PART 1 OVERVIEW OF STRATEGIC MANAGEMENT 1
CASES C- 1
CHAPTER 1
THE NATURE OF STRATEGIC MANAGEMENT 2
SERVICE COMPANIESSMALL BUSINESSES1．Splatterball Adventure Games—1996 2
Defining Strategic Management 4
WHAT IS STRATEGIC MANAGEMENT? 4
Stages of Strategic Management 5
Adapting to Change 6
Integrating Intuition and Analysis 6
KEY TERMS IN STRATEGIC MANAGEMENT 8
Strategists 8
Mission Statements 9
External Opportunities and Threats 9
Internal Strengths and Weaknesses 9
Long-Term Objectives 10
ContentsPREFACE 10
Strategies 11
Annual Objectives 11
THE STRATEGIC-MANAGEMENT MODEL 12
Policies 12
2．Norwood Furniture Company—1995 14
BENEFITS OF STRATEGIC MANAGEMENT 15
INTRODUCTIONHOW TO ANALYZE A BUSINESS POLICY CASE 15
Financial Benefits 16
Nonfinancial Benefits 17
The Need for Practicality 18
BUSINESS ETHICS AND STRATEGIC MANAGEMENT 18
The Need for Justification 18
The Need for Realism 18
WHAT IS A BUSINESS POLICY CASE? 18
GUIDELINES FOR PREPARING CASE ANALYSES 18
The Need for Specificity 19
PREPARING A CASE FOR CLASS DISCUSSION 19
The Need for Originality 19
The Case Method Versus Lecture Approach 19
The Need to Contribute 19
PREPARING A WRITTEN CASE ANALYSIS 20
The Executive Summary 20
The Cross-Examination 20
COMPARING BUSINESS AND MILITARY STRATEGY 21
MAKING AN ORAL PRESENTATION 21
The Comprehensive Written Analysis 21
Steps in Preparing a Comprehensive Written Analysis 21
Constructing Visual Aids 22
Speaking from Notes 22
Managing Body Language 22
Controlling Your Voice 22
Organizing the Presentation 22
FIFTY TIPS FOR SUCCESS IN CASE ANALYSIS 23
Answering Questions 23
INSTRUCTIONS FOR USING THE STRATEGY FORMULATOR AND CASE ANALYST SOFTWARE 26
THE COHESION CASE AND EXPERIENTIAL EXERCISES 26
THE STRATEGY FORMULATOR SOFTWARE 27
Making a Backup Copy of the Diskettes 27
The Cohesion Case:Hershey Foods Corporation—1996 27
3．The Woodlands Cleaning Service—1995 28
The Structure and Function of Strategy Formulator 28
The Print Routine 29
The Save and Load Routines 29
Getting Started 29
Contents of the Diskette 31
THE CASE ANALYST SOFTWARE 31
BANKINGINDUSTRY NOTE 37
Experiential Exercise 1B Developing a Code of Business Ethics for Hershey Foods 42
Experiential Exercise 1A Strategy Analysis for Hershey Foods 42
Experiential Exercise 1C The Ethics of Spying on Competitors 43
Experiential Exercise 1E Strategic Planning at a Local Company 44
Experiential Exercise 1D Strategic Planning for My University 44
CHAPTER 2 STRATEGIES IN ACTION 46
TYPES OF STRATEGIES 48
INTEGRATION STRATEGIES 48
Forward Integration 50
Backward Integration 50
Horizontal Integration 51
INTENSIVE STRATEGIES 51
Market Penetration 52
Market Development 52
Product Development 52
4．Citicorp—1996 53
DIVERSIFICATION STRATEGIES 53
Horizontal Diversification 53
Concentric Diversification 53
Joint Venture 54
DEFENSIVE STRATEGIES 54
Conglomerate Diversification 54
Divestiture 55
Retrenchment 55
GUIDELINES FOR PURSUING STRATEGIES 56
Combination 56
Liquidation 56
MERGERS AND LEVERAGED BUYOUTS 59
MICHAEL PORTER'S GENERIC STRATEGIES 60
Leveraged Buyouts(LBOs) 60
Cost Leadership Strategies 61
Differentiation Strategies 61
Focus Strategies 62
The Value Chain 63
The Competitive Advantage of Nations 63
STRATEGIC MANAGEMENT IN NONPROFIT GOVERNMENTAL ORGANIZATIONS 63
Educational Institutions 64
Medlcal Organizations 64
STRATEGIC MANAGEMENT IN SMALL FIRMS 65
Governmental Agencies and Departments 65
EXPERIENTIAL EXERCISE 2B EXAMINING STRATEGY ARTICLES 70
EXPERIENTIAL EXERCISE 2A WHAT HAPPENED AT HERSHEY FOODS IN 1997? 70
EXPERIENTIAL EXERCISE 2D STRATEGIC MANAGEMENT AT THE DYNAMIC COMPUTER COMPANY 71
EXPERIENTIAL EXERCISE 2C CLASSIFYING 1996 STRATEGIES 71
5．Banc One Corporation—1996 72
EXPERIENTIAL EXERCISE 2E HOW RISKY ARE VARIOUS ALTERNATIVE STRATEGIES? 73
EXPERIENTIAL EXERCISE 2F DEVELOPING ALTERNATIVE STRATEGIES FOR MY UNIVERSITY 74
PART 2 STRATEGY FORMULATION 75
CHAPTER 3 THE BUSINESS MISSION 76
WHAT IS OUR BUSINESS? 78
THE IMPORTANCE OF A CLEAR MISSION 80
Vision Versus Mission 81
The Process of Developing a Mission Statement 82
THE NATURE OF A BUSINESS MISSION 82
A Declaration of Attitude 82
A Resolution of Divergent Views 84
A Customer Orientation 86
A Declaration of Social Policy 87
COMPONENTS OF A MISSION STATEMENT 87
WRITING AND EVALUATING MISSION STATEMENTS 88
RETAILINGINDUSTRY NOTE 89
6．The Limited,Inc.—1996 94
EXPERIENTIAL EXERCISE 3A EVALUATING MISSION STATEMENTS 96
EXPERIENTIAL EXERCISE 3B WRITING A MISSION STATEMENT FOR HERSHEY FOODS 97
EXPERIENTIAL EXERCISE 3D CONDUCTING MISSION STATEMENT RESEARCH 98
EXPERIENTIAL EXERCISE 3C WRITING A MISSION STATEMENT FOR MY UNIVERSITY 98
EXPERIENTIAL EXERCISE 3F USING THE STRATEGY FORMULATOR SOFTWARE 99
EXPERIENTIAL EXERCISE 3E ARE MISSION STATEMENTS ESOTERIC? 99
CHAPTER 4 THE EXTERNAL ASSESSMENT 100
THE NATURE OF AN EXTERNAL AUDIT 102
Key External Forces 102
The Process of Performing an External Audit 104
Information Technology 105
ECONOMIC FORCES 106
7．Nordstrom—1997 107
SOCIAL,CULTURAL,DEMOGRAPHIC,AND ENVIRONMENTAL FORCES 109
POLITICAL,GOVERNMENTAL,AND LEGAL FORCES 111
TECHNOLOGICAL FORCES 113
COMPETITIVE FORCES 115
Competitive Intelligence Programs 118
Cooperation Among Competitors 120
SOURCES OF EXTERNAL INFORMATION 121
Library Publications 121
Online Databases 121
Indexes 121
FORECASTING TOOLS AND TECHNIQUES 124
COMPETITIVE ANALYSIS:PORTER'S FIVE-FORCES MODEL 126
Making Assumptions 126
8．Wal-Mart Stores,Inc.—1997 127
Rivalry Among Competing Firms 127
Bargaining Power of Suppliers 128
Development of Substitute Products 128
Potential Entry of New Competitors 128
INDUSTRY ANALYSIS:THE EXTERNAL FACTOR EVALUATION (EFE)MATRIX 129
Bargaining Power of Consumers 129
THE COMPETITIVE PROFILE MATRIX (CPM) 130
EXPERIENTIAL EXERCISE 4B THE LIBRARY SEARCH 135
EXPERIENTIAL EXERCISE 4A DEVELOPING AN EFE MATRIX FOR HERSHEY FOODS 135
EXPERIENTIAL EXERCISE 4E DEVELOPING A COMPETITIVE PROFILE MATRIX FOR HERSHEY FOODS 136
EXPERIENTIAL EXERCISE 4D USING THE STRATEGY FORMULATOR SOFTWARE 136
EXPERIENTIAL EXERCISE 4C DEVELOPING AN EFE MATRIX FOR MY UNIVERSITY 136
EXPERIENTIAL EXERCISE 4F DEVELOPING A COMPETITIVE PROFILE MATRIX FOR MY UNIVERSITY 137
CHAPTER 5 THE INTERNAL ASSESSMENT 138
LODGING AND GAMING INDUSTRY NOTE 140
Key Internal Forces 140
THE NATURE OF AN INTERNAL AUDIT 140
The Process of Performing an Internal Audit 140
RELATIONSHIPS AMONG THE FUNCTIONAL AREAS OF BUSINESS 142
Integrating Strategy and Culture 143
Operating As If the Natural Environment Matters 145
MANAGEMENT 146
Planning 146
Organizing 148
Motivating 148
Staffing 149
Controlling 150
MARKETING 151
Customer Analysis 151
Buying Supplies 151
Selling Products/Services 151
Product andService Planning 152
Pricing 152
Distribution 152
FINANCE/ACCOUNTING 153
Marketing Research 153
Opportunity Analysis 153
Social Responsibility 153
Basic Types of Financial Ratios 154
Finance/Accounting Functions 154
PRODUCTION/OPERATIONS 157
RESEARCH AND DEVELOPMENT 158
9．Promus Companies,Inc.—1996 159
Internal and External R D 160
COMPUTER INFORMATION SYSTEMS 162
Strategic Planning Software 163
INTERNAL-AUDIT CHECKLISTS 163
THE INTERNAL FACTOR EVALUATION(IFE) MATRIX 164
EXPERIENTIAL EXERCISE 5B CONSTRUCTING AN IFE MATRIX FOR HERSHEY FOODS 170
EXPERIENTIAL EXERCISE 5A PERFORMING A FINANCIAL RATIO ANALYSIS FOR HERSHEY FOODS 170
EXPERIENTIAL EXERCISE 5D USINGTHESTRATEGYFORMULATOR SOFTWARE 171
EXPERIENTIAL EXERCISE 5C CONSTRUCTING AN IFE MATRIX FOR MY UNIVERSITY 171
CHAPTER 6 STRATEGY ANALYSIS AND CHOICE 172
The Process of Generating and Selecting Strategies 174
THE NATURE OF STRATEGY ANALYSIS AND CHOICE 174
10．Circus Circus Enterprises,Inc.—1997 175
The Nature of Long-Term Objectives 176
LONG-TERM OBJECTIVES 176
A COMPREHENSIVE STRATEGY-FORMULATION FRAMEWORK 178
Not Managing by Objectives 178
THE MATCHING STAGE 179
THE INPUTSTAGE 179
The Threats-Opportunities-Weaknesses-Strengths(TOWS)Matrix 180
The Strategic Position and Action Evaluation(SPACE)Matrix 184
The Boston Consulting Group(BCG) Matrix 187
11．Carnival Corporation—1996 188
The Internal-External(IE)Matrix 190
The Grand Strategy Matrix 191
The Quantitative Strategic Planning Matrix(QSPM) 193
THE DECISION STAGE 193
Positive Features and Limitations of the QSPM 195
CULTURAL ASPECTS OF STRATEGY CHOICE 196
THE POLITICS OF STRATEGY CHOICE 197
THE ROLE OF A BOARD OF DIRECTORS 199
RAILROADS AND BUSESINDUSTRY NOTE 203
EXPERIENTIAL EXERCISE 6C DEVELOPING A BCG MATRIX FOR HERSHEY FOODS 205
EXPERIENTIAL EXERCISE 6B DEVEIOPING A SPACE MATRIX FOR HERSHEY FOODS 205
EXPERIENTIAL EXERCISE 6A DEVELOPING A TOWS MATRIX FOR HERSHEY FOODS 205
EXPERIENTIAL EXERCISE 6E FORMULATING INDIVIDUAL STRATEGIES 206
EXPERIENTIAL EXERCISE 6D DEVELOPING A QSPM FOR HERSHEY FOODS 206
EXPERIENTIAL EXERCISE 6F THE MACH TEST 207
EXPERIENTIAL EXERCISE 6G DEVELOPING A BCG MATRIX FOR MY UNIVERSITY 208
EXPERIENTIAL EXERCISE 6I THE ROLE OF BOARDS OF DIRECTORS 209
EXPERIENTIAL EXERCISE 6H USING THE STRATEGY FORMULATOR SOFTWARE 209
EXPERIENTIAL EXERCISE 6J LOCATING COMPANIES IN A GRAND STRATEGY MATRIX 210
12．Dakota,Minnesota, Eastern Railroad—1995 210
PART 3 STRATEGY IMPLEMENTATION 211
CHAPTER 7 IMPLEMENTING STRATEGIES:MANAGEMENT ISSUES 212
THE NATURE OF STRATEGY IMPLEMENTATION 214
Management Perspectives 214
ANNUAL OBJECTIVES 217
POLICIES 219
RESOURCE ALLOCATION 220
MANAGING CONFLICT 221
MATCHING STRUCTURE WITH STRATEGY 222
The Functional Structure 223
The Divisional Structure 223
13．Greyhound Lines,Inc.—1996 225
The Strategic Business Unit(SBU)Structure 226
The Matrix Structure 226
RESTRUCTURING AND REENGINEERING 226
Restructuring 227
Reengineering 227
LINKING PERFORMANCE AND PAY TO STRATEGIES 228
MANAGING RESISTANCE TO CHANGE 230
MANAGING THE NATURAL ENVIRONMENT 232
CREATING A STRATEGY-SUPPORTIVE CULTURE 233
MOVIE CINEMASINDUSTRY NOTE 234
PRODUCTION/OPERATIONS CONCERNS WHEN IMPLEMENTING STRATEGIES 234
HUMAN RESOURCE CONCERNS WHEN IMPLEMENTING STRATEGIES 236
14．Cineplex Odeon—1996 237
Employee Stock Ownership Plans(ESOPs) 237
Balancing Work Life and Home Life 238
Corporate Fitness Programs 239
EXPERIENTIAL EXERCISE 7A REVISING HERSHEY FOODS'ORGANIZATIONAL CHART 245
EXPERIENTIAL EXERCISE 7B MATCHING MANAGERS WITH STRATEGY 245
EXPERIENTIAL EXERCISE 7C DO ORGANIZATIONS REALLY ESTABLISH OBJECTIVES? 246
NOT-FOR-PROFIT ORGANIZATIONS15．Audubon Zoo—1995 246
EXPERIENTIAL EXERCISE 7D UNDERSTANDING MY UNIVERSITY'S CULTURE 247
CHAPTER 8 IMPLEMENTING STRATEGIES:MARKETING,FINANCE/ACCOUNTING,R D,AND CIS ISSUES 248
THE NATURE OF STRATEGY IMPLEMENTATION 250
MARKETING ISSUES 250
Market Segmentation 252
Product Positioning 254
FINANCE/ACCOUNTING ISSUES 257
Pro Forma Financial Statements 258
Financial Budgets 261
Evaluating the Worth of a Business 262
RESEARCH AND DEVELOPMENT(R D)ISSUES 263
Deciding Whether to Go Public 263
16．The Classic Car Club of America—1996 263
COMPUTER INFORMATION SYSTEMS(CIS)ISSUES 266
EXPERIENTIAL EXERCISE 8A DEVELOPING A PRODUCT POSITIONING MAP FOR HERSHEY FOODS 270
EXPERIENTIAL EXERCISE 8B PERFORMING AN EPS/EBIT ANALYSIS FOR HERSHEY FOODS 270
EXPERIENTIAL EXERCISE 8C USING CASE ANALYST TO PREPARE PRO FORMA FINANCIAL STATEMENTS FOR HERSHEY FOODS 270
EXPERIENTIAL EXERCISE 8D DETERMINING THE CASH VALUE OF HERSHEY FOODS 271
EXPERIENTIAL EXERCISE 8E DEVELOPING A PRODUCT POSITIONING MAP FOR MY UNIVERSITY 271
EXPERIENTIAL EXERCISE 8F DO BANKS REQUIRE PRO FORMA STATEMENTS? 272
PART 4 STRATEGY EVALUATION 273
CHAPTER 9 STRATEGY REVIEW,EVALUATION,AND CONTROL 274
17．Elkins Lake Baptist Church—1995 275
THE NATURE OF STRATEGY EVALUATION 276
The Process of Evaluating Strategies 280
A STRATEGY-EVALUATION FRAMEWORK 281
Reviewing Bases of Strategy 281
Measuring Organizational Performance 283
Taking Corrective Actions 284
PUBLISHED SOURCES OF STRATEGY-EVALUATION INFORMATION 286
CHARACTERISTICS OF AN EFFECTIVE EVALUATION SYSTEM 287
18．Walnut Creek Baptist Church—1995 288
CONTINGENCY PLANNING 288
AUDITING 290
The Environmental Audit 290
USING COMPUTERS TO EVALUATE STRATEGIES 291
GUIDELINES FOR EFFECTIVE STRATEGIC MANAGEMENT 293
19．The Metropolitan Museum of Art—1996 297
EXPERIENTIAL EXERCISE 9A PREPARING A STRATEGY-EVALUATION REPORT FOR HERSHEY FOODS 297
EXPERIENTIAL EXERCISE 9C WHO PREPARES AN ENVIRONMENTAL AUDIT? 297
EXPERIENTIAL EXERCISE 9B EVALUATING MY UNIVERSITY'S STRATEGIES 297
PART 5 GLOBAL ISSUES IN STRATEGIC MANAGEMENT 299
CHAPTER 10 INTERNATIONAL STRATEGIC MANAGEMENT 300
THE NATURE OF GLOBAL COMPETITION 302
Advantages and Disadvantages of International Operations 304
CULTURES AROUND THE WORLD 305
American Versus Foreign Cultures 306
The Impact of Diverse Industrial Policies 308
THE GLOBAL CHALLENGE 308
Globalization 310
MEXICO 311
Trade Trends 312
Trade Climate 313
A New President 314
Mexican Culture 315
New Business Opportunities 316
RUSSIA 316
Trade Climate and Trends 317
Russia:An Entrepreneur's Paradise 317
Money and Politics 318
Corruption 318
MANUFACTURING COMPANIESSMALL BUSINESSES20．E.L.Nickell Company—1997 318
Joint Ventures 319
The Russian CuIture 319
CHINA 320
Guidelines for Strategic Ventures 320
Trade Climate 322
Trade Trends 322
The Hong Kong Annexation 323
Risks in Doing Business 324
JAPAN 325
Trade Trends 326
Trade Climate 327
21．NSP Corporate Graphics—1995 328
Japanese Management Style 328
Global Expansion 329
Lifetime Employment 330
Financial Services 330
THE EUROPEAN UNION 331
Trade Climate and Trends 331
Unification 334
Mergers and Acquisitions 334
GUIDELINES FOR SUCCESS AS A GLOBAL COMPETITOR 335
NAME INDEX 340
EXPERIENTIAL EXERCISE 10B DETERMINING MY UNIVERSITY'S RECRUITING EFFORTS IN FOREIGN COUNTRIES 341
EXPERIENTIAL EXERCISE 10A DETERMINING THE COMPETITIVE ENVIRONMENT FOR HERSHEY'S PRODUCTS IN OTHER COUNTRIES 341
EXPERIENTIAL EXERCISE 10C LESSONS IN DOING BUSINESS GLOBALLY 342
22．Material Handling Engineering,Ltd．—1995 346
SUBJECT INDEX 347
COMPANY INDEX 350
MOTORCYCLE AND MOTOR HOME23．Harley-Davidson—1996 360
24．Winnebago Industries—1996 378
COMMERCIAL AIRCRAFTINDUSTRY NOTE 389
25．McDonnell Douglas Corporation—1996 402
26．Boeing—1996 414
BUILDING AND FOREST PRODUCTS INDUSTRY NOTE 424
27．Weyerhaeuser Company—1996 439
28．Georgia-Pacific Corporation—1996 452
APPARELINDUSTRY NOTE 464
29．W.L.Gore Associates,Inc.—1995 480
30．Nike,Inc.—1996 495
MAGAZINE PUBLISHINGINDUSTRY NOTE 512
31．Playboy Enterprises,Inc.—1996 516
MEDICAL EQUIPMENT AND SUPPLIESINDUSTRY NOTE 529
32．Biomet,Inc.—1996 540
33．Stryker Corporation—1996 552
PERSONAL-CARE PRODUCTSINDUSTRY NOTE 564
34．Avon Products,Inc.—1996 570
TOBACCOINDUSTRY NOTE 584
35．UST,Inc.—1996 590
FOODINDUSTRY NOTE 603
36．Campbell Soup Company—1996 615
37．Pilgrim's Pride—1996 630
38．Perdue Farms,Inc.—1995 643