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THIRTEENTH EDITION

Strategic Management CONCEPTS AND CASES

Fred R. David Francis Marion University Florence, South Carolina

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Strategic Management CONCEPTS AND CASES

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Library of Congress Cataloging-in-Publication Data David, Fred R.

Strategic management: concepts and cases / Fred R. David.—13th ed. p. cm.

Includes bibliographical references and index. ISBN-13: 978-0-13-612098-8 (casebound) ISBN-10: 0-13-612098-9 (casebound) 1. Strategic planning. 2. Strategic planning—Case studies. I. Title.

HD30.28.D385 2011 658.4'012—dc22

2009052036

10 9 8 7 6 5 4 3 2

ISBN 10: 0-13-612098-9 ISBN 13: 978-0-13-612098-8

www.pearsonhighered.com
To Joy, Forest, Byron, and Meredith— my wife and children—

for their encouragement and love.

Brief Contents

Preface xvii

Acknowledgments xxiii

About the Author xxvii

Part 1 Overview of Strategic Management 2

Chapter 1 The Nature of Strategic Management 2 THE COHESION CASE: MCDONALD’S — 2009 27

Part 2 Strategy Formulation 40

Chapter 2 The Business Vision and Mission 40

Chapter 3 The External Assessment 58

Chapter 4 The Internal Assessment 90

Chapter 5 Strategies in Action 130

Chapter 6 Strategy Analysis and Choice 172

Part 3 Strategy Implementation 210

Chapter 7 Implementing Strategies: Management and Operations Issues 210

Chapter 8 Implementing Strategies: Marketing, Finance/ Accounting, R&D, and MIS Issues 250

Part 4 Strategy Evaluation 284

Chapter 9 Strategy Review, Evaluation, and Control 284

Part 5 Key Strategic-Management Topics 308

Chapter 10 Business Ethics/Social Responsibility/ Environmental Sustainability 308

Chapter 11 Global/International Issues 328

Part 6 Strategic-Management Case Analysis 346 How to Prepare and Present a Case Analysis 346

Name Index 359

Subject Index 363

vii

Contents

Preface xvii

Acknowledgments xxiii

About the Author xxvii

Part 1 Overview of Strategic Management 2

Chapter 1 The Nature of Strategic Management 2

MCDONALD’S CORPORATION: DOING GREAT IN A WEAK ECONOMY 4

What Is Strategic Management? 5 Defining Strategic Management 6 & Stages of Strategic Management 6 & Integrating Intuition and Analysis 7 & Adapting to Change 8

Key Terms in Strategic Management 9 Competitive Advantage 9 & Strategists 10 & Vision and Mission Statements 11 & External Opportunities and Threats 11& Internal Strengths and Weaknesses 12 & Long-Term Objectives 13 & Strategies 13 & Annual Objectives 13 & Policies 14

The Strategic-Management Model 14 Benefits of Strategic Management 16

Financial Benefits 17 & Nonfinancial Benefits 18

Why Some Firms Do No Strategic Planning 18 Pitfalls in Strategic Planning 19 Guidelines for Effective Strategic Management 19 Comparing Business and Military Strategy 21

THE COHESION CASE: MCDONALD’S CORPORATION—2009 27

ASSURANCE OF LEARNING EXERCISES 37 Assurance of Learning Exercise 1A: Gathering Strategy Information 37

Assurance of Learning Exercise 1B: Strategic Planning for My University 37

Assurance of Learning Exercise 1C: Strategic Planning at a Local Company 38

Assurance of Learning Exercise 1D: Getting Familiar with SMCO 38

Part 2 Strategy Formulation 40

Chapter 2 The Business Vision and Mission 40

WAL-MART: DOING GREAT IN A WEAK ECONOMY 42

What Do We Want to Become? 43

What Is Our Business? 43 Vision versus Mission 45 & The Process of Developing Vision and Mission Statements 46

Importance (Benefits) of Vision and Mission Statements 47

A Resolution of Divergent Views 48

Characteristics of a Mission Statement 49 A Declaration of Attitude 49 & A Customer Orientation 50 & Mission Statement Components 51

Writing and Evaluating Mission Statements 53

ASSURANCE OF LEARNING EXERCISES 56 Assurance of Learning Exercise 2A: Evaluating Mission Statements 56

Assurance of Learning Exercise 2B: Writing a Vision and Mission Statement for McDonald’s Corporation 56

Assurance of Learning Exercise 2C: Writing a Vision and Mission Statement for My University 57

Assurance of Learning Exercise 2D: Conducting Mission Statement Research 57

Chapter 3 The External Assessment 58

DUNKIN' BRANDS, INC.: DOING GREAT IN A WEAK ECONOMY 60

The Nature of an External Audit 61 Key External Forces 61 & The Process of Performing an External Audit 62

The Industrial Organization (I/O) View 63

Economic Forces 63

Social, Cultural, Demographic, and Natural Environment Forces 66

Political, Governmental, and Legal Forces 68

Technological Forces 69

Competitive Forces 71 Competitive Intelligence Programs 72 & Market Commonality and Resource Similarity 74

Competitive Analysis: Porter’s Five-Forces Model 74

Rivalry Among Competing Firms 75 & Potential Entry of New Competitors 76 & Potential Development of Substitute Products 77 & Bargaining Power of Suppliers 77 & Bargaining Power of Consumers 77

Sources of External Information 78

Forecasting Tools and Techniques 78 Making Assumptions 79

ix

Industry Analysis: The External Factor Evaluation (EFE) Matrix 80 The Competitive Profile Matrix (CPM) 81

ASSURANCE OF LEARNING EXERCISES 86 Assurance of Learning Exercise 3A: Developing an EFE Matrix for McDonald’s Corporation 86

Assurance of Learning Exercise 3B: The External Assessment 86

Assurance of Learning Exercise 3C: Developing an EFE Matrix for My University 87

Assurance of Learning Exercise 3D: Developing a Competitive Profile Matrix for McDonald’s Corporation 87

Assurance of Learning Exercise 3E: Developing a Competitive Profile Matrix for My University 87

Chapter 4 The Internal Assessment 90

AMAZON.COM, INC.: DOING GREAT IN A WEAK ECONOMY. HOW? 92

The Nature of an Internal Audit 93 Key Internal Forces 93 & The Process of Performing an Internal Audit 93

The Resource-Based View (RBV) 96 Integrating Strategy and Culture 97 Management 99

Planning 100 & Organizing 100 & Motivating 101 & Staffing 102 & Controlling 102 & Management Audit Checklist of Questions 103

Marketing 103 Customer Analysis 103 & Selling Products/Services 103 & Product and Service Planning 104 & Pricing 105 & Distribution 105 & Marketing Research 106 & Cost/Benefit Analysis 106 & Marketing/Audit Checklist of Questions 106

Finance/Accounting 106 Finance/Accounting Functions 107 & Basic Types of Financial Ratios 108 & Finance/Accounting Audit Checklist 113

Production/Operations 113 Production/Operations Audit Checklist 115

Research and Development 115 Internal and External R&D 116 & Research and Development Audit 117

Management Information Systems 117 Strategic-Planning Software 118 & Management Information Systems Audit 119

Value Chain Analysis (VCA) 119 Benchmarking 120

The Internal Factor Evaluation (IFE) Matrix 122

ASSURANCE OF LEARNING EXERCISES 128 Assurance of Learning Exercise 4A: Performing a Financial Ratio Analysis for McDonald’s Corporation (MCD) 128

Assurance of Learning Exercise 4B: Constructing an IFE Matrix for McDonald’s Corporation 128

Assurance of Learning Exercise 4C: Constructing an IFE Matrix for My University 128

Chapter 5 Strategies in Action 130

VOLKSWAGEN AG: DOING GREAT IN A WEAK ECONOMY. HOW? 132

Long-Term Objectives 133 The Nature of Long-Term Objectives 133 & Financial versus Strategic Objectives 134 & Not Managing by Objectives 135

The Balanced Scorecard 135 Types of Strategies 136

Levels of Strategies 138

Integration Strategies 139 Forward Integration 139 & Backward Integration 140 & Horizontal Integration 141

Intensive Strategies 141 Market Penetration 141 & Market Development 142 & Product Development 142

Diversification Strategies 143 Related Diversification 144 & Unrelated Diversification 144

Defensive Strategies 146 Retrenchment 146 & Divestiture 148 & Liquidation 149

Michael Porter’s Five Generic Strategies 151 Cost Leadership Strategies (Type 1 and Type 2) 152 & Differentiation Strategies (Type 3) 153 & Focus Strategies (Type 4 and Type 5) 154 & Strategies for Competing in Turbulent, High-Velocity Markets 155

Means for Achieving Strategies 155 Cooperation Among Competitors 155 & Joint Venture/ Partnering 156 & Merger/Acquisition 158 & First Mover Advantages 161 & Outsourcing 161

Strategic Management in Nonprofit and Governmental Organizations 162

Educational Institutions 162 & Medical Organizations 163 & Governmental Agencies and Departments 163

Strategic Management in Small Firms 164

ASSURANCE OF LEARNING EXERCISES 168 Assurance of Learning Exercise 5A: What Strategies Should McDonald’s Pursue in 2011–2013? 168

Assurance of Learning Exercise 5B: Examining Strategy Articles 168

Assurance of Learning Exercise 5C: Classifying Some Year 2009 Strategies 169

Assurance of Learning Exercise 5D: How Risky Are Various Alternative Strategies? 169

Assurance of Learning Exercise 5E: Developing Alternative Strategies for My University 170

Assurance of Learning Exercise 5F: Lessons in Doing Business Globally 170

Chapter 6 Strategy Analysis and Choice 172

APPLE: DOING GREAT IN A WEAK ECONOMY. HOW? 174

The Nature of Strategy Analysis and Choice 175 The Process of Generating and Selecting Strategies 175

x CONTENTS

A Comprehensive Strategy-Formulation Framework 176 The Input Stage 177 The Matching Stage 177

The Strengths-Weaknesses-Opportunities-Threats (SMOT) Matrix 178 & The Strategic Position and Action Evaluation (SPACE) Matrix 181 & The Boston Consulting Group (BCG) Matrix 185 & The Internal-External (IE) Matrix 188 & The Grand Strategy Matrix 191

The Decision Stage 192 The Quantitative Strategic Planning Matrix (QSPM) 192 & Positive Features and Limitations of the QSPM 195

Cultural Aspects of Strategy Choice 196 The Politics of Strategy Choice 196 Governance Issues 198

ASSURANCE OF LEARNING EXERCISES 205 Assurance of Learning Exercise 6A: Developing a SWOT Matrix for McDonald’s 205

Assurance of Learning Exercise 6B: Developing a SPACE Matrix for McDonald’s 205

Assurance of Learning Exercise 6C: Developing a BCG Matrix for McDonald’s 205

Assurance of Learning Exercise 6D: Developing a QSPM for McDonald’s 206

Assurance of Learning Exercise 6E: Formulating Individual Strategies 206

Assurance of Learning Exercise 6F: The Mach Test 206

Assurance of Learning Exercise 6G: Developing a BCG Matrix for My University 208

Assurance of Learning Exercise 6H: The Role of Boards of Directors 208

Assurance of Learning Exercise 6I: Locating Companies in a Grand Strategy Matrix 209

Part 3 Strategy Implementation 210

Chapter 7 Implementing Strategies: Management and Operations Issues 210

GOOGLE: DOING GREAT IN A WEAK ECONOMY. HOW? 212

The Nature of Strategy Implementation 213 Management Perspectives 214

Annual Objectives 215 Policies 217 Resource Allocation 219 Managing Conflict 220 Matching Structure with Strategy 220

The Functional Structure 222 & The Divisional Structure 222 & The Strategic Business Unit (SBU) Structure 225 & The Matrix Structure 226 & Some Do’s and Don’ts in Developing Organizational Charts 228

Restructuring, Reengineering, and E-Engineering 229 Restructuring 230 & Reengineering 231

Linking Performance and Pay to Strategies 231 Managing Resistance to Change 234 Creating a Strategy-Supportive Culture 235 Production/Operations Concerns When Implementing Strategies 236 Human Resource Concerns When Implementing Strategies 237

Employee Stock Ownership Plans (ESOPs) 239 & Balancing Work Life and Home Life 240 & Benefits of a Diverse Workforce 242 & Corporate Wellness Programs 242

ASSURANCE OF LEARNING EXERCISES 248 Assurance of Learning Exercise 7A: Revising McDonald’s Organizational Chart 248

Assurance of Learning Exercise 7B: Do Organizations Really Establish Objectives? 248

Assurance of Learning Exercise 7C: Understanding My University’s Culture 249

Chapter 8 Implementing Strategies: Marketing, Finance/Accounting, R&D, and MIS Issues 250 The Nature of Strategy Implementation 252

JOHNSON & JOHNSON (J&J): DOING GREAT IN A WEAK ECONOMY. HOW? 252

Current Marketing Issues 253 New Principles of Marketing 254 & Advertising Media 256 & Purpose-Based Marketing 257

Market Segmentation 257 Does the Internet Make Market Segmentation Easier? 259

Product Positioning 260 Finance/Accounting Issues 261 Acquiring Capital to Implement Strategies 262

New Source of Funding 266 & Projected Financial Statements 266 & Projected Financial Statement for Mattel, Inc. 268 & Financial Budgets 271 & Evaluating the Worth of a Business 273 & Deciding Whether to Go Public 275

Research and Development (R&D) Issues 275 Management Information Systems (MIS) Issues 277

ASSURANCE OF LEARNING EXERCISES 282 Assurance of Learning Exercise 8A: Developing a Product- Positioning Map for McDonald’s 282

Assurance of Learning Exercise 8B: Performing an EPS/EBIT Analysis for McDonald’s 282

Assurance of Learning Exercise 8C: Preparing Projected Financial Statements for McDonald’s 282

Assurance of Learning Exercise 8D: Determining the Cash Value of McDonald’s 283

Assurance of Learning Exercise 8E: Developing a Product- Positioning Map for My University 283

Assurance of Learning Exercise 8F: Do Banks Require Projected Financial Statements? 283

CONTENTS xi

Part 4 Strategy Evaluation 284

Chapter 9 Strategy Review, Evaluation, and Control 284

FAMILY DOLLAR STORES: DOING GREAT IN A WEAK ECONOMY. HOW? 286

The Nature of Strategy Evaluation 286 The Process of Evaluating Strategies 290

A Strategy-Evaluation Framework 290 Reviewing Bases of Strategy 290 & Measuring Organizational Performance 292 & Taking Corrective Actions 294

The Balanced Scorecard 295 Published Sources of Strategy-Evaluation Information 297 Characteristics of an Effective Evaluation System 298 Contingency Planning 299 Auditing 300 Twenty-First-Century Challenges in Strategic Management 301

The Art of Science Issue 301 & The Visible or Hidden Issue 301 & The Top-Down or Bottom-Up Approach 302

ASSURANCE OF LEARNING EXERCISES 306 Assurance of Learning Exercise 9A: Preparing a Strategy-Evaluation Report for McDonald’s Corp. 306

Assurance of Learning Exercise 9B: Evaluating My University’s Strategies 306

Part 5 Key Strategic-Management Topics 308

Chapter 10 Business Ethics/Social Responsibility/ Environmental Sustainability 308

WALT DISNEY: DOING GREAT IN A WEAK ECONOMY. HOW? 310

Business Ethics 311 Code of Business Ethics 312 & An Ethics Culture 313 & Bribes 314 & Love Affairs at Work 314

Social Responsibility 315 Social Policy 315 & Social Policies on Retirement 316

Environmental Sustainability 317 What Is a Sustainability Report? 317 & Lack of Standards Changing 318 & Obama Regulations 318 & Managing Environmental Affairs in the Firm 319 & Should Students Receive Environmental Training? 319 & Reasons Why Firms Should “Be Green” 320 & Be Proactive, Not Reactive 320 & ISO 14000/14001 Certification 320 & Electric Car Networks Are Coming 321 & The March 2009 Copenhagen Meeting 322

ASSURANCE OF LEARNING EXERCISES 326 Assurance of Learning Exercise 10A: Does McDonald’s Have a Code of Business Ethics? 326

Assurance of Learning Exercise 10B: The Ethics of Spying on Competitors 326

Assurance of Learning Exercise 10C: Who Prepares a Sustainability Report? 327

Chapter 11 Global/International Issues 328

MARRIOTT INTERNATIONAL: DOING GREAT IN A WEAK ECONOMY. HOW? 330

Multinational Organizations 331 Advantages and Disadvantages of International Operations 332 The Global Challenge 333

Globalization 334 & A Weak Economy 335

United States versus Foreign Business Cultures 335 The Mexican Culture 337 & The Japanese Culture 338 & Communication Differences Across Countries 338

Worldwide Tax Rates 339 Joint Ventures in India 339

ASSURANCE OF LEARNING EXERCISES 343 Assurance of Learning Exercise 11A: McDonald’s Wants to Enter Africa. Help Them. 343

Assurance of Learning Exercise 11B: Does My University Recruit in Foreign Countries? 343

Assurance of Learning Exercise 11C: Assessing Differences in Culture Across Countries 343

Assurance of Learning Exercise 11D: How Well Traveled Are Business Students at Your University? 344

Part 6 Strategic-Management Case Analysis 346 How to Prepare and Present a Case Analysis 346

What Is a Strategic-Management Case? 348 Guidelines for Preparing Case Analyses 348

The Need for Practicality 348 & The Need for Justification 348 & The Need for Realism 348 & The Need for Specificity 349 & The Need for Originality 349 & The Need to Contribute 349

Preparing a Case for Class Discussion 349 The Case Method versus Lecture Approach 349 & The Cross- Examination 350

Preparing a Written Case Analysis 350 The Executive Summary 350 & The Comprehensive Written Analysis 351 & Steps in Preparing a Comprehensive Written Analysis 351

Making an Oral Presentation 351 Organizing the Presentation 351 & Controlling Your Voice 352 & Managing Body Language 352 & Speaking from Notes 352 & Constructing Visual Aids 352 & Answering Questions 353 & Tips for Success in Case Analysis 353 & Content Tips 353 & Process Tips 354 & Sample Case Analysis Outline 355

xii CONTENTS

STEPS IN PRESENTING AN ORAL CASE ANALYSIS 356 Oral Presentation—Step 1: Introduction (2 minutes) 356 Oral Presentation—Step 2: Mission/Vision (4 minutes) 356 Oral Presentation—Step 3: Internal Assessment (8 minutes) 356 Oral Presentation—Step 4: External Assessment (8 minutes) 357 Oral Presentation—Step 5: Strategy Formulation (14 minutes) 357

Oral Presentation—Step 6: Strategy Implementation (8 minutes) 357 Oral Presentation—Step 7: Strategy Evaluation (2 minutes) 358 Oral Presentation—Step 8: Conclusion (4 minutes) 358

Name Index 359

Subject Index 363

CONTENTS xiii

xiv CONTENTS

Cases

HOSPITALITY/ENTERTAINMENT 1. Walt Disney Company — 2009, Mernoush Banton 1

2. Merryland Amusement Park — 2009, Gregory Stone 14

AIRLINES 3. JetBlue Airways Corporation — 2009, Mernoush Banton 26

4. AirTran Airways, Inc. — 2009, Charles M. Byles 37

RETAIL STORES 5. Family Dollar Stores, Inc. — 2009, Joseph W. Leonard 50

6. Wal-Mart Stores, Inc. — 2009, Amit J. Shah and Michael L. Monahanat 59

7. Whole Foods Market, Inc. — 2009, James L. Harbin and Patricia Humphrey 73

8. Macy’s, Inc. — 2009, Rochelle R. Brunson and Marlene M. Reed 83

INTERNET BASED 9. Yahoo! Inc. — 2009, Hamid Kazeroony 91

10. eBay Inc. — 2009, Lori Radulovich 99

FINANCIAL 11. Wells Fargo Corporation — 2009, Donald L. Crooks, Robert S. Goodman,

and John Burbridge 111

RESTAURANTS 12. Krispy Kreme Doughnuts (KKD) — 2009, John Burbridge and

Coleman Rich 120

13. Starbucks Corporation — 2009, Sharynn Tomlin 129

NONPROFIT 14. The United States Postal Service (USPS) — 2009, Fred and

Forest David 138

15. National Railroad Passenger Corporation (AMTRAK) — 2009, Kristopher J. Blanchard 150

16. Goodwill of San Francisco, San Mateo and Marin Counties — 2009, Mary E. Vradelis 158

TRANSPORTATION 17. Harley-Davidson, Inc. — 2009, Carol Pope and Joanne Mack 166

18. Ford Motor Company — 2009, Alen Badal 176

FOOD 19. Kraft Foods Inc. — 2009, Kristopher J. Blanchard 184

20. Hershey Company — 2009, Anne Walsh and Ellen Mansfield 192

PERSONAL CARE 21. Johnson & Johnson — 2009, Sharynn Tomlin, Matt Milhauser,

Bernhard Gierke, Thibault Lefebvre, and Mario Martinez 201

22. Avon Products Inc. — 2009, Rochelle R. Brunson and Marlene M. Reed 212

BEVERAGE 23. Molson Coors — 2009, Amit J. Shah 220

24. PepsiCo — 2009, John and Sherry Ross 232

CONTENTS xv

HEALTH CARE 25. Pfizer, Inc. — 2009, Vijaya Narapareddy 243

26. Merck & Company Inc. — 2010, Mernoush Banton 252

SPORTS 27. Nike, Inc. — 2010, Randy Harris 261

28. Callaway Golf Company — 2009, Amit J. Shah 272

ENERGY 29. Chevron Corporation — 2009, Linda Herkenhoff 282

Preface

Why the Need for This New Edition? The global economic recession has created a business world today that is quite different and more complex than it was just two years ago when the previous edition of this text was published. Thousands of businesses have vanished, and consumers have become extremely price sensitive and oftentimes reluctant purchasers of products and services. Very tight credit markets, high unemployment, and millions of new entrepreneurs have also changed the business landscape. Business firms that have survived the last three years of global economic turmoil are today leaner and meaner than ever before. Gaining and sustaining competitive advantage is harder than ever. Social networking and e-commerce have altered marketing to its core since the prior edition. This new edi- tion reveals how to conduct effective strategic planning in this new world order.

Since the prior edition, thousands of liquidations, bankruptcies, divestitures, merg- ers, alliances, and partnerships captured the news. Corporate scandals highlighted the need for improved business ethics and corporate disclosure of financial transactions. Downsizing, rightsizing, and reengineering contributed to a permanently altered corpo- rate landscape. Thousands of firms began doing business globally, and thousands more closed their global operations. Thousands prospered, and yet thousands failed in the last two years as the global recession spared few. Long-held competitive advantages have eroded as new ones formed. This new edition captures the complexity of this world busi- ness environment.

Both the challenges and opportunities facing organizations of all sizes today are greater than ever. There is less room than ever for error in the formulation and imple- mentation of a strategic plan. This new edition provides a systematic effective approach for developing a clear strategic plan, even in the worst of times. Changes made in this edition are aimed squarely at illustrating the effect of new business concepts and tech- niques on strategic-management theory and practice.

Due to the magnitude of recent changes affecting companies, cultures, and countries, every page of this edition has been updated. The first edition of this text was published in 1986. Since then, this textbook has grown to be one of the most widely read strategic- management books, perhaps the most widely read, in the world. This text is now published in nine languages.

What Is New in This Edition? This edition includes exciting new features, changes, and content designed to position this text as the clear leader and best choice for teaching strategic management. Here is a sum- mary of what is new in this edition:

• A new Chapter 10, “Business Ethics/Social Responsibility/Environmental Sustainability”; there is extensive new coverage of ethics and sustainability because this text emphasizes that “good ethics is good business.” Unique to strategic-management texts, the natural environment discussion is strengthened in this edition to promote and encourage firms to conduct operations in an environmentally sound manner. Respect for the natural environment has become an important concern for consumers, companies, society, and AACSB-International.

• A new Chapter 11, “Global/International Issues”; there is extensive new coverage of cultural and conceptual strategic-management differences across countries. Doing business globally has become a necessity, rather than a luxury in most industries because nearly all strategic decisions today are affected by global

issues and concerns. Every case company in this edition does business globally, providing students ample opportunity to evaluate and consider international aspects of doing business.

• A new boxed insert at the beginning of each chapter showcases a company that has done exceptionally well in the 2008–2010 global economic recession and reveals their strategy.

• Hundreds of new examples abound in every chapter. • A new cohesion case on McDonald’s Corporation (2010); this is one of the most

successful, well-known, and best managed global companies in the world; students apply strategy concepts to McDonald’s at the end of each chapter through new Assurance of Learning Exercises.

• Thirty-two new tables in the chapters to better capture key strategic-management concepts.

• A revised comprehensive strategic management model to reflect the new chapters. • Extensive new narrative on strategic management theory and concepts in every

chapter to illustrate the new business world order. • On average, 15 new review questions at the end of each chapter. • Forty-eight new Assurance of Learning Exercises at the end of chapters that apply

chapter concepts; the exercises prepare students for strategic-management case analysis.

• Twenty-four new color photographs bring the edition to life and illustrate companies/concepts.

• All new current readings at the end of each chapter; new research and theories of seminal thinkers in strategy development, such as Ansoff, Chandler, Porter, Hamel, Prahalad, Mintzberg, and Barney are provided in the chapters; practical aspects of strategic management, however, are still center stage and the trademark of this text below.

• Twenty-nine new cases—grouped by industry; great mix of profit/nonprofit, large/small, and manufacturing/service organizations; all the cases have a 2009–2010 time setting; all the cases are “comprehensive” in the sense that each focuses on multiple business functions, rather than addressing one particular busi- ness problem or issue; all the cases are undisguised and feature real organizations in real industries using real names and real places (nothing is fictitious in any case); all the cases feature an organization “undergoing strategic change,” thus offering students up-to-date issues to evaluate and consider; all the cases are written in a lively, concise writing style that captures the reader’s interest and establishes a time setting, usually in the opening paragraph; all the cases provide excellent quantitative information such as numbers, ratios, percentages, dollar val- ues, graphs, statistics, and maps so students can prepare a more specific, rational, and defensible strategic plan for the organization; all the cases provide excellent information about the industry and competitors.

This edition continues to offer many special time-tested features and content that have made this text so successful for over 20 years. Historical trademarks of this text that are strengthened in this edition are described below.

Chapters: Time-Tested Features • This text meets AACSB-International guidelines that support a practitioner orien-

tation rather than a theory/research approach. It offers a skills-oriented approach to developing a vision and mission statement; performing an external audit; con- ducting an internal assessment; and formulating, implementing, and evaluating strategies.

• The author’s writing style is concise, conversational, interesting, logical, lively, and supported by numerous current examples throughout.

xviii PREFACE

• A simple, integrative strategic-management model appears in all chapters and on the inside front cover of the text. This model is widely used for strategic planning among consultants and companies worldwide. One reviewer said, “One thing I have admired about David’s text is that he follows the fundamental sequence of strategy formulation, implementation, and evaluation. There is a basic flow from mission/purposes to internal/external environmental scanning to strategy develop- ment, 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.”

• A Cohesion Case follows Chapter 1 and is revisited at the end of each chapter. This Cohesion Case allows students to apply strategic-management concepts and tech- niques to a real organization as chapter material is covered, which readies students for case analysis in the course.

• End-of-chapter Assurance of Learning Exercises effectively apply concepts and techniques in a challenging, meaningful, and enjoyable manner. Eighteen exercises apply text material to the Cohesion Case; 10 apply textual material to a college or university; another 10 exercises send students into the business world to explore important strategy topics. The exercises are relevant, interesting, and contemporary.

• There is excellent pedagogy in this text, including notable quotes and objectives to open each chapter, and key terms, current readings, discussion questions, and experi- ential exercises to close each chapter.

• There is excellent coverage of strategy formulation issues, such as business ethics, global versus domestic operations, vision/mission, matrix analysis, partnering, joint venturing, competitive analysis, governance, and guidelines for conducting an internal/external strategy assessment.

• There is excellent coverage of strategy implementation issues such as corporate culture, organizational structure, outsourcing, marketing concepts, financial analysis, and business ethics.

• A systematic, analytical approach is presented in Chapter 6, including matrices such as the SWOT, BCG, IE, GRAND, SPACE, and QSPM.

• The chapter material is again published in a four-color format. • A chapters-only paperback version of the text is available. • 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 cases desired from the 29 cases in the full text.

• For the chapter material, the outstanding ancillary package includes a comprehensive Instructor’s Manual, computerized test bank, and PowerPoints.

*The comprehensive strategic-management model is displayed on the inside front cover of the text. At the start of each chapter, the section of the comprehensive strategy model covered in that chapter is highlighted and enlarged so students can see the focus of each chapter in the basic unifying comprehensive model. *The Case Information Matrix and Case Description Matrix provided in the preface reveal (1) topical areas emphasized in each case and (2) contact and location information for each case company. These matrices provide suggestions on how the cases deal with concepts in the 11 chapters.

Cases: Time-Tested Features • This edition contains the most current set of cases in any strategic-management

text on the market. All cases include year-end 2009 financial data and information.

• The cases focus on well-known firms in the news making strategic changes. All cases are undisguised, and most are exclusively written for this text to reflect