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Overview

Fred R. David's revision of his popular text gives students of all levels a thorough and interesting introduction to strategic management — one that will show you the value and the excitement of the field. Now with a greater emphasis on the use of technology and international strategic management, this eighth edition includes fascinating new cases, a useful model, handy matrices, and much more:

  • A new box on e-commerce appears in every chapter
  • A new Cohesion Case featuring America Online illustrates key concepts at the end of each chapter
  • Up-to-date international coverage has been integrated throughout the text
  • Over 50 Experiential Exercises that help you learn new management skills
  • A practical — not theoretical — orientation that shows you how to apply what you're reading about
  • Available with "Mastering Strategy" — the most extensive cross-platform business education resource in the world
  • MYPHLIP — Prentice Hall's industry standard Web gives you one-click access to all of the resources created by our award-winning team of educators.
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Editorial Reviews

Booknews
A textbook that meets all AACSB guidelines for the business policy and strategic management course at both the graduate and undergraduate level. Pivots on the themes that global factors affect virtually all strategic decision, that information technology is a vital strategic management tool, and that preserving the natural environment is a vital strategic issue. Incorporates changes in the business climate, new research, and updated examples since the previous edition in 1997 (first in 1991). Also new is an associated World Wide Web site with a range of resources. The text itself comprises 350 pages, after which over 500 pages of cases are presented in separately numbered pages; the arrangement puts the index inconveniently in the middle of the volume. Annotation c. by Book News, Inc., Portland, Or.
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Product Details

  • ISBN-13: 9780130269959
  • Publisher: Pearson
  • Publication date: 11/14/2000
  • Edition description: Older Edition
  • Edition number: 8
  • Pages: 768

Read an Excerpt

PREFACE:

PREFACE

The new millennium has ushered in a radically different and more complex business world than it was just two years ago when the previous edition of this text was published. An avalanche of e-commerce has changed the nature of business to its core. European companies purchased hundreds of American companies. Downsizing, rightsizing, reengineering, and countless divestitures, acquisitions, and liquidations permanently altered the corporate landscape. Thousands of firms globalized, and thousands more merged in the last two years. Thousands prospered, and yet thousands more failed. Many manufacturers became e-commerce suppliers, and many rival firms became partners. Long-held competitive advantages have eroded, and new ones have formed. Both the challenges and opportunities facing organizations of all sizes today are greater than ever.

Our mission in preparing the eighth edition of Strategic Management was "to create the most current, well-written business policy textbook on the market—a book that is exciting and valuable to both students and professors." To achieve this mission, every page has been revamped, updated, and improved. The prior Chapter 10 titled "International Strategic Management" has been replaced with every chapter now comprising 20 percent new global content. There is a new E-commerce Theme permeating each chapter in this edition. Chapter 2 in the prior edition becomes Chapter 5 in this edition. New strategic-management research and practice are incorporated throughout the chapters, and hundreds of new examples abound. There is a new Cohesion Case on America Online (AOL)—2000. A wonderful selection of newcases include such companies as eBay, E*Trade, Amazon.com, Compaq Computer Corporation, First Union Corporation, and Wachovia Corporation. The time basis for all cases included in this edition is to 2000, representing the most up-to-date compilation of cases ever assembled in a business policy text.

SPECIAL NOTE TO PROFESSORS

This textbook meets all AACSB guidelines for the business policy and strategic management course at both the graduate and undergraduate level. Previous editions of this text have been used at more than five hundred colleges and universities. Prentice Hall maintains a separate Web site for this text at www.prenhall.com/davidsm. The author maintains the Strategic Management Club Online Web site at www.strategyclub.com. Membership is free to both professors and students.

Although structure of this edition parallels the last, dramatic improvements have been made in readability, currentness, and coverage. In keeping with the mission "to become the most current, well-written business policy textbook on the market," every page has undergone rethinking and rewriting to streamline, update, and improve the caliber of presentation. A net result of this activity is that every chapter is shorter in length, and there are now nine chapters instead of ten. New concepts and practices in strategic management are presented in a style that is clear, focused, and relevant.

CHAPTER THEMES

Three themes permeate all chapters in this edition and contribute significantly to making this text timely, informative, exciting, and valuable. A new boxed insert for each theme and substantial new narrative appear in each chapter. The three themes follow.

1. Global Factors Affect Virtually All Strategic Decisions
The global theme is greatly enhanced in this edition because doing business globally has become a necessity, rather than a luxury, in most industries. Nearly all strategic decisions today are affected by global issues and concerns. For this reason, the previous Chapter 10 on "International Strategic Management" has been replaced by substantial new global coverage in each chapter. There is growing interdependence among countries and companies worldwide. The dynamics of political, economic, and cultural differences across countries directly affect strategic management decisions.

2. E-Commerce Is a Vital Strategic Management Tool
A new e-commerce theme is deeply integrated throughout the chapters in response to immense e-commerce opportunities and threats facing organizations today. Almost all products can now be purchased over the Internet. Business-to-business e-commerce is ten times greater even than business-to-consumer e-commerce. Accelerating use of the Internet to gather, analyze, send, and receive information has changed the way strategic decisions are made. Since the last edition, literally millions of companies have established World Wide Web sites and are conducting e-commerce internationally.

3. Preserving the Natural Environment Is a Vital Strategic Issue
Unique to strategic-management texts, the natural environment theme is strengthened in this edition in order to promote and encourage firms to conduct operations in an environmentally sound manner. Countries worldwide have enacted laws to curtail firms from polluting streams, rivers, the air, land, and sea. Environmental concerns are a new point 'of contention in World Trade Organization (WTO) policies and practices. The strategic efforts of both companies and countries to preserve the natural environment are described in this edition. Respect for the natural environment has become an important Concern for consumers, companies, society, and the AACSB.

TIME-TESTED FEATURES

This edition continues many of the special time-tested features and content that have made this text so successful over the last decade. Trademarks of this text strengthened in this edition are as follows:

Chapters: Time-Tested Features

  • The text meets AACSB guidelines which support a practitioner orientation rather than a theory/research approach. This text supports that effort by taking a skills-oriented approach to developing a mission statement, performing an external audit, conducting an internal assessment, and formulating, implementing, and evaluating strategies.
  • The global theme permeating all chapters couches strategic-management concepts in a global perspective.
  • A simple, integrative strategic-management model appears in all chapters and on the inside front cover of the text.
  • A Cohesion Case (America Online—2000) appears after Chapter 1 and is revisited at the end of each chapter. This case allows students to apply strategic-management concepts and techniques to a real organization as chapter material is covered. This integrative (cohesive) approach readies students for case analysis.
  • End-of-chapter Experiential Exercises effectively apply concepts and techniques in a challenging, meaningful, and enjoyable manner. Eighteen exercises apply text material to the Cohesion Case; ten apply textual material to a college or university; another ten send students into the business world to explore important strategy topics. The exercises are relevant, interesting, and contemporary.
  • Excellent pedagogy, including Notable Quotes and Objectives to open each chapter, and Key Terms, Current Readings, Discussion Questions, and Experiential Exercises to close each chapter.
  • Excellent coverage of business ethics aimed at more than meeting AACSB standards.
  • Excellent coverage of strategy implementation issues such as corporate culture, organizational structure, marketing concepts, and financial tools and techniques.
  • A systematic, analytical approach presented in Chapter 6, including matrices such as the TOWS, BCG, IE, GRAND, SPACE, and QSPM.
  • The chapter material is again published in four color.
  • The Web site www.prenhall.com/davidsm provides chapter and case updates, an online Study Guide, and support materials.

Cases: Time-Tested Features

  • The 2000 timeframe for cases offers the most current set in any business policy text on the market.
  • The cases focus on well-known firms in the news making strategic changes. All cases are undisguised and most are exclusively written for this text to reflect current strategic-management problems and practices.
  • The cases feature a great mix of small business, international, and not-for-profit firms organized conveniently by industry.
  • Almost all cases provide complete financial information about the firm and an organizational chart.
  • A split-paperback version including only cases is available.
  • A special matrix provided here in preface compares all cases in the text on important criteria such as topics covered, size of firm, complexity of case, etc.

NEW TO THIS EDITION

In addition to the special time-tested trademarks described above, this edition includes some exciting new features designed to position this text as the clear leader and best choice for teaching business policy and strategic management include:

Changes in the Cases

  • Thirteen brand-new, year 2000 cases focusing on companies in the news appear exclusively for the first time in this text. The cases are:

    America Online (AOL)—The New Cohesion Case; E*Trade; eBay; Amazon.com; First Union Corporation; Wachovia Corporation; Lockheed Martin Corporation; Compaq Computer Corporation; Dell Computer Corporation; Research in Motion; M. D. Anderson Biomedical Services Department; Quorum Health Group; Reader's Digest Association; Reebok International.


  • Twenty-eight fully-updated cases from the last edition are included as follows:

    The Limited; Wal-Mart Stores; Target Corporation; Mandalay Resort Group; Harrah's Entertainment; The Audubon Institute; Riverbanks Zoological Park and Botanical Garden; The Classic Car Club of America; RailTex; Greyhound Lines; Carnival Corporation; Southwest Airlines Co.; Central United Methodist Church; Elkins Lake Baptist Church; Harley-Davidson; Winnebago Industries; Avon Products; Revlon; UST; Pilgrim's Pride Corporation; H. J. Heinz Company; Hershey Foods Corporation; The Boeing Company; Apple Computer; Stryker Corporation; Biomet; Playboy Enterprises; Nike.
Specific Chapter Changes

  • Chapter 1 titled "The Nature of Strategic Management"—New headings, subheadings, and topics include: History of Strategic Planning, Pitfalls in Doing Strategic Planning, Why Some Firms Do No Strategic Planning, Guidelines for Doing Strategic Planning, Internet Ethics Issues, Nature of Global Competition, Advantages and Disadvantages of International Operations.
  • Chapter 2 titled "The Business Mission"—Extensive new coverage of vision statements is provided including numerous examples. All-new example mission statements are provided and evaluated. New topics include Concern About Company Mission Across Continents and Vision Versus Mission. Chapter material is totally reorganized to improve caliber of presentation.
  • Chapter 3 titled "The External Assessment"—Fully undated Web site references and narrative with all new examples. New headings include The Global Challenge, Politics in Mexico, Politics in Russia, Politics in China, Is the Internet Revolution Bypassing the Poor, Minorities?, What Country is the Most Wireless Nation? Expanded coverage of Competitive Intelligence and Cooperation Among Competitors is provided. New demographic trend information included.
  • Chapter 4 titled "The Internal Assessment"—New headings, subheadings, and topics include: American Versus Foreign Cultures, Changing Role of Women in Japan, E-Stores Replacing Brick Stores. All new examples provided. Prior table giving internal audit checklist of questions now integrated throughout the chapter. Extensive new advertising and global material.
  • Chapter 5 titled "Strategies in Action"—Previously Chapter 2, new headings include: Should Internet Sales Remain Tax-Free? Does the USA Lead in Small Business Startups?, The Nature of Long-Term Objectives, and Not Managing by Objectives. All new strategy examples are provided, including the lists of current divestitures, joint ventures, and mergers. Previous table titled Guidelines for Situations When Particular Strategies Are Most Effective has been replaced with appropriate integration throughout the chapter. Joint Venture is no longer grouped as a Defensive Strategy. Michael Porter's generic strategy material shifts and expands in coverage.
  • Chapter 6 titled "Strategy Analysis and Choice"—New headings include: Industries Most Affected By Online Sales, Merger Mania in Europe, Boards of Directors. The long-term objectives material shifts to prior chapter. New year2000 examples provided throughout. Extensive new coverage provided on governance. Matrix approach to strategy analysis and choice improved.
  • Chapter 7 titled "Implementing Strategies: Management Issues"—New headings include: Restructuring Changes a Country, The Mexican Culture, The Russian Culture, The Chinese Culture, CEO's Becoming E-Commerce Leaders. Increased coverage of women in top management, natural environment issues, e-engineering, global issues, and e-commerce. All new examples provided.
  • Chapter 8 titled "Implementing Strategies: Marketing, Finance/Accounting, R&D, and CIS Issues"—New coverage of Internet marketing, Internet advertising, market segmentation, New headings include: Europe Acquiring the USA, Business Reaction to Global Warming, New Trends in Firms Going Public. New examples provided throughout. Expanded coverage of global and e-commerce factors.
  • Chapter 9 titled "Strategy Review, Evaluation, and Control"—New headings are The Best Companies in Britain, France, and Germany and Using Virtual Close for Strategy Evaluation. All new examples provided. Increased coverage of global factors and e-commerce issues.

ANCILLARY MATERIALS

  • Instructor's Resource CD-ROM. Includes improved PowerPoint slides offering professors easy lecture outlines for in-class presentations. Chapter headings and topics are highlighted on up to forty PowerPoint slides per chapter. The Instructor's Manual and Test Item File are also included.
  • Case Instructor's Manual. Provides a comprehensive teacher's note for all forty-one cases. The teachers' notes feature detailed analyses, classroom discussion questions with answers, an external and internal assessment, specific recommendations, strategy implementation material, and an epilogue for each case. Each teachers' note is also provided on a PowerPoint slide for convenience to the professor.
  • Instructor's Manual. Provides lecture notes, teaching tips, answers to all end chapter Experiential Exercises and Review Questions, additional Experiential Exercises not in the text, a glossary with definitions of all end-of-chapter key terms and concepts, sample course syllabi, and a test bank of nearly fifteen hundred questions with answers.
  • Twenty Color Care Video Segments. To accompany the Cohesion Case, a color video prepared by America Online (AOL) is available to adopters free of charge. Shown near the beginning of the course, the AOL video can arouse students' interest in studying the Cohesion Case and completing Experiential Exercises that apply chapter material to this case. In addition, a collection of nineteen other color case video segments is available free of charge. The segments average fifteen minutes each and were professionally prepared by firms used in cases in this text.
  • PHLIP/CW—Prentice Hall Learning on the Internet Partnership (PHLIP). This is a content-rich, multidisciplinary business education Web site created by professors for professors and their students. PHLIP provides academic support for faculty and students using this text, offering students the Student Study Hall, Current Events, an Interactive Study Guide, and Internet Resources. Instructors can choose from text-specific resources such as the Faculty Lounge, Teaching Archive, Help with Computers, and Internet Skills.
  • Standard Web CT—Free to Adoptors. Standard Web CT, an online course from Prentice Hall, features Companion Web Site and Test Item File Content in an easy-to-use system. Developed by educators for educators and their students, this online content and tools feature the most advanced educational technology and instructional design available today. The rich set of materials, communication tools, and course management resources can be easily customized to either enhance a traditional course or create the entire course online.
  • Transparency Masters. Approximately one hundred transparency masters are available with this text. These transparencies feature figures and key topics in the text and a e provided as full-color acetates.
  • Print and Computerized Test Bank. The test bank for this text includes 737 True/False questions, 425 multiple-choice questions, and 202 essay questions for the text chapters. Answers to all objective questions are provided. The test questions given in the Instructor's Manual are also available on computerized test software to facilitate preparing and grading tests.

MASTERING STRATEGY

Mastering Strategy is the first product in the Mastering Business series. It offers students an interactive, multimedia experience as they follow the people and issues of Cango, Inc., a small Internet startup. The text, video, and interactive exercises provide students an opportunity to simulate the strategic planning experience and chart the future activities for Cango.

The Mastering Strategy Environment
Students will learn strategy concepts within the context of Cango, Inc., a fictitious Internet company that focuses its efforts in the entertainment arena of the e-commerce world. The company began by retailing books on the Internet and has branched pt to offer CDs, videos, MP3 files, and customized players. Cango employs mostly recent college graduates enthusiastic about working with an online business and its possibilities for expansion. Currently, Cango is experiencing great growth, but little profit.

Thus, Cango employees are always on the lookout for new ventures. The company considering hosting streaming video, e-books and e-book readers, and partnerships with other firms. One example would be a film studio so that Cango can serve the needs independent filmmakers and tap into the growing popularity of home video hardware and software.

The company's goals are to get bigger, better, and to someday make a significant fit. In Mastering Strategy, the firm transforms from a small, independent company to one sold on the NASDAQ through the IPO process. The firm's founder and the management ' must deal with all the implications of this change, both within the company and in the text of the external world of investors, the board of directors, and potential competitors.

Employees
Liz is Cango's founder. She's a smart, enthusiastic, and driven CEO. She can be intimidating to some employees, but invokes a great deal of admiration from them as well. She received her MBA about five years ago, and holds a BA in Music. She left a traditional company to start Cango when she recognized that the Internet would take off. Liz is recognized in the industry as a pioneer who likes to play a role in every decision. She's a visionary with a very magnetic personality.

Cango currently has a total of thirty-two employees. There are six managers that comprise the senior management team at Cango.

Andrew is a recent marketing graduate and Cango's director of marketing. He is enthusiastic and creative in his work. He's also a fun guy who tends to dress and act in an avant-garde way. Other employees turn to him to lighten things up, or whenever they need a creative shot in the arm. He keeps his eye on what the competition is doing. He loves coming up with cool new ideas, and as far as Cango is concerned, he's always thinking, "What are we going to do tomorrow?"

Warren, the Director of Operations, has a background in economics. He focuses on how supply and demand, pricing, interest fates, and production costs affect Cango's new ventures. Warren has been with Cango since its inception. He is a realist and everyone knows that it is thanks to him that many neat ideas become realities. Warren is a sports buff and frequent sports analogies can be heard coming from him. His goal is to keep the firm on track.

The company's director of personnel is Maria. She has an MBA in human resource management and a BA in psychology. She is a people person who nonetheless has to make many of the hard decisions regarding hiring and firing. Many employees turn to her to discuss personnel issues as well as for advice and feedback. She finds that her role is to always be thinking, "How will this affect our workforce?" whenever new ideas or changes are on the horizon for Cango.

Clark is Cango's VP of finance. He frequently interfaces with actual and potential Cango investors. Whenever new ideas come up, he can be counted on to ask, "Are we making shareholders more money with this idea?" Clark is a married man with strong family values; he is extremely competent in his work. He tends to look at new opportunities with the approach of, "How does this idea add value to the firm?"

Cango's director of accounting is Ethel. She is detail oriented and has a bookkeeper/CPA background. The company depends upon her to always consider the potential costs of all the exciting new ideas that get floated around. She can be counted on to bring up questions that no one else wants to talk about. She spends most of her time dealing with the legalities, with auditing firms, etc. Cango's managers may not always want to hear what she has to say, but they admit—she's usually right.

There are several minor characters as well as many extras. Each employee brings a different set of personal and professional attributes to the young firm. The dynamics between all of these people is what will make Cango either a success or failure. How each copes with various decisions and problems is the basis for the Mastering Strategy project.

Cango's Course of Action

In early episodes, students engage in the crux of strategic planning as they work with Cango to create vision and mission statements, grapple with the issues of social responsibility and engage in the detailed planning of a SWOT analysis. In later episodes, working from competitive and internal environmental analyses, students engage in strategic choice and the implementation issues that arise from selecting among various strategic options.

Cango's IPO

Embedded in these analytical activities are events at Cango that add further spice to the decision-making process. Competitive environment realities move Cango towards an IPO. This change presents Cango's management team with options for investing capital in different strategic venues, including whether and how to diversify into a new line of business.

The threat of being acquired by a larger industry player appears, as do problems with managing the firm's value chain when demand forecasting is inadequate, and the struggle for the CEO to maintain power in the face of not meeting Wall Street's or the board of director's performance expectations. Embedded in all of these strategic issues are the human factors that are encountered when decisions about tangible and intangible resources, performance measurements, and power relationships are made.

Episodes Within Mastering Strategy

The videos show the management team in action within their offices and on location at the company's warehouse, restaurants, public parks, parking lots and other areas. Here are brief summaries of each of the twelve episodes that comprise the Mastering Strategy project.

Episode l: Concept of Strategic Management

Elizabeth is named Business Leader of the Year and delivers a speech on how she and Cango came to be a success. For the first time in the company's history, she actually examines its development and her thinking along the way. Cango's management team meets to decide if the company should enter the online gaming marketing.

Episode 2: Vision and Mission

Elizabeth struggles with the idea of taking Cango public, realizing that to do so she must have clear vision and mission statements for the company. She puts her ideas about the company on paper and gives her staff the opportunity to voice their own Cango vision.

Episode 3: External Environment

The rumor on the street is that a rival Internet startup is looking to buy Cango. The team views this as a hostile takeover, and they also discuss the possible impact of another threat: government regulation of commercial Internet sites.

Episode 4: Competitor Analysis

Cango's management team learns of another large company's plans to buy out the: Internet entertainment industry. Cango isn't on the "hit list," but comes out against the' action, calling the company a "bureaucratic behemoth." The team makes a list identifying and rating their competitors.

Episode 5: Internal Analysis

Cango's board of directors questions Liz's leadership ability after the company stock takes a dive. An outside consultant's report verifies the board's concerns. Liz manages to convince the Board that she can change her leadership style and keeps her current position.

Episode 6: Strategic Analysis and Choice

The IPO has raised $130 million and the management team meets to discuss how to use it. Some want the company to push into new markets, others are more cautious. The resolution is to move into the emerging online gaming market.

Episode 7: Business Level Strategy in a Single or Dominant-Product Business

Liz and Andrew discuss the ramifications (including cost leadership, differentiation, and focus) of Cango entering the online gaming arena. An MP3 company offers Cango an exclusive distribution contract and a high commission for space on Cango's Web site.

Episode 8: Corporate Level Strategy

Cango's management team discusses how the company can get into online gaming without having to start from scratch. The idea put forth is that Cango form an alliance with a well-known gaming company already on the market. The repercussions of this are debated.

Episode 9: Strategic Implementation

Cango has acquired Webjouster, Inc., which specializes in interactive entertainment media. The two cultures clash, impacting employee productivity and satisfaction. Resolutions to this problem are discussed.

Episode 10: Strategic Control

Cango's financial data shows the company's performance has been lackluster, and Liz is concerned that this information will create a negative response from the board of directors even though Cango has been successful in other ways.

Episode 11: Leadership and Governance

Cango's board of directors decides to "promote" Elizabeth to chair of the board and bring in a more seasoned CEO. In a passionate speech, Liz persuades the board to keep her as CEO. She vows to step back more from the day-to-day operations.

Episode 12: International Management

Warren discovers that the majority of Cango's Web sales are within the United States, and the management team decides if they should start targeting international customers. It is determined that no one at Cango has the expertise to tackle the issue of internationalization.

Summary

Mastering Strategy can be ordered separately or packaged with this or other texts for an additional fee. Contact your local Prentice Hall sales representative for details.

  • System Requirements:
    The Mastering Business CD-ROM takes no space on a PC's hard drive. It runs entirely from the CD-ROM. You will need an Internet browser program (Internet Explorer 4+ or Netscape 4+) and a media player (Windows Media Player or Quicktime Player).


  • Using the CD-ROM:
    The program itself is very easy to use, but every computer starts CDs differently. Some begin playing CDs as soon as you put them in and close the tray. For others, there may be a desktop icon for you to click. Look on the Mastering Strategy CDROM for detailed instructions.

SPECIAL NOTE TO STUDENTS

Welcome to business policy. This is a challenging and exciting course that will allow you to function as the owner or chief executive officer- of different organizations. Your major task in this course will be to make strategic decisions and to justify those decisions through oral and written communication. Strategic decisions determine the future direction and competitive position of an enterprise for a long time. Decisions to expand geographically or to diversify are examples of strategic decisions.

Strategic decision making occurs in all types and sizes of organizations, from General Motors to a small hardware store. Many people's lives and jobs are affected by strategic decisions, so the stakes are very high. An organization's very survival is often at stake. The overall importance of strategic decisions makes this course especially exciting and challenging. You will be called upon in business policy to demonstrate how your strategic decisions could be successfully implemented.

In this course, you can look forward to making strategic decisions both as an individual and as a member of a team. No matter how hard employees work, an organization is in real trouble if strategic decisions are not made effectively. Doing the right things (effectiveness) is more important than doing things right (efficiency). For example, Compaq was prosperous in the mid1990s, but ineffective strategies led to millions in losses in the late 1990s. Compaq Computer CEO Eckhard Pfeiffer lost his job for lack of an Internet vision Del Jones, "Are Company Chiefs Paying Heed to Web?" USA Today, July 2, 1999, p. 5B.

You will have the opportunity in this course to make actual strategic decisions, perhaps for the first time in your academic career. Do not hesitate to take a stand and defend specific strategies that you determine to be the best. The rationale for your strategic decisions will be more important than the actual decision, because no one knows for sure what the best strategy is for a particular organization at a given point in time. This fact accents the subjective, contingency nature of the strategic-management process.

Use the concepts and tools presented in this text, coupled with your own intuition, to recommend strategies that you can defend as being most appropriate for the organizations that you study. You will also need to integrate knowledge acquired in previous business courses. For this reason, business policy is often called a capstone course; you may want to keep this book for your personal library.

This text is practitioner-oriented and applications-oriented. It presents strategic-management concepts that will enable you to formulate, implement, and evaluate strategies in all kinds of profit and nonprofit organizations. The end-of-chapter Experiential Exercises allow you to apply what you've read in each chapter to the Hershey Foods Cohesion Case and to your own university.

Use the Strategic Management Club Online Web site at www.strategyclub.com. The templates and links there will save you time in performing analyses and will make your work look professional. Work hard in policy this term and have fun. Good luck!

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Table of Contents

(NOTE: Each chapter contains Notable Quotes and Objectives, Key Terms, Current Readings, Discussion Questions, and Experiential Exercises.)

INTRODUCTION.

How to Analyze a Business Policy Case.
Instructions for Using The Strategy Formulator Software.

I. OVERVIEW OF STRATEGIC MANAGEMENT.

1. The Nature of Strategic Management.

II. STRATEGY FORMULATION.

2. The Business Mission.
3. The External Assessment.
4. The Internal Assessment.
5. Strategies in Action.
6. Strategy Analysis and Choice.

III. STRATEGY IMPLEMENTATION.

7. Implementing Strategies: Management Issues.
8. Implementing Strategies: Marketing, Finance/Accounting, R&D, and CIS Issues.

IV. STRATEGY EVALUATION.

9. Strategy Review, Evaluation, and Control.
Name Index.
Subject Index.
Company index.

CASES. (NOTE: *= New to This Edition. All Cases Updated with 1999 Financial Information.)

Service Companies.

Internet Companies.
1. E-Trade, Inc.—2000, Phillip Lynn. *
2. E-Bay Inc.—2000, Stephen M. Giordano. *
3. Amazon.com, Inc.—2000, Phillip Bartlett and Fred David. *
Retailers.
4. The Limited, Inc.—2000, Jill Austin.
5. Wal-Mart Stores Inc.—2000, Amit Shah and Tyra Phipps.
6. Target Corporation—2000, Henry H. Beam.
Hotel and Gaming.
7. Mandalay Resort Group—2000, John Ross.
8. Harrahs Entertainment, Inc.—2000, Mary R. Dittman.
Banks.
9. First Union Corporation—2000, Brian E. Williamson. *
10. Wachovia Corporation—2000, Jule Eldridge III. *
Zoos and Clubs.
11. The Audubon Institute—2000, Caroline Fisher and Claire J. Anderson.
12. Riverbanks Zoological Park and Botanical Garden—2000, Carolyn R. Stokes and Eugene M. Bland.
13. The Classic Car Club of America—2000, Matthew C. Sonfield.
Hospitals.
14. M.D. Anderson Biomedical Services Department, Paul Reed, et. al.
15. Quorum Health Group, Inc.—2000, Teresa DeWitt Dullaghan. *
Travel.
16. Greyhound Lines, Inc.—2000, James Harbin.
17. Carnival Corporation—2000, Mike Keefe et al.
18. Southwest Airlines Co.—2000, Amit Shah and Charles R. Sterrett.
Churches.
19. Central United Methodist Church—2000, Robert T. Barrett.
20. Elkins Lake Baptist Church—2000, Paul Reed et al.
Railroad.
21. RailTex, Inc.—2000, Paul Reed et al.

Manufacturing Companies.

Transportation.
22. Harley-Davidson, Inc.—2000, Ricky Cox.
23. Winnebago Industries, Inc.—2000, Eugene M. Bland and John G. Marcis.
Cosmetics.
24. Avon Products, Inc.—2000, James Camerius.
25. Revlon, Inc.—2000, M. Jill Austin.
Food.
26. Pilgrim's Pride Corporation- 2000, James L. Harbin.
27. H.J. Heinz Company—2000, Henry H. Beam.
28. Hershey Foods Corporation- 2000, Forest R. David.
Aerospace.
29. The Boeing Company—2000, Carolyn R. Stokes.
30. Lockheed Martin Corporation—2000, Wayne Chamblee. *
Computers.
31. Dell Computer Corporation—2000, Cindy R. Smith.
32. Apple Computer, Inc.—2000, David Stanton.
33. Compaq Computer Corporation—2000, Maria Margiotis. *
34. Research in Motion—2000, David Griffin. *
Medical.
35. Stryker Corporation—2000, Henry H. Beam.
36. Biomet, Inc.—2000, Satish P. Deshpande.
Magazines.
37. Playboy Enterprises, Inc.—2000, Kay W. Lawrimore and Fred R. David.
38. Readers Digest Association, Inc.—2000, Caroll Braddock. *
Footwear.
39. Nike, Inc.—2000, M. Jill Austin.
40. Reebok International, Ltd.—2000, Angela G. Page. *
Tobacco.
41. UST, Inc.—2000, Marilyn M. Helms and Fred R. David.

Concepts and Cases

Read More Show Less

Preface

PREFACE:

PREFACE

The new millennium has ushered in a radically different and more complex business world than it was just two years ago when the previous edition of this text was published. An avalanche of e-commerce has changed the nature of business to its core. European companies purchased hundreds of American companies. Downsizing, rightsizing, reengineering, and countless divestitures, acquisitions, and liquidations permanently altered the corporate landscape. Thousands of firms globalized, and thousands more merged in the last two years. Thousands prospered, and yet thousands more failed. Many manufacturers became e-commerce suppliers, and many rival firms became partners. Long-held competitive advantages have eroded, and new ones have formed. Both the challenges and opportunities facing organizations of all sizes today are greater than ever.

Our mission in preparing the eighth edition of Strategic Management was "to create the most current, well-written business policy textbook on the market—a book that is exciting and valuable to both students and professors." To achieve this mission, every page has been revamped, updated, and improved. The prior Chapter 10 titled "International Strategic Management" has been replaced with every chapter now comprising 20 percent new global content. There is a new E-commerce Theme permeating each chapter in this edition. Chapter 2 in the prior edition becomes Chapter 5 in this edition. New strategic-management research and practice are incorporated throughout the chapters, and hundreds of new examples abound. There is a new Cohesion Case on America Online (AOL)—2000. A wonderful selection ofnewcases include such companies as eBay, E*Trade, Amazon.com, Compaq Computer Corporation, First Union Corporation, and Wachovia Corporation. The time basis for all cases included in this edition is to 2000, representing the most up-to-date compilation of cases ever assembled in a business policy text.

SPECIAL NOTE TO PROFESSORS

This textbook meets all AACSB guidelines for the business policy and strategic management course at both the graduate and undergraduate level. Previous editions of this text have been used at more than five hundred colleges and universities. Prentice Hall maintains a separate Web site for this text at www.prenhall.com/davidsm. The author maintains the Strategic Management Club Online Web site at www.strategyclub.com. Membership is free to both professors and students.

Although structure of this edition parallels the last, dramatic improvements have been made in readability, currentness, and coverage. In keeping with the mission "to become the most current, well-written business policy textbook on the market," every page has undergone rethinking and rewriting to streamline, update, and improve the caliber of presentation. A net result of this activity is that every chapter is shorter in length, and there are now nine chapters instead of ten. New concepts and practices in strategic management are presented in a style that is clear, focused, and relevant.

CHAPTER THEMES

Three themes permeate all chapters in this edition and contribute significantly to making this text timely, informative, exciting, and valuable. A new boxed insert for each theme and substantial new narrative appear in each chapter. The three themes follow.

1. Global Factors Affect Virtually All Strategic Decisions
The global theme is greatly enhanced in this edition because doing business globally has become a necessity, rather than a luxury, in most industries. Nearly all strategic decisions today are affected by global issues and concerns. For this reason, the previous Chapter 10 on "International Strategic Management" has been replaced by substantial new global coverage in each chapter. There is growing interdependence among countries and companies worldwide. The dynamics of political, economic, and cultural differences across countries directly affect strategic management decisions.

2. E-Commerce Is a Vital Strategic Management Tool
A new e-commerce theme is deeply integrated throughout the chapters in response to immense e-commerce opportunities and threats facing organizations today. Almost all products can now be purchased over the Internet. Business-to-business e-commerce is ten times greater even than business-to-consumer e-commerce. Accelerating use of the Internet to gather, analyze, send, and receive information has changed the way strategic decisions are made. Since the last edition, literally millions of companies have established World Wide Web sites and are conducting e-commerce internationally.

3. Preserving the Natural Environment Is a Vital Strategic Issue
Unique to strategic-management texts, the natural environment theme is strengthened in this edition in order to promote and encourage firms to conduct operations in an environmentally sound manner. Countries worldwide have enacted laws to curtail firms from polluting streams, rivers, the air, land, and sea. Environmental concerns are a new point 'of contention in World Trade Organization (WTO) policies and practices. The strategic efforts of both companies and countries to preserve the natural environment are described in this edition. Respect for the natural environment has become an important Concern for consumers, companies, society, and the AACSB.

TIME-TESTED FEATURES

This edition continues many of the special time-tested features and content that have made this text so successful over the last decade. Trademarks of this text strengthened in this edition are as follows:

Chapters: Time-Tested Features

  • The text meets AACSB guidelines which support a practitioner orientation rather than a theory/research approach. This text supports that effort by taking a skills-oriented approach to developing a mission statement, performing an external audit, conducting an internal assessment, and formulating, implementing, and evaluating strategies.
  • The global theme permeating all chapters couches strategic-management concepts in a global perspective.
  • A simple, integrative strategic-management model appears in all chapters and on the inside front cover of the text.
  • A Cohesion Case (America Online—2000) appears after Chapter 1 and is revisited at the end of each chapter. This case allows students to apply strategic-management concepts and techniques to a real organization as chapter material is covered. This integrative (cohesive) approach readies students for case analysis.
  • End-of-chapter Experiential Exercises effectively apply concepts and techniques in a challenging, meaningful, and enjoyable manner. Eighteen exercises apply text material to the Cohesion Case; ten apply textual material to a college or university; another ten send students into the business world to explore important strategy topics. The exercises are relevant, interesting, and contemporary.
  • Excellent pedagogy, including Notable Quotes and Objectives to open each chapter, and Key Terms, Current Readings, Discussion Questions, and Experiential Exercises to close each chapter.
  • Excellent coverage of business ethics aimed at more than meeting AACSB standards.
  • Excellent coverage of strategy implementation issues such as corporate culture, organizational structure, marketing concepts, and financial tools and techniques.
  • A systematic, analytical approach presented in Chapter 6, including matrices such as the TOWS, BCG, IE, GRAND, SPACE, and QSPM.
  • The chapter material is again published in four color.
  • The Web site www.prenhall.com/davidsm provides chapter and case updates, an online Study Guide, and support materials.

Cases: Time-Tested Features

  • The 2000 timeframe for cases offers the most current set in any business policy text on the market.
  • The cases focus on well-known firms in the news making strategic changes. All cases are undisguised and most are exclusively written for this text to reflect current strategic-management problems and practices.
  • The cases feature a great mix of small business, international, and not-for-profit firms organized conveniently by industry.
  • Almost all cases provide complete financial information about the firm and an organizational chart.
  • A split-paperback version including only cases is available.
  • A special matrix provided here in preface compares all cases in the text on important criteria such as topics covered, size of firm, complexity of case, etc.

NEW TO THIS EDITION

In addition to the special time-tested trademarks described above, this edition includes some exciting new features designed to position this text as the clear leader and best choice for teaching business policy and strategic management include:

Changes in the Cases

  • Thirteen brand-new, year 2000 cases focusing on companies in the news appear exclusively for the first time in this text. The cases are:

    America Online (AOL)—The New Cohesion Case; E*Trade; eBay; Amazon.com; First Union Corporation; Wachovia Corporation; Lockheed Martin Corporation; Compaq Computer Corporation; Dell Computer Corporation; Research in Motion; M. D. Anderson Biomedical Services Department; Quorum Health Group; Reader's Digest Association; Reebok International.


  • Twenty-eight fully-updated cases from the last edition are included as follows:

    The Limited; Wal-Mart Stores; Target Corporation; Mandalay Resort Group; Harrah's Entertainment; The Audubon Institute; Riverbanks Zoological Park and Botanical Garden; The Classic Car Club of America; RailTex; Greyhound Lines; Carnival Corporation; Southwest Airlines Co.; Central United Methodist Church; Elkins Lake Baptist Church; Harley-Davidson; Winnebago Industries; Avon Products; Revlon; UST; Pilgrim's Pride Corporation; H. J. Heinz Company; Hershey Foods Corporation; The Boeing Company; Apple Computer; Stryker Corporation; Biomet; Playboy Enterprises; Nike.
Specific Chapter Changes

  • Chapter 1 titled "The Nature of Strategic Management"—New headings, subheadings, and topics include: History of Strategic Planning, Pitfalls in Doing Strategic Planning, Why Some Firms Do No Strategic Planning, Guidelines for Doing Strategic Planning, Internet Ethics Issues, Nature of Global Competition, Advantages and Disadvantages of International Operations.
  • Chapter 2 titled "The Business Mission"—Extensive new coverage of vision statements is provided including numerous examples. All-new example mission statements are provided and evaluated. New topics include Concern About Company Mission Across Continents and Vision Versus Mission. Chapter material is totally reorganized to improve caliber of presentation.
  • Chapter 3 titled "The External Assessment"—Fully undated Web site references and narrative with all new examples. New headings include The Global Challenge, Politics in Mexico, Politics in Russia, Politics in China, Is the Internet Revolution Bypassing the Poor, Minorities?, What Country is the Most Wireless Nation? Expanded coverage of Competitive Intelligence and Cooperation Among Competitors is provided. New demographic trend information included.
  • Chapter 4 titled "The Internal Assessment"—New headings, subheadings, and topics include: American Versus Foreign Cultures, Changing Role of Women in Japan, E-Stores Replacing Brick Stores. All new examples provided. Prior table giving internal audit checklist of questions now integrated throughout the chapter. Extensive new advertising and global material.
  • Chapter 5 titled "Strategies in Action"—Previously Chapter 2, new headings include: Should Internet Sales Remain Tax-Free? Does the USA Lead in Small Business Startups?, The Nature of Long-Term Objectives, and Not Managing by Objectives. All new strategy examples are provided, including the lists of current divestitures, joint ventures, and mergers. Previous table titled Guidelines for Situations When Particular Strategies Are Most Effective has been replaced with appropriate integration throughout the chapter. Joint Venture is no longer grouped as a Defensive Strategy. Michael Porter's generic strategy material shifts and expands in coverage.
  • Chapter 6 titled "Strategy Analysis and Choice"—New headings include: Industries Most Affected By Online Sales, Merger Mania in Europe, Boards of Directors. The long-term objectives material shifts to prior chapter. New year2000 examples provided throughout. Extensive new coverage provided on governance. Matrix approach to strategy analysis and choice improved.
  • Chapter 7 titled "Implementing Strategies: Management Issues"—New headings include: Restructuring Changes a Country, The Mexican Culture, The Russian Culture, The Chinese Culture, CEO's Becoming E-Commerce Leaders. Increased coverage of women in top management, natural environment issues, e-engineering, global issues, and e-commerce. All new examples provided.
  • Chapter 8 titled "Implementing Strategies: Marketing, Finance/Accounting, R&D, and CIS Issues"—New coverage of Internet marketing, Internet advertising, market segmentation, New headings include: Europe Acquiring the USA, Business Reaction to Global Warming, New Trends in Firms Going Public. New examples provided throughout. Expanded coverage of global and e-commerce factors.
  • Chapter 9 titled "Strategy Review, Evaluation, and Control"—New headings are The Best Companies in Britain, France, and Germany and Using Virtual Close for Strategy Evaluation. All new examples provided. Increased coverage of global factors and e-commerce issues.

ANCILLARY MATERIALS

  • Instructor's Resource CD-ROM. Includes improved PowerPoint slides offering professors easy lecture outlines for in-class presentations. Chapter headings and topics are highlighted on up to forty PowerPoint slides per chapter. The Instructor's Manual and Test Item File are also included.
  • Case Instructor's Manual. Provides a comprehensive teacher's note for all forty-one cases. The teachers' notes feature detailed analyses, classroom discussion questions with answers, an external and internal assessment, specific recommendations, strategy implementation material, and an epilogue for each case. Each teachers' note is also provided on a PowerPoint slide for convenience to the professor.
  • Instructor's Manual. Provides lecture notes, teaching tips, answers to all end chapter Experiential Exercises and Review Questions, additional Experiential Exercises not in the text, a glossary with definitions of all end-of-chapter key terms and concepts, sample course syllabi, and a test bank of nearly fifteen hundred questions with answers.
  • Twenty Color Care Video Segments. To accompany the Cohesion Case, a color video prepared by America Online (AOL) is available to adopters free of charge. Shown near the beginning of the course, the AOL video can arouse students' interest in studying the Cohesion Case and completing Experiential Exercises that apply chapter material to this case. In addition, a collection of nineteen other color case video segments is available free of charge. The segments average fifteen minutes each and were professionally prepared by firms used in cases in this text.
  • PHLIP/CW—Prentice Hall Learning on the Internet Partnership (PHLIP). This is a content-rich, multidisciplinary business education Web site created by professors for professors and their students. PHLIP provides academic support for faculty and students using this text, offering students the Student Study Hall, Current Events, an Interactive Study Guide, and Internet Resources. Instructors can choose from text-specific resources such as the Faculty Lounge, Teaching Archive, Help with Computers, and Internet Skills.
  • Standard Web CT—Free to Adoptors. Standard Web CT, an online course from Prentice Hall, features Companion Web Site and Test Item File Content in an easy-to-use system. Developed by educators for educators and their students, this online content and tools feature the most advanced educational technology and instructional design available today. The rich set of materials, communication tools, and course management resources can be easily customized to either enhance a traditional course or create the entire course online.
  • Transparency Masters. Approximately one hundred transparency masters are available with this text. These transparencies feature figures and key topics in the text and a e provided as full-color acetates.
  • Print and Computerized Test Bank. The test bank for this text includes 737 True/False questions, 425 multiple-choice questions, and 202 essay questions for the text chapters. Answers to all objective questions are provided. The test questions given in the Instructor's Manual are also available on computerized test software to facilitate preparing and grading tests.

MASTERING STRATEGY

Mastering Strategy is the first product in the Mastering Business series. It offers students an interactive, multimedia experience as they follow the people and issues of Cango, Inc., a small Internet startup. The text, video, and interactive exercises provide students an opportunity to simulate the strategic planning experience and chart the future activities for Cango.

The Mastering Strategy Environment
Students will learn strategy concepts within the context of Cango, Inc., a fictitious Internet company that focuses its efforts in the entertainment arena of the e-commerce world. The company began by retailing books on the Internet and has branched pt to offer CDs, videos, MP3 files, and customized players. Cango employs mostly recent college graduates enthusiastic about working with an online business and its possibilities for expansion. Currently, Cango is experiencing great growth, but little profit.

Thus, Cango employees are always on the lookout for new ventures. The company considering hosting streaming video, e-books and e-book readers, and partnerships with other firms. One example would be a film studio so that Cango can serve the needs independent filmmakers and tap into the growing popularity of home video hardware and software.

The company's goals are to get bigger, better, and to someday make a significant fit. In Mastering Strategy, the firm transforms from a small, independent company to one sold on the NASDAQ through the IPO process. The firm's founder and the management ' must deal with all the implications of this change, both within the company and in the text of the external world of investors, the board of directors, and potential competitors.

Employees
Liz is Cango's founder. She's a smart, enthusiastic, and driven CEO. She can be intimidating to some employees, but invokes a great deal of admiration from them as well. She received her MBA about five years ago, and holds a BA in Music. She left a traditional company to start Cango when she recognized that the Internet would take off. Liz is recognized in the industry as a pioneer who likes to play a role in every decision. She's a visionary with a very magnetic personality.

Cango currently has a total of thirty-two employees. There are six managers that comprise the senior management team at Cango.

Andrew is a recent marketing graduate and Cango's director of marketing. He is enthusiastic and creative in his work. He's also a fun guy who tends to dress and act in an avant-garde way. Other employees turn to him to lighten things up, or whenever they need a creative shot in the arm. He keeps his eye on what the competition is doing. He loves coming up with cool new ideas, and as far as Cango is concerned, he's always thinking, "What are we going to do tomorrow?"

Warren, the Director of Operations, has a background in economics. He focuses on how supply and demand, pricing, interest fates, and production costs affect Cango's new ventures. Warren has been with Cango since its inception. He is a realist and everyone knows that it is thanks to him that many neat ideas become realities. Warren is a sports buff and frequent sports analogies can be heard coming from him. His goal is to keep the firm on track.

The company's director of personnel is Maria. She has an MBA in human resource management and a BA in psychology. She is a people person who nonetheless has to make many of the hard decisions regarding hiring and firing. Many employees turn to her to discuss personnel issues as well as for advice and feedback. She finds that her role is to always be thinking, "How will this affect our workforce?" whenever new ideas or changes are on the horizon for Cango.

Clark is Cango's VP of finance. He frequently interfaces with actual and potential Cango investors. Whenever new ideas come up, he can be counted on to ask, "Are we making shareholders more money with this idea?" Clark is a married man with strong family values; he is extremely competent in his work. He tends to look at new opportunities with the approach of, "How does this idea add value to the firm?"

Cango's director of accounting is Ethel. She is detail oriented and has a bookkeeper/CPA background. The company depends upon her to always consider the potential costs of all the exciting new ideas that get floated around. She can be counted on to bring up questions that no one else wants to talk about. She spends most of her time dealing with the legalities, with auditing firms, etc. Cango's managers may not always want to hear what she has to say, but they admit—she's usually right.

There are several minor characters as well as many extras. Each employee brings a different set of personal and professional attributes to the young firm. The dynamics between all of these people is what will make Cango either a success or failure. How each copes with various decisions and problems is the basis for the Mastering Strategy project.

Cango's Course of Action

In early episodes, students engage in the crux of strategic planning as they work with Cango to create vision and mission statements, grapple with the issues of social responsibility and engage in the detailed planning of a SWOT analysis. In later episodes, working from competitive and internal environmental analyses, students engage in strategic choice and the implementation issues that arise from selecting among various strategic options.

Cango's IPO

Embedded in these analytical activities are events at Cango that add further spice to the decision-making process. Competitive environment realities move Cango towards an IPO. This change presents Cango's management team with options for investing capital in different strategic venues, including whether and how to diversify into a new line of business.

The threat of being acquired by a larger industry player appears, as do problems with managing the firm's value chain when demand forecasting is inadequate, and the struggle for the CEO to maintain power in the face of not meeting Wall Street's or the board of director's performance expectations. Embedded in all of these strategic issues are the human factors that are encountered when decisions about tangible and intangible resources, performance measurements, and power relationships are made.

Episodes Within Mastering Strategy

The videos show the management team in action within their offices and on location at the company's warehouse, restaurants, public parks, parking lots and other areas. Here are brief summaries of each of the twelve episodes that comprise the Mastering Strategy project.

Episode l: Concept of Strategic Management

Elizabeth is named Business Leader of the Year and delivers a speech on how she and Cango came to be a success. For the first time in the company's history, she actually examines its development and her thinking along the way. Cango's management team meets to decide if the company should enter the online gaming marketing.

Episode 2: Vision and Mission

Elizabeth struggles with the idea of taking Cango public, realizing that to do so she must have clear vision and mission statements for the company. She puts her ideas about the company on paper and gives her staff the opportunity to voice their own Cango vision.

Episode 3: External Environment

The rumor on the street is that a rival Internet startup is looking to buy Cango. The team views this as a hostile takeover, and they also discuss the possible impact of another threat: government regulation of commercial Internet sites.

Episode 4: Competitor Analysis

Cango's management team learns of another large company's plans to buy out the: Internet entertainment industry. Cango isn't on the "hit list," but comes out against the' action, calling the company a "bureaucratic behemoth." The team makes a list identifying and rating their competitors.

Episode 5: Internal Analysis

Cango's board of directors questions Liz's leadership ability after the company stock takes a dive. An outside consultant's report verifies the board's concerns. Liz manages to convince the Board that she can change her leadership style and keeps her current position.

Episode 6: Strategic Analysis and Choice

The IPO has raised $130 million and the management team meets to discuss how to use it. Some want the company to push into new markets, others are more cautious. The resolution is to move into the emerging online gaming market.

Episode 7: Business Level Strategy in a Single or Dominant-Product Business

Liz and Andrew discuss the ramifications (including cost leadership, differentiation, and focus) of Cango entering the online gaming arena. An MP3 company offers Cango an exclusive distribution contract and a high commission for space on Cango's Web site.

Episode 8: Corporate Level Strategy

Cango's management team discusses how the company can get into online gaming without having to start from scratch. The idea put forth is that Cango form an alliance with a well-known gaming company already on the market. The repercussions of this are debated.

Episode 9: Strategic Implementation

Cango has acquired Webjouster, Inc., which specializes in interactive entertainment media. The two cultures clash, impacting employee productivity and satisfaction. Resolutions to this problem are discussed.

Episode 10: Strategic Control

Cango's financial data shows the company's performance has been lackluster, and Liz is concerned that this information will create a negative response from the board of directors even though Cango has been successful in other ways.

Episode 11: Leadership and Governance

Cango's board of directors decides to "promote" Elizabeth to chair of the board and bring in a more seasoned CEO. In a passionate speech, Liz persuades the board to keep her as CEO. She vows to step back more from the day-to-day operations.

Episode 12: International Management

Warren discovers that the majority of Cango's Web sales are within the United States, and the management team decides if they should start targeting international customers. It is determined that no one at Cango has the expertise to tackle the issue of internationalization.

Summary

Mastering Strategy can be ordered separately or packaged with this or other texts for an additional fee. Contact your local Prentice Hall sales representative for details.

  • System Requirements:
    The Mastering Business CD-ROM takes no space on a PC's hard drive. It runs entirely from the CD-ROM. You will need an Internet browser program (Internet Explorer 4+ or Netscape 4+) and a media player (Windows Media Player or Quicktime Player).


  • Using the CD-ROM:
    The program itself is very easy to use, but every computer starts CDs differently. Some begin playing CDs as soon as you put them in and close the tray. For others, there may be a desktop icon for you to click. Look on the Mastering Strategy CDROM for detailed instructions.

SPECIAL NOTE TO STUDENTS

Welcome to business policy. This is a challenging and exciting course that will allow you to function as the owner or chief executive officer- of different organizations. Your major task in this course will be to make strategic decisions and to justify those decisions through oral and written communication. Strategic decisions determine the future direction and competitive position of an enterprise for a long time. Decisions to expand geographically or to diversify are examples of strategic decisions.

Strategic decision making occurs in all types and sizes of organizations, from General Motors to a small hardware store. Many people's lives and jobs are affected by strategic decisions, so the stakes are very high. An organization's very survival is often at stake. The overall importance of strategic decisions makes this course especially exciting and challenging. You will be called upon in business policy to demonstrate how your strategic decisions could be successfully implemented.

In this course, you can look forward to making strategic decisions both as an individual and as a member of a team. No matter how hard employees work, an organization is in real trouble if strategic decisions are not made effectively. Doing the right things (effectiveness) is more important than doing things right (efficiency). For example, Compaq was prosperous in the mid1990s, but ineffective strategies led to millions in losses in the late 1990s. Compaq Computer CEO Eckhard Pfeiffer lost his job for lack of an Internet vision Del Jones, "Are Company Chiefs Paying Heed to Web?" USA Today, July 2, 1999, p. 5B.

You will have the opportunity in this course to make actual strategic decisions, perhaps for the first time in your academic career. Do not hesitate to take a stand and defend specific strategies that you determine to be the best. The rationale for your strategic decisions will be more important than the actual decision, because no one knows for sure what the best strategy is for a particular organization at a given point in time. This fact accents the subjective, contingency nature of the strategic-management process.

Use the concepts and tools presented in this text, coupled with your own intuition, to recommend strategies that you can defend as being most appropriate for the organizations that you study. You will also need to integrate knowledge acquired in previous business courses. For this reason, business policy is often called a capstone course; you may want to keep this book for your personal library.

This text is practitioner-oriented and applications-oriented. It presents strategic-management concepts that will enable you to formulate, implement, and evaluate strategies in all kinds of profit and nonprofit organizations. The end-of-chapter Experiential Exercises allow you to apply what you've read in each chapter to the Hershey Foods Cohesion Case and to your own university.

Use the Strategic Management Club Online Web site at www.strategyclub.com. The templates and links there will save you time in performing analyses and will make your work look professional. Work hard in policy this term and have fun. Good luck!

Read More Show Less

Introduction

PREFACE

The new millennium has ushered in a radically different and more complex business world than it was just two years ago when the previous edition of this text was published. An avalanche of e-commerce has changed the nature of business to its core. European companies purchased hundreds of American companies. Downsizing, rightsizing, reengineering, and countless divestitures, acquisitions, and liquidations permanently altered the corporate landscape. Thousands of firms globalized, and thousands more merged in the last two years. Thousands prospered, and yet thousands more failed. Many manufacturers became e-commerce suppliers, and many rival firms became partners. Long-held competitive advantages have eroded, and new ones have formed. Both the challenges and opportunities facing organizations of all sizes today are greater than ever.

Our mission in preparing the eighth edition of Strategic Management was "to create the most current, well-written business policy textbook on the market—a book that is exciting and valuable to both students and professors." To achieve this mission, every page has been revamped, updated, and improved. The prior Chapter 10 titled "International Strategic Management" has been replaced with every chapter now comprising 20 percent new global content. There is a new E-commerce Theme permeating each chapter in this edition. Chapter 2 in the prior edition becomes Chapter 5 in this edition. New strategic-management research and practice are incorporated throughout the chapters, and hundreds of new examples abound. There is a new Cohesion Case on America Online (AOL)—2000. A wonderful selection of new casesinclude such companies as eBay, E*Trade, Amazon.com, Compaq Computer Corporation, First Union Corporation, and Wachovia Corporation. The time basis for all cases included in this edition is to 2000, representing the most up-to-date compilation of cases ever assembled in a business policy text.

SPECIAL NOTE TO PROFESSORS

This textbook meets all AACSB guidelines for the business policy and strategic management course at both the graduate and undergraduate level. Previous editions of this text have been used at more than five hundred colleges and universities. Prentice Hall maintains a separate Web site for this text at www.prenhall.com/davidsm. The author maintains the Strategic Management Club Online Web site at www.strategyclub.com. Membership is free to both professors and students.

Although structure of this edition parallels the last, dramatic improvements have been made in readability, currentness, and coverage. In keeping with the mission "to become the most current, well-written business policy textbook on the market," every page has undergone rethinking and rewriting to streamline, update, and improve the caliber of presentation. A net result of this activity is that every chapter is shorter in length, and there are now nine chapters instead of ten. New concepts and practices in strategic management are presented in a style that is clear, focused, and relevant.

CHAPTER THEMES

Three themes permeate all chapters in this edition and contribute significantly to making this text timely, informative, exciting, and valuable. A new boxed insert for each theme and substantial new narrative appear in each chapter. The three themes follow.

1. Global Factors Affect Virtually All Strategic Decisions
The global theme is greatly enhanced in this edition because doing business globally has become a necessity, rather than a luxury, in most industries. Nearly all strategic decisions today are affected by global issues and concerns. For this reason, the previous Chapter 10 on "International Strategic Management" has been replaced by substantial new global coverage in each chapter. There is growing interdependence among countries and companies worldwide. The dynamics of political, economic, and cultural differences across countries directly affect strategic management decisions.

2. E-Commerce Is a Vital Strategic Management Tool
A new e-commerce theme is deeply integrated throughout the chapters in response to immense e-commerce opportunities and threats facing organizations today. Almost all products can now be purchased over the Internet. Business-to-business e-commerce is ten times greater even than business-to-consumer e-commerce. Accelerating use of the Internet to gather, analyze, send, and receive information has changed the way strategic decisions are made. Since the last edition, literally millions of companies have established World Wide Web sites and are conducting e-commerce internationally.

3. Preserving the Natural Environment Is a Vital Strategic Issue
Unique to strategic-management texts, the natural environment theme is strengthened in this edition in order to promote and encourage firms to conduct operations in an environmentally sound manner. Countries worldwide have enacted laws to curtail firms from polluting streams, rivers, the air, land, and sea. Environmental concerns are a new point 'of contention in World Trade Organization (WTO) policies and practices. The strategic efforts of both companies and countries to preserve the natural environment are described in this edition. Respect for the natural environment has become an important Concern for consumers, companies, society, and the AACSB.

TIME-TESTED FEATURES

This edition continues many of the special time-tested features and content that have made this text so successful over the last decade. Trademarks of this text strengthened in this edition are as follows:

Chapters: Time-Tested Features

  • The text meets AACSB guidelines which support a practitioner orientation rather than a theory/research approach. This text supports that effort by taking a skills-oriented approach to developing a mission statement, performing an external audit, conducting an internal assessment, and formulating, implementing, and evaluating strategies.
  • The global theme permeating all chapters couches strategic-management concepts in a global perspective.
  • A simple, integrative strategic-management model appears in all chapters and on the inside front cover of the text.
  • A Cohesion Case (America Online—2000) appears after Chapter 1 and is revisited at the end of each chapter. This case allows students to apply strategic-management concepts and techniques to a real organization as chapter material is covered. This integrative (cohesive) approach readies students for case analysis.
  • End-of-chapter Experiential Exercises effectively apply concepts and techniques in a challenging, meaningful, and enjoyable manner. Eighteen exercises apply text material to the Cohesion Case; ten apply textual material to a college or university; another ten send students into the business world to explore important strategy topics. The exercises are relevant, interesting, and contemporary.
  • Excellent pedagogy, including Notable Quotes and Objectives to open each chapter, and Key Terms, Current Readings, Discussion Questions, and Experiential Exercises to close each chapter.
  • Excellent coverage of business ethics aimed at more than meeting AACSB standards.
  • Excellent coverage of strategy implementation issues such as corporate culture, organizational structure, marketing concepts, and financial tools and techniques.
  • A systematic, analytical approach presented in Chapter 6, including matrices such as the TOWS, BCG, IE, GRAND, SPACE, and QSPM.
  • The chapter material is again published in four color.
  • The Web site www.prenhall.com/davidsm provides chapter and case updates, an online Study Guide, and support materials.

Cases: Time-Tested Features

  • The 2000 timeframe for cases offers the most current set in any business policy text on the market.
  • The cases focus on well-known firms in the news making strategic changes. All cases are undisguised and most are exclusively written for this text to reflect current strategic-management problems and practices.
  • The cases feature a great mix of small business, international, and not-for-profit firms organized conveniently by industry.
  • Almost all cases provide complete financial information about the firm and an organizational chart.
  • A split-paperback version including only cases is available.
  • A special matrix provided here in preface compares all cases in the text on important criteria such as topics covered, size of firm, complexity of case, etc.

NEW TO THIS EDITION

In addition to the special time-tested trademarks described above, this edition includes some exciting new features designed to position this text as the clear leader and best choice for teaching business policy and strategic management include:

Changes in the Cases

  • Thirteen brand-new, year 2000 cases focusing on companies in the news appear exclusively for the first time in this text. The cases are:

    America Online (AOL)—The New Cohesion Case; E*Trade; eBay; Amazon.com; First Union Corporation; Wachovia Corporation; Lockheed Martin Corporation; Compaq Computer Corporation; Dell Computer Corporation; Research in Motion; M. D. Anderson Biomedical Services Department; Quorum Health Group; Reader's Digest Association; Reebok International.


  • Twenty-eight fully-updated cases from the last edition are included as follows:

    The Limited; Wal-Mart Stores; Target Corporation; Mandalay Resort Group; Harrah's Entertainment; The Audubon Institute; Riverbanks Zoological Park and Botanical Garden; The Classic Car Club of America; RailTex; Greyhound Lines; Carnival Corporation; Southwest Airlines Co.; Central United Methodist Church; Elkins Lake Baptist Church; Harley-Davidson; Winnebago Industries; Avon Products; Revlon; UST; Pilgrim's Pride Corporation; H. J. Heinz Company; Hershey Foods Corporation; The Boeing Company; Apple Computer; Stryker Corporation; Biomet; Playboy Enterprises; Nike.
Specific Chapter Changes

  • Chapter 1 titled "The Nature of Strategic Management"—New headings, subheadings, and topics include: History of Strategic Planning, Pitfalls in Doing Strategic Planning, Why Some Firms Do No Strategic Planning, Guidelines for Doing Strategic Planning, Internet Ethics Issues, Nature of Global Competition, Advantages and Disadvantages of International Operations.
  • Chapter 2 titled "The Business Mission"—Extensive new coverage of vision statements is provided including numerous examples. All-new example mission statements are provided and evaluated. New topics include Concern About Company Mission Across Continents and Vision Versus Mission. Chapter material is totally reorganized to improve caliber of presentation.
  • Chapter 3 titled "The External Assessment"—Fully undated Web site references and narrative with all new examples. New headings include The Global Challenge, Politics in Mexico, Politics in Russia, Politics in China, Is the Internet Revolution Bypassing the Poor, Minorities?, What Country is the Most Wireless Nation? Expanded coverage of Competitive Intelligence and Cooperation Among Competitors is provided. New demographic trend information included.
  • Chapter 4 titled "The Internal Assessment"—New headings, subheadings, and topics include: American Versus Foreign Cultures, Changing Role of Women in Japan, E-Stores Replacing Brick Stores. All new examples provided. Prior table giving internal audit checklist of questions now integrated throughout the chapter. Extensive new advertising and global material.
  • Chapter 5 titled "Strategies in Action"—Previously Chapter 2, new headings include: Should Internet Sales Remain Tax-Free? Does the USA Lead in Small Business Startups?, The Nature of Long-Term Objectives, and Not Managing by Objectives. All new strategy examples are provided, including the lists of current divestitures, joint ventures, and mergers. Previous table titled Guidelines for Situations When Particular Strategies Are Most Effective has been replaced with appropriate integration throughout the chapter. Joint Venture is no longer grouped as a Defensive Strategy. Michael Porter's generic strategy material shifts and expands in coverage.
  • Chapter 6 titled "Strategy Analysis and Choice"—New headings include: Industries Most Affected By Online Sales, Merger Mania in Europe, Boards of Directors. The long-term objectives material shifts to prior chapter. New year2000 examples provided throughout. Extensive new coverage provided on governance. Matrix approach to strategy analysis and choice improved.
  • Chapter 7 titled "Implementing Strategies: Management Issues"—New headings include: Restructuring Changes a Country, The Mexican Culture, The Russian Culture, The Chinese Culture, CEO's Becoming E-Commerce Leaders. Increased coverage of women in top management, natural environment issues, e-engineering, global issues, and e-commerce. All new examples provided.
  • Chapter 8 titled "Implementing Strategies: Marketing, Finance/Accounting, R&D, and CIS Issues"—New coverage of Internet marketing, Internet advertising, market segmentation, New headings include: Europe Acquiring the USA, Business Reaction to Global Warming, New Trends in Firms Going Public. New examples provided throughout. Expanded coverage of global and e-commerce factors.
  • Chapter 9 titled "Strategy Review, Evaluation, and Control"—New headings are The Best Companies in Britain, France, and Germany and Using Virtual Close for Strategy Evaluation. All new examples provided. Increased coverage of global factors and e-commerce issues.

ANCILLARY MATERIALS

  • Instructor's Resource CD-ROM. Includes improved PowerPoint slides offering professors easy lecture outlines for in-class presentations. Chapter headings and topics are highlighted on up to forty PowerPoint slides per chapter. The Instructor's Manual and Test Item File are also included.
  • Case Instructor's Manual. Provides a comprehensive teacher's note for all forty-one cases. The teachers' notes feature detailed analyses, classroom discussion questions with answers, an external and internal assessment, specific recommendations, strategy implementation material, and an epilogue for each case. Each teachers' note is also provided on a PowerPoint slide for convenience to the professor.
  • Instructor's Manual. Provides lecture notes, teaching tips, answers to all end chapter Experiential Exercises and Review Questions, additional Experiential Exercises not in the text, a glossary with definitions of all end-of-chapter key terms and concepts, sample course syllabi, and a test bank of nearly fifteen hundred questions with answers.
  • Twenty Color Care Video Segments. To accompany the Cohesion Case, a color video prepared by America Online (AOL) is available to adopters free of charge. Shown near the beginning of the course, the AOL video can arouse students' interest in studying the Cohesion Case and completing Experiential Exercises that apply chapter material to this case. In addition, a collection of nineteen other color case video segments is available free of charge. The segments average fifteen minutes each and were professionally prepared by firms used in cases in this text.
  • PHLIP/CW—Prentice Hall Learning on the Internet Partnership (PHLIP). This is a content-rich, multidisciplinary business education Web site created by professors for professors and their students. PHLIP provides academic support for faculty and students using this text, offering students the Student Study Hall, Current Events, an Interactive Study Guide, and Internet Resources. Instructors can choose from text-specific resources such as the Faculty Lounge, Teaching Archive, Help with Computers, and Internet Skills.
  • Standard Web CT—Free to Adoptors. Standard Web CT, an online course from Prentice Hall, features Companion Web Site and Test Item File Content in an easy-to-use system. Developed by educators for educators and their students, this online content and tools feature the most advanced educational technology and instructional design available today. The rich set of materials, communication tools, and course management resources can be easily customized to either enhance a traditional course or create the entire course online.
  • Transparency Masters. Approximately one hundred transparency masters are available with this text. These transparencies feature figures and key topics in the text and a e provided as full-color acetates.
  • Print and Computerized Test Bank. The test bank for this text includes 737 True/False questions, 425 multiple-choice questions, and 202 essay questions for the text chapters. Answers to all objective questions are provided. The test questions given in the Instructor's Manual are also available on computerized test software to facilitate preparing and grading tests.

MASTERING STRATEGY

Mastering Strategy is the first product in the Mastering Business series. It offers students an interactive, multimedia experience as they follow the people and issues of Cango, Inc., a small Internet startup. The text, video, and interactive exercises provide students an opportunity to simulate the strategic planning experience and chart the future activities for Cango.

The Mastering Strategy Environment
Students will learn strategy concepts within the context of Cango, Inc., a fictitious Internet company that focuses its efforts in the entertainment arena of the e-commerce world. The company began by retailing books on the Internet and has branched pt to offer CDs, videos, MP3 files, and customized players. Cango employs mostly recent college graduates enthusiastic about working with an online business and its possibilities for expansion. Currently, Cango is experiencing great growth, but little profit.

Thus, Cango employees are always on the lookout for new ventures. The company considering hosting streaming video, e-books and e-book readers, and partnerships with other firms. One example would be a film studio so that Cango can serve the needs independent filmmakers and tap into the growing popularity of home video hardware and software.

The company's goals are to get bigger, better, and to someday make a significant fit. In Mastering Strategy, the firm transforms from a small, independent company to one sold on the NASDAQ through the IPO process. The firm's founder and the management ' must deal with all the implications of this change, both within the company and in the text of the external world of investors, the board of directors, and potential competitors.

Employees
Liz is Cango's founder. She's a smart, enthusiastic, and driven CEO. She can be intimidating to some employees, but invokes a great deal of admiration from them as well. She received her MBA about five years ago, and holds a BA in Music. She left a traditional company to start Cango when she recognized that the Internet would take off. Liz is recognized in the industry as a pioneer who likes to play a role in every decision. She's a visionary with a very magnetic personality.

Cango currently has a total of thirty-two employees. There are six managers that comprise the senior management team at Cango.

Andrew is a recent marketing graduate and Cango's director of marketing. He is enthusiastic and creative in his work. He's also a fun guy who tends to dress and act in an avant-garde way. Other employees turn to him to lighten things up, or whenever they need a creative shot in the arm. He keeps his eye on what the competition is doing. He loves coming up with cool new ideas, and as far as Cango is concerned, he's always thinking, "What are we going to do tomorrow?"

Warren, the Director of Operations, has a background in economics. He focuses on how supply and demand, pricing, interest fates, and production costs affect Cango's new ventures. Warren has been with Cango since its inception. He is a realist and everyone knows that it is thanks to him that many neat ideas become realities. Warren is a sports buff and frequent sports analogies can be heard coming from him. His goal is to keep the firm on track.

The company's director of personnel is Maria. She has an MBA in human resource management and a BA in psychology. She is a people person who nonetheless has to make many of the hard decisions regarding hiring and firing. Many employees turn to her to discuss personnel issues as well as for advice and feedback. She finds that her role is to always be thinking, "How will this affect our workforce?" whenever new ideas or changes are on the horizon for Cango.

Clark is Cango's VP of finance. He frequently interfaces with actual and potential Cango investors. Whenever new ideas come up, he can be counted on to ask, "Are we making shareholders more money with this idea?" Clark is a married man with strong family values; he is extremely competent in his work. He tends to look at new opportunities with the approach of, "How does this idea add value to the firm?"

Cango's director of accounting is Ethel. She is detail oriented and has a bookkeeper/CPA background. The company depends upon her to always consider the potential costs of all the exciting new ideas that get floated around. She can be counted on to bring up questions that no one else wants to talk about. She spends most of her time dealing with the legalities, with auditing firms, etc. Cango's managers may not always want to hear what she has to say, but they admit—she's usually right.

There are several minor characters as well as many extras. Each employee brings a different set of personal and professional attributes to the young firm. The dynamics between all of these people is what will make Cango either a success or failure. How each copes with various decisions and problems is the basis for the Mastering Strategy project.

Cango's Course of Action

In early episodes, students engage in the crux of strategic planning as they work with Cango to create vision and mission statements, grapple with the issues of social responsibility and engage in the detailed planning of a SWOT analysis. In later episodes, working from competitive and internal environmental analyses, students engage in strategic choice and the implementation issues that arise from selecting among various strategic options.

Cango's IPO

Embedded in these analytical activities are events at Cango that add further spice to the decision-making process. Competitive environment realities move Cango towards an IPO. This change presents Cango's management team with options for investing capital in different strategic venues, including whether and how to diversify into a new line of business.

The threat of being acquired by a larger industry player appears, as do problems with managing the firm's value chain when demand forecasting is inadequate, and the struggle for the CEO to maintain power in the face of not meeting Wall Street's or the board of director's performance expectations. Embedded in all of these strategic issues are the human factors that are encountered when decisions about tangible and intangible resources, performance measurements, and power relationships are made.

Episodes Within Mastering Strategy

The videos show the management team in action within their offices and on location at the company's warehouse, restaurants, public parks, parking lots and other areas. Here are brief summaries of each of the twelve episodes that comprise the Mastering Strategy project.

Episode l: Concept of Strategic Management

Elizabeth is named Business Leader of the Year and delivers a speech on how she and Cango came to be a success. For the first time in the company's history, she actually examines its development and her thinking along the way. Cango's management team meets to decide if the company should enter the online gaming marketing.

Episode 2: Vision and Mission

Elizabeth struggles with the idea of taking Cango public, realizing that to do so she must have clear vision and mission statements for the company. She puts her ideas about the company on paper and gives her staff the opportunity to voice their own Cango vision.

Episode 3: External Environment

The rumor on the street is that a rival Internet startup is looking to buy Cango. The team views this as a hostile takeover, and they also discuss the possible impact of another threat: government regulation of commercial Internet sites.

Episode 4: Competitor Analysis

Cango's management team learns of another large company's plans to buy out the: Internet entertainment industry. Cango isn't on the "hit list," but comes out against the' action, calling the company a "bureaucratic behemoth." The team makes a list identifying and rating their competitors.

Episode 5: Internal Analysis

Cango's board of directors questions Liz's leadership ability after the company stock takes a dive. An outside consultant's report verifies the board's concerns. Liz manages to convince the Board that she can change her leadership style and keeps her current position.

Episode 6: Strategic Analysis and Choice

The IPO has raised $130 million and the management team meets to discuss how to use it. Some want the company to push into new markets, others are more cautious. The resolution is to move into the emerging online gaming market.

Episode 7: Business Level Strategy in a Single or Dominant-Product Business

Liz and Andrew discuss the ramifications (including cost leadership, differentiation, and focus) of Cango entering the online gaming arena. An MP3 company offers Cango an exclusive distribution contract and a high commission for space on Cango's Web site.

Episode 8: Corporate Level Strategy

Cango's management team discusses how the company can get into online gaming without having to start from scratch. The idea put forth is that Cango form an alliance with a well-known gaming company already on the market. The repercussions of this are debated.

Episode 9: Strategic Implementation

Cango has acquired Webjouster, Inc., which specializes in interactive entertainment media. The two cultures clash, impacting employee productivity and satisfaction. Resolutions to this problem are discussed.

Episode 10: Strategic Control

Cango's financial data shows the company's performance has been lackluster, and Liz is concerned that this information will create a negative response from the board of directors even though Cango has been successful in other ways.

Episode 11: Leadership and Governance

Cango's board of directors decides to "promote" Elizabeth to chair of the board and bring in a more seasoned CEO. In a passionate speech, Liz persuades the board to keep her as CEO. She vows to step back more from the day-to-day operations.

Episode 12: International Management

Warren discovers that the majority of Cango's Web sales are within the United States, and the management team decides if they should start targeting international customers. It is determined that no one at Cango has the expertise to tackle the issue of internationalization.

Summary

Mastering Strategy can be ordered separately or packaged with this or other texts for an additional fee. Contact your local Prentice Hall sales representative for details.

  • System Requirements:
    The Mastering Business CD-ROM takes no space on a PC's hard drive. It runs entirely from the CD-ROM. You will need an Internet browser program (Internet Explorer 4+ or Netscape 4+) and a media player (Windows Media Player or Quicktime Player).


  • Using the CD-ROM:
    The program itself is very easy to use, but every computer starts CDs differently. Some begin playing CDs as soon as you put them in and close the tray. For others, there may be a desktop icon for you to click. Look on the Mastering Strategy CDROM for detailed instructions.

SPECIAL NOTE TO STUDENTS

Welcome to business policy. This is a challenging and exciting course that will allow you to function as the owner or chief executive officer- of different organizations. Your major task in this course will be to make strategic decisions and to justify those decisions through oral and written communication. Strategic decisions determine the future direction and competitive position of an enterprise for a long time. Decisions to expand geographically or to diversify are examples of strategic decisions.

Strategic decision making occurs in all types and sizes of organizations, from General Motors to a small hardware store. Many people's lives and jobs are affected by strategic decisions, so the stakes are very high. An organization's very survival is often at stake. The overall importance of strategic decisions makes this course especially exciting and challenging. You will be called upon in business policy to demonstrate how your strategic decisions could be successfully implemented.

In this course, you can look forward to making strategic decisions both as an individual and as a member of a team. No matter how hard employees work, an organization is in real trouble if strategic decisions are not made effectively. Doing the right things (effectiveness) is more important than doing things right (efficiency). For example, Compaq was prosperous in the mid1990s, but ineffective strategies led to millions in losses in the late 1990s. Compaq Computer CEO Eckhard Pfeiffer lost his job for lack of an Internet vision Del Jones, "Are Company Chiefs Paying Heed to Web?" USA Today, July 2, 1999, p. 5B.

You will have the opportunity in this course to make actual strategic decisions, perhaps for the first time in your academic career. Do not hesitate to take a stand and defend specific strategies that you determine to be the best. The rationale for your strategic decisions will be more important than the actual decision, because no one knows for sure what the best strategy is for a particular organization at a given point in time. This fact accents the subjective, contingency nature of the strategic-management process.

Use the concepts and tools presented in this text, coupled with your own intuition, to recommend strategies that you can defend as being most appropriate for the organizations that you study. You will also need to integrate knowledge acquired in previous business courses. For this reason, business policy is often called a capstone course; you may want to keep this book for your personal library.

This text is practitioner-oriented and applications-oriented. It presents strategic-management concepts that will enable you to formulate, implement, and evaluate strategies in all kinds of profit and nonprofit organizations. The end-of-chapter Experiential Exercises allow you to apply what you've read in each chapter to the Hershey Foods Cohesion Case and to your own university.

Use the Strategic Management Club Online Web site at www.strategyclub.com. The templates and links there will save you time in performing analyses and will make your work look professional. Work hard in policy this term and have fun. Good luck!

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  • Anonymous

    Posted February 10, 2002

    Concepts of the Future

    Wow! This professor taught at a no name college call Francis Marion University in Florence, SC. However, Harvard is also using his book to teach their students? What more can I say!

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  • Anonymous

    Posted November 21, 2001

    Great for college and beyond!

    This is really the only book that I had no intention of selling back to the college. Gives you a great idea of how the companies mentioned in this book operate. It is also good if you are looking for information for investment purposes. This book seems to be updated so to keep you informed of current sector leaders, new trends, and techniques in business.

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