collection of strategies devised by different managers at different levels in the organizational hierarchy. We’ve taken pains to explain why all managers are on a company’s strategy-making, strategy-executing team, why managers are well advised to make the concepts and techniques of strategic management a basic part of their toolkit, and why the best companies want their personnel to be true “students of the business.” The chapter winds up with a section on corporate governance.
Chapter 3 presents the now-standard tools of industry and competitive analysis and makes a case for why it is important for management to tailor strategy to fit the circumstances of a company’s industry and competitive environment. The standout feature of this chapter is a dramatically enhanced and more visual presentation of Michael E. Porter’s five-forces model of competition—we think it is the clearest, most compelling five-forces model discussion of any text in the field. Globalization and Internet technology are treated as potent driving forces capable of reshaping industry competition—their roles as change agents have become factors that most companies in most industries must reckon with in forging winning strategies.
Chapter 4 establishes the equal importance of doing solid company situation analysis as a basis for matching strategy to organizational resources, competencies, and competitive capabilities. The roles of core competencies and organizational resources and capabilities in creating customer value and helping build competitive advantage are center stage in the discussions of company resource strengths and weaknesses. SWOT analysis is cast as a simple, easy-to-use way to assess a company’s resources and overall situation. There is solid coverage of the now-standard tools of value chain analysis, benchmarking, and competitive strength assessments—all of which, we believe, provide insight into a company’s relative cost position and market standing vis-à-vis rivals. There’s solid coverage of how company implementation of Internet technology applications is altering company and industry value chains and the performance of particular value chain activities.
Chapter 5 deals with a company’s quest for competitive advantage and is framed around the five generic competitive strategies: low-cost leadership, differentiation, best-cost provider, focused differentiation, and focused low-cost.
Chapter 6 extends the coverage of the previous chapter and deals with what other strategic actions a company can take to complement its choice of a basic competitive strategy. The chapter features sections on what use to make of strategic alliances and collaborative partnerships, what use to make of mergers and acquisitions in strengthening the company’s competitiveness, when to integrate backward or forward into more stages of the industry value chain, the merits of outsourcing certain value chain activities from outside specialists, whether and when to employ offensive and defensive moves, and the different ways a company can use the Internet as a distribution channel to position itself in the marketplace.
Chapter 7 explores a company’s strategy options for expanding beyond its domestic boundary and competing in the markets of either a few or a great many countries—options ranging from an export strategy to licensing and franchising to multicountry strategies to global strategies to heavy reliance on strategic alliances and joint ventures. Four strategic issues unique to competing multinationally are given special attention: (1) whether to customize the company’s offerings in each different country market to match the tastes and preferences of local buyers or whether to offer a mostly standardized product worldwide; (2) whether to employ essentially the same basic competitive strategy in the markets of all countries where it operates or whether to modify the company’s competitive approach country-by-country as may be needed to fit the specific market conditions and competitive circumstances it encounters; (3) locating production facilities, distribution centers, and customer service operations to maximum competitive advantage; and (4) efficient cross-border transfer of a company’s resource strengths and capabilities to build competitive advantage. There’s also coverage of concepts of profit sanctuaries and cross-market subsidization, the special problems associated with entry into the markets of emerging countries; and strategies that local companies in emerging countries can use to defend against the invasion of opportunity-seeking, resource-rich global giants.
Chapter 8 looks at the broad strategy options for companies competing in five different industry environments: (1) emerging industries of the future; (2) turbulent high-velocity markets; (3) mature, slow-growth industries; (4) stagnant and declining industries; and (5) fragmented industries. And it covers the strategy-making challenges that confront companies pursuing rapid growth, companies in industry-leading positions, companies in runner-up positions, and crisis-ridden companies. These nine situations merit special attention in strategy courses because of their widely representative nature and because they reinforce the points made in Chapters 3 and 4 that winning strategies have to be matched both to industry and competitive conditions and to company resources and capabilities.
In this edition we have combined our two-chapter treatment of diversification into a single streamlined but meaty chapter. The treatment of diversification strategies for multibusiness enterprises in Chapter 9 begins by laying out the various paths for becoming diversified, explains how a company can use diversification to create or compound competitive advantage for its business units, and examines the strategic options an already-diversified company has to improve its overall performance. In the middle part of the chapter, the analytical spotlight is on the techniques and procedures for assessing the strategic attractiveness of a diversified company’s business portfolio—the relative attractiveness of the various businesses the company has diversified into, a multi-industry company’s competitive strength in each of its lines of business, and the strategic fits and resource fits among a diversified company’s different businesses. The chapter concludes with a brief survey of a company’s four main post-diversification strategy alternatives: (1) broadening the diversification base, (2) divesting some businesses and retrenching to a narrower diversification base, (3) restructuring the makeup of the company’s business lineup, and (4) multinational diversification.
Post-Enron and WorldCom, there is a cry that corporate and business strategies should pass the test of moral scrutiny. Chapter 10 examines this controversial issue. Students usually acknowledge that a company and its personnel have a legal duty to obey the law and play by the rules of fair competition. But today’s students seem to be much less clear on (1) whether a company has a duty to operate according to the ethical norms of the societies in which it operates and (2) whether a company has a duty or obligation to contribute to the betterment of society independent of the needs and preferences of the customers it serves. Is it in the best interests of shareholders for a company to operate ethically and/or to operate in a socially responsible manner? The focus of this chapter is squarely on what link, if any, there should be between a company’s efforts to craft and execute a winning strategy and its duties to (a) conduct its activities in an ethical manner and (b) demonstrate socially responsible behavior by being a committed corporate citizen and attending to the needs of non-owner stakeholders—employees, the communities in which it operates, the disadvantaged, and society as a whole. The chapter reflects the very latest in the literature and contains a section on moral, immoral, and amoral managerial behavior, a section addressing “the business of business is business, not ethics” kind of thinking, a section on the concept of social responsibility, and sections that explore the business case for ethical and socially responsible behavior. The chapter has been written as a stand-alone chapter that can be assigned in the early, middle, or late part of the course.
The three-chapter module on executing strategy (Chapters 11–13) is anchored around a pragmatic, compelling conceptual framework: (1) building the resource strengths and organizational capabilities needed to execute the strategy in competent fashion; (2) allocating ample resources to strategy-critical activities; (3) ensuring that policies and procedures facilitate rather than impede strategy execution; (4) instituting best practices and pushing for continuous improvement in how value chain activities are performed; (5) installing information and operating systems that enable company personnel to better carry out their strategic roles proficiently; (6) tying rewards and incentives directly to the achievement of performance targets and good strategy execution; (7) shaping the work environment and corporate culture to fit the strategy; and (8) exerting the internal leadership needed to drive execution forward. The recurring theme of these three chapters is that executing strategy entails figuring out the specific actions, behaviors, and conditions that are needed for a smooth strategy-supportive operation and then following through to get things done and deliver results—the goal here is to ensure that students understand the strategy-implementing/strategy-executing phase is a make-things-happen and make-them-happen-right kind of managerial exercise.
Our priority has been to ensure that the 13 chapters of text hit the bull’s-eye with respect to content and represent the best thinking of both academics and practitioners. All the chapters contain enough relevant examples to make the presentation convincing, pertinent, and worthwhile to readers preparing for careers in management and business. The boxed Illustration Capsules in each chapter relate stories aimed at both informing students and persuading them that the discipline of strategy merits their rapt attention. We believe our enthusiasm for and dedication to the subject matter will come across to readers. The Case Collection The cases included in this edition are the latest and best-suited for our requirements. The lineup is flush with examples of strategy in action and valuable lessons for students in the art and science of crafting and executing strategy. And there’s a good blend of cases from a length perspective. Most cases involve high-profile companies, products, or people that students will have heard of, know about from personal experience, or can easily identify with. There are cases on companies in the ‘new economy’, plus several others that will provide students with insights into the special demands of competing in industry environments where technological developments are an everyday event, product life cycles are short, and competitive maneuvering among rivals comes fast and furious. There are several cases that involve situations where company resources and competitive capabilities play as large a role in strategy-making, strategy-implementing scheme of things as industry and competitive conditions do. Some cases concern companies spread across the globe, or about globally competitive industries, and/or cross-cultural situations. These cases, in conjunction with the globalized content of the text chapters, provide ample material for tightly linking the study of crafting and executing strategy to the ongoing globalization of the world economy. A few cases deal with the strategic problems of family-owned or relatively small entrepreneurial businesses. For most cases, students can do further research on the Internet. The collection of assorted cases in our opinion is quite appealing, eminently teachable, and very suitable for drilling students in the use of the concepts and analytical treatments in various chapters. A WORD ABOUT PART THREE We have added a new Part 3 to this edition, with the students from the Indian sub-continent in mind. These cases are of companies from various industry backgrounds, and in various stages of evolutionary process. In choosing the contextually-rich cases, a deliberate attempt has been made to balance between: The global and the local business environments;Companies from emerging and developed economies;The large companies and the small firms;The ‘new’ economy types and the ‘old’ economy types.We have taken care to include cases that illustrate and debate issues such as: wrong-doings within the organization (e.g. Boeing), how small companies from small nations can globalize (Giant Bicycles), how the bottom-of-the-pyramid strategies are executed (Mumbai Dabbawallas, and Nirma), country-level leadership (BPO-ITES Industry in India), turnaround management (GTB), public disinvestment (BALCO), transformational change management and leadership styles (ICICI Bank), etc. Arthur A. Thompson (athompso@cba.ua.edu)
A. J. Strickland (astrickl@cba.ua.edu)
John E. Gamble (jgamble@usouthal.edu)
Arun Kumar Jain (arunjain@iiml.ac.in) |
2006
Tata McGraw-Hill