Why is it necessary for an organization to align its managers with the corporate strategy to ensure better organizational performance?

Why is it necessary for an organization to align its managers with the corporate strategy to ensure better organizational performance?

4Staffing decisions are considered an important

component of strategic planning and the man- agement process. Why? How is strategy imple- mentation process connected to the decisions resulting from a staffing strategy?

10-4. Why is it necessary for an organization to align its managers with the corporate strategy to ensure better organizational performance?

10-5. Is downsizing a good strategy for revamping an organization’s competitiveness when it is facing major competitive threats in the market?

10-6. Can organizations be controlled by culture? Explain.

10-7. How is an international staffing strategy different from a domestic one?

S T R A T E G I C P R A C T I C E E X E R C I S E The Synergy Game Yolanda Sarason and Catherine Banbury

Setup

Put three to five chairs on either side of a room, facing each other, in the front of the class. Put a table in the middle, with a bell in the middle of the table.

Procedure

The instructor/moderator divides the class into teams of three to five people. Each team selects a name for itself. The instructor/moderator lists the team names on the board. The first two teams come to the front and sit in the chairs facing each other. The instruc- tor/moderator reads a list of products or services

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■■ Learning objectives begin each chapter. ■■ Timely, well-researched, and class-tested cases deal with interesting companies

and industries. Many of the cases are about well-known, publicly held corpora- tions—ideal subjects for further research by students wishing to “update” the cases.

Both the text and the cases have been class-tested in strategy courses and revised based on feedback from students and instructors. The first 12 chapters are organized around a strategic management model that begins each chapter and provides a structure for both content and case analysis. We emphasize those concepts that have proven to be most useful in understanding strategic decision making and in conducting case analysis. Our goal was to make the text as comprehensive as possible without getting bogged down in any one area. Extensive endnote references are provided for those who wish to learn more about any particular topic. All cases are about actual organizations. The firms range in size from large, established multinationals to small, entrepreneurial ventures, and cover a broad variety of issues. As an aid to case analysis, we propose the strategic audit as an analytical technique.

SUPPLEMENTS At www.pearsonglobaleditions.com/Wheelen instructors can access teaching resources available with this text in a downloadable, digital format. Registra- tion is simple and gives you immediate access to new titles and editions. Please contact your Pearson sales representative for your access code. As a registered f aculty member, you can download resource files and receive immediate access and i nstructions for installing course management content on your campus server. In case you ever need assistance, our dedicated technical support team is ready to assist instructors with questions about the media supplements that accompany this text. Visit for answers to frequently asked questions. This title has the follow- ing electronic resources.

Instructor’s Manuals Two comprehensive Instructor’s Manuals have been carefully constructed to accom- pany this book. The first one accompanies the concepts chapters; the second one accompanies the cases.

Concepts Instructor’s Manual To aid in discussing the 13 strategy chapters, the Concepts Instructor’s Manual includes:

■■ Suggestions for Teaching Strategic Management: These include various teaching methods and suggested course syllabi.

■■ Chapter Notes: These include summaries of each chapter, suggested answers to discussion questions, and suggestions for using end-of-chapter cases/exercises and part-ending cases, plus additional discussion questions (with answers) and lecture modules.

Case Instructor’s Manual To aid in case method teaching, the Case Instructor’s Manual includes detailed sugges- tions for its use, teaching objectives, and examples of student analyses for each of the

26 PREFACE

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full-length comprehensive cases. This is the most comprehensive instructor’s manual available in strategic management. A standardized format is provided for each case:

1. Case Abstract

2. Case Issues and Subjects

3. Steps Covered in the Strategic Decision-Making Process

4. Case Objectives

5. Suggested Classroom Approaches

6. Discussion Questions

7. Case Author’s Teaching Note (if available)

8. Student-Written Strategic Audit (if appropriate)

9. EFAS, IFAS, and SFAS Exhibits

10. Financial Analysis—ratios and common-size income statements (if appropriate)

PowerPoint Slides PowerPoint slides, provided in a comprehensive package of text outlines and figures cor- responding to the text, are designed to aid the educator and supplement in-class lectures.

Test Item File The Test Item File contains over 1200 questions, including multiple-choice, true/false, and essay questions. Each question is followed by the correct answer, AACSB cat- egory, and difficulty rating.

TestGen TestGen software is preloaded with all of the Test Item File questions. It allows instruc- tors to manually or randomly view test questions, and to add, delete, or modify test- bank questions as needed to create multiple tests.

VIDEO LIBRARY Videos illustrating the most important subject topics are available in the following format:

■■ MyLab—available for instructors and students, provides round the clock instant access to videos and corresponding assessment for Pearson textbooks. Contact your local Pearson representative to request access to either format.

Acknowledgments We would like to thank the many people at Pearson who helped make this edition possible. We are especially grateful to our senior sponsoring editor, Neeraj Bhalla, who managed to keep everything on an even keel. We also would like to thank Greetal Carolyn Jayanandan, Nicole Suddeth, Dan Tylman, Claudia Fernandes and everyone at Pearson who guided the book through the production and marketing processes. Special thanks to Kaitlyn Dell’Aquila at Pearson for her hard work in the trenches.

PREFACE 27

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We are very thankful to Paul D. Maxwell, St. Thomas University, Miami, FL; Terry J. Schindler, University of Indianapolis; Anne Walsh, La Salle University; Angelo Ca- millo, Woodbury University; Jeannine L. Scherenberg, Rockford College; William Rei- sel, St. John’s University; Ronaldo Parente, Florida International University; Roxana Wright, Plymouth State University; J. Barry Dickinson, Holy Family University; The- odore E. Davis, Jr., PhD, SUNY College at Buffalo; Manzoor Chowdhury, Lincoln University; David Olson, California State University at Bakersfield; and Janis Dietz, University of La Verne for their constructive criticism of the 14th edition.

We are especially thankful to the many students who tried out the cases we chose to include in this book. Their comments helped us find any flaws in the cases before the book went to the printer.

We also offer a big thanks to the many case authors who have provided us with ex- cellent cases for the 15th edition of this book. We consider many of these case authors to be our friends. A special thanks to you!! The adage is true: The path to greatness is through others.

Alan Hoffman would like to thank the following colleagues for their valuable in- sight, support, and feedback during the writing process: Anne Nelson, Trena Depel, Kathy Connolly, John Nicholson, Robert Frisch, Barbara Gottfried, Bonnie Kornman, Gail Goldman, Raj Sisodia, Ken Kornman, Donna Gallo, Jeff Shuman, Anna Forte, Deb Kennedy, Paula Josephs, Lisa Dinsmore, Alyssa Goldman, Susan Fleming, Jill Brown, Lucia Gumbs, Jadwiga Supryn, Cynthia Clark, Natalia Gold, Aileen Cordette, Andrea Harding, Martha Bailey, Lew Sudarsky, Ed Ottensmeyer, Tim Stearns, Christopher Forte, Roberta Francis, Abbey Nicholson, Sam Vitali, Michael Page, Chip Wiggins, Jon Horlink, Vicki Lafarge, Dorothy Feldmann, Susan Adams, Josh Senn, Gary Cordette, Merle Gordon, Thom McGillvray, Bob Cronin, Arthur Hughes, Jayne Pollack, Susan McGrath, Joe Goldman, Ed Harding, Lynne Young, Rick Vitali, Catherine Usoff, and Beverley Earle. Special thanks to Joyce Vincelette, Kathryn Wheelen, Patricia Ryan, Jim Schwartz, and Pamela Goldberg Schwartz.

Lastly, to the many strategy instructors and students who have relayed to us their thoughts about teaching the strategy course: We have tried to respond to your prob- lems and concerns as best we could by providing a comprehensive yet usable text cou- pled with recent and complex cases. To you, the people who work hard in the strategy trenches, we acknowledge our debt. This book is yours.

A. N. H. Needham Heights, Massachusetts

C. E. B. Durham, North Carolina

Global Edit ion Acknowledgments Pearson would like to thank Georg Hauer, Stuttgart Technology University of Applied Sciences, Humphry Hung, Tung Wah College, Krish Saha, Birmingham City University, and Sununta Siengthai, Asian Institute of Technology (A.I.T.), for their contributions to the Global Edition.

We would also like to thank David Ahlstrom, Chinese University of Hong Kong, Nazih El-Jor, Universite du Saint Esprit Kaslik, Goh See Kwong, Taylor’s University Malaysia, and Tan Wei Lian, Taylor’s University.

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About the Authors

Thomas L. Wheelen, May 30, 1935 – December 24, 2011. DBA, MBA, BS Cum Laude (George Washington University, Babson College, and Boston College, respectively), College, MBA (1961); Boston College, BS cum laude (1957). Teaching Experience: Visiting Professor— Trinity College—University of Dublin (Fall 1999); University of South Florida—Professor of Strategic Management (1983–2008); Uni- versity of Virginia – McIntire School of Commerce; Ralph A. Beeton Professor of Free Enterprise (1981–1985); Professor (1974–1981); Associate Professor (1971–1974); and Assistant Professor (1968–1971); Visiting Professor—University of Arizona (1979–1980 and Northeastern University (Summer 1975, 1977, and 1979). Academic, Industry, and Military Experience: University of Virginia College of Continuing Edu- cation: (1) Coordinator for Business Education (1978–1983, 1971–1976)—approved all undergraduate courses offered at seven Regional Centers and approved faculty; (2) Liaison Faculty and Consultant to the National Academy of the FBI Academy (1972–1983) and; (3) developed, sold, and conducted over 200 seminars for local, state, and national governments, and companies for the McIntire School of Com- merce and Continuing Education. General Electric Company—various management positions (1961–1965); U.S. Navy Supply Corps (SC)—Lt. (SC) USNR—assistant supply officer aboard nuclear support tender (1957–1960). Publications: (1) Mono- graph, An Assessment of Undergraduate Business Education in the United States (with J. D. Hunger), 1980; (2) Books: 60 books published; 14 books translated into eight languages (Arabic, Bahasa-Indonesian, Chinese, Chinese Simplified, Greek, Italian, Japanese, Portuguese, and Thai); (3) Books—co-author with J. D. Hunger—five active books: Strategic Management and Business Policy, 10th edition (2006); Cases in Strategic Management and Business Policy, 10th edition (2006); Concepts in Strate- gic Management and Business Policy, 10th edition (2006); Strategic Management and Business Policy, 10th edition; International Edition (2006); and Essentials of Strategic Management, 3rd edition (2003); (4) Co-editor: Developments in Information Systems (1974) and Collective Bargaining in the Public Sector (1977); and (5) Co-developer of software—STrategic Financial ANalyzer (ST. FAN) (1993, 1990, 1989—different ver- sions); (6) Articles—authored over 40 articles that have appeared in such journals as the Journal of Management, Business Quarterly, Personnel Journal, SAM Advanced Management Journal, Journal of Retailing, International Journal of Management, and the Handbook of Business Strategy; (6) Cases—have about 280 cases appearing in over 83 text and case books, as well as the Business Case Journal, Journal of Man- agement Case Studies, International Journal of Case Studies and Research, and the Case Research Journal. Awards: (1) Fellow elected by the Society for Advancement of Management in 2002; (2) Fellow elected by the North American Case Research Association in 2000; (3) Fellow elected by the Text and Academic Authors Association in 2000; (4) the 1999 Phil Carroll Advancement of Management Award in Strategic Management from the Society for Advancement of Management; (5) 1999 McGuffey Award for Excellence and Longevity for Strategic Management and Business Policy, 6th edition, from the Text and Academic Authors Association; (6) 1996/97 Teaching Incentive Program Award for teaching undergraduate strategic management; (7) Ful- bright, 1996–1997, to Ireland but had to turn it down; (8) Endowed Chair, Ralph A.

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Beeton Professor, at University of Virginia (1981–1985); (9) a Sesquicentennial Associateship research grant from the Center for Advanced Studies at the University of Virginia, 1979–1980; (10) Small Business Administration (Small Business Institute), supervised undergraduate team that won District, Regional III, and Honorable Men- tion Awards; and (11) awards for two articles. Associations: Dr. Wheelen served on the Board of Directors of the Adhia Mutual Fund, the Society for Advancement of Management, and on the Editorial Board and as Associate Editor of SAM Advanced Management Journal. He served on the Board of Directors of Lazer Surgical Software Inc. and the Southern Management Association, and on the Editorial Boards of the Journal of Management and Journal of Management Case Studies, the Journal of Retail Banking, the Case Research Journal, and the Business Case Journal. He was Vice President of Strategic Management for the Society for the Advancement of Manage- ment, and President of the North American Case Research Association. Dr. Wheelen was a member of the Academy of Management, Beta Gamma Sigma, the Southern Management Association, the North American Case Research Association, the So- ciety for Advancement of Management, the Society for Case Research, the Strategic Management Association, and the World Association for Case Method Research and Application. He has been listed in Who’s Who in Finance and Industry, Who’s Who in the South and Southwest, and Who’s Who in American Education.

J. David Hunger, Ph.D. (Ohio State University), is currently Strategic Man- agement Scholar in Residence at Saint John’s University in Minnesota. He is also Professor Emeritus at Iowa State University where he taught for 23 years. He previ- ously taught at George Mason University, the University of Virginia, and Baldwin- Wallace College. He worked in brand management at Procter & Gamble Company, as a selling supervisor at Lazarus Department Store, and served as a Captain in U.S. Army Military Intelligence. He has been active as a consultant and trainer to busi- ness corporations, as well as to state and federal government agencies. He has writ- ten numerous articles and cases that have appeared in the Academy of Management Journal, International Journal of Management, Human Resource Management, Jour- nal of Business Strategies, Case Research Journal, Business Case Journal, Handbook of Business Strategy, Journal of Management Case Studies, Annual Advances in Business Cases, Journal of Retail Banking, SAM Advanced Management Journal, and Journal of Management, among others. Dr. Hunger is a member of the Academy of Manage- ment, the North American Case Research Association, the Society for Case Research, the North American Management Society, the Textbook and Academic Authors Association, and the Strategic Management Society. He is past-President of the North American Case Research Association, the Society for Case Research, and the Iowa State University Press Board of Directors. He also served as a Vice President of the U.S. Association for Small Business and Entrepreneurship. He was Academic Direc- tor of the Pappajohn Center for Entrepreneurship at Iowa State University. He has served on the editorial review boards of SAM Advanced Management Journal, the Journal of Business Strategies, and the Journal of Business Research. He has served on the board of directors of the North American Case Research Association, the Society for Case Research, the Iowa State University Press, and the North American Man- agement Society. He is co-author with Thomas L. Wheelen of Strategic Management and Business Policy and Essentials of Strategic Management plus Concepts in Strategic Management and Business Policy and Cases in Strategic Management and Business Policy, as well as Strategic Management Cases (PIC: Preferred Individualized Cases), and a monograph assessing undergraduate business education in the United States. The 8th edition of Strategic Management and Business Policy received the McGuffey

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Award for Excellence and Longevity in 1999 from the Text and Academic Authors Association. Dr. Hunger received the Best Case Award given by the McGraw-Hill Publishing Company and the Society for Case Research in 1991 for outstanding case development. He is listed in various versions of Who’s Who, including Who’s Who in the United States and Who’s Who in the World. He was also recognized in 1999 by the Iowa State University College of Business with its Innovation in Teaching Award and was elected a Fellow of the Teaching and Academic Authors Association and of the North American Case Research Association.

Alan N. Hoffman, MBA, DBA (Indiana University), is Professor of Strategic Management at Bentley University in Waltham, Massachusetts. He is the former Director of the MBA Program at Bentley University. He served as the course coordi- nator and Visiting Professor of Strategic Management for the Global Strategy course in the OneMBA Program at the Rotterdam School of Management at Erasmus Uni- versity, Rotterdam, The Netherlands. He is also the owner of Dr. Alan N. Hoffman Investment Management, founded in 1995. His major areas of interest include strategic management, global competition, investment strategy, design thinking, and technol- ogy. Professor Hoffman is coauthor of The Strategic Management Casebook and Skill Builder textbook (with Hugh O’Neill). His academic publications have appeared in the Academy of Management Journal, Human Relations, the Journal of Business Ethics, the Journal of Business Research, and Business Horizons. He has authored more than 40 strategic management cases, including The Boston YWCA, Ryka Inc., Liz Claiborne, Ben & Jerry’s, Cisco Systems, Sun Microsystems, Palm Inc., Handspring, eBay, AOL/Time Warner, McAfee, Apple Computer, TiVo Inc., Wynn Resorts, TomTom, Blue Nile, GE, Amazon, Netflix, Delta Airlines, A123, Tesla Motors, Chi- potle, Staples, Target, Sonic Restaurants, Harley Davidson, and Whole Foods Mar- ket. He is the recipient of the 2004 Bentley University Teaching Innovation Award for his course: “The Organizational Life Cycle—The Boston Beer Company Brewers of Samuel Adams Lager Beer.” He teaches strategic management in many executive programs and also teaches business to artists at The Massachusetts College of Art and Design.

Charles E. Bamford, Ph.D. (University of Tennessee), MBA (Virginia Tech), and BS (University of Virginia). He is an adjunct professor at the University of Notre Dame, where he has been awarded the EMBA Professor of the Year Award four times. Chuck worked in industry for 12 years prior to pursuing his Ph.D. His last posi- tion was as the Manager of Business Analysis (Mergers & Acquisitions, Dispositions, and Business Consulting) for Dominion Bankshares Corporation (now Wells Fargo). Three years ago Chuck founded Bamford Associates, LLC and relocated to Durham, NC. He has worked with thousands of managers in the development of implementable strategic plans and an entrepreneurial orientation to growth.

His research has been published in the Strategic Management Journal, Journal of Business Venturing, Entrepreneurship Theory & Practice, Journal of Business Research, Journal of Business Strategies, Journal of Technology Transfer, and Journal of Small Business Management, among others. Chuck has co-authored four other text- books and is the author of the fiction novel Some Things Are Never Forgiven (Penguin Press).

He has taught courses in strategy and entrepreneurship at the undergraduate, graduate, and executive levels. His teaching experience includes courses taught at universities in Scotland, Hungary, and the Czech Republic. He was a Professor and the Dennis Thompson Chair of Entrepreneurship at Queens University of Charlotte. He also held positions as an Associate Professor at Texas Christian University and at

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the University of Richmond. He has taught Executive MBA courses at The University of Notre Dame, Texas Christian University, Tulane University, and at Queens Uni- versity of Charlotte.

Chuck has won 19 individual teaching excellence awards during his career, includ- ing 10 Executive MBA Professor of the Year Awards. He is also a Noble Foundation Fellow in Teaching Excellence.

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Introduction to Strategic

Management and Business

Policy

PA R T1

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34

Basic Concepts of Strategic Management

C h a p t e r 1

Pearson MyLab Management® Improve Your Grade!

Over 10 million students improved their results using the Pearson MyLabs. Visit mymanagementlab.com for simulations, tutorials, and end-of-chapter problems.

Putting Strategy into Action

Developing Long-range Plans

Monitoring Performance

Feedback/Learning: Make corrections as needed

Gathering Information

Strategy Implementation:

Strategy Formulation:

Evaluation and Control:

Environmental Scanning:

Societal Environment: General forces

Natural Environment: Resources and

climate

Task Environment:

Industry analysis

Structure: Chain of command

Culture: Beliefs, expectations,

values

Resources: Assets, skills, competencies,

knowledge

Activities needed to accomplish a plan Cost of the

programs

Sequence of steps needed to do the job

What results to accomplish by when Plan to

achieve the mission & objectives Broad

guidelines for decision making

Mission

Internal

External

Programs and Tactics

Budgets

Procedures

Performance

Objectives

Strategies

Policies

Actual results

Reason for existence

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