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STRATEGIC MANAGEMENT Concepts and Cases

A COMPETITIVE ADVANTAGE APPROACH

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Fred R. David Francis Marion University Florence, South Carolina

Forest R. David Strategic Planning Consultant Ocean Isle Beach, North Carolina

Meredith E. David Baylor University Waco, Texas

STRATEGIC MANAGEMENT Concepts and Cases

A COMPETITIVE ADVANTAGE APPROACH

SEVENTEENTH EDITION

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Library of Congress Cataloging-in-Publication Data Names: David, Fred R., author. | David, Forest R., author. | David, Meredith E., author. Title: Strategic management: concepts and cases, a competitive advantage

approach/Fred R. David, Francis Marion University, Florence, South Carolina, Forest R. David, Strategic Planning Consultant, Meredith E. David, Baylor University.

Description: Seventeenth edition. | Boston: Pearson, [2020] Identifiers: LCCN 2018037425 | ISBN 9780135173947 (case) Subjects: LCSH: Strategic planning. | Strategic planning–Case studies. Classification: LCC HD30.28 .D385 2020 | DDC 658.4/012–dc23 LC record available at https://lccn.loc.gov/2018037425

ISBN 10: 0-13-517394-9 ISBN 13: 978-0-13-517394-7

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Preface xv

Acknowledgments xxv

About the Authors xxvii

PART 1 Overview of Strategic Management 2 Chapter 1 The Nature of Strategic Management 3

THE COHESION CASE: COCA-COLA COMPANY, 2018 28

PART 2 Strategy Formulation 42 Chapter 2 Business Vision and Mission 43 Chapter 3 The External Assessment 65 Chapter 4 The Internal Assessment 95 Chapter 5 Strategies in Action 127 Chapter 6 Strategy Analysis and Choice 163

PART 3 Strategy Implementation 200 Chapter 7 Implementing Strategies: Management and Marketing Issues 201 Chapter 8 Implementing Strategies: Finance and Accounting Issues 241

PART 4 Strategy Evaluation and Governance 270 Chapter 9 Strategy Evaluation and Governance 271

PART 5 Key Strategic-Management Topics 298 Chapter 10 Business Ethics, Environmental Sustainability, and Corporate Social Responsibility 299 Chapter 11 Global and International Issues 323

PART 6 Strategic-Management Case Analysis 348 How to Prepare and Present a Case Analysis 349

Glossary 615

Name Index 623

Subject Index 629

Brief Contents

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vii

Preface xv

Acknowledgments xxv

About the Authors xxvii

PART 1 Overview of Strategic Management 2

Chapter 1 The Nature of Strategic Management 3

What Is Strategic Management? 4 EXEMPLARY STRATEGIST SHOWCASED: COACH VINCE LOMBARDI 4 Strategic Planning 5 • The Strategic-Management Model 6

ETHICS CAPSULE 1: WHAT ETHICS VARIABLE IS MOST IMPORTANT IN DOING BUSINESS? 7

Stages of Strategic Management 7 Integrating Analysis and Intuition 8

Adapting to Change 9

GLOBAL CAPSULE 1: MOBIKE: GLOBAL BIKE RENTING TAKES OFF LIKE A JET PLANE 10

Key Terms in Strategic Management 10 Competitive Advantage 10 • Strategists 10 • Vision and Mission Statements 11 • External Opportunities and Threats 12 • Internal Strengths and Weaknesses 12 • Long-Term Objectives 13 • Strategies 13 • SWOT Analysis 14 • Annual Objectives 14 • Policies 16

Benefits of Engaging in Strategic Management 16 Financial Benefits 17 • Nonfinancial Benefits 17

Why Some Firms Do No Strategic Planning 18 Pitfalls in Strategic Planning 18 Comparing Business and Military Strategies 18 Developing Employability Skills 20

IMPLICATIONS FOR STRATEGISTS 21 IMPLICATIONS FOR STUDENTS 22

Chapter Summary 23 Key Terms and Concepts 23 Issues for Review and Discussion 24 MINI-CASE ON TESLA, INC. (TSLA): WHAT AMERICAN COMPANY DOES THE BEST JOB OF STRATEGIC PLANNING, AND HOW IS IT DONE? 25 Web Resources 26 Current Readings 26 Endnotes 27 THE COHESION CASE: COCA-COLA COMPANY, 2018 28 ASSURANCE-OF-LEARNING EXERCISES 37 Set 1: Strategic Planning for Coca-Cola 37 Exercise 1A: Gather Strategy Information for Coca-Cola Company 37

Exercise 1B: Enter Coca-Cola Vitals into the Strategic Planning Template 38 Set 2: Strategic Planning for My University 38 Exercise 1C: Perform SWOT Analysis for My University 38 Set 3: Strategic Planning to Enhance My Employability 39 Exercise 1D: Perform SWOT Analysis on Myself 39 Set 4: Individual versus Group Strategic Planning 39 Exercise 1E: How Detrimental Are Various Pitfalls in Strategic Planning? 39

PART 2 Strategy Formulation 42

Chapter 2 Business Vision and Mission 43 Core Values Statements: What Is Our Foundation? 44

EXEMPLARY STRATEGIST SHOWCASED: FREDERICK W. SMITH, FOUNDER AND CEO OF FEDEX CORPORATION 44 GLOBAL CAPSULE 2: LINKEDIN: CLEAR CORE VALUES, VISION, AND MISSION LEAD TO GLOBAL PROMINENCE 45

Vision Statements: What Do We Want to Become? 45 Characteristics of a Vision Statement 46

Vision Statement Analysis 47

Mission Statements: What Is Our Business? 47 Characteristics of a Mission Statement 48 Components of a Mission Statement 49

ETHICS CAPSULE 2: FACEBOOK: CHANGING OUR MISSION TO ENHANCE OUR ETHICS AND INTEGRITY 51

The Importance (Benefits) of Vision and Mission Statements 51

The Process of Developing Vision and Mission Statements 53

Evaluating and Writing Mission Statements 53 IMPLICATIONS FOR STRATEGISTS 55 IMPLICATIONS FOR STUDENTS 56

Chapter Summary 56 Key Terms and Concepts 57 Issues for Review and Discussion 57 ASSURANCE-OF-LEARNING EXERCISES 58 Set 1: Strategic Planning for Coca-Cola 58 Exercise 2A: Develop an Improved Coca-Cola Vision Statement 58 Exercise 2B: Develop an Improved Coca-Cola Mission Statement 58 Exercise 2C: Compare Coca-Cola’s Mission Statement to a Rival Firm’s 59 Set 2: Strategic Planning for My University 59 Exercise 2D: Compare Your University’s Vision and Mission Statements to Those of a Rival Institution 59 Set 3: Strategic Planning for Myself 59 Exercise 2E: Develop a Vision and Mission Statement for Yourself 59 Set 4: Individual versus Group Strategic Planning 60 Exercise 2F: What Is the Relative Importance of Each of the Nine Components of a Mission Statement? 60

Contents

viii CONTENTS

MINI-CASE ON FORD MOTOR COMPANY (F): EVALUATE FORD’S VISION FOR THE FUTURE AND MISSION FOR THE PRESENT 61 Web Resources 62 Current Readings 62 Endnotes 63

Chapter 3 The External Assessment 65 EXEMPLARY STRATEGIST SHOWCASED: BEN SILBERMANN, CEO AND COFOUNDER OF PINTEREST 66

The External Assessment Phase of Strategy Formulation 67 Key External Forces 67 • The Actionable-Quantitative- Comparative-Divisional (AQCD) Test 67

10 External Forces that Impact Organizations 68 Economic Forces 68 • Social, Cultural, Demographic, and Environment (SCDE) Forces 69 • Political, Governmental, and Legal Forces 69

ETHICS CAPSULE 3: PRESERVE ALASKA WILDLIFE OR BOOST ALASKA ECONOMY? 70 Technological Forces 71 • Competitive Forces 72

GLOBAL CAPSULE 3: WHAT COMPANY IS GROWING FASTEST GLOBALLY? 73

Porter’s Five-Forces Model 73 Rivalry Among Competing Firms 74 • Potential Entry of New Com- petitors 75 • Potential Development of Substitute Products 75 • Bargaining Power of Suppliers 75 • Bargaining Power of Consumers 76

Key Sources of Information for an External Audit 77 Forecasting and Making Assumptions 77

Making Assumptions 78

The External Factor Evaluation Matrix 79 Steps to Develop an EFE Matrix 79 • Step 1: Develop a Full and Narrow List of Key External Factors 79 • Step 2: Assign Weights to Key External Factors 80 • Step 3: Assign Ratings to Key External Factors 80 • Step 4: Obtain Weighted Scores 80 • Step 5: Obtain Total Weighted Score 80 • An Example EFE Matrix 81

The Competitive Profile Matrix 82 IMPLICATIONS FOR STRATEGISTS 84 IMPLICATIONS FOR STUDENTS 85

Chapter Summary 86 Key Terms and Concepts 86 Issues for Review and Discussion 86 ASSURANCE-OF-LEARNING EXERCISES 87 Set 1: Strategic Planning for Coca-Cola 87 Exercise 3A: Develop an EFE Matrix for Coca-Cola 87 Exercise 3B: Develop a Competitive Profile Matrix for Coca-Cola 88 Set 2: Strategic Planning for My University 88 Exercise 3C: Develop an EFE Matrix for Your College or University 88 Exercise 3D: Develop a Competitive Profile Matrix for Your College or University 88 Set 3: Strategic Planning to Enhance My Employability 89 Exercise 3E: How Competitive Is Your State Among All States for Finding a Job? 89 Exercise 3F: Compare and Contrast CareerBuilder, Glassdoor, Monster Jobs, and ZipRecruiter 89 Exercise 3G: A Template Competency Test 89 Set 4: Individual versus Group Strategic Planning 90

Exercise 3H: What External Forces Are Most Important In Strategic Planning? 90

MINI-CASE ON SAM’S CLUB: SAM’S CLUB IS BOOMING IN CHINA 91 Web Resources 92 Current Readings 92 Endnotes 93

Chapter 4 The Internal Assessment 95 The Internal Assessment Phase of Strategy Formulation 96

EXEMPLARY STRATEGIST SHOWCASED: ELON MUSK, CEO AND COFOUNDER OF TESLA, INC. AND SPACE EXPLORATION TECHNOLOGIES CORPORATION (SPACEX) 96 Resource-Based View 97 • Key Internal Forces 97

ETHICS CAPSULE 4: THE SAGEBRUSH LIZARD VERSUS THE BIG OIL MAN 98

Management 98 Planning 99 • Organizing 99 • Motivating 99 • Controlling 100 • Integrating Strategy and Culture 101 • Management Audit Checklist of Questions 102

Marketing 103 Marketing Research and Target Market Analysis 103 • Product Planning 104 • Pricing 105 • Promotion 105

GLOBAL CAPSULE 4: BITCOIN: THE NEW GLOBAL CURRENCY 106 Channels of Distribution 106 • Marketing Audit Checklist of Questions 107

Finance and Accounting 107 Finance and Accounting 107 • Financial Ratios 108 • Finance and Accounting Audit Checklist 110

Management Information Systems 112 Business Analytics 112

The Internal Factor Evaluation (IFE) Matrix 113 The Actionable-Quantitative-Comparative-Divisional (AQCD) Test 113 • Steps in Developing an IFE Matrix 114 • Step 1: Develop a Full and Narrow List of Key Internal Factors 114 • Step 2: Assign Weights to Key Internal Factors 114 • Step 3: Assign Ratings to Key Internal Factors 114 • Step 4: Obtain Weighted Scores 115 • Step 5: Obtain Total Weighted Score 115 • An Example IFE Matrix 116

IMPLICATIONS FOR STRATEGISTS 117 IMPLICATIONS FOR STUDENTS 118

Chapter Summary 118 Key Terms and Concepts 119 Issues for Review and Discussion 119 ASSURANCE-OF-LEARNING EXERCISES 121 Set 1: Strategic Planning for Coca-Cola 121 Exercise 4A: Perform a Financial Ratio Analysis for Coca-Cola 121 Exercise 4B: Construct an IFE Matrix for Coca-Cola 121 Set 2: Strategic Planning for My University 121 Exercise 4C: Construct an IFE Matrix for Your College or University 121 Set 3: Strategic Planning for Myself 122 Exercise 4D: Construct an IFE Matrix for Yourself 122 Set 4: Individual versus Group Strategic Planning 122 Exercise 4E: What Internal Functional Areas Are Most Important to Examine in Strategic Planning? 122

CONTENTS ix

MINI-CASE ON PROCTER & GAMBLE (P&G) COMPANY: WHAT COMPANY IS BEST MANAGED IN THE UNITED STATES? 123 Web Resources 124 Current Readings 124 Endnotes 125

Chapter 5 Strategies in Action 127 Long-Term Objectives 128

Characteristics and Benefits of Objectives 128

EXEMPLARY STRATEGIST SHOWCASED: TIM COOK, CEO OF APPLE, INC. 128 Financial versus Strategic Objectives 129 • Avoid Managing by Crisis, Hope, Extrapolation, and Mystery (CHEM) 130

Types of Strategies 130 Levels of Strategies 131

Integration Strategies 132 Forward Integration 132 • Backward Integration 133 • Horizontal Integration 134

Intensive Strategies 135 Market Penetration 135 • Market Development 135

GLOBAL CAPSULE 5: HOW CAN A FIRM DETERMINE WHERE TO INITIATE NEW BUSINESS? USE GROSS DOMESTIC PRODUCT (GDP) AS A GUIDE. 136 Product Development 136

Diversification Strategies 137 Related Diversification 138 • Unrelated Diversification 138

Defensive Strategies 138 Retrenchment 138 • Divestiture 139 • Liquidation 140

Value Chain Analysis and Benchmarking 141 Benchmarking 143

Michael Porter’s Two Generic Strategies 144 Cost Leadership 144 • Differentiation 145

Means for Achieving Strategies 146 BUILD from Within to Grow 146 • BORROW from Others to Grow 146 • BUY Others to Grow 148

ETHICS CAPSULE 5: ARE CEOS LESS ETHICAL TODAY THAN IN THE PAST? 148

First-Mover Advantages 149 Strategic Management in Nonprofit and Small Firms 150

Educational Institutions 150 • Governmental Agencies and Departments 151 • Small Firms 151

IMPLICATIONS FOR STRATEGISTS 152 IMPLICATIONS FOR STUDENTS 153

Chapter Summary 153 Key Terms and Concepts 154 Issues for Review and Discussion 154 ASSURANCE-OF-LEARNING EXERCISES 155 Set 1: Strategic Planning for Coca-Cola 155 Exercise 5A: Develop Hypothetical Coca-Cola Company Strategies 155 Exercise 5B: Should Coca-Cola Build, Borrow, or Buy in 2020–2021? 156 Set 2: Strategic Planning for My University 156 Exercise 5C: Develop Alternative Strategies for Your University 156 Set 3: Strategic Planning for Myself 157

Exercise 5D: The Key to Personal Strategic Planning: Simultaneously Build and Borrow 157 Set 4: Individual versus Group Strategic Planning 157 Exercise 5E: What Is the Best Mix of Strategies for Coca-Cola Company? 157

MINI-CASE ON FACEBOOK (FB): SHOULD FACEBOOK ACQUIRE, COOPERATE, OR JUST STAY FIERCE RIVALS WITH LINKEDIN? 159 Web Resources 159 Current Readings 160 Endnotes 160

Chapter 6 Strategy Analysis and Choice 163 Strategy Analysis and Choice 164

EXEMPLARY STRATEGIST SHOWCASED: DAVID GREEN, CEO OF HOBBY LOBBY 164 The Process of Generating and Selecting Strategies 165

The Strategy-Formulation Analytical Framework 165 Stage 1: The Input Stage 166 • Stage 2: The Matching Stage 166 • Stage 3: The Decision Stage 166

The SWOT Matrix 167 ETHICS CAPSULE 6: AS WE STRATEGIZE WE MUST NOT JEOPARDIZE ANIMAL WELFARE 168

The Strategic Position and Action Evaluation (SPACE) Matrix 169

Steps in Performing SPACE Analysis 170 • SPACE Matrix Quadrants 171 • SPACE Matrix 174

The Boston Consulting Group (BCG) Matrix 174 The Internal-External (IE) Matrix 178 The Grand Strategy Matrix 180 The Decision Stage: The QSPM 182

Positive Features and Limitations of the QSPM 186

How to Estimate Costs Associated with Recommendations 186

GLOBAL CAPSULE 6: INDIA’S ECONOMY IS BOOMING 186 Cultural Aspects of Strategy Analysis and Choice 188 The Politics of Strategy Analysis and Choice 188

IMPLICATIONS FOR STRATEGISTS 189 IMPLICATIONS FOR STUDENTS 190

Chapter Summary 190 Key Terms and Concepts 191 Issues for Review and Discussion 191 ASSURANCE-OF-LEARNING EXERCISES 193 Set 1: Strategic Planning for Coca-Cola 193 Exercise 6A: Perform a SWOT Analysis for Coca-Cola 193 Exercise 6B: Develop a SPACE Matrix for Coca-Cola 193 Exercise 6C: Develop a BCG Matrix for Coca-Cola 194 Exercise 6D: Develop a QSPM for Coca-Cola 194 Set 2: Strategic Planning for My University 194 Exercise 6E: Develop a BCG Matrix for My University 194 Set 3: Strategic Planning to Enhance My Employability 195 Exercise 6F: Perform QSPM Analysis on Myself 195 Exercise 6G: A Template Competency Test 195 Set 4: Individual versus Group Strategic Planning 196

x CONTENTS

Exercise 6H: How Severe Are Various Subjective Threats in Strategic Planning?  196

MINI-CASE ON THE BOSTON CONSULTING GROUP: WHAT AMERICAN FIRM HELPS THE MOST COMPANIES DO STRATEGIC PLANNING? 197 Web Resources 198 Current Readings 198 Endnotes 199

PART 3 Strategy Implementation 200

Chapter 7 Implementing Strategies: Manage- ment and Marketing Issues 201

EXEMPLARY STRATEGIST SHOWCASED: INDRA NOOYI, FORMER CEO OF PEPSICO 202

Transitioning from Formulating to Implementing Strategies 203 The Need for Clear Annual Objectives 203 Establish Policies 205

ETHICS CAPSULE 7: DO FIRMS NEED A POLICY AGAINST WORKPLACE PHUBBING? 207

Allocate Resources and Manage Conflict 207 Allocate Resources 207 • Manage Conflict 208

Match Structure with Strategy 208 Types of Organizational Structure 209

The Functional Structure 209 • The Divisional Structure 210 • The Strategic Business Unit Structure 212 • The Matrix Structure 212

Do’s and Don’ts in Developing Organizational Charts 214 How to Depict an Organizational Chart 215

Strategic Production/Operations Issues 217 Restructuring and Reengineering 218 • Manage Resistance to Change 218 • Decide Where and How to Produce Goods 219

Strategic Human Resource Issues 219 Link Performance and Pay to Strategy 220 • Balance Work Life and Home Life 220 • Promote Diversity 221 • Use Caution in Hiring a Rival’s Employees 222 • Create a Strategy-Supportive Culture 222 • Use Caution in Monitoring Employees’ Social Media 223 • Develop a Corporate Well-Being Program 224

Strategic Marketing Issues 224 Segment and Target Markets Effectively 224 • Product Positioning 225 • Perceptual Mapping 226

GLOBAL CAPSULE 7: FOUR GUIDELINES TO FOLLOW IN GLOBAL MARKETING 226 Engage Customers in Social Media 228

IMPLICATIONS FOR STRATEGISTS 229 IMPLICATIONS FOR STUDENTS 230

Chapter Summary 231 Key Terms and Concepts 231 Issues for Review and Discussion 231 ASSURANCE-OF-LEARNING EXERCISES 233 Set 1: Strategic Planning for Coca-Cola 233 Exercise 7A: Compare and Contrast Coca-Cola’s Marketing Expenses versus Rival Firms 233 Exercise 7B: Diagram an Existing and Proposed Organizational Chart for Coca-Cola 233 Set 2: Strategic Planning for My University 234 Exercise 7C: Develop a Perceptual Map for My University 234

Set 3: Strategic Planning to Enhance My Employability 234 Exercise 7D: Marketing Yourself to Best Achieve Your Career Objectives 234 Set 4: Individual versus Group Strategic Planning 235 Exercise 7E: What Are the Most Important Benefits of Having a Diverse Workforce? 235

MINI-CASE 7 ON DE BEERS GROUP OF COMPANIES: DE BEERS SHIFTS ITS MARKET SEGMENTATION STRATEGY 236 Web Resources 237 Current Readings 238 Endnotes 239

Chapter 8 Implementing Strategies: Finance and Accounting Issues 241

EXEMPLARY STRATEGIST SHOWCASED: JAMIE DIMON, CEO JPMORGAN CHASE 242

Capital Structure 243 EPS/EBIT Analysis: Steps to Complete 244 • EPS/EBIT Analysis: An Example 245 • EPS/EBIT Analysis: Limitations 247

Projected Financial Statements 247 The Free Excel Strategic Planning Template at www.strategyclub.com 248

ETHICS CAPSULE 8: PROJECTED FINANCIAL STATEMENT MANIPULATION 249 GLOBAL CAPSULE 8: THE LEAST (AND MOST) CORRUPT COUNTRIES IN THE WORLD FOR DOING BUSINESS 249 Steps to Develop Projected Financial Statements 250 • Nonprofit Organizations 251 • P&G’s Actual Financial Statements 251 • P&G’s Projected Financial Statements 253 • P&G’s Retained Earnings Data Table 255

Corporate Valuation 256 Corporate Valuation Methods 256

Manage Financial Ratios, IPOs, and Bonds 258 Financial Ratio Analyses 258 • Go Public with an IPO? 259 • Issue Bonds to Raise Capital? 260

IMPLICATIONS FOR STRATEGISTS 260 IMPLICATIONS FOR STUDENTS 261

Chapter Summary 262 Key Terms and Concepts 262 Issues for Review and Discussion 262 ASSURANCE-OF-LEARNING EXERCISES 263 Set 1: Strategic Planning for Coca-Cola 263 Exercise 8A: Perform an EPS/EBIT Analysis for Coca-Cola 263 Exercise 8B: Prepare Projected Financial Statements for Coca-Cola 264 Exercise 8C: Determine the Cash Value of Coca-Cola 264 Exercise 8D: Prepare Projected Financial Ratios for Coca-Cola 264 Set 2: Strategic Planning for My University 265 Exercise 8E: Determine the Cash Value of My University 265 Set 3: Strategic Planning to Enhance My Employability 265 Exercise 8F: Developing Personal Financial Statements 265 Exercise 8G: A Template Competency Test 265 Set 4: Individual versus Group Strategic Planning 266 Exercise 8H: How Severe Are the Seven Limitations to EPS/EBIT Analysis? 266

MINI-CASE ON HASBRO, INC.: NERF WANTS TO TAKE OVER BARBIE DOLL: THE CASE OF HASBRO, INC. 268 Web Resources 268 Current Readings 268

http://www.strategyclub.com
CONTENTS xi

PART 4 Strategy Evaluation and Governance 270

Chapter 9 Strategy Evaluation and Governance 271

The Strategy-Evaluation Process 272 EXEMPLARY STRATEGIST SHOWCASED: ANTHONY WOOD, FOUNDER AND CEO OF ROKU, INC. 272 GLOBAL CAPSULE 9: WHAT COUNTRY’S NEW STRATEGY IS CALLED “VISION 2030”? 274

Three Strategy-Evaluation Activities 274 Reviewing Bases of Strategy 275 • Measuring Organizational Performance 276 • Taking Corrective Actions 278

The Balanced Scorecard 279 Boards of Directors: Governance Issues 280 Challenges in Strategic Management 282

The Art or Science Issue 283 • The Visible or Hidden Issue 283

ETHICS CAPSULE 9: ACHIEVING EXEMPLARY BUSINESS ETHICS THROUGH EXEMPLARY TRANSPARENCY 284 Promote Workplace Democracy 284 • Contingency Planning 285 • Auditing 286

Guidelines for Effective Strategic Management 286 IMPLICATIONS FOR STRATEGISTS 289 IMPLICATIONS FOR STUDENTS 289

Chapter Summary 290 Key Terms and Concepts 290 Issues for Review and Discussion 290 ASSURANCE-OF-LEARNING EXERCISES 291 Set 1: Strategic Planning for Coca-Cola 291 Exercise 9A: Develop a Balanced Scorecard for Coca-Cola 291 Set 2: Strategic Planning for My University 292 Exercise 9B: Prepare a Strategy Evaluation Report for My University 292 Set 3: Strategic Planning to Enhance My Employability 292 Exercise 9C: A Balanced Scorecard to Evaluate My Professional versus Personal Objectives 292 Set 4: Individual versus Group Strategic Planning 293 Exercise 9D: How Important Are Various Guidelines for Effective Strategic Management? 293

MINI-CASE ON TJX COMPANIES, INC. (TJX): SECRET STRATEGIC PLANNING WORKS GREAT FOR TJX 295 Web Resources 296 Current Readings 296 Endnotes 297

PART 5 Key Strategic-Management Topics 298

Chapter 10 Business Ethics, Environmental Sustainability, and Corporate Social Responsibility 299

EXEMPLARY STRATEGIST SHOWCASED: BILL GATES, FORMER CEO AND CHAIRMAN OF MICROSOFT CORPORATION 300

Why “good Ethics Is Good Business” 301 Does It Pay to Be Ethical? 301 • How to Establish an Ethics Culture 302

Whistle-Blowing, Bribery, and Workplace Romance 303

Whistle-Blowing 303 • Avoid Bribery 304 • Workplace Romance 304

Environmental Sustainability 306 GLOBAL CAPSULE 10: INDIA IS TURNING GARBAGE INTO CASH 306 Sustainability Reports and the Environmental Protection Agency (EPA) 307 • International Standardization Organization (ISO) Certification 308

Corporate Social Responsibility (CSR) 310 ETHICS CAPSULE 10: TOMS SHOES, INC.: SHOES ARE MAGIC, PUT SHOES ON EVERY CHILD ON THE PLANET 311 Food Suppliers and Livestock Welfare 311 • Wildlife Welfare 312 • What Firms Are the Best CSR Stewards? 312

IMPLICATIONS FOR STRATEGISTS 314 IMPLICATIONS FOR STUDENTS 314

Chapter Summary 315 Key Terms and Concepts 315 Issues for Review and Discussion 315 ASSURANCE-OF-LEARNING EXERCISES 316 Set 1: Strategic Planning for Coca-Cola 316 Exercise 10A: Does Coca-Cola or PepsiCo Win On Sustainability? 316 Set 2: Strategic Planning for My University 317 Exercise 10B: How Does My University Compare to Others on the Use of Green Power? 317 Set 3: Strategic Planning for Myself 317 Exercise 10C: What Is My Business Ethics Quotient? 317 Set 4: Individual versus Group Strategic Planning 318 Exercise 10D: How Potentially Severe Are the Various Reasons Why Workplace Romance Should Be Discouraged? 318

MINI-CASE ON CHICK-FIL-A: WHAT COMPANY HAS THE MOST ETHICAL BUSINESS CULTURE? 319 Web Resources 320 Current Readings 320 Endnotes 321

Chapter 11 Global and International Issues 323 The Nature of Doing Business Globally 324

EXEMPLARY STRATEGIST: ANDRE CALANTZOPOULOS, CEO OF PHILIP MORRIS INTERNATIONAL 324 Multinational Firms 325 • Labor Unions across Europe 326 • Tax Rates 326

Advantages and Disadvantages of Doing Business Globally 327 The Global Challenge 328

Outsourcing and Reshoring 329

U.S. versus Foreign Business Culture 330 Communication Differences across Countries 332

Business Culture across Countries 333 Mexico 333

ETHICS CAPSULE 11: WHICH TWO U.S.-BASED AIRLINES ARE WORST ON CUSTOMER SERVICE? 333 Japan 334 • China 334 • India 335

Business Climate across Countries 335 Africa 336 • China 337 • Indonesia 337 • India 337

GLOBAL CAPSULE 11: CHINA AIMS FOR SUPERIORITY IN QUANTUM COMPUTING 338 Mexico 338