Strategic Management Concepts and Cases PDF

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 Full-Circle Learning MyLab™: Learning Full Circle for Marketing, Management, Business Communication, and Intro to Business BEFORE CLASS DSMs, pre-lecture homework, eText Writing MyLab AFTER Space,Video Decision CLASS Cases, Quizzes/ Sims,Videos, DURING Tests and Learning CLASS Catalytics  MyManagementLab : Improves Student ® Engagement Before, During, and After Class BREAKTHROUGH To better results Prep and OUGH KTHR BREA Engagement NEW! VIDEO LIBRARY – Robust video library with over 100 new book-specific videos that include easy-to-assign assessments, the ability for instructors to add YouTube or other sources, the ability for students to upload video submissions, and the ability for polling and teamwork. Decision-making simulations – NEW and improved feedback for students. Place your students in the role of a key decision-maker! Simulations branch based on the decisions students make, providing a variation of scenario paths. 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Additional Features – Included with the MyLab are a powerful homework and test manager, robust gradebook tracking, Reporting Dashboard, comprehensive online course content, and easily scalable and shareable content. http://www.pearsonmylabandmastering.com Strategic ManageMent concepts and cases A Competitive AdvAntAge ApproACh This page intentionally left blank  Strategic ManageMent Sixteenth edition concepts and cases A Competitive AdvAntAge ApproACh Fred r. David Francis Marion University Florence, South Carolina Forest r. David Strategic Planning Consultant Boston Columbus Indianapolis New York San Francisco Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Vice President, Business Publishing: Donna Battista Editor-in-Chief: Stephanie Wall Acquisitions Editor: Daniel tylman Editorial Assistant: Linda albelli Vice President, Product Marketing: Maggie Moylan Director of Marketing, Digital Services and Products: Jeanette Koskinas Field Marketing Manager: Lenny ann raper Product Marketing Assistant: Jessica Quazza Team Lead, Program Management: ashley Santora Program Manager: claudia Fernandes Team Lead, Project Management: Jeff Holcomb Project Manager: ann Pulido Operations Specialist: carol Melville Creative Director: Blair Brown Art Director: Janet Slowik Vice President, Director of Digital Strategy & Assessment: Paul gentile Manager of Learning Applications: Paul Deluca Digital Editor: Brian Surette Director, Digital Studio: Sacha Laustsen Digital Studio Manager: Diane Lombardo Digital Studio Project Manager: robin Lazrus Digital Studio Project Manager: alana coles Digital Studio Project Manager: Monique Lawrence Full-Service Project Management and Composition: integra Interior Designer: integra Cover Designer: integra Cover Image: Francesco Pezzotta Printer/Binder: rr Donnelley/Kendallville Cover Printer: Phoenix color/Hagerstown copyright © 2017, 2015, 2013 by Pearson education, inc. or its affiliates. all rights reserved. Manufactured in the United States of america. this publication is protected by copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permissions, request forms and the appropriate contacts within the Pearson education global rights & Permissions department, please visit www.pearsoned.com/permissions/. acknowledgements of third party content appear on the appropriate page within the text, which constitutes an extension of this copyright page with the exception of the photo of the chocolate candies that appear throughout the text and is credited to Dan Kosmayer/Shutterstock. PearSOn aLWaYS Learning and MYManageMentLaB® are exclusive trademarks owned by Pearson education, inc. or its affiliates in the U.S. and/or other countries. Unless otherwise indicated herein, any third-party trademarks that may appear in this work are the property of their respective owners and any references to third-party trademarks, logos or other trade dress are for demonstrative or descriptive purposes only. Such references are not intended to imply any sponsorship, endorsement, authorization, or promotion of Pearson’s products by the owners of such marks, or any relationship between the owner and Pearson education, inc. or its affiliates, authors, licensees or distributors. Library of Congress Cataloging-in-Publication Data David, Fred r. Strategic management: concepts and cases—a competitive advantage approach / Fred r. David, Francis Marion University, Florence, South carolina, Forest r. David, Strategic Planning consultant.—Sixteenth edition. pages cm iSBn 978-0-13-416784-8 (alk. paper) — iSBn 0-13-416784-8 (alk. paper) 1. Strategic planning. 2. Strategic planning—case studies. i. David, Forest r. ii. title. HD30.28.D3785 2015 658.4'012—dc23 2015021210 10 9 8 7 6 5 4 3 2 1 iSBn 10: 0-13-416784-8 iSBn 13: 978-0-13-416784-8  Thank you to the following companies that graciously provided the substance of the Cohesion Cases over a 30-year span of 16 editions of this book. 1st edition, 1987: Ponderosa 2nd edition, 1989: Ponderosa 3rd edition, 1991: Hershey Company 4th edition, 1993: Hershey Company 5th edition, 1995: Hershey Company 6th edition, 1997: Hershey Company 7th edition, 1999: Hershey Company 8th edition, 2001: America Online (AOL) 9th edition, 2003: American Airlines 10th edition, 2005: Krispy Kreme Doughnuts, Inc. 11th edition, 2007: Google Inc. 12th edition, 2009: The Walt Disney Company 13th edition, 2011: Apple, Inc. 14th edition, 2013: McDonald’s Corporation 15th edition, 2015: PepsiCo, Inc. 16th edition, 2017: Hershey Company This page intentionally left blank  Brief Contents Preface xvii Acknowledgments xxxi About the Authors xxxiii Part 1 Overview of Strategic Management 2 Chapter 1 The Nature of Strategic Management 3 The Cohesion Case: The heRsheY CoMPanY, 2015 (hsY) 26 Part 2 Strategy Formulation 38 Chapter 2 The Business Vision and Mission 39 Chapter 3 The External Assessment 59 Chapter 4 The Internal Assessment 89 Chapter 5 Strategies in Action 129 Chapter 6 Strategy Analysis and Choice 167 Part 3 Strategy Implementation 204 Chapter 7 Implementing Strategies: Management, Operations, and Human Resource Issues 205 Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues 243 Part 4 Strategy Evaluation 278 Chapter 9 Strategy Review, Evaluation, and Control 279 Part 5 Key Strategic-Management topics 304 Chapter 10 Business Ethics, Social Responsibility, and Environmental Sustainability 305 Chapter 11 Global and International Issues 329 Part 6 Strategic-Management Case analysis 356 How to Prepare and Present a Case Analysis 357 Glossary 627 Name Index 637 Subject Index 643 vii This page intentionally left blank  Contents Preface xvii Assurance of Learning Exercise 1C: Update the Hershey Cohesion Case 36 Acknowledgments xxxi Assurance of Learning Exercise 1D: Strategic Planning for Your University 36 About the Authors xxxiii Assurance of Learning Exercise 1E: Strategic Planning at a Local Company 37 Part 1 Overview of Strategic Assurance of Learning Exercise 1F: Get Familiar with the Strategy Club Website 37 Management 2 Assurance of Learning Exercise 1G: Game Plans vs. Strategic Plans: Chapter 1 the Nature of Strategic Teams vs. Companies 37 Management 3 exeMPlaRY CoMPanY showCased: aPPle, inC. 4 Part 2 Strategy Formulation 38 what is strategic Management? 4 Chapter 2 the Business Vision and Mission 39 What Is a Cohesion Case? 5 Defining Strategic Management 5 exeMPlaRY CoMPanY showCased: h&R BloCK 40 stages of strategic Management 5 vision statements: what do we want to Become? 40 integrating intuition and analysis 6 Vision Statement Analysis 41 Adapting to Change 7 Mission statements: what is our Business? 42 Key Terms in strategic Management 8 The Process of developing vision and Mission Competitive Advantage 8 Strategists 8 statements 43 aCadeMiC ReseaRCh CaPsule 1-1: when aRe Chief The importance (Benefits) of vision and Mission sTRaTegY offiCeRs (Csos) hiRed/aPPoinTed? 9 statements 44 Vision and Mission Statements 10 External Opportunities aCadeMiC ReseaRCh CaPsule 2-1: The Mission sTaTeMenT/ and Threats 10 Internal Strengths and Weaknesses 11 Long-Term Objectives 12 Strategies 12 Annual fiRM PeRfoRManCe linKage 44 Objectives 12 Policies 13 A Resolution of Divergent Views 45 The strategic-Management Model 14 Characteristics of a Mission statement 46 aCadeMiC ReseaRCh CaPsule 1-2: whaT aCTiviTY is A Customer Orientation 47 Most IMportant In the strategIc-ManageMent Components of a Mission statement 47 PRoCess? 15 evaluating and writing Mission statements 48 Benefits of engaging in strategic Management 15 Two Mission Statements Critiqued 49 Five Mission Statements Financial Benefits 16 Nonfinancial Benefits 17 Revised 49 Two Mission Statements Proposed 49 why some firms do no strategic Planning 17 iMPliCaTions foR sTRaTegisTs 51 Pitfalls in strategic Planning 18 iMPliCaTions foR sTudenTs 52 Comparing Business and Military strategy 18 Chapter summary 52 iMPliCaTions foR sTRaTegisTs 20 Key Terms and Concepts 53 Issues for Review and Discussion 53 iMPliCaTions foR sTudenTs 21 assuRanCe of leaRning exeRCises 54 Chapter summary 21 Assurance of Learning Exercise 2A: Develop an Improved BB&T Mission Key Terms and Concepts 22 Statement 54 Issues for Review and Discussion 22 Assurance of Learning Exercise 2B: Evaluate Three Mission Statements 54 Mini-Case on The KRogeR CoMPanY: whaT aMeRiCan Assurance of Learning Exercise 2C: Write a Vision and Mission Statement CoMPanY does The BesT JoB of sTRaTegiC for the Hershey Company 55 Planning? 24 Assurance of Learning Exercise 2D: Compare Your College or University’s Current Readings 25 Vision and Mission Statements to That of a Leading Endnotes 25` Rival Institution 55 The Cohesion Case: The heRsheY CoMPanY, 2015 26 Assurance of Learning Exercise 2E: Conduct Mission Statement assuRanCe of leaRning exeRCises 35 Research 55 Assurance of Learning Exercise 1A: Compare Business Strategy with Mini-Case on walT disneY CoMPanY: whaT is disneY’s Military Strategy 35 vision foR The fuTuRe and Mission foR The PResenT? 56 Assurance of Learning Exercise 1B: Gather Strategy Information Current Readings 56 for the Hershey Company 35 Endnotes 57 ix x CONTENTS Chapter 3 the External assessment 59 Marketing 100 exeMPlaRY CoMPanY showCased: ChiPoTle Customer Analysis 100 Selling Products and Services 100 MexiCan gRill 60 Product and Service Planning 101 Pricing 101 Distribution 102 Marketing Research 102 Cost/Benefit The Purpose and nature of an external audit 61 Analysis 102 Marketing Audit Checklist of Questions 103 Key External Forces 61 The Process of Performing an External finance/accounting 103 Audit 62 The Industrial Organization (I/O) View 63 Finance/Accounting Functions 103 Financial Ratios 104 Ten external forces That affect organizations 63 Breakeven Analysis 107 Finance/Accounting Audit Economic Forces 63 Social, Cultural, Demographic, and Checklist 109 Natural Environment Forces 65 Political, Governmental, and Production/operations 109 Legal Forces 66 Technological Forces 68 Competitive Forces 69 Production/Operations Audit Checklist 110 Porter’s five-forces Model 71 Research and development 111 Rivalry among Competing Firms 72 Potential Entry of New Internal and External Research and Development 111 Research Competitors 73 Potential Development of Substitute and Development Audit 112 Products 73 Bargaining Power of Suppliers 73 Management information systems 112 Bargaining Power of Consumers 74 Managing Voluminous Consumer Data 112 sources of external information 74 aCadeMiC ReseaRCh CaPsule 4-2: new TRends forecasting Tools and Techniques 74 in Managing Big daTa 113 Making Assumptions 75 Business Analytics 76 Management Information Systems Audit 113 The external factor evaluation Matrix 77 value Chain analysis 113 The Competitive Profile Matrix 78 Benchmarking 114 iMPliCaTions foR sTRaTegisTs 81 The internal factor evaluation Matrix 116 iMPliCaTions foR sTudenTs 82 iMPliCaTions foR sTRaTegisTs 118 Chapter summary 82 iMPliCaTions foR sTudenTs 120 Key Terms and Concepts 83 Chapter summary 121 Issues for Review and Discussion 83 Key Terms and Concepts 121 assuRanCe of leaRning exeRCises 84 Issues for Review and Discussion 122 Assurance of Learning Exercise 3A: Competitive Intelligence (CI) assuRanCe of leaRning exeRCises 123 Certification 84 Assurance of Learning Exercise 4A: Apply Breakeven Analysis 123 Assurance of Learning Exercise 3B: Develop an EFE Matrix for Assurance of Learning Exercise 4B: Compare Netflix with Redbox 123 Hershey Company 84 Assurance of Learning Exercise 4C: Perform a Financial Ratio Analysis Assurance of Learning Exercise 3C: Perform an External for Hershey Company 124 Assessment 85 Assurance of Learning Exercise 4D: Construct an IFE Matrix Assurance of Learning Exercise 3D: Develop an EFE Matrix for Your for Hershey Company 124 University 85 Assurance of Learning Exercise 4E: Construct an IFE Matrix Assurance of Learning Exercise 3E: Comparing Chipotle Mexican for Your University 124 Grill to Panera Bread and Moe’s Southwest Grill 85 Assurance of Learning Exercise 4F: Applying Research-Based Assurance of Learning Exercise 3F: Develop a Competitive Profile View (RBV) Theory 125 Matrix for Hershey Company 86 Mini-Case on Buffalo wild wings, inC.: whaT do Assurance of Learning Exercise 3G: Develop a Competitive Profile ouTsTanding ManageMenT, MaRKeTing, and finanCe Matrix for Your University 86 exeCuTives do TogeTheR? 125 Mini-Case on CoaCh, inC.: whY aRe The ladies Current Readings 126 shunning CoaCh? 86 Endnotes 126 Current Readings 87 Endnotes 87 Chapter 5 Strategies in action 129 exeMPlaRY CoMPanY showCased: signeT Chapter 4 the Internal assessment 89 JeweleRs liMiTed 130 exeMPlaRY CoMPanY showCased: neTflix, inC. 90 long-Term objectives 130 Characteristics and Benefits of Objectives 131 Financial versus The nature of an internal audit 90 Strategic Objectives 131 Avoid Not Managing by Objectives 132 Key Internal Forces 91 The Process of Performing an Internal Audit 92 The Resource-Based View 93 Types of strategies 132 Levels of Strategies 134 aCadeMiC ReseaRCh CaPsule 4-1: does RBv TheoRY deTeRMine diveRsifiCaTion TaRgeTs? 93 integration strategies 134 integrating strategy and Culture 94 Forward Integration 135 Backward Integration 136 Horizontal Integration 137 Management 96 intensive strategies 138 Planning 96 Organizing 97 Motivating 98 Staffing 98 Controlling 99 Management Audit Market Penetration 138 Market Development 138 Product Development 139 Checklist of Questions 99  CONTENTS xi diversification strategies 139 The swoT Matrix 171 Related Diversification 140 Unrelated Diversification 140 The strategic Position and action evaluation (sPaCe) Matrix 174 defensive strategies 141 The Boston Consulting group (BCg) Matrix 178 Retrenchment 141 Divestiture 142 Liquidation 143 The internal-external (ie) Matrix 181 Michael Porter’s five generic strategies 144 aCadeMiC ReseaRCh CaPsule 6-1: a new ie MaTRix 184 Cost Leadership Strategies (Type 1 and Type 2) 145 The grand strategy Matrix 185 Differentiation Strategies (Type 3) 146 Focus Strategies (Type 4 and Type 5) 147 The decision stage: The Quantitative strategic Planning Matrix (QsPM) 186 Means for achieving strategies 148 Positive Features and Limitations of the QSPM 189 Cooperation among Competitors 148 Joint Venture and Partnering 148 Cultural aspects of strategy analysis and Choice 190 aCadeMiC ReseaRCh CaPsule 5-1: aRe inTeRnaTional The Politics of strategy analysis and Choice 190 allianCes MoRe effeCTive wiTh CoMPeTiToRs oR Boards of directors: governance issues 191 nonCoMPeTiToRs? 149 aCadeMiC ReseaRCh CaPsule 6-2: how ManY BoaRd Merger/Acquisition 150 Private-Equity Acquisitions 151 of diReCToRs MeMBeRs aRe ideal? 193 Tactics to facilitate strategies 152 iMPliCaTions foR sTRaTegisTs 194 First Mover Advantages 152 Outsourcing and Reshoring 152 iMPliCaTions foR sTudenTs 194 strategic Management in nonprofit, governmental, Chapter summary 195 and small firms 154 Key Terms and Concepts 196 Educational Institutions 154 Medical Organizations 155 Issues for Review and Discussion 196 Governmental Agencies and Departments 155 Small Firms 155 assuRanCe of leaRning exeRCises 198 aCadeMiC ReseaRCh CaPsule 5-2: whaT aTTRiBuTes do Assurance of Learning Exercise 6A: Perform a SWOT Analysis gReaT enTRePReneuRs Possess? 156 for Hershey Company 198 iMPliCaTions foR sTRaTegisTs 156 Assurance of Learning Exercise 6B: Develop a SPACE Matrix iMPliCaTions foR sTudenTs 157 for Hershey 199 Chapter summary 157 Assurance of Learning Exercise 6C: Develop a BCG Matrix for Hershey 199 Key Terms and Concepts 158 Assurance of Learning Exercise 6D: Develop a QSPM for Hershey 199 Issues for Review and Discussion 158 Assurance of Learning Exercise 6E: Formulate Individual Strategies 200 assuRanCe of leaRning exeRCises 159 Assurance of Learning Exercise 6F: Develop a BCG Matrix for Your University 200 Assurance of Learning Exercise 5A: Develop Hypothetical Hershey Company Strategies 159 Assurance of Learning Exercise 6G: The Role of Boards of Directors 200 Assurance of Learning Exercise 5B: Horizontal Integration in Assurance of Learning Exercise 6H: Locate Companies in a Grand Practice 160 Strategy Matrix 201 Assurance of Learning Exercise 5C: What Strategies Should Hershey Mini-Case on The sTaRBuCKs CoRPoRaTion: whaT Pursue in 2017? 160 sTaRBuCKs sTRaTegies aRe BesT? 201 Assurance of Learning Exercise 5D: Examine Strategy Current Readings 202 Articles 160 Endnotes 202 Assurance of Learning Exercise 5E: Classify Some Recent Strategies 161 Part 3 Strategy Implementation 204 Assurance of Learning Exercise 5F: How Risky Are Various Alternative Strategies? 162 Chapter 7 Implementing Strategies: Management, Assurance of Learning Exercise 5G: Develop Alternative Strategies for Operations, and Human resource Your University 162 Issues 205 Mini-Case on linKedin CoRPoRaTion: should linKedin exeMPlaRY CoMPanY showCased: PaPa John’s CooPeRaTe wiTh faCeBooK? 163 inTeRnaTional, inC. 206 Current Readings 164 Transitioning from formulating to implementing Endnotes 164 strategies 206 The need for Clear annual objectives 208 Chapter 6 Strategy analysis and Choice 167 The need for Clear Policies 211 exeMPlaRY CoMPanY showCased: sMiTh & wesson allocate Resources and Manage Conflict 211 holding CoRPoRaTion 168 Allocate Resources 211 Manage Conflict 213 The strategy analysis and Choice Process 168 Match structure with strategy 213 The Process of Generating and Selecting Strategies 168 Types of organizational structure 214 The strategy-formulation analytical framework 170 The Functional Structure 214 The Divisional Structure 215 The Input Stage 171 The Matching Stage 171 The Strategic Business Unit (SBU) Structure 217 The Matrix The Decision Stage 171 Structure 218 xii CONTENTS dos and don’ts in developing organizational Charts 219 strategic Research and development (R&d) issues 267 aCadeMiC ReseaRCh CaPsule 7-1: whY is The Coo strategic Management information systems (Mis) issues 269 PosiTion Being deleTed in ManY oRganizaTions? 221 Mobile Tracking of Employees 270 strategic Production/operations issues 222 iMPliCaTions foR sTRaTegisTs 270 Restructuring and Reengineering 222 Manage Resistance to iMPliCaTions foR sTudenTs 271 Change 223 Decide Where and How to Produce Goods 223 Mobile Apps for Customers 271 Employee Stock Ownership Plans (ESOPs) 224 Chapter summary 271 strategic human Resource issues 225 Key Terms and Concepts 272 Linking Performance and Pay to Strategy 225 Balance Work Life Issues for Review and Discussion 272 and Home Life 227 Develop a Diverse Workforce 228 assuRanCe of leaRning exeRCises 274 aCadeMiC ReseaRCh CaPsule 7-2: how do woMen vs. Men Assurance of Learning Exercise 8A: Develop a Product-Positioning Ceos PeRfoRM? 229 Map for Hershey Company 274 Use Caution in Hiring a Rival’s Employees 229 Create a Strategy- Assurance of Learning Exercise 8B: Gain Practice Developing Supportive Culture 232 Use Caution in Monitoring Employees’ Perceptual Maps 274 Social Media 233 Develop a Corporate Wellness Program 233 Assurance of Learning Exercise 8C: Perform an EPS/EBIT Analysis iMPliCaTions foR sTRaTegisTs 235 for Hershey Company 274 iMPliCaTions foR sTudenTs 236 Assurance of Learning Exercise 8D: Prepare Projected Financial Chapter summary 237 Statements for Hershey Company 275 Key Terms and Concepts 237 Assurance of Learning Exercise 8E: Determine the Cash Value Issues for Review and Discussion 237 of Hershey Company 275 assuRanCe of leaRning exeRCises 239 Assurance of Learning Exercise 8F: Develop a Product-Positioning Assurance of Learning Exercise 7A: Critique Corporate Organizational Map for Your University 275 Charts 239 Assurance of Learning Exercise 8G: Do Banks Require Projected Assurance of Learning Exercise 7B: Draw an Organizational Chart for Financial Statements? 276 Hershey Company Using a Free, Online Template 239 Mini-Case on aliBaBa gRouP holding lTd.: is selling Assurance of Learning Exercise 7C: Do Organizations Really Establish sToCK oR Bonds BesT To Raise CaPiTal? 276 Objectives? 239 Current Readings 277 Assurance of Learning Exercise 7D: Understanding Your University’s Endnotes 277 Culture 240 Mini-Case on hilTon woRldwide holdings: is The new hilTon PoliCY waRRanTed? 240 Part 4 Strategy Evaluation 278 Current Readings 241 Endnotes 241 Chapter 9 Strategy review, Evaluation, and Control 279 exeMPlaRY CoMPanY showCased: niKe, inC. 280 Chapter 8 Implementing Strategies: Marketing, The strategy-evaluation Process, Criteria, Finance/accounting, r&D, and MIS and Methods 280 Issues 243 The Process of Evaluating Strategies 283 exeMPlaRY CoMPanY showCased: fooT The Three strategy-evaluation activities 284 loCKeR, inC. 244 Reviewing Bases of Strategy 284 Measuring Organizational strategic Marketing issues 244 Performance 286 Taking Corrective Actions 287 social Media Marketing 245 The Balanced scorecard 289 Market segmentation 247 Published sources of strategy-evaluation information 291 Product Positioning and Perceptual Mapping 250 Characteristics of an effective strategy evaluation system 291 Author Commentary 251 Contingency Planning 292 strategic finance/accounting issues 253 auditing 293 ePs/eBiT analysis: acquire needed Capital 254 Twenty-first-Century Challenges in strategic Projected financial statements 258 Management 294 Projected financial statement analysis for d. R. horton 260 The Art or Science Issue 294 The Visible or Hidden Corporate valuation 262 Issue 295 The Top-Down or Bottom-Up Approach 296 aCadeMiC ReseaRCh CaPsule 8-1: when should guidelines for effective strategic Management 296 we oveRPaY To aCQuiRe a fiRM? 264 iMPliCaTions foR sTRaTegisTs 298 Corporate Valuation Methods 264 iMPliCaTions foR sTudenTs 298 iPos, Cash Management, and Corporate Bonds 266 Chapter summary 299 Go Public With An IPO? 266 Key Terms and Concepts 299 Keep Cash Offshore if Earned Offshore? 267 Issues for Review and Discussion 299 Issue Corporate Bonds for What Purpose? 267 assuRanCe of leaRning exeRCises 300  CONTENTS xiii Assurance of Learning Exercise 9A: Examine 100 Balanced Scorecards 300 Chapter 11 Global and International Assurance of Learning Exercise 9B: Prepare a Strategy-Evaluation Report Issues 329 for Hershey Company 301 exeMPlaRY CoMPanY showCased: alCoa, inC. 330 Assurance of Learning Exercise 9C: Evaluate Your University’s Strategies 301 The nature of doing Business globally 330 Multinational Firms 332 Different Languages Mini-Case on TJx CoMPanies, inC.: is seCReT sTRaTegiC Globally 333 Labor Unions across Europe 333 Planning BesT foR TJx? 301 Current Readings 302 aCadeMiC ReseaRCh CaPsule 11-1: how ManY Endnotes 302 languages aRe TheRe gloBallY? 333 advantages and disadvantages of doing Business globally 334 Part 5 Key Strategic-Management The global Challenge 335 topics 304 aCadeMiC ReseaRCh CaPsule 11-2: how do fiRMs deCide wheRe To exPand? 336 Chapter 10 Business Ethics, Social responsibility, Tax Rates and Tax inversions 336 and Environmental Sustainability 305 Tax Rates 336 Tax Inversions 338 exeMPlaRY CoMPanY showCased: american versus foreign Business Culture 338 ChiCK-fil-a 306 Communication Differences across Countries 340 why “good ethics is good Business” 306 Business Culture across Countries 341 Does It Pay to Be Ethical? 307 Mexico’s Business Culture 341 Japan’s Business Culture 342 aCadeMiC ReseaRCh CaPsule 10-1: whaT Can we China’s Business Culture 343 India’s Business Culture 344 leaRn fRoM high-PeRfoRManCe CoMPanies? 308 Business Climate across Countries 344 aCadeMiC ReseaRCh CaPsule 10-2: who is PRone Africa’s Business Climate 345 China’s Business Climate 346 To Be uneThiCal in a Business? 309 Brazil's Business Climate 347 Indonesia’s Business Climate 347 How to Establish an Ethics Culture 309 India’s Business Climate 347 Japan’s Business Climate 348 Mexico’s Business Climate 348 Vietnam’s Business Climate 349 whistle-Blowing, Bribery, and workplace Romance 310 iMPliCaTions foR sTRaTegisTs 350 Whistle-Blowing 310 Avoid Bribery 311 Workplace Romance 312 iMPliCaTions foR sTudenTs 350 social Responsibility and Policy 313 Chapter summary 351 aCadeMiC ReseaRCh CaPsule 10-3: does iT PaY To Be Key Terms and Concepts 351 soCiallY ResPonsiBle? 314 Issues for Review and Discussion 351 Design and Articulate a Social Policy 314 Social Policies on assuRanCe of leaRning exeRCises 352 Retirement 314 Assurance of Learning Exercise 11A: Business Cultures across environmental sustainability 315 Countries: A Hershey Company Analysis 352 What Firms Are the Best Stewards? 316 Sustainability Assurance of Learning Exercise 11B: Hershey Company Wants Reports 317 The Office of Environmental Affairs 318 to Enter Africa. Help Them 353 ISO 14000/14001 Certification 318 Assurance of Learning Exercise 11C: Does Your University Recruit in Foreign Countries? 353 wildlife welfare 319 Assurance of Learning Exercise 11D: Assess Differences in Culture Food Suppliers and Animal Welfare 321 across Countries 353 iMPliCaTions foR sTRaTegisTs 321 Assurance of Learning Exercise 11E: How Well Traveled Are Business iMPliCaTions foR sTudenTs 322 Students at Your University? 354 Chapter summary 322 Mini-Case on doMino’s Pizza, inC.: To gRow gloBallY Key Terms and Concepts 322 The RighT waY = follow doMino’s? 354 Issues for Review and Discussion 322 Current Readings 355 assuRanCe of leaRning exeRCises 323 Endnotes 355 Assurance of Learning Exercise 10A: How Does Your Municipality Compare to Others on Being Pollution-Safe? 323 Assurance of Learning Exercise 10B: Does Hershey Company or Mars, Inc. Win on Sustainability? 324 Part 6 Strategic-Management Case Assurance of Learning Exercise 10C: The Ethics of Spying on analysis 356 Competitors 324 Assurance of Learning Exercise 10D: Who Prepares a Sustainability How to Prepare and Present a Case Report? 325 analysis 357 Mini-Case on avon PRoduCTs, inC.: would ClaiMs what is a strategic-Management Case? 358 of eThiCal wRongdoing BY a CoMPanY iMPaCT guidelines for Preparing Case analyses 358 YouR BuYing The fiRM’s PRoduCTs? 325 The Need for Practicality 358 The Need for Justification 358 Current Readings 326 The Need for Realism 358 The Need for Specificity 358 Endnotes 326 The Need for Originality 359 The Need to Contribute 359 xiv CONTENTS The Case Method versus lecture approach 359 Sample Case Analysis Outline 363 Recommended Time The Cross-Examination 359 Allocation for Presenting a Case Analysis 365 Preparing a written Case analysis 360 Assurance of Learning Exercise Strategic Planning for Gruma SAB 365 The Executive Summary 360 The Comprehensive Written strategic-Management Cases Analysis 360 Steps in Preparing a Comprehensive Written Analysis 360 Making an oral Presentation 361 Glossary 627 Controlling Your Voice 361 Managing Body Language 361 Speaking from Notes 362 Constructing Visual Aids 362 Name Index 637 Answering Questions 362 Tips for success in Case analysis 362 Subject Index 643 Cases USa-Headquartered Service Firms Restaurants 1. Dunkin’ Brands Group, Inc. (DNKN) 370 2. Krispy Kreme Doughnuts, Inc. (KKD) 378 Lodging and Movies 3. Marriott International, Inc. (MAR) 385 4. Wynn Resorts Limited (WYNN) 396 5. Cinemark Holdings, Inc. (CNK) 404 Internet Based 6. Facebook, Inc. (FB) 412 7. Zynga, Inc. (ZNGA) 420 8. The Priceline Group, Inc. (PCLN) 428 Stores and Banks 9. The TJX Companies, Inc. (TJX) 437 10. Tiffany & Company (TIF) 446 11. Citigroup Inc. (C) 455 Airlines and Airfreight 12. JetBlue Airways Corporation (JBLU) 464 13. FedEx Corporation (FDX) 472 USa-Headquartered Manufacturing Firms Food 14. Tyson Foods, Inc. (TSN) 481 15. Constellation Brands Inc. (STZ) 491 Leisure Sports 16. GoPro, Inc. (GPRO) 500 17. Arctic Cat Inc. (ACAT) 508 Automobiles and Motorcycles 18. Tesla Motors, Inc. (TSLA) 516 19. Ford Motor Company (F) 522 20. Harley-Davidson, Inc. (HOG) 532 Computers/Software 21. Apple Inc. (AAPL) 540 22. International Business Machines Corporation (IBM) 549 Personal Products 23. TASER International, Inc. (TASR) 558 24. Revlon, Inc. (REV) 566 xv xvi CASES Nonprofit Organizations 25. World Relief 574 26. World Wildlife Fund for Nature (WWF) 582 Outside-USA Headquartered Firms 27. Michael Kors Holdings Ltd. (KORS) 591 28. SABMiller plc (SAB) 599 29. Gruma S.A.B. de C.V. (GMK) 609 30. Restaurant Brands International, Inc. (QSR) 617 Preface Why Adopt This Text? this textbook is trusted across five continents to provide managers the latest skills and con- cepts needed to effectively formulate and efficiently implement a strategic plan—a game plan, if you will—that can lead to sustainable competitive advantage for any type of business. the association to advance collegiate Schools of Business (aacSB) international increasingly advocates a more skills-oriented, practical approach in business books, which this text provides, rather than a theory-based approach. Strategic Management Concepts and Cases: A Competitive Advantage Approach meets all aacSB international guidelines for the strategic-management course at both the graduate and undergraduate levels, and previous editions have been used at more than 500 colleges and universities globally. We believe you will find this sixteenth edition to be the best textbook available for communicating both the excitement and value of strategic management. concise and exceptionally well organized, this text is now available in english, chinese, Spanish, thai, german, Japanese, Farsi, indonesian, indian, Vietnamese, and arabic. a version in russian is being negotiated. in addition to universities, hundreds of companies, orga- nizations, and governmental bodies use this text as a management guide. an MBa student using this text recently wrote the following: Dear Dr. David: i am in the midst of my MBa at adams State University here in colorado. i’m 7 of 12 classes in with a 4.0 average. as a result, i’ve been through about 14 textbooks (not to mention the 60 or so i went through for my BBa at the University of california (Uc)-Berkeley. this is the first time i’ve written to the author of a textbook. Why? Because the David book is by far the best textbook i have ever used. it’s clear. it’s accurate. it’s not full of opinion masquerading as fact! You, sir, are to be commended. Usually when i spend an insane amount of money on a text, i’m broke. But your text is worth every cent, and i’ll keep it forever. Well done sir! respectively, eric Seiden, MBa Student in Littleton, colorado (august 10, 2015) eric n. Sims, a professor who has used this text for his classes at Sonoma State University in california, says: i have read many strategy books. i am going to use the David book. What i like—to steal a line from alabama coach nick Saban—is your book teaches “a process.” i believe at the end of your book, you can actually help a company do strategic planning. in contrast, other books teach a number of near and far concepts related to strategy. a recent reviewer of this textbook shares his opinion: One thing i admire most about the David text is that it follows the fundamental sequence of strategy formulation, implementation, and evaluation. there is a basic flow from vision/mission to internal/external environmental scanning, to strategy development, selection, implementation, and evaluation. this has been, and continues to be, a hallmark of the David text. Many other strategy texts are more disjointed in their presentation, and thus confusing to the student, especially at the undergraduate level. New to This Edition 1. this 16th edition is 40 percent new and improved from the prior edition. 2. a brand new COHESION CASE on the Hershey company (2015) is provided. Hershey is one of the most successful, well-known, and best-managed global companies in the world. Students apply strategy concepts to Hershey at the end of each chapter through new, innovative assurance of Learning exercises. xvii xviii PREFACE 3. Brand-new one-page MINI-CASES appear at the end of each chapter, complete with ques- tions designed to apply chapter concepts. Provided for the first time ever in this text, the mini-cases focus on the following companies: chapter 1: Kroger company chapter 2: Walt Disney company chapter 3: coach chapter 4: Buffalo Wild Wings chapter 5: Linkedin chapter 6: Starbucks chapter 7: Hilton Worldwide chapter 8: alibaba chapter 9: tJX companies chapter 10: avon Products chapter 11: Domino’s Pizza 4. Original, half-page ACADEMIC RESEARCH CAPSULES are presented in each chapter to showcase how new strategic-management research is impacting business practice. two capsules per chapter are provided—for the first time ever in this text. 5. at the end of each chapter are new sections titled IMPLICATIONS FOR STRATEGISTS and IMPLICATIONS FOR STUDENTS that highlight how companies can best gain and sustain competitive advantages. 6. Brand new EXEMPLARY COMPANY CAPSULES appear at the beginning of each chapter and showcase a company that is employing strategic management exceptionally well. the capsules focus on the following companies: chapter 1: apple chapter 2: H&r Block chapter 3: chipotle Mexican grill chapter 4: netflix chapter 5: Signet Jewelers Limited chapter 6: Smith & Wesson Holding corp. chapter 7: Papa John’s international chapter 8: Foot Locker chapter 9: nike chapter 10: chick-fil-a chapter 11: alcoa 7. chapter 2, the Business Vision and Mission, is 60 percent new, due to current research and practice that reveals the need for “these statements to be more customer-oriented.” 8. chapter 11, global and international issues, is shortened by 30 percent but provides new coverage of cultural and conceptual strategic-management differences across countries. Doing business globally has become a necessity in most industries. 9. chapter 10, Business ethics, Social responsibility, and environmental Sustainability, provides extensive new coverage of ethics, workplace romance, flirting, hiring away rival firms’ employees, wildlife welfare, and sustainability. “good ethics is good business.” Unique to strategic-management texts, the sustainability discussion is strengthened in this edition to promote and encourage firms to conduct operations with respect for the environment—an important concern for consumers, companies, society, and aacSB international. 10. Sixty-four unique ASSURANCE OF LEARNING EXERCISES appear at the end of chapters to apply chapter concepts. the exercises prepare students for strategic- management case analysis. an additional excellent exercise for each chapter is provided in the Chapter Instructor’s Resource Manual. 11. More than 200 new EXAMPLES bring the chapters to life. 12. at the end of chapters are 78 new (459 total) REVIEW QUESTIONS related to chapter content. 13. all the current readings at the end of the chapters are new, and up-to-date research and theories of seminal thinkers are included. However, practical aspects of strategic manage- ment are center stage and the trademark of this text. 14. every sentence and paragraph has been scrutinized, modified, clarified, streamlined, updated, and improved to enhance the content and caliber of presentation.  preface xix 15. an enhanced, continually updated AUTHOR WEBSITE (www.strategyclub.com) pro- vides new author videos, case and chapter updates, sample case analyses, and the popular, Free eXceL StUDent teMPLate. the template enables students to more easily develop strategic-planning matrices, tables, and analyses needed for case analysis. New Case Features 1. all 30 cases have a 2015 time setting, offering students up-to-date issues to evaluate. 2. all 30 cases focus on exciting, well-known companies, effective for students to apply strat- egy concepts. 3. all 30 cases are undisguised, featuring real organizations in real industries using real names (nothing is fictitious in any case). 4. all 30 cases feature an organization and industry undergoing strategic change. 5. all 30 cases provide ample, excellent quantitative information, so students can prepare a defensible strategic plan. 6. all 30 cases are written in a lively, concise writing style that captures the reader’s interest. 7. all 30 cases are “comprehensive,” focusing on multiple business functions, rather than a single problem or issue. 8. all 30 cases include current financial statements for the firm, so students can show the impact of a proposed strategic plan. 9. all 30 cases provide an organizational chart and a vision and mission statement— important strategy concepts. 10. all 30 cases are supported by an excellent teacher’s note, provided to professors in a new Case Instructor’s Resource Manual. 11. all 30 cases are available for inclusion in a customized tailored text to meet the special needs of some professors. 12. all 30 cases facilitate coverage of all strategy concepts, but as revealed in the new concepts by cases Matrix, some cases especially exemplify some concepts, enabling pro- fessors to effectively use an assortment of cases with various chapters in the text. 13. all 30 cases have been class-tested to ensure that they are interesting, challenging, and effective for illustrating strategy concepts. 14. all 30 cases appear in no other textbooks, thus offering a truly fresh, new, up-to-date learn- ing platform. 15. the 30 cases represent an excellent mix of firms performing really well and some perform- ing very poorly, including 14 U.S. service-based organizations, 10 U.S. manufacturing- based firms, and 2 nonprofit organizations (World relief and World Wildlife Fund for nature). also included are 4 outside-U.S. headquartered firms (Michael Kors Holdings Ltd., SaBMiller plc, gruma SaB de cV, and restaurant Brands international). 16. all 30 case companies have excellent websites in english that provide detailed financial information, history, sustainability statements, ethics statements, and press releases, so stu- dents can easily access current information to apply strategy concepts. Time-Tested Features 1. this text meets all aacSB international guidelines that support a practitioner orientation rather than a theory/research approach. it offers a skills-oriented process for developing a vision and mission statement; performing an external audit; conducting an internal assess- ment; and formulating, implementing, and evaluating strategies. 2. the author’s writing style is concise, conversational, interesting, logical, lively, and sup- ported by numerous current examples. 3. a simple, integrative strategic-management model appears in all chapters and on the inside back cover. the model is widely used by strategic-planning consultants and companies worldwide. 4. an exciting, new cohesion case on Hershey company follows chapter 1 and is revisited at the end of each chapter, allowing students to apply strategic-management concepts and techniques to a real company as the text develops, thus preparing students for case analysis as the course evolves. xx PREFACE 5. end-of-chapter assurance of Learning exercises apply chapter concepts and tech- niques in a challenging, meaningful, and enjoyable manner. eighteen exercises apply text material to the cohesion case; 11 exercises apply textual material to a college or university; another 9 exercises send students into the business world to explore important strategy topics. 6. there is excellent pedagogy, including Learning Objectives opening each chapter as well as Key terms, current readings, Discussion Questions, and assurance of Learning exercises ending each chapter. 7. the various strategy-formulation issues are outstanding, covering topics such as business ethics, global versus domestic operations, vision and mission, matrix analysis, partnering, joint venturing, competitive analysis, value chain analysis, governance, and matrices for assimilating and evaluating information. 8. Strategy-implementation issues are covered thoroughly and include items such as corpo- rate culture, organizational structure, outsourcing, marketing concepts, financial analysis, business ethics, whistleblowing, bribery, pay and performance linkages, and workplace romance. 9. a systematic, analytical “process” is presented that includes nine matrices: iFeM, eFeM, cPM, SWOt, Bcg, ie, granD, SPace, and QSPM. 10. Both the chapter material and case material is published in color. 11. chapters-only and e-book versions of the text are available. 12. custom-case publishing is available whereby an instructor can combine chapters from this text with cases from a variety of sources or select any number of the 30 cases provided. 13. For the chapter material, an outstanding ancillary package includes a comprehensive Chapter Instructor’s Resource Manual, Case Instructor’s Resource Manual, test Bank, testgen, and chapter PowerPoints, and vastly improved chapter MyLab and case MyLab products to promote assurance of learning. Why Is This Text Different/Better Than Other Strategic-Management Texts? Strategic Management Concepts and Cases: A Competitive Advantage Approach is by far the most practical, skills-oriented strategic management textbook on the market. this text is designed to enable students to learn “how to do strategic planning,” rather than simply memorize seminal theories in strategy. Students using this text follow an integrative model that appears in every chapter as the “process” unfolds. Students learn how to construct strategic planning matrices, such as the Strengths, Weaknesses, Opportunities, and threats (SWOt) and the Boston consulting group (Bcg) matrices. readers also learn how to perform strategic-planning analyses, such as earnings-per-share/earnings-before-interest-and-taxes (ePS/eBit) and corporate valuation. the focus throughout this text is on “learning by doing.” this overarching, differentiating aspect has been improved with every edition and has led to this text becoming perhaps the leading strategic- management text globally, now available in 10 languages. the practical, skills-oriented approach is manifested through eight specific features: 1. a cohesion case that appears after chapter 1 with 64 end-of-chapter assurance of learning exercises, many that apply concepts to the cohesion case, thus allowing students to gain practice doing strategic planning by performing analysis. no other strategic-management textbook provides a cohesion case or an array of end-of-chapter exercises. 2. a strategy formulation analytical framework in chapter 6 integrates nine widely used planning matrices (iFeM, eFeM, cPM, SWOt, Bcg, ie, SPace, granD, and QSPM) into three stages (input, Matching, and Decision), which guide the strategic-planning process in all companies. Firms gather strategic information (input), array key external with internal factors (Matching), and then make strategic decisions (Decision). 3. a far wider coverage of strategy topics than any other strategic-management textbook, for two primary reasons: (a) as firms formulate and implement strategies, a wide variety of functional business topics arise and (b) as the capstone, integrative course in nearly all Schools of Business, strategic management entails students applying functional business skills to case companies.  preface xxi 4. this text provides 30 comprehensive, exciting, exceptionally up-to-date cases designed to apply chapter concepts as students develop a strategic plan for the case companies. For example, every case includes (a) the company’s vision/mission statements (if the firm has one); (b) the company’s by-segment revenue breakdown (since allocating resources divi- sions is perhaps the key strategy decision made by firms); (c) the company’s organizational chart (since structure is a key strategy topic); and (d) the company’s financial statements so students can show the impact of a proposed strategic plan on a firm’s financial state- ments. thus, the cases take a total-firm, multifunctional approach, which by definition is the nature of strategic management. in addition, this text offers end-of-chapter mini-cases to further apply chapter concepts. 5. More coverage of business ethics, social responsibility, and sustainability is provided in this text than in any other strategic-management textbook, including topics such as bribery, workplace romance, devising codes of ethics, taking a position (or not) on social issues, and wildlife welfare—topics that other textbooks do not mention, even though companies continually face strategic decisions in these areas. 6. this text offers more coverage of global/international issues than any other strategic- management textbook, including topics such as how business culture and practice vary across countries, as well as how taxes, tariffs, political stability, and economic conditions vary across countries—all framed from a strategic planning perspective. 7. the conversational, concise writing style is supported by hundreds of current examples, all aimed at arousing and maintaining the reader’s interest as the “process” unfolds from start to finish. the unique writing style is in stark contrast to some strategic-management books that seem to randomly present theory and research for the sake of discussion, rather than material being presented in a logical flow that emulates the actual practice of strategic planning among companies and organizations. 8. this text is supported by outstanding ancillaries, including author-developed manuals, and an author website at www.strategyclub.com that offers practical author-developed videos, templates, sample case analyses, special resources, and even a Facebook page for the text. Pearson education also offers outstanding support materials for instructors and students. For more information, visit www.pearsonhighered.com. Instructor Resources at the instructor resource center, www.pearsonhighered.com/irc, instructors can easily reg- ister to gain access to a variety of instructor resources available with this text in downloadable format. if assistance is needed, our dedicated technical support team is ready to help with the media supplements that accompany this text. Visit http://247.pearsoned.com for answers to frequently asked questions and toll-free user support phone numbers. the following supplements are available with this text: Case Instructor’s Resource Manual Chapter Instructor’s Resource Manual Test Bank TestGen® Computerized Test Bank PowerPoint Presentation Sample of Universities Recently Using This Textbook abraham Baldwin agricultural college amberton University adelphi University american intercontinental akron institute University—Weston albany State University american international college albertus Magnus college american international continental (aiU) albright college University—Houston alcorn State University american international University alvernia University american University ambassador college anderson University xxii PREFACE angelo State University cleveland State University aquinas college college of William & Mary arizona State University—Polytechnic colorado State University—Pueblo campus columbia college art institute of california columbia Southern University—Online averett University concordia University avila University concordia University Wisconsin azusa Pacific University curry college Baker college—Flint cuyahoga community college Baldwin Wallace college Daniel Webster college Barry University Davis & elkins college Belhaven University—Jackson Delaware State University Bellevue University Delaware technology & community Belmont abbey college college—Dover Benedictine University Delaware technology & community Black Hills State University college—Wilmington Bloomsburg University DePaul University—Loop campus Briar cliff University east Stroudsburg University Brooklyn college eastern Michigan University Broward college—central eastern Oregon University Broward college—north eastern Washington University Broward college—South ecPi college of technology—charleston Bryant & Stratton—Orchard Park ecPi computer institute Buena Vista University—Storm Lake elmhurst college caldwell college embry-riddle aero University—Prescott california Polytechnic State University Ferrum college california State University—Sacramento Florida agricultural & Mechanical california State University—San University Bernadino Florida Southern college california University of Pa Florida State University calumet college Florida technical college—Deland capella University Florida technical college—Kissimmee carlow University Florida technical college—Orlando carson-newman college Fort Valley State college catawba college Francis Marion University catholic University of america Fresno Pacific University cedar crest college Frostburg State University central connecticut State University george Fox University central Michigan University georgetown college central new Mexico community college georgia Southern University central Washington University georgia Southwestern State University chatham University Hampton University chestnut Hill college Harding University chicago State University Harris Stowe State University christian Brothers University Herzing college—Madison claflin University Herzing college—new Orleans clarion University of Pennsylvania Herzing college—Winter Park clarkson college Herzing University—atlanta clatsop community college High Point University  preface xxiii Highline community college Miami-Dade college—Wolfson Hofstra University Michigan State University Hood college Mid-america christian Hope international University Millersville University Houghton college Mississippi University for Women Huntingdon college Morgan State University indiana University Bloomington Morrison college of reno indiana Wesleyan caPS Mount Marty college—South Dakota iona college Mount Mercy University iowa Lakes community college— Mount Wachusett community college emmetsburg Mt. Hood community college Jackson community college Mt. Vernon nazarene Jackson State University Mti Western Business college John Brown University Muhlenberg college Johnson & Wales—charlotte Murray State University Johnson & Wales—colorado new england college Johnson & Wales—Miami new Mexico State University Johnson & Wales—rhode island new York University Johnson c. Smith University north carolina Wesleyan college Kalamazoo college north central college Kansas State University north central State college Keene State college northwest arkansas community college Kellogg community college northwestern college La Salle University northwood University—cedar Hill Lake Michigan college notre Dame of Maryland University Lebanon Valley college nyack college Lee University Oakland University Lehman college of cUnY Ohio Dominican University Liberty University Oklahoma christian University Limestone college—gaffney Oklahoma State University Lincoln Memorial University Olivet college Loyola college Business center Oral roberts University Loyola college—chennai Pace University—Pleasantville Loyola University—Maryland Park University Lyndon State college Penn State University—abington Madonna University Penn State University—Hazleton Manhattan college Pensacola State college Manhattanville college Philadelphia University Marian University—indiana Point Park University Marshall University Prince george’s community college Marshall University graduate college Queens college of cUnY Marymount University—arlington richard Stockton University Medgar evers college rider University Medical careers institute/newport news roger Williams University Mercer University—atlanta Saint edwards University Mercer University—Macon Saint Leo University Miami-Dade college—Homestead Saint Mary’s college Miami-Dade college—Kendal Saint Mary’s college—indiana Miami-Dade college—north Saint Xavier University xxiv PREFACE San antonio college University of Massachusetts—Dartmouth Santa Fe college University of Miami Savannah State University University of Michigan—Flint Shippensburg University University of Minnesota—crookston Siena Heights University University of Mobile Southern nazarene University University of Montevallo Southern new Hampshire University University of nebraska—Omaha Southern Oregon University University of nevada Las Vegas Southern University—Baton rouge University of new Orleans Southern Wesleyan University University of north texas Southwest Baptist University University of north texas—Dallas Southwest University University of Pikeville St. Bonaventure University University of Sioux Falls St. Francis University University of South Florida St. Louis University University of St. Joseph St. Martins University University of tampa Sterling college University of texas—Pan american Stevenson University University of the incarnate Word Strayer University—Dc University of toledo texas a&M University—commerce Upper iowa University texas a&M University—texarkana Valley city State University texas a&M—San antonio Virginia community college System texas tech University Virginia State University the college of St. rose Virginia tech the Masters college Wagner college tri-county technical college Wake Forest University trinity christian college Washington University troy State University Webber international University troy University—Dothan Webster University troy University—Main campus West chester University troy University—Montgomery West Liberty University University of alabama—Birmingham West Valley college University of arkansas—Fayetteville West Virginia Wesleyan college University of Findlay Western connecticut State University University of Houston—clearlake Western Kentucky University University of Louisiana at Monroe Western Michigan University University of Maine at augusta Western Washington University University of Maine—Fort Kent William Jewell college University of Maryland Williams Baptist college University of Maryland—college Park Winona State University University of Massachusetts—Boston Winston-Salem State University Harbor WSU Vancouver Sample of Countries Outside the United States Where This Textbook Is Widely Used Mexico, china, Japan, australia, Singapore, canada, indonesia, Pakistan, iran, Kenya, congo, Hong Kong, india, england, argentina, equador, Zambia, guam, italy, cyprus, colombia, Philippines, South africa, Peru, turkey, Malaysia, and egypt  preface xxv the Case rationale case analysis remains the primary learning vehicle used in most strategic-management classes, for five important reasons: 1. analyzing cases gives students the opportunity to work in teams to evaluate the internal operations and external issues facing various organizations and to craft strategies that can lead these firms to success. Working in teams gives students practical experience in solving problems as part of a group. in the business world, important decisions are generally made within groups; strategic-management students learn to deal with overly aggressive group members as well as timid, noncontributing group members. this experience is valuable because strategic-management students are near graduation and soon enter the working world full time. 2. analyzing cases enables students to improve their oral and written communication skills as well as their analytical and interpersonal skills by proposing and defending particular courses of action for the case companies. 3. analyzing cases allows students to view a company, its competitors, and its industry con- currently, thus simulating the complex business world. through case analysis, students learn how to apply concepts, evaluate situations, formulate strategies, and resolve imple- mentation problems. 4. analyzing cases allows students to apply concepts learned in many business courses. Students gain experience dealing with a wide range of organizational problems that impact all the business functions. 5. analyzing cases gives students practice in applying concepts, evaluating situations, formu- lating a “game plan,” and resolving implementation problems in a variety of business and industry settings. the Case MyLab testing Feature as revealed in the concepts by cases matrix, student learning of 30 key strategic-management concepts can easily be tested by using the 30 cases. the new case MyLab testing feature assures that the cases are excellent for testing student learning of the key strategic-management concepts, thus serving as a great mechanism for professors to achieve aacSB’s assurance of Learning Objectives. this new testing feature simplifies grading for professors in both tradi- tional and online class settings. the case MyLab testing feature includes 25 multiple-choice questions for each case, com- prised of 10 Basic questions that simply test whether the student read the case before class, and 15 Applied questions that test the student’s ability to apply various strategic-management con- cepts. in addition, there are 2 Discussion questions per case. this testing feature enables profes- sors to determine, before class if desired, whether students (1) read the case in Basic terms, and/ or (2) are able to Apply strategy concepts to resolve issues in the case. For example, the MyLab case Basic question may be: in what country is SaBMiller headquartered? Whereas a MyLab case Applied question may be: What are three aspects of the organizational chart given in the SaBMiller case that violate strategic-management guidelines? the New Concepts by Cases Matrix all 30 cases facilitate coverage of all strategy concepts, but as revealed by purple cells, some cases especially exemplify some key strategy concepts. the purple cells reveal which concepts are tested with multiple-choice questions in the MyLab. the concepts by cases matrix enables professors to effectively utilize different cases to assure student learning of various chapter concepts. note from the purple boxes that two, three, or four cases are used to test each strate- gic-management concept. this new, innovative ancillary promises to elevate the case learning method to new heights in teaching strategic management. xxvi cONcepTS BY caSeS MaTrIX Competitive Profile Matrix Vision/Mission Statements Strategy Model/Process Management Concepts Resource Based View Porter's Five Generic Value Chain Analysis Porter’s Five Forces Financial Ratios & Strategy Types Key Strategic- EFE Matrix Breakeven IFE Matrix Strategies Case Number USA Headquartered 3 3 3 5 4 3 4 2 4 3 4 USA-Based Service Companies case 1 Dunkin’ Brands group, inc. case 2 Krispy Kreme Doughnuts, inc. case 3 Marriott international, inc. case 4 Wynn resorts Limited case 5 cinemark Holdings, inc. case 6 Facebook, inc. case 7 Zynga, inc. case 8 the Priceline group, inc. case 9 the tJX companies, inc. case 10 tiffany & company case 11 citigroup inc. case 12 JetBlue airways corporation case 13 Fedex corporation USA-Based Manufacturing Companies case 14 tyson Foods, inc. case 15 constellation Brands inc. case 16 goPro, inc. case 17 artic cat, inc. case 18 tesla Motors, inc. case 19 Ford Motor company case 20 Harely-Davidson, inc. case 21 apple inc. case 22 international Business Machines corp. case 23 taser international, inc. case 24 revlon, inc. case 25 World relief Outside-USA Headquartered case 26 World Wildlife Fund case 27 Michael Kors Holdings Limited case 28 SaBMiller plc case 29 gruma, S.a.B. de c.V. case 30 restaurant Brands international, inc. 3 First Mover Advantages 1 Outsourcing 4 SWOT Matrix 4 SPACE Matrix 4 3 BCG & IE Matrices Grand Strategy & QSPM 4 Organizational Structure 1 Organizational Culture 3 Product Positioning 4 EPS-EBIT Analysis Projected Financial 3 Statements 4 Company Valuation 2 Balanced Scorecard 2 Business Ethics 2 Environmental Sustainability 1 Foreign Business Culture cONcepTS BY caSeS MaTrIX xxvii xxviii cONcepTS BY caSeS MaTrIX The Case Synopses USA-Headquartered Service Firms reStaUrantS 1. Dunkin’ Brands group, inc. (DnKn) — Headquartered in canton, Massachusetts, Dunkin’ Brands owns, operates, and franchises quick-service restaurants under the Dunkin’ Donuts and Baskin-robbins brands worldwide. 2. Krispy Kreme Doughnuts, inc. (KKD) — Headquartered in Winston-Salem, north carolina, KKD operates about 750 doughnut locations, of which about 650 are franchise owned. Most KKD locations (515) are outside the United States. the company plans to reach 900 stores internationally by 2017. Most restaurants “produce” their own doughnuts. LODging anD MOVieS 3. Marriott international, inc. (Mar) — Headquartered in Bethesda, Maryland, and having 127,000 employees worldwide, Marriott owns and manages a broad range of hotels and lodging facilities. Marriott’s ceO, anne Sorenson, is leading the firm’s expansion through- out africa. the ritz-carlton is a subsidiary of Marriott. 4. Wynn resorts Limited (WYnn) — Headquartered in Paradise, nevada, Wynn resorts is a global developer and operator of high-end casinos and hotels, especially in Las Vegas and Macau. Wynn cotai opened in Macau in 2014 amidst overall Macau gambling revenues declining. 5. cinemark Holdings, inc. (cnK) — Headquartered in Plano, texas, cinemark is a chain of movie theaters operating in north and South america and taiwan. cinemark has over 300 theaters in the United States, is the largest movie theater firm in Brazil, the fourth largest in Mexico, and the second largest globally. internet BaSeD 6. Facebook, inc. (FB) — Headquartered in Menlo Park, california, Facebook is the largest online social networking website with over 1.3 billion users (but reportedly more than 10 percent are fake). Facebook charges for placing advertisements; its vision is “to connect the world.” 7. Zynga, inc. (Znga) — Headquartered in San Francisco, california, Zynga develops, mar- kets, and operates online social media games primarily under the FarmVille, Words With Friends, and Zynga Poker franchises. Founded in 2007, Zynga’s games are accessible on Facebook and Zynga.com. 8. the Priceline group, inc. (PcLn) — Headquartered in norwalk, connecticut, Priceline is an online travel, car rental, and hotel reservation company with products that include Booking.com and, in asia, agoda.com. StOreS anD BanKS 9. the tJX companies, inc. (tJX) — Headquartered in Framingham, Massachusetts, tJX operates off-price apparel and home fashion retail stores in the United States and globally under the names t. J. Maxx, Marshalls, Homegoods, Winners, HomeSense, and Sierra trading Post. 10. tiffany & company (tiF) — Headquartered in new York city, tiffany designs, produces, and sells jewelry, as well as watches, china, crystal, stationery, and fragrances worldwide. the company owns and operates 275 stores in 24 countries. 11. citigroup inc. (c) — Headquartered in new York city, citigroup is one of the world’s larg- est bank holding companies with more than 16,000 offices and 255,000 employees world- wide. citi operates through two segments: citicorp (primarily banking) and city Holdings (primarily brokerage). airLineS anD airFreigHt 12. JetBlue airways corporation (JBLU) — Headquartered in Long island city, new York, JetBlue is a passenger airline company that serves the United States, the caribbean, and Latin america.  cONcepTS BY caSeS MaTrIX xxix 13. Fedex corporation (FDX) — Headquartered in Memphis, tennessee, Fedex is a global delivery services company with over 300,000 employees competing daily with UPS, DHL, USPS, and online emailing. USA-Headquartered Manufacturing Firms FOOD 14. tyson Foods, inc. (tSn) — Headquartered in Springdale, arkansas, tyson Foods is the world’s second-largest processor and marketer of chicken, beef, and pork. With 115,000 employees, tyson is the largest meat producer in the world. 15. constellation Brands inc. (StZ) — Headquartered in Victor, new York, constellation Brands is the largest wine producer in the world and has more than 100 wine, beer, and spirits brands, including robert Mondavi, corona, Paul Masson, and Black Velvet canadian Whisky. LeiSUre SPOrtS 16. goPro, inc. (gPrO) — Headquartered in San Mateo, california, goPro develops and produces sportswear, sports cameras, and accessories widely used by surfers, divers, and sports enthusiasts. the company has about 700 employees. 17. arctic cat inc. (acat) — Headquartered in Plymouth, Minnesota, arctic cat designs, pro- duces, and, through independent dealers, markets snowmobiles and all-terrain vehicles (atVs), and accessory parts, including lights, racks, snow plows, wheels, and a full garment portfolio. aUtOMOBiLeS anD MOtOrcYcLeS 18. tesla Motors, inc. (tSLa) — Headquartered in Palo alto, california, tesla designs, manu- factures, and markets all-electric cars and lithium batteries. after 10 years being in busi- ness, tesla turned its first profit ever in Q1 2013. tesla’s sports car, the roadster, and its Model S are especially popular. 19. Ford Motor company (F) — Headquartered in Dearborn, Michigan, Ford develops, pro- duces, and markets automobiles, trucks, and accessories globally. the company also has a large financial services segment. 20. Harley-Davidson, inc. (HOg) — Headquartered in Milwaukee, Wisconsin, Harley devel- ops, produces, and markets motorcycles and related parts and accessories through indepen- dent dealers globally. the company also has a large financial services segment. cOMPUterS/SOFtWare 21. apple inc. (aaPL) — Headquartered in cupertino, california, apple designs, produces, and markets laptop computers, tablets, smartphones, watches, portable digital music play- ers, and accessories globally. 22. international Business Machines corporation (iBM) — Headquartered in armonk, new York, iBM is a large technology and consulting company with about 100,000 employees in the United States and more than 330,000 outside the United States. the iBM’s chairman, president, and ceO is ginni rometty. PerSOnaL PrODUctS 23. taSer international, inc. (taSr) — Headquartered in Scottsdale, arizona, taSer devel- ops, produces, and markets conducted electrical weapons (ceWs) for use in law enforce- ment, federal, military, security, and personal defense markets globally. the company also offers aXOn body cameras. 24. revlon, inc. (reV) — Headquartered in new York city, revlon develops, manufactures, and markets cosmetics, fragrances, and personal care products globally. revlon competes