Chapter 1: Strategizing Around the Globe PDF

CHAPTER 1 Strategizing Around the Globe...

CHAPTER 1 Strategizing Around the Globe iStock.com/golero KNOWLEDGE OBJECTIVES After studying this chapter, you should be able to 1. Offer a basic critique of the traditional, narrowly defined “global strategy” 2. Articulate the rationale behind studying global strategy 3. Define what is strategy and what is global strategy 4. Outline the four fundamental questions in strategy 5. Understand the nature of globalization and semiglobalization 6. Participate in three debates concerning globalization and global strategy 2 Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  OPENING CASE Emerging Markets Ethical Dilemma Zoom The year 2020 is destined to go down in history as $19.99 could host as many 1,000 participants on one of the most unforgettable years. Thanks to the a single video call. Another attractive feature was coronavirus (COVID-19), economies shut down one that it was a neutral platform. Its solution offered after another. Millions of people were sick, many video, audio, and screen-sharing experience across died, and suffering was immense. All nonessential Windows, Mac, Linux, Android, BlackBerry, and Zoom businesses closed, stock markets crashed, oil prices Rooms. Its IPO prospectus identified six leading dived into the negative, unemployment soared, and sources of competitive advantage: (1) video-first firms were bankrupt left and right. In such a bleak platform, (2) cloud-native architecture, (3) function- environment, can any firm grow? It turns out ality and scalability, (4) ease of use and reliability, that videoconferencing software firm Zoom has (5) ability to utilize existing legacy infrastructure, and experienced skyrocketing growth during the crisis. (6) low total cost of ownership. Zoom was founded in 2011 by a Chinese immi­ The onslaught of COVID-19 made Zoom a house- grant Eric Yuan. In 1997, Yuan went to work for hold name. According to a letter from Zoom’s man- WebEx, a videoconferencing start-up. In 2007, Cisco agement team to customers posted on its website acquired Webex for $3.2 billion. Yuan—as Cisco’s on April 23, 2020: corporate vice president of engineering—proposed that Cisco develop a product that would work on We are humbled to have the opportunity to support mobile phones, not merely on personal computers such a wide range of clients from schools (100,000 (PCs). Cisco rejected his proposal. Frustrated but in 25 countries), to universities (many of the major determined, Yuan left in 2011 to start Zoom. By 2017, San Jose, California-based Zoom became a US institutions), to governments (e.g., major func- “unicorn”—a private firm worth more than $1 billion. tions of the US Government, the British Parliament, It went through an initial public offering (IPO) at and many other governments around the world), to NASDAQ in April 2019. By the end of its first day of trading, its share price increased more than 72% enterprises of all sizes, industries, and geographies to reach $62 per share, resulting in a $16 billion (226 of the 241 countries and territories), including market capitalization. By the end of December 2019, full deployments in many Fortune 500 companies. Zoom was trading at $68. On April 22, 2020, its share reached $169 and it was worth $46 billion. We have grown from 10 million daily meeting par- Convenient live-video chat was a science-fiction ticipants as of December 2019, to over 300 million a dream for a long time. Helping to turn that dream day in April 2020. into reality, Zoom’s mission, according to its IPO prospectus, was “to make video communications Throughout March and April 2020, Zoom’s num- frictionless.” Its original strategy was to be a lead- ber of users broke a new record every day. Its original ing corporate videoconferencing firm—specifically strategy obviously had to rapidly adapt and impro- for businesses with information technology (IT) vise. It was no longer its plan to be a leading corpo- departments that can set up accounts and help end rate videoconferencing provider that mattered. What users. It competed with two giants—Cisco Webex mattered was how its actions satisfied the ballooning and Microsoft Teams—as well as smaller rivals such demand for its services as a mass market service pro- as Skype, Google Meets, and Hangouts. Zoom vider. In late February and early March, after schools excelled in its easy-to-use software: one click on an in Italy and Japan were shut down, Zoom removed email or the smartphone. If the conference had fewer the time limits on its free product for educational than 100 participants and was less than 40 minutes, institutions in these countries—a practice now ex- Zoom was free. Clients that paid a monthly fee of tended to other countries where schools shut down. 3 Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 4 PART 1 Foundations of Global Strategy OPENING CASE (Continued) By design, a Zoom meeting was anchored by one security problems. How to enhance Zoom’s security of its 17 data centers worldwide. If one data center while maintaining its user-friendliness, thus, became experienced problems, the meeting would be handed a dilemma. “Zoombombings” arguably became one over to the next closest. In the middle of the crisis, of the newest English words, indicating the severity Zoom added two more data centers and bought and frequency of security incidents. In response, more cloud storage capacity for surge protection Zoom quickly addressed some issues (such as from Oracle and Amazon Web Services. requiring passwords for all Zoom meetings as of April 4) and endeavored to solve some of the more Although meteoric, Zoom’s rise to become a challenging security weaknesses going forward. household name was not without bumps. Its connec- Rapidly becoming part of critical infrastructure, tions in China made it aware of the potential devas- Zoom “is now owned by the world,” noted Yuan tation of COVID-19. To protect its employees, Zoom in an interview. He went on to claim that Zoom shut down its San Jose headquarters two weeks be- “can’t go back.... For now we have to embrace fore Santa Clara County ordered citizens to shelter in this new paradigm and figure out how to make place. As a result, Yuan and his executive team—like it work.” millions of other people who work at home—had to go through a long series of Zoom meetings every day. “I hate that,” Yuan admitted to a reporter—a Sources: (1) Bloomberg Businessweek, 2020, The accidental social sentiment more recently known as “Zoom fatigue” network, April 13: 45–49; (2) CNBC, 2020, Zoom Video Com- worldwide. munications Inc., April 27: www.cnbc.com; (3) Economist, 2020, Zoom diplomacy, April 11: 44; (4) Guardian, 2020, Worried In addition to worrying about whether servers about Zoom’s privacy problems? April 9: theguardian.com; were overwhelmed by the surging traffic, another (5) National Geographic, 2020, “Zoom fatigue” is taxing the brain, major headache was security. Simplicity versus April: www.nationalgeographic.com; (6) Zoom, 2019, Amend- security (read: complexity) has always been a source ment No. 2 to Form S-1 Registration Statement, April 16, of tension in IT. The very reason behind Zoom’s Washington: SEC; (7) Zoom, 2020, A letter from Zoom’s manage- success—simplicity—also contained a seed for ment team to our customers, April 23: zoom.us. H ow do firms such as Zoom compete around the globe? What determines their success and failure? Since strategy is about competing and winning, this book will help current and would-be strategists answer these and other important questions. In brief, “global strategy” in this book is about strategy around the globe—practiced by firms big and small. In other words, this book does not focus on a particular form of international (cross-border) strategy, which is characterized by the production and distribution of standardized products and services on a world- wide basis. For more than three decades, this strategy, often referred to as global strat- egy for lack of a better term, has often been advocated by traditional global-strategy books.1 However, such a relatively narrow “global strategy” had always been difficult multinational enterprise to practice, going forward it is likely to be less useful in a possibly deglobalizing world. (MNE) A firm that engages in The relatively narrow “global strategy” has been practiced by some foreign direct investment multinational enterprises (MNEs), defined as firms that engage in foreign direct (FDI) by directly controlling investment (FDI) by directly controlling and managing value-adding activities and managing value-adding activities in other countries. in other countries.2 Although Zoom is a young firm, it has become an MNE with FDI in a number of countries. In reality, MNEs often have to adapt their strate- foreign direct investment gies, products, and services for local markets. In the automobile industry, there (FDI) is no “world car.” Cars popular in one region are often rejected by customers A firm’s direct investment in production and/or service elsewhere. The Volkswagen Golf and the Ford Mondeo (marketed as the Contour in activities abroad. the United States) are popular in Europe, but have little visibility in the streets of Asia Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Chapter 1 Strategizing Around the Globe 5 and North America. The so-called world drink, Coke Classic, actually tastes different around the world (with varying sugar content). Coca-Cola’s effort in pushing for a set of “world commercials” centered on the polar bear cartoon character presumably appealing to some worldwide values and interests has not been appreciated by many viewers around the world. Viewers in warmer weather countries had a hard time relating to the furry bear. In response, Coca-Cola switched to more costly but more effective country-specific advertisements. For instance, the Indian subsidiary launched an advertising campaign that equated Coke with thanda, the Hindi word for “cold.” The German subsidiary developed a series of commercials that showed a “hidden” kind of eroticism (!).3 In summary, one size does not fit all. It is evident that the narrow notion of “global strategy” (the “one-size-fits- all strategy”), while useful for a small number of MNEs, is often incomplete and unbalanced. Even for most MNEs, a sensible approach seems to be “think global, act local.” In the case of Zoom, it operates data centers in Australia, Brazil, Canada, China, Germany, India, Japan, the Netherlands, and the United States. Its “global” business business model model—a firm’s way of doing business and creating and capturing value—is to route A firm’s way of doing videoconferencing traffic to the data center anywhere in the world that can provide the business and creating and capturing value. most seamless and best performance. At any given time, data centers in some regions may be busier than those elsewhere. Given the sensitive nature of the content of Zoom meetings, some users expressed concerns about their meetings being routed to data centers in regions that have potential cybersecurity issues.4 In response, Zoom has offered a “local” solution, by letting users opt out of specific data center regions and opt in to specific data center regions. This gives customers more control over their data.5 In summary, simple-mindedly pushing for a “global” solution is likely to backfire, and a sensible combination of what is “global” and what is “local” is a must. Why Study Global Strategy? Strategy courses in general—and global-strategy courses in particular—are typically the most valued courses in a business school.6 Why study global strategy? Some of the most sought- after and highest-paid business school graduates (both MBAs and undergraduates) are typically strategy consultants with global-strategy expertise.7 You can be one of them. Outside the consulting industry, if you aspire to join the top ranks of large firms, expertise in global strategy is often a prerequisite. So, don’t forget to add a line on your résumé that you have studied this strategically important course. Even for graduates at large firms with no interest in working for the consulting industry and no aspiration to compete for top jobs, as well as individuals who work at small firms or are self-employed, you may find yourself using foreign products and services (such as Zoom meetings), competing with foreign entrants in your home market, and perhaps even selling and investing overseas. Alternatively, you may find yourself working for a foreign-owned firm, your previously domestic employer acquired by a foreign player, or your unit ordered to shut down for global consolidation. Approximately 80 million people worldwide, including seven million Americans, one million British, and 18 million Chinese, are directly employed by foreign-owned firms. For example, in Africa, the largest private- sector employer is Coca-Cola with 65,000 employees. In Britain, the largest private-sector employer is Tata Group with 50,000 employees. Understanding how strategic decisions are made may facilitate your own career in such organizations. If there is a strategic rationale to downsize your unit, you want to be able to figure this out as soon as possible and be the first to post your résumé online, instead of being the first to receive a pink slip. In other words, you want to be more strategic. After all, it is your career that is at stake. Don’t be the last to know! Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 6 PART 1 Foundations of Global Strategy What is Strategy? Origin Derived from the ancient Greek word strategos, the word strategy originally referred to “the art of the general” or “generalship.” Strategy has strong military roots.8 The oldest book on strategy, The Art of War, dates back to approximately 500 b.c. It was authored by Sun Tzu, a Chinese military strategist.9 Sun Tzu’s most famous teaching is, “Know yourself, know your opponents; encounter a hundred battles, win a hundred victories.” The application of the strategic management principles of military strategy to business competition, known as strategic management A way of managing the (or strategy in short), is a more recent phenomenon developed since the 1960s.10 firm from a strategic, “big picture” perspective. Plan versus Action strategy Because business strategy is a relatively young field (despite its long roots in military An organization’s theory strategy), what defines strategy has been a subject of intense debate.11 Three schools of about how to compete thought have emerged (see Table 1.1). The first “strategy as plan” school is the oldest. successfully. Drawing on the work of Carl von Clausewitz, a Prussian (German) military strategist of the 19th century,12 this school suggests that strategy is embodied in the same explicit rigorous strategy as plan formal planning as in the military. A perspective that suggests However, the planning school has been challenged by the likes of Liddell Hart, a British that strategy is most military strategist of the 20th century, who argued that the key to strategy is a set of fundamentally embodied flexible goal-oriented actions.13 Hart favored an indirect approach, which seeks rapid flexible in explicit, rigorous formal planning as in the military. actions to avoid clashing with opponents head-on. Within the field of business strategy, this “strategy as action” school has been advocated by Henry Mintzberg, a Canadian scholar. strategy as action Mintzberg posited that in addition to the intended strategy that the planning school A perspective that suggests that strategy is most TABLE 1.1 What Is Strategy? fundamentally reflected by firms’ pattern of actions. Strategy as Plan “Concerned with drafting the plan of war and shaping the individual campaigns and, with- intended strategy in these, deciding on the individual engagements” (von Clausewitz, 1976)1 A strategy that is “A set of concrete plans to help the organization accomplish its goal” (Oster, 1994)2 deliberately planned for. Strategy as Action “The art of distributing and applying military means to fulfill the ends of policy” (Liddell Hart, 1967)3 “A pattern in a stream of actions or decisions” (Mintzberg, 1978)4 “The creation of a unique and valuable position, involving a different set of activities... making trade-offs in competing … creating fit among a company’s activities” (Porter, 1996)5 Strategy as Integration “The determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals” (Chandler, 1962)6 “The major intended and emergent initiatives undertaken by general managers on behalf of owners, involving utilization of resources to enhance the performance of firms in their external environments” (Nag, Hambrick, and Chen, 2007)7 “The ideas, decisions, and actions that enable a firm to succeed” (Dess, McNamara, Eisner, and Lee, 2019)8 Sources: Based on (1) C. von Clausewitz, 1976, On War, vol. 1 (p. 177), London: Kegan Paul; (2) S. Oster, 1994, Modern Competitive Analysis, 2nd ed. (p. 4), New York: Oxford University Press; (3) B. Liddell Hart, 1967, Strategy, 2nd rev. ed. (p. 321), New York: Meridian; (4) H. Mintzberg, 1978, Patterns in strategy formulation (p. 934), Management Science 24: 934–948; (5) M. Porter, 1996, What is strate- gy? (pp. 68, 70, 75), Harvard Business Review 74: 61–78; (6) A. Chandler, 1962, Strategy and Structure (p. 13), Cambridge, MA: MIT Press; (7) R. Nag, D. Hambrick, & M. Chen, 2007, What is strategic man- agement, really? Strategic Management Journal 28: 935–955; (8) G. Dess, G. McNamara, A. Eisner, & S. Lee, 2019, Strategic Management, 9th ed. (p. 6), Chicago: McGraw-Hill. Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Chapter 1 Strategizing Around the Globe 7 emphasizes, there can be an emergent strategy that is not the result of “top-down” planning emergent strategy but rather the outcome of a stream of smaller decisions from the “bottom up.”14 Facebook is a A strategy based on the good example. Its founder Mark Zuckerberg shared in an interview: outcome of a stream of smaller decisions from the We build things quickly and ship them. We get feedback. We iterate, we iterate, we iterate. “bottom up.” We have these great signs around: “Done is better than perfect.”15 It is not just fast-moving high-tech firms such as Facebook that are practitioners of the strategy as action school. For a firm as traditional as Walmart, its CEO Doug McMillon told a journalist: Once, a company like ours made big decisions annually or quarterly. Today strategy is daily.16 Both of these two schools of thought have merits and drawbacks. Strategy in Action 1.1 compares and contrasts them by drawing on real strategies used by the German and French militaries in 1914. The Germans embraced the strategy as plan school, and the French prac- ticed the strategy as action school. In the end, both militaries failed miserably. A crucial les- son is that a winning strategy must have a combination of both schools of thought, leveraging their advantages while minimizing their weaknesses. Strategy as Theory Shown in the Opening Case, Zoom had a plan to be a leading corporate videoconferenc- ing provider. However, in the middle of the coronavirus outbreak, it ended up becom- ing a mass-market provider on a much larger scale. Its actions had to adjust to these new demands, ranging from making sure there was sufficient cloud capacity to meet the surging demand to improving its security measures in the middle of dramatically scaling up its strategy as integration operations. Like managers at Zoom, many managers and scholars have realized that, in A perspective that suggests reality, the essence of strategy is likely to be a combination of both planned deliberate that strategy is neither actions and unplanned emergent activities, thus leading to a “strategy as integration” solely about plan nor action school (see Table 1.1). and that strategy integrates First advocated by Alfred Chandler,17 an American business historian, this more balanced elements of both schools of strategy as integration school of thought has been adopted in many textbooks.18 It is the thought. STRATEGY IN ACTION 1.1 German and French Military Strategies in 1914 Although Germany and France are now the best of friends with- to the German one. Humiliated in the 1870 Franco–Prussian War, in the European Union (EU), they had fought for hundreds of during which France lost two provinces (Alsace and Lorraine), years (the last war in which they butted heads was World War II). the French were determined to regain them. But the French had Prior to the commencement of hostilities that led to World War I a smaller population and, thus, a smaller army. Since the French in August 1914, both sides had planned for a major clash. army could not match the German army man for man, the French The Germans embraced the strategy as plan school with a military emphasized action—the individual initiatives and bravery meticulous Schlieffen Plan. Focusing on the right wing, German (known as élan vital, the all-conquering will). In Plan 17, a total forces would smash through Belgium. Every day’s schedule of of five sentences were all that was shared with the generals who march was fixed: Brussels would be taken by the 19th day, the would lead a million soldiers into battle. Sentence one was “Target French–Belgium border crossed on the 22nd, and Paris conquered Berlin.” Sentence two was “Recover Alsace and Larraine.” The last and victory achieved by the 39th. Heeding Carl von Clausewitz’s sentence was “Vive la France!” warning that military plans that left room for the unexpected In the end, both plans failed miserably, with appalling casual- could result in disaster, the Germans with infinite care had en- ties but no victory to show. deavored to plan for everything—except flexibility. In short, there was no Plan B. The French were practitioners of the strategy as action Source: Condensed from B. Tuchman, 1962, The Guns of August, school. Known as Plan 17, the French plan was a radical contrast New York: Macmillan. Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 8 PART 1 Foundations of Global Strategy TABLE 1.2 Four Advantages of the Strategy as Theory Definition Integrating both planning and action schools Leveraging the concept of “theory,” which serves two purposes (explanation and prediction) Requiring replications and experimentations Understanding the difficulty of strategic change perspective we embrace here. Following Peter Drucker, an Austrian–American management guru, we extend the strategy as integration school by defining strategy as an organization’s theory about how to compete successfully. In other words, if we have to define strategy with one word, it is neither plan nor action—it is theory. According to Drucker, “a valid theory that is clear, consistent, and focused is extraordi- narily powerful.”19 A theory in a business context can be viewed as a way of doing business.20 For example, Zoom’s theory “to make video communications frictionless” is clear, consistent, strategy formulation and focused, helping to channel its energies to make it happen (see the Opening Case). The crafting of a firm’s Table 1.2 outlines the four advantages associated with our definition. First, it capitalizes strategy. on the insights of both planning and action schools. This is because a firm’s theory of how to compete will simply remain an idea until it has been translated into action. Thus, formu- strategy implementation lating a theory (advocated by the planning school as strategy formulation) is merely a first The actions undertaken to step.21 Implementing it through a series of actions (noted by the action school as strategy carry out a firm’s strategy. implementation) is a necessary second part.22 Although the cartoon in Figure 1.1 humorously SWOT analysis portrays these two activities as separate endeavors, in reality good strategists do both. A strategic analysis of a Shown in Figure 1.2, a strategy entails a firm’s assessment at point A of its own strengths (S) firm’s internal strengths (S) and weaknesses (W), its desired performance levels at point B, and the opportunities (O) and weaknesses (W) and and threats (T) in the environment.23 Such a SWOT analysis resonates very well with Sun the external opportunities Tzu’s teaching on the importance of knowing “yourself ” and “your opponents.” After such an (O) and threats (T) in the assessment, the firm formulates its theory on how to best connect points A and B. In other environment. words, the broad arrow becomes its intended strategy. However, given so many uncertainties, FIGURE 1.1 Strategy Formulation and Strategy Implementation Source: Harvard Business Review, October 2011 (p. 40). Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Chapter 1 Strategizing Around the Globe 9 FIGURE 1.2 The Essence of Strategy Where must we be? trategy Performance Inte nded s Where are we? Point B Emergent Point A strategy Unrealized strategy Time not all intended strategies may prove successful, and some may become unrealized strategies. On the other hand, other unintended actions may become emergent strategies with a thrust toward point B. Overall, the strategy as theory definition enables us (1) to retain the elegance of the planning school with its more orthodox logical approach, and (2) to entertain the flex- ibility of the action school with its more dynamic experimental character. Second, this new definition rests on a simple but powerful idea, the concept of “theory.” The word theory often frightens students and managers because it implies an image of “abstract” and “impractical.” But it shouldn’t.24 A theory is merely a statement on relationships between two phenomena. At its core, a theory serves two purposes: to explain the past and to predict the future. For example, the theory of gravity explains why many people committing suicide were “successful” by jumping from high-rise buildings or tall cliffs. It also predicts that should individuals (hypothetically) harbor such a dangerous tendency, they will be equally “success- ful” by doing the same. Each firm has a unique theory (way) of doing business.25 Walmart’s theory, “everyday low prices,” explains why it has been successful in the past. After all, who doesn’t like everyday low prices? The theory also predicts that Walmart will continue to do well by focusing on low prices. Third, a theory proven successful in one context during one period does not necessarily mean it will be successful elsewhere or in other periods. A hallmark of theory building and development is replication—repeated testing under a variety of conditions to establish a replication theory’s boundaries.26 In natural sciences, this is known as continuous experimentation. For Repeated testing of instance, after several decades of experiments in outer space, we now know that objects theory under a variety of dropped by astronauts inside a spacecraft would not fall. Instead, they float. In other words, conditions to establish its replication helps us understand that the theory of gravity is Earth bound and does not applicable boundaries. apply in outer space. Such replication seems to be the essence of business strategy. Firms successful in one product or geographic market—that is, having proven the merit of their theory once—constantly seek to expand into newer markets and replicate their success.27 Each new entry can be viewed as a new experiment. In new markets, firms sometimes succeed and other times fail. As a result, firms are able to gradually establish the limits of their particular theory about how to compete successfully. For instance, Walmart’s theory failed in Germany and South Korea, and the firm had to pull out from those markets. Just as knowing the limits of the theory of gravity helps the scientific community, knowing the limits of a business theory, although painful to managers involved, is beneficial to the firm. Walmart’s corporate performance actually improved after exiting money-losing operations in Germany and South Korea. Finally, the strategy as theory definition helps us understand why it is often difficult to change strategy. Imagine how hard it is to change an established theory. The reason that a cer- tain theory is widely accepted is because of its past success. But past success does not guarantee Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 10 PART 1 Foundations of Global Strategy future success. Although scientists are supposed to be objective, they are also human. Many scientists may be unwilling to concede the failure of their favorite theories even in the face of repeatedly failed tests. Think about how much resistance from the scientific establishment that Galileo, Copernicus, and Einstein had to face initially. The same holds true for strategists. Bosses have been promoted to current positions because of their past success in developing and implementing old theories. National heritage, organizational politics, and personal career considerations may prevent many bosses from admitting the failure of an existing strategy.28 Yet, the history of scientific progress suggests that it is possible to change established theories, although it may be difficult initially. If enough failures in testing are reported and enough researchers raise doubts about certain theories, then their views, which may be peripheral initially, gradually drive out failed theories and introduce better ones. The painful process of strategic change in many firms is similar. Usually a group of younger managers challenge the current strategy. They propose a new theory on how to compete more effectively, which initially is often marginalized by top management. But eventually, the momentum of the new theory may outweigh the resistance of the old strategy, leading to some strategic change (see Strategy in Action 1.2). Walmart recently changed its strategy from “everyday low prices” to “save money, live better,” in order to soften its undesirable image as a ruthless cost cutter associated with “everyday low prices.” Overall, strategy is not a rulebook, a blueprint, or a set of programmed instructions. Rather, it is a firm’s theory about how to compete successfully, a unifying theme that gives coherence to its various actions.29 Strategy is about making choices and balancing trade-offs. Strategy is also about articulating and communicating.30 If a theory is to be understood, it STRATEGY IN ACTION 1.2 Selling Star Wars to LEGO Top Management Founded in 1932, LEGO was derived from the Danish phase leg at corporate headquarters even claimed that “Over my dead body godt (“play well”). Its theory of doing business has always been will LEGO ever introduce Star Wars.” building excellent toy bricks to foster creativity. In 1997, Peter During the next round, Eio and his team surveyed parents Eio, chief of LEGO North America, proposed to LEGO Group in the United States. He also convinced his colleague in charge of senior management at the Danish headquarters the idea of Germany, which was LEGO’s largest and by far its most conser- licensing Star Wars characters for LEGO toys. This would vative market, to conduct a similar survey. While American par- enable LEGO to capitalize on the anticipated release of the new ents strongly supported the Star Wars idea, German parents were Star Wars trilogy starting with The Phantom Menace. From his also enthusiastic. Armed with such supportive consumer data, Eio North America headquarters in Enfield, Connecticut, Eio was pushed this subsidiary-driven initiative further and continued convinced that the US toy market had become license-driven. to meet resistance and pushback from corporate headquarters. Licensed toys such as fairy-tale characters from Disney movies Eventually, the founder’s grandson and the president and CEO of and Buzz Lightyear from Toy Story accounted for half of all toys LEGO Group at that time, Kjeld Kirk Kristiansen, who was a Star sold in the United States. Despite its success, LEGO’s go-it-alone Wars fan himself, overruled his conservative executives and gave culture had prevented it from messing with any licensed products the licensing deal his blessing. up to this point. In 1999, LEGO Star Wars products were released on the Encouraged by Lucasfilm executives who were LEGO fans wings of the blockbuster The Phantom Menace, becoming one of and wanted to partner with LEGO, Eio thought he had proposed a the most successful product launches not only for LEGO, but also winning strategy that would enable LEGO to get into the lucrative for the global toy industry. More than one-sixth of LEGO Groups’ world of licensing. Unfortunately, LEGO senior executives’ initial earnings in the 2000s came from the Star Wars line. reaction, according to Eio himself, “was one of shock and horror. It wasn’t the LEGO way.” Specifically, headquarters executives felt LEGO did not need to license intellectual property from another Sources: (1) The author’s interviews of LEGO customers and player. Further, the specific characters centered on war and vio- LEGO store personnel in Copenhagen and Dallas; (2) M. W. Peng, ­­­lence would violate one of LEGO founder Ole Kirk Christiansen’s 2022, LEGO’s secrets, in Global Strategy, 5th ed., Boston: Cengage; core values: Never let war seem like child’s play. According to (3) D. Robertson, 2013, Brick by Brick: How LEGO Rewrote the critics, the very name, Star Wars, would violate the essence of Rules of Innovation and Conquered the Global Toy Industry, New LEGO’s peaceful identity. Heated debate took place. One executive York: Crown Business. Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Chapter 1 Strategizing Around the Globe 11 must be communicated in a powerful yet effective way. If it has too many words, managers and employees will not remember it. Then there is no way they can relate what they do day in and day out to strategy. For this reason, this book’s definition of strategy goes above and beyond the dozens of words stemming from each of the previous definitions (see Table 1.1). We leverage the power of just one word—theory. One of the first questions I often raise when engaging executives in training and consult- ing is: “What is your company’s strategy?” One of the most typical answers I get is: “What do you mean? Vision? Mission?” While they have some vague sense about vision (articulation vision of a firm’s envisioned future) and mission (statement of a firm’s purpose), most of them are Articulation of a firm’s clueless about “strategy.” Then after overcoming the initial confusion and after going to envisioned future. their corporate website, they usually give me dozens (and sometimes hundreds!) of words. mission “Can you recite these words and tell your subordinates what these words are, without using Google?” I would ask. They, of course, cannot. Regardless of the labels used such as “vision” or Statement of a firm’s purpose. “mission,” any strategy statement that is hard to remember is by definition hard to commu- nicate and, thus, hard to understand. A successful strategy needs to be short but to the point, communicating the uniqueness of a particular theory of doing business. Examples include Walmart’s “everyday low prices” and “save money, live better” and Zoom’s “to make video communications frictionless.” Table 1.3 illustrates my efforts to push executives at MTR Corporation to condense their (relatively) well-crafted mission from 23 words to only eight words—a two-thirds (!) reduction. Strategy, Strategist, and Strategic Leadership Just as military strategies and generals must be studied simultaneously, an understanding of business strategies around the globe would be incomplete without an appreciation of the role top managers play as strategists.31 Although mid-level and lower-level managers must understand strategy, they typically lack the perspective and confidence to craft and execute a firm-level strategy. A top management team (TMT) led by the chief executive officer top management team (CEO) must exercise strategic leadership by making strategic choices. Since leadership is (TMT) about transforming organizations from what they are to what the leaders would have them The team consisting of the become, strategic leadership can be defined as how to most effectively manage organizations’ highest level of executives strategy formulation and implementation processes to create competitive advantage.32 of a firm led by the CEO. Since the directions and operations of a firm typically are a reflection of its top managers, chief executive officer their personal preferences based on their own culture, background, and experience may (CEO) The top executive in charge of the strategy and TABLE 1.3 Articulating Strategy for MTR Corporation operations of a firm. Official Mission Articulation leadership We will: We will: Transforming organizations from what they are to what Strengthen our Hong Kong corporate Strengthen reputation the leaders would have citizen reputation them become. Grow and enhance our Hong Kong core Grow in Hong Kong businesses strategic leadership How to most effectively Accelerate our success in the Mainland Go global manage organizations’ and internationally strategy formulation and [TOTAL: 23 words] [TOTAL: 8 words] implementation processes to create competitive Source: MTR Corporation is a publicly listed company headquartered in Hong Kong, where it builds advantage. and operates transit railways that carry five million passengers every weekday. It also develops residential and commercial real estate property. In addition to Hong Kong, it operates in six cit- ies worldwide: Beijing, Hangzhou, and Shenzhen, China; London, United Kingdom; Melbourne, Australia; and Stockholm, Sweden. Globally, it carries 1.36 billion passengers every year. “Official Mission” is adapted from MTR Corporation, 2015, Vision, mission, values, www.mtr.com.hk (accessed February 1, 2015). “Articulation” is from the author’s consulting engagements with MTR executives, July 2013 and July 2014. Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 12 PART 1 Foundations of Global Strategy TABLE 1.4 Strategic Work Only the CEO Can Do Identify the meaningful outside and link it with the internal organization Define what business the firm is in (and not in). Balance present and future. Shape values and standards. Source: Adapted from A. G. Lafley, 2009, What only the CEO can do, Harvard Business Review May: 54–62. Lafley was chairman and CEO of P&G, 2000–2009. affect firm strategy.33 In other words, underpinning strategy and strategic leadership are microfoundation microfoundations, which are the proximate causes of a given strategic phenomenon at a Proximate causes of a given level of analysis lower than that of the phenomenon itself.34 For example, a strategy to embark strategy phenomenon at a on overseas expansion is often championed by managers with significant international level of analysis lower than experience and global mindset.35 While this book focuses on firm strategies, it is also about that of the phenomenon strategists who exercise strategic leadership to propel their firms to new heights. itself. By definition, strategic work is different from nonstrategic (tactical) work. Drawing on the wisdom of A. G. Lafley, former chairman and CEO of Procter & Gamble (P&G), Table 1.4 outlines the nature of the highest level of strategic work that only the CEO can do.36 In a nutshell, the CEO needs to shape strategy, refine it, communicate it, and help people get it. No hard line exists separating strategic and nonstrategic work. While CEOs can delegate significant work to members of TMT (such as chief financial officer and chief operations officer), some CEOs enjoy hands-on management. But too much interference in lower-level work—often known as micromanaging—is going to render strategic leadership ineffective. The military has recently struggled with this challenge. On traditional battlefields, the “fog of war” gave senior commanders insufficient information, and they had to rely on tactical commanders to accomplish missions. However, on modern battlefields, satellites, sensors, and unmanned aerial vehicles (UAVs) present “fog of information”—too much information. Armed with such abundant (but still distorted) information, some senior commanders feel emboldened to issue direct orders to lower-level units, becoming in essence “four-star company commanders.”37 Tactical commanders, when facing risky decisions, would not mind letting senior commanders to call the shots. The upshot? Lower-level flexibility and initiatives as well as overall organizational effectiveness can be undermined. Fundamental Questions in Strategy Although strategy around the globe is a vast area, we will focus our attention only on the most fundamental issues, which define a field and orient the attention of students, practitioners, and scholars in a certain direction. Specifically, we will address the following four fundamen- tal questions:38 Why do firms differ? How do firms behave? What determines the scope of the firm? What determines the success and failure of firms around the globe? Why Do Firms Differ? Within every modern economy, firms, just like individuals, differ. Across economies, the diversity among firms is striking. Figure 1.3 illustrates how management quality varies round the world. Firms in developed economies led by the United States, Japan, and Germany generally have higher-quality management than firms in emerging economies such as Brazil, China, and India. Within every economy, there is a distribution of well-managed and poorly-managed firms, resulting in a bell curve. The distribution of firms in Figure 1.4 Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Chapter 1 Strategizing Around the Globe 13 FIGURE 1.3 Management Quality Varies Around the World USA Japan Germany Sweden Canada Australia UK Italy France New Zealand Mexico Poland Ireland Portugal Chile Argentina Greece Brazil China India 2.6 2.8 3 3.2 3.4 Average management quality scores, from 1 (worst practice) to 5 (best practice) Source: Adapted from N. Bloom, C. Genakos, R. Sadun, & J. Van Reenen, 2012, Management practices across firms and countries (p. 18), Academy of Management Perspectives February: 12–33. Averages taken across all firms within each country. A total of 9,079 observations. Firms were randomly sam- pled from the population of all manufacturing firms with 100 to 5,000 employees. The median firm is privately owned, has approximately 350 employees, and operates two production plants. FIGURE 1.4 The Distribution of Firms USA Brazil China Bars are the histogram of firms in each country.8.6 Line is the smoothed.4 US density, shown for comparison to.2 the US Fraction of Firms 0 UK India Greece and Portugal.8.6.4.2 0 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 Management quality scores, from 1 (worst practice) to 5 (best practice) Source: Adapted from N. Bloom, C. Genakos, R. Sadun, & J. Van Reenen, 2012, Management practices across firms and countries (p. 20). Academy of Management Perspectives February: 12–33. A total of 4,930 observations. See footnote to Figure 1.3 for details of the survey. Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 14 PART 1 Foundations of Global Strategy presents much richer information than a single score for each country’s firms in Figure 1.3. It turns out that outstanding firms exist in Brazil, China, and India.39 Examples of such exceptional firms include Embraer and 3G Capital from Brazil, Alibaba and Huawei from China, and Tata and Infosys from India. But in comparison with the distribution of US and UK firms, Brazil, China, and India, as well as Greece and Portugal, suffer from a large tail of poorly-managed firms. Why firms in emerging economies on average suffer from lower-quality management and—if this is the case—how they can catch up have been a puzzle. Some point to institu- tional differences: The lack of market-supporting institutions that can facilitate firm growth in emerging economies may play a role.40 However, this view needs to reconcile with the fact that firms in emerging economies have generally been growing at a much faster rate than firms in developed economies in the last three decades. As a result, why firms differ remains to be an intriguing question in strategy. How Do Firms Behave? This question focuses on what determines firms’ theories on how to compete. Shown strategy tripod in Figure 1.5, one way to help us understand how firms behave is a strategy tripod, A framework that suggests which is a comprehensive view of strategy consisting of three leading perspectives.41 that strategy as a discipline The industry-based view suggests that the strategic task is mainly to examine the has three “legs” or key competitive forces affecting an industry and to stake out a position that is less vulnerable perspectives: industry- relative to these forces. While the industry-based view primarily focuses on the external based, resource-based, and opportunities and threats (the O and T in a SWOT analysis), the resource-based view institution-based views. largely concentrates on the internal strengths and weaknesses (S and W) of the firm. This view posits that it is firm-specific capabilities that differentiate successful firms from failing ones. Recently, an institution-based view has emerged to account for differences in firm strategy.42 This view argues that in addition to industry-level and firm-level conditions, firms also must take into account the influences of formal and informal rules of the game.43 A better understanding of the formal and informal rules of the game explains a great deal behind the success and failure of numerous firms around the world. Collectively viewed as a strategy tripod, these three views form the backbone of the first part of this book, Foundations of Global Strategy (Chapters 1, 2, 3, and 4). They shed con- siderable light on the question “How do firms behave?” For the second and third parts of the book, we will repeatedly draw on the strategy tripod with these three views to tackle a variety of strategy problems. FIGURE 1.5 The Strategy Tripod: Three Leading Perspectives on Strategy Industry-based competition Firm-specific resources Strategy Performance and capabilities Institutional conditions and transitions Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.  Chapter 1 Strategizing Around the Globe 15 What Determines the Scope of the Firm? This question first focuses on the growth of the firm. Most firms seem to have a lingering love affair with growth. The motivation to grow is fueled by the excitement associated with such growth. However, there is a limit beyond which further growth may backfire. Then, downsiz- ing, downscoping, and withdrawals are often necessary. In developed economies, a conglomeration strategy featuring product-unrelated diversification, in vogue in the 1960s and the 1970s, was found to destroy value and was largely discredited by the 1980s and the 1990s. Witness how many firms are still trying to divest and downsize in the West. However, this strategy seems to be alive and well in many emerging economies. Although puzzled Western media and consultants often suggest that conglomerates destroy value and should be dismantled in emerging economies, empirical evidence suggests otherwise. Recent research in emerging economies reports that some (but not all) units affiliated with conglomerates may enjoy higher profitability than independent firms, pointing out some discernible performance benefits associated with conglomeration.44 One reason behind such a contrast lies in the institutional differences between developed and emerging economies. Viewed through an institutional lens, conglomeration may make sense (at least to some extent) in emerging economies, because this strategy and its relatively positive link with performance may be a function of the level of institutional (under)development in these countries.45 In addition to product scope, careful deliberation of the geographic scope is important.46 For firms aspiring to become global leaders, a strong position in the three major developed regions—North America, Europe, and Japan—is often necessary. Expanding market position in key emerging economies is also desirable. However, it is not realistic that all firms can, or should, “go global.” Many firms may have entered too many countries too quickly and may be subsequently forced to withdraw. Further, many firms that have done a reasonably good job competing abroad have now been seriously thinking about reducing their geographic scope in a “less global” world (see the Closing Case). What Determines the Success and Failure of Firms Around the Globe? competitive advantage The focus on firm performance, more than anything else, defines the field of strategic man- Performance superiority agement and international business.47 All three major perspectives that form the strategy tri- over rivals. pod ultimately seek to answer this crucial performance question.48 We are interested not only in acquiring and leveraging competitive advantage (defined as performance superiority over stakeholder rivals), but also in sustaining such advantage over time and across regions. Sustaining com- Any group or individual petitive advantage does not mean maintaining excellent performance forever—not possible who can affect or is affected (see Strategy in Action 1.3). It merely means efforts to maintain high levels of performance by the achievement of the to the extent possible. organization’s objectives. What is firm performance? There is no consensus. If you survey ten managers from ten triple bottom line countries on what performance exactly is, you may get ten different answers.49 Long-term or A performance yardstick short-term performance? Financial returns or market shares? Profits maximized for share- consisting of economic, holders or benefits maximized for stakeholders (groups and individuals who can affect or social, and environmental are affected by the achievement of the organization’s objectives)? Without consensus on the dimensions. performance measures, it is difficult to find an easy answer to the question on what drives balanced scorecard firm performance. Instead of focusing on a single financial or economic bottom line, some firms adopt a triple bottom line that consists of economic, social, and environmental A performance evaluation dimensions—also known as profit-people-planet (PPP) dimensions. method from the customer, internal, innovation and One solution is a balanced scorecard, which is a performance evaluation method from learning, and financial the customer, internal, innovation and learning, and financial perspectives. Outlined in perspectives. Table 1.5, the balanced scorecard can be thought of as the dials in a flight cockpit. To fly an aircraft, pilots simultaneously require a lot of information, such as air speed, altitude, information overload and bearing. To manage a firm, strategists have similar needs. But pilots and strategists Too much information to cannot afford information overload—too much information. The balanced scorecard process. Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 16 PART 1 Foundations of Global Strategy STRATEGY IN ACTION 1.3 Confessions of Your Textbook Author The first edition of Global Strategy was written during 2003–2004, An all-time favorite in the first four editions was General first marked in 2005, and copyrighted in 2006. An enduring interest Electric (GE). It was positively mentioned numerous times: of the book is sustainable competitive advantage. One secret 12 times in the first edition, 31 times in the second, 19 times in the I can confess to the readers is that while I always endeavor to find third, and eight times in the fourth. However, between the fourth a diverse set of high-performance firms from around the world as edition (copyrighted in 2017) and the fifth edition (copyrighted in examples, I have maintained a small list of fallback examples. When 2022—written in 2020), GE suffered one of the most spectacular other examples are ineffective, I would fall back on these excellent and swiftest corporate meltdowns. It went from being one of the firms. Now looking back while working on the fifth edition, I am most-prestigious firms to being kicked out of the Dow Jones disappointed to find that a number of these “excellent” firms have Industrial Average in 2018 (it was a founding member in 1896 got themselves into trouble. But then I am (secretly) happy that and had been on it continuously between 1907 and 2018). When such corporate mess-ups can vividly illustrate a key point: Even for revising for the fifth edition, I find that Bloomberg Businessweek excellent firms, competitive advantage does not last forever. used the following highly unusual title: “What the Hell Is Wrong In the first edition, Nokia was one of those hot firms. In fact, with GE?” Fortune evidently imitated this title, with its own: “What it was written up as one of the only nine “most-global” multina- the Hell Happened?” As a result, in the fifth edition, GE, my all-time tionals, and had numerous appearances. However, the global leader darling, has turned into an unenviable example. See Strategy in of mobile phones was completely elbowed out of this business by Action 9.2: “GE–Alstom: A Deal Too Far?” Apple and Samsung, which first unleashed their smartphones in Making its first appearance in Global Strategy, Zoom is my 2007—around the time the second edition was written. In 2012, new darling, commanding readers’ attention as the all-important Nokia sold its mobile phone business to Microsoft for $7 billion opening case for Chapter 1. While Zoom is undoubtedly an and concentrated on selling servers and routers to telecom oper- excellent firm, it must be secretly thanking the coronavirus. It is ators. “Remember Nokia?” is the title of a nostalgic media article the deadly virus that propelled this relatively obscure corporate I find when working on the fifth edition. Today, Nokia is still in videoconferencing firm to become a household name, coin- business, but it is no longer a household name. ing new terms such as “Zoombombing” (one word), “Zoom Another favorite in the first edition was Siemens. But in the diplomacy,” and “Zoom fatigue.” Will it remain its relevance in the second edition (copyrighted in 2009), it was written up as the clos- tenth edition of Global Strategy? ing case for Chapter 4: “Siemens in a Sea of Scandals.” Between 2000 and 2006, Siemens not only paid $1.9 billion bribery to “win” hundreds of contracts worldwide, but also recorded such expenses Sources: (1) Bloomberg Businessweek, 2017, Remember Nokia? as tax-deductible expenses. It went from being one of the most- July 3: 66–69; (2) Bloomberg Businessweek, 2018, What the hell is respected firms in Germany to one of the least-respected. Its num- wrong with GE? February 5: 42–49; (3) Fortune, 2018, What the ber of appearances dropped from 11 times in the first edition to a hell happened? June 1: 149–156; (4) M. W. Peng, 2006, 2009, 2014, mere two in the fourth edition. 2017, Global Strategy, 1st–4th ed., Boston: Cengage. summarizes and channels a large volume of information to a relatively small number of crucial dimensions. In summary, these four questions represent some of the most fundamental puzzles in strategy. While other questions can be raised, they all relate in one way or another to these four.50 Thus, answering these four questions will be the primary focus of this book and will be addressed in every chapter. TABLE 1.5 Performance Goals and Measures from the Balanced Scorecard From a customer perspective: How do customers see us? From an internal business perspectives: What must we excel at? From an innovation and learning perspective: Can we continue to improve and create value? From a financial perspective: How do we look to shareholders? Source: Adapted from R. Kaplan & D. Norton, 2005, The balanced scorecard: Measures that drive performance, Harvard Business Review July: 172–180. Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.