charles w. l - external.dandelon.com · swot analysis and the business model 19 strategy...

Charles W. LUniversity of Washington

Gareth R. JonesTexas A&M University

Houghton Mifflin CompanyBoston New York

© 2008 AGI-Information Management Consultants

May be used for personal purporses only or by libraries associated to dandelon.com network.

ContentsPreface xxiii

PART 1 Introduction to Strategic Management

Strategic Leadership: Managing the Strategy-Making Process forCompetitive AdvantageOpening Case: Wal-Mart 1Overview 3Strategic Leadership, Competitive Advantage, and Superior Performance 4

Superior Performance 4Competitive Advantage and a Company's Business Model 5Industry Differences in Performance 7Performance in Nonprofit Enterprises 7

Strategic Managers 8Corporate-Level Managers 9Business-Level Managers 10Functional-Level Managers 10

The Strategy-Making Process 11A Model of the Strategic Planning Process 11Mission Statement 13

Strategy in Action 1.1: Strategic Planning at Microsoft 14External Analysis 18Internal Analysis 19SWOT Analysis and the Business Model 19Strategy Implementation 20The Feedback Loop 20

Strategy as an Emergent Process 20Strategy Making in an Unpredictable World 21Autonomous Action: Strategy Making by Lower-Level Managers 21

Strategy in Action 1.2: A Strategic Shift at Microsoft 22Serendipity and Strategy 22

Strategy in Action 1.3: The Genesis of Autonomous Action at 3M 23Intended and Emergent Strategies 24

Strategic Planning in Practice 25Scenario Planning 26Decentralized Planning 26Strategic Intent 27

Strategic Decision Making 28

VIII Contents

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Cognitive Biases and Strategic Decision Making 28Groupthink and Strategic Decisions 29Techniques for Improving Decision Making 30

Strategy in Action 1.4: Was Intelligence on Iraq Biased by Groupthink? 30Strategic Leadership 32

Vision, Eloquence, and Consistency 32Articulation of the Business Model 33Commitment 33Being Well Informed 33Willingness to Delegate and Empower 34The Astute Use of Power 34Emotional Intelligence 34

Summary of Chapter 35 I Discussion Questions 36Practicing Strategic Management 36

Small-Group Exercise: Designing a Planning System I Article File 1 I Strategic ManagementProject: Module 1 I Exploring the Web: Visiting 3M I General Task

Closing Case: Shattered Dreams: Level 3 Communications 38Appendix to Chapter 1: Enterprise Valuation, ROIC, and Growth 40

External Analysis: The Idenfflcation of Opportunities and T t a 42Opening Case: Why Is the Pharmaceutical Industry So Profitable? 42Overview 43Defining an Industry 44

Industry and Sector 44Industry and Market Segments 45Changing Industry Boundaries 46

Porter's Five Forces Model 46Risk of Entry by Potential Competitors 46Economies of Scale 47Brand Loyalty 48Absolute Cost Advantages 48Customer Switching Costs 48Government Regulation 48

Strategy in Action 2.1: Circumventing Entry Barriers into the Soft Drink Industry 49Rivalry Among Established Companies 50Industry Competitive Structure 50

Strategy in Action 2.2: Price Wars in the Breakfast Cereal Industry 52Industry Demand 52Cost Conditions 53Exit Barriers 53The Bargaining Power of Buyers 54The Bargaining Power of Suppliers 55

Running Case: Wal-Mart's Bargaining Power over Suppliers 56Substitute Products 57A Sixth Force: Complementors 57

Summary 57Strategic Groups Within Industries 57

Contents IX

Implications of Strategic Groups 59

The Role of Mobility Barriers 59

Industry Life Cycle Analysis 60Embryonic Industries 60Growth Industries 61Industry Shakeout 61Mature Industries 62

Declining Industries 63

Summary 63

Limitations of Models for Industry Analysis 63Life Cycle Issues 63Innovation and Change 64

Company Differences 66

The Macroenvironment 66Macroeconomic Forces 66Global Forces 68Technological Forces 68Demographic Forces 69Social Forces 70

Political and Legal Forces 70

Summary of Chapter 71 I Discussion Questions 71

Practicing Strategic Management 72Small-Group Exercise: Competing with Microsoft I Article File 2 I Strategic Management

Project: Module 2 I Exploring the Web: Visiting Boeing and Airbus I General Task

Closing Case: Plane Wreck: The Airline Industry in 2001-2004 73

PART 2 The Nature of Competitive Advantage

3 Internal Analysis: Distinctive Competencies,Competitive Advantage, and Profitability 75Opening Case: Dell's Competitive Advantage 75Overview 76Competencies, Resources, and Competitive Advantage 77

Strategy, Distinctive Competencies, and Competitive Advantage 77Competitive Advantage, Value Creation, and Profitability 79Differentiation and Cost Structure 83

The Value Chain 83Primary Activities 83Strategy in Action 3.1: Value Creation at Pfizer 85Support Activities 85The Building Blocks of Competitive Advantage 86

Efficiency 86Running Case: Support Activities as a Source of Value Creation at Wal-Mart 87Strategy in Action 3.2: Southwest Airlines' Low-Cost Structure 89

Contents

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Quality as Excellence and Reliability 89Innovation 91Responsiveness to Customers 92Business Models, the Value Chain, and Generic Distinctive Competencies 92

Analyzing Competitive Advantage and Profitability 94The Durability of Competitive Advantage 98

Barriers to Imitation 98Capability of Competitors 100Industry Dynamism 100

Summary 101Avoiding Failure and Sustaining Competitive Advantage 101

Why Companies Fail 101Steps to Avoid Failure 103

Strategy in Action 3.3: The Road to Ruin at DEC 104The Role of Luck 105

Strategy in Action 3.4: Bill Gates's Lucky Break 105Summary of Chapter 106 I Discussion Questions 106Practicing Strategic Management 106

Small-Group Exercise: Analyzing Competitive Advantage I Article File 3 I StrategicManagement Project: Module 3 I Exploring the Web: VisitingJohnson & Johnson I General Task

Closing Case: Google 107

Building Competitive Advantage Through Functional-Level Strategy 109Opening Case: Verizon Wireless 109Overview 110Achieving Superior Efficiency 111

Efficiency and Economies of Scale 111Efficiency and Learning Effects 113Efficiency and the Experience Curve 114

Strategy in Action 4.1: Too Much Experience at Texas Instruments 116Efficiency, Flexible Manufacturing, and Mass Customization 117Strategy in Action 4.2: Toyota's Lean Production System 118

Marketing and Efficiency 119Materials Management, Just-in-Time, and Efficiency 121

Strategy in Action 4.3: Supply-Chain Management at Office Superstores 122R&D Strategy and Efficiency 123Human Resource Strategy and Efficiency 123

Running Case: Human Resource Strategy and Productivity at Wal-Mart 124Information Systems and Efficiency 125Infrastructure and Efficiency 126

Achieving Superior Quality 127Attaining Superior Reliability 127Implementing Reliability Improvement Methodologies 128

I Contents XI

: Strategy in Action 4.4: General Electric's Six Sigma Quality Improvement Process 129Improving Quality as Excellence 133

I Strategy in Action 4.5: Six Sigma at Mount Carmel Health J33

; Achieving Superior Innovation 135!. The High Failure Rate of Innovation 135| Building Competencies in Innovation 137I Achieving Superior Responsiveness to Customers 142? Focusing on the Customer 142?• Satisfying Customer Needs 144% Summary of Chapter 145 I Discussion Questions 146f. Practicing Strategic Management 146

Small-Group Exercise: Identifying Excellence I Article File 4 I Strategic ManagementProject: Module 4 I Exploring the Web: Visiting Applied Materials I General Task

Closing Case: Redesigning the American Car 147

PART 3 Strategies

5 Building Competitive Advantage Through Business-Level Strategy 149Opening Case: Samsung Changes Its Business Model Again and Again 149Overview 150Competitive Positioning and the Business Model 151

Formulating the Business Model: Customer Needs and Product Differentiation 151Formulating the Business Model: Customer Groups and Market Segmentation 153Implementing the Business Model: Building Distinctive Competencies 156

Competitive Positioning and Business-Level Strategy 158Competitive Positioning: Generic Business-Level Strategies 159Cost Leadership 160Strategy in Action 5.1: Ryanair Takes Control over the Sky in Europe 163

Focused Cost Leadership 164Differentiation 166

Focused Differentiation 169Strategy in Action 5.2: L.L. Bean's New Business Model 170Strategy in Action 5.3: Up, Up, and Away in the Restaurant Business 171The Dynamics of Competitive Positioning 172

Competitive Positioning for Superior Performance 173Strategy in Action 5.4: Toyota's Goal? A High-Value Vehicle to Match Every Customer Need 175

Failures in Competitive Positioning 181Strategy in Action 5.5: Holiday Inns on Six Continents 182Summary of Chapter 183 I Discussion Questions 184Practicing Strategic Management 185

Small-Group Exercise: Finding a Strategy for a Restaurant I Article 5 I Strategic ManagementProject: Module 5 I Exploring the Web: Visiting the Luxury Car Market I General Task

Closing Case: How E*TRADE Uses the Internet to Gain a Low-Cost Advantage 186

XII Contents

Business-Level Strategy and the Industry Environment 187187

188

Opening Case: Nike's Winning WaysOverview 188Strategies in Fragmented Industries

Chaining 189Franchising 190Horizontal Merger 191Using Information Technology and the Internet 191

Strategies in Embryonic and Growth Industries 191Strategy in Action 6.1: Clear Channel Creates a National Chain of Local Radio Stations

The Changing Nature of Market Demand 194Strategic Implications: Crossing the Chasm 195

Strategy in Action 6.2: How Prodigy Fell into the Chasm 198Strategic Implications of Market Growth Rates 198Factors Affecting Market Growth Rates 199Strategic Implications of Differences in Growth Rates 200

Navigating Through the Life Cycle to Maturity 201Embryonic Strategies 202Growth Strategies 202Shakeout Strategies 203Maturity Strategies 203

Strategy in Mature Industries

192

204Strategies to Deter Entry: Product Proliferation, Price Cutting, and Maintaining Excess CapacityStrategies to Manage Rivalry 207

Strategy in Action 6.3: Toys "R" Us's New Competitors 208Game Theory 214

Strategy in Action 6.4: Coca-Cola and PepsiCo Go Head-to-Head 221Strategies in Declining Industries 221

The Severity of Decline 222Choosing a Strategy 223

Strategy in Action 6.5: How to Make Money in the Vacuum Tube Business 224Summary of Chapter 225 I Discussion Questions 226Practicing Strategic Management 226

Small-Group Exercise: How to Keep the Hot Sauce Hot I Article File 6 I Strategic ManagementProject: Module 6 I Exploring the Web: Visiting Wal-Mart I General Task

Closing Case: Information Technology, the Internet, and Changing Strategiesin the Fashion World 227

205

Strategy in High-Technology Industries 229Opening Case: The Smart Phone Format WarOverview 230Technical Standards and Format Wars 231

Examples of Standards 231Benefits of Standards 232

229

Contents XIII

Strategy in Action 7.1: Where Is the Standard for DVD Recorders? 233Establishment of Standards 234Network Effects, Positive Feedback, and Lockout 235

Strategy in Action 7.2: How Dolby Became the Standard in Sound Technology 237Strategies for Winning a Format War 239

Ensure a Supply of Complements 239Leverage Killer Applications 239Aggressively Price and Market 240Cooperate with Competitors 240License the Format 241

Costs in High-Technology Industries 241Comparative Cost Economics 242Strategic Significance 243

Strategy in Action 7.3: Lowering Costs Through Digitalization 244Managing Intellectual Property Rights 244

Intellectual Property Rights 245Digitalization and Piracy Rates 245Strategies for Managing Digital Rights 246

Capturing First-Mover Advantages 247First-Mover Advantages 248First-Mover Disadvantages 249Strategies for Exploiting First-Mover Advantages 250

Technological Paradigm Shifts 253Paradigm Shifts and the Decline of Established Companies 253

Strategy in Action 7.4: Disruptive Technology in Mechanical Excavators 257Strategic Implications for Established Companies 258Strategic Implications for New Entrants 259


Small-Group Exercise: Burning DVDs I Article File 7 I Strategic ManagementProject: Module 7 I Exploring the Web: Visiting Kodak I General Task

Closing Case: Battling Piracy in the Videogame Market 262

Strategy in the Global Environment 263Opening Case: The Evolution of Global Strategy at Procter & Gamble 263Overview 264The Global and National Environments 265The Globalization of Production and Markets 265Strategy in Action 8.1: Finland's Nokia 267

National Competitive Advantage 268Increasing Profitability and Profit Growth Through Global Expansion 270

Expanding the Market: Leveraging Products 271Realizing Cost Economies from Global Volume 271

Running Case: Wal-Mart's Global Expansion 272Realizing Location Economies 273Leveraging the Skills of Global Subsidiaries 275

XIV Contents

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Cost Pressures and Pressures for Local Responsiveness 276Pressures for Cost Reductions 277Pressures for Local Responsiveness 277

Strategy in Action 8.2: MTV Goes Global, with a Local Accent 279Choosing a Global Strategy 280

Global Standardization Strategy 281Localization Strategy 281Transnational Strategy 282International Strategy 283Changes in Strategy over Time 284

Basic Entry Decisions 285Which Overseas Markets to Enter 285

Strategy in Action 8.3: Merrill Lynch in Japan 286Timing of Entry 287Scale of Entry and Strategic Commitments 288

The Choice of Entry Mode 289Exporting 289Licensing 290Franchising 291Joint Ventures 292Wholly Owned Subsidiaries 293Choosing an Entry Strategy 294

Global Strategic Alliances 296Advantages of Strategic Alliances 296Disadvantages of Strategic Alliances 297

Making Strategic Alliances Work 297Partner Selection 297Alliance Structure 298Managing the Alliance 299


Small-Group Exercise: Develop a Global Strategy I Article File 8 I Strategic ManagementProject: Module 8 I Exploring the Web: Visiting IBM I General Task

Closing Case: Planet Starbucks 302

Corporate-Level Strategy: Horizontal Integration,Vertical Integration, and Strategic Outsourcing 304Opening Case: Read All About News Corp 304Overview 305Corporate-Level Strategy and the Multibusiness Model 306"Horizontal Integration: Single-Industry Strategy 307

Benefits of Horizontal Integration 309Strategy in Action 9.1: Beating Dell: Why Hewlett-Packard Wanted to Acquire Compaq 310Running Case: Wal-Mart's New Chain of "Neighborhood Markets" 312

Problems with Horizontal Integration 313Strategy in Action 9.2: Horizontal Integration in Health Care 314

Contents XV

Vertical Integration: Entering New Industries to Strengthen the "Core" Business Model 315Increasing Profitability Through Vertical Integration 317

Strategy in Action 9.3: Specialized Assets and Vertical Integration in the Aluminum Industry 319Problems with Vertical Integration 320The Limits of Vertical Integration 322

Alternatives to Vertical Integration: Cooperative Relationships 322Short-Term Contracts and Competitive Bidding 322Strategic Alliances and Long-Term Contracting 323Building Long-Term Cooperative Relationships 324

Strategy in Action 9.4: DaimlerChrysler's U.S. Keiretsu 325Strategic Outsourcing 326Strategy in Action 9.5: Cisco's $2 Billion Blunder 328

Benefits of Outsourcing 329Risks of Outsourcing 331


Small-Group Exercise: Comparing Vertical Integration Strategies I Article File 9 I StrategicManagement Project: Module 9 I Exploring the Web: Visiting Motorola I General Task

Closing Case: The Rise of WorldCom 334

Corporate-Level Strategy: Formulating and ImplementingRelated and Unrelated Diversification 336Opening Case: United Technologies Has an "ACE in Its Pocket" 336Overview 337Expanding Beyond a Single Industry 338

A Company as a Portfolio of Distinctive Competencies 338Increasing Profitability Through Diversification 340

Transferring Competencies Across Industries 341Leveraging Competencies 342Sharing Resources: Economies of Scope 343

Strategy in Action 10.1: Diversification at 3M: Leveraging Technology 344Using Product Bundling 345Managing Rivalry: Multipoint Competition 346Utilizing General Organizational Competencies 346

Two Types of Diversification 349Related Diversification 349Unrelated Diversification 350

Strategy in Action 10.2: Related Diversification at Intel 351Disadvantages and Limits of Diversification 352

Changing Industry- and Firm-Specific Conditions 352Diversification for the Wrong Reasons 352The Bureaucratic Costs of Diversification 354

Choosing a Strategy 356Related Versus Unrelated Diversification 356The Web of Corporate-Level Strategy 356

Entry Strategy: Internal New Ventures 357

XVI Contents

The Attractions of Internal New Venturing 358Pitfalls of New Ventures 358Guidelines for Successful Internal New Venturing 360

Entry Strategy: Acquisitions 361The Attractions of Acquisitions 361Acquisition Pitfalls 362

Strategy in Action 10.3: Postacquisition Problems at Mellon Bank 363Guidelines for Successful Acquisition 365

Entry Strategy: Joint Ventures 366Restructuring 367

Why Restructure? 367Summary of Chapter 368 I Discussion Questions 369Practicing Strategic Management 369

Small-Group Exercise: Dun & Bradstreet I Article File 10 I Strategic ManagementProject: Module 10 I Exploring the Web: Visiting General Electric I General Task

Closing Case: Tyco International 377

PART 4 Implementing Strategy

Corporate Performance, Governance, and Business Ethics 373Opening Case: Nike: The Sweatshop Debate 373Overview 374Stakeholders and Corporate Performance 374

Stakeholder Impact Analysis 375Strategy in Action 11.1: Bill Agee at Morrison Knudsen 376

The Unique Role of Stockholders 377Profitability, Profit Growth, and Stakeholder Claims 378

Strategy in Action 11.2: Price Fixing at Sotheby's and Christie's 380Agency Theory 381

Principal-Agent Relationships 381The Agency Problem 382

Governance Mechanisms 385Strategy in Action 11.3: Did Computer Associates Inflate Revenues to Enrich Managers? 386

The Board of Directors 387Stock-Based Compensation 388Financial Statements and Auditors 390The Takeover Constraint 391Governance Mechanisms Inside a Company 392

Ethics and Strategy 394Ethical Issues in Strategy 395The Roots of Unethical Behavior 397

Running Case: Working Conditions at Wal-Mart 398Philosophical Approaches to Ethics 399Behaving Ethically 403

Summary of Chapter 406 I Discussion Questions 406

Contents XVII

Practicing Strategic Management 407Small-Group Exercise: Evaluating Stakeholder Claims I Article File 11 I Strategic ManagementProject: Module 11 I Exploring the Web: Visiting Merck I General Task

Closing Case: The Collapse of Enron 408

Implementing Strategy in Companies That Compete in a Single Industry 411Opening Case: Nokia's New Product Structure 411Overview 412Implementing Strategy Through Organizational Design 413Building Blocks of Organizational Structure 414

Grouping Tasks, Functions, and Divisions 414Allocating Authority and Responsibility 415

Strategy in Action 12.1: Union Pacific Decentralizes to Increase Customer Responsiveness 418Integration and Integrating Mechanisms 418

Strategic Control Systems 419Levels of Strategic Control 420Types of Strategic Control Systems 422Using Information Technology 424Strategic Reward Systems 424

Strategy in Action 12.2: Control at Cypress Semiconductor 425Organizational Culture 425

Culture and Strategic Leadership 426Strategy in Action 12.3: How Ray Kroc Established McDonald's Culture 427

Traits of Strong and Adaptive Corporate Cultures 428Building Distinctive Competencies at the Functional Level 429

Functional Structure: Grouping by Function 429Running Case: Sam Walton's Approach to Implementing Wal-Mart's Strategy 430

The Role of Strategic Control 431Developing Culture at the Functional Level 431Functional Structure and Bureaucratic Costs 433The Outsourcing Option 435

Implementing Strategy in a Single Industry 435Implementing Cost Leadership 437Implementing Differentiation 437Product Structure: Implementing a Wide Product Line 438Marketing Structure: Increasing Responsiveness to Customer Groups 439Geographic Structure: Expanding Nationally 440Matrix and Product-Team Structures: Competing in Fast-Changing, High-Tech

Environments 441Focusing on a Narrow Product Line 444

Strategy in Action 12.4: Restructuring at Lexmark 445Restructuring and Reengineering 446Summary of Chapter 448 I Discussion Questions 449Practicing Strategic Management 449

Small-Group Exercise: Deciding on an Organizational Structure I Article File 12 I StrategicManagement Project: Module 12 I Exploring the Web: Visiting Home Depot I General Task

Closing Case: Strategy Implementation at Dell Computer 450

XVIII Contents

13 Implementing Strategy in Companies That Compete Across Industriesand Countries 452Opening Case: GM Searches for the Right Global Structure 452Overview 453Managing Corporate Strategy Through the Multidivisional Structure 453

Advantages of a Multidivisional Structure 456Problems in Implementing a Multidivisional Structure 457

Strategy in Action 13.1: Amoco, ARCO, and Burmah Castrol Become Part of BP 458Structure, Control, Culture, and Corporate-Level Strategy 460The Role of Information Technology 464

Implementing Strategy Across Countries 464Strategy in Action 13.2: SAP's ERP Systems 465

Implementing a Localization Strategy 466Implementing an International Strategy 467Implementing a Global Standardization Strategy 468Implementing a Transnational Strategy 469

Strategy in Action 13.3: Using IT to Make Nestle's Global Structure Work 471Entry Mode and Implementation 472

Internal New Venturing 473Joint Venturing 475Mergers and Acquisitions 476

Information Technology, the Internet, and Outsourcing 478Information Technology and Strategy Implementation 478

Strategy in Action 13.4: Oracle's New Approach to Control 480Strategic Outsourcing and Network Structure 480

Strategy in Action 13.5: Li & Fung's Global Supply-Chain Management 481Summary of Chapter 483 I Discussion Questions 483Practicing Strategic Management 484

Small-Group Exercise: Deciding on an Organizational Structure (Continued)Article File 13 I Strategic Management Project: Module 13 I Exploring the Web:Visiting Sears I General Task

Closing Case: The New HP Gets Up to Speed 485

Endnotes 486Box Source Notes 501

Part 5 Cases in Strategic Management

I Introduction: Analyzing a Case Study and Writing a Case Study Analysis ClWhat Is Case Study Analysis? ClAnalyzing a Case Study C2Writing a Case Study Analysis C6

Contents XIX

The Role of Financial Analysis in Case Study Analysis C8

Profit Ratios C8 I Liquidity Ratios C9 I Activity Ratios CIO I

Leverage Ratios CIO I Shareholder-Return Ratios Cll I Cash Flow C12

Conclusion C12

SECTION A: Business Level Cases: Domestic and Global

Case 1: Brown-Forman Wine Estates C13Armand Gilinsky Jr., Sonoma State University; Sally Baack, San Francisco State University;Murray Sliverman, San Francisco State University; and Lew Brown, University of North Carolina, Greensboro

What does the future hold for this marketer of premium wine? Can it survive as an independent entity withinBrown-Forman?

Case 2: Welch Foods, Inc. C35Vincent Amanor-Boadu, Michael Boland, and David Barton, Kansas State University

How can this manufacturer of grape juices and jellies survive against competition from well-financedcompetitors?

Case 3: The Global Automobile Industry in 2004 C50

Charles W. L. Hill, University of Washington

Profiles the structure of the competitive automobile industry.

Case 4: Toyota: Origins, Evolution, and Current Prospects C61Charles W. L. Hill, University of Washington

How did Toyota grow from a small, Japanese automobile company in the 1950s to become the second largestautomobile company in the world by 2004?

Case 5: General Motors in 2005 C73

Gareth R. Jones, Texas A&M University

Can GM change its strategy and structure to lower costs and innovate competitive, new global cars?

Case 6: The Comeback of Caterpillar, 1985-2002 C88Isaac Cohen, San Jose State University

How did Caterpillar come back from near bankruptcy to regain global leadership in the earthmovingequipment business?

Case 7: Huawei Technologies Co., Ltd. C105Jie Xu and Robert H. Girling, Sonoma State University

This fast-growing Chinese competitor to Cisco Systems is gaining market share rapidly. How?

Case 8: The Home Video Game Industry: From Pong to Halo 2 C121


Profiles the dynamic history of the home video game industry from inception to the current strategicstruggle between Sony and Microsoft.

Case 9: Satellite Radio: XM Versus Sirius C137


Two satellite radio companies are fighting it out for dominance in this fast-growing new market. Who will win?

Case 10: Strategic Inflection: TiVo in 2003 C153

David Yoffie, Pai-Ling Yin, and Christina Darwall, HBS California Research Center

TiVo's customers love the product, but can the company survive?

XX Contents

Case 11: The Music Industry in the Age of the Internet: From Napster to Apple's iPod C173


The Internet has thrown the music industry into turmoil. Why is Apple succeeding where Napster failed?

Case 12: Staples C187Charles W. L. Hill, University of Washington

How did Staples revolutionize the office supplies industry? Can it keep growing?

Case 13: Gap International: A Specialty Apparel Retailer C200

Robert J. Mockler, St. John's University

What is this fashion retailer's secret to success?

Case 14: Charles Schwab C230Charles W. L. Hill, University of Washington

Discusses the rise of discount stockbroker Charles Schwab and its current strategic challenges.

Case 15: Li & Fung—The Global Value Chain Configurator C245S.S. George, ICFAI Center for Management Research

Li & Fung has become a textile-industry powerhouse by creating and coordinating a global supply for itscustomers: clothing companies.

Case 16: Starbucks Corporation: Competing in a Global Market C267

Suresh Kotha and Debra Glassman, University of Washington

Can Starbucks repeat its domestic success in the global marketplace?

Case 17: Kentucky Fried Chicken and the Global Fast-Food Industry C289Jeffrey A. Krug, Appalachian State University

KFC was an early mover in the global fast-food industry. What must the company do to continue to prosperin this competitive industry?

SECTION B: Corporate Level Cases: Domestic and Global

Case 18: Nucorin2005 C310Frank C. Barnes, University of North Carolina-Charlotte, and Beverly B. Tyler, North Carolina StateUniversity

How does this steel company achieve such strong performance?

Case 19: 3M in the New Millennium C335


3M's innovative culture took 100 years to build, but can it prosper in the new millennium?

Case 20: The Rise of IBM C350Gareth R. Jones and Susan L. Peters, Texas A&M University

Details how IBM became the global leader in computer hardware and software.

Case 21: The Fall of IBM C361Gareth R. Jones and Susan L. Peters, Texas A&M University

How did IBM respond to the rapidly changing computer industry? What happened to its competitiveadvantage and its prosperity?

Case 22: The Rebirth of IBM C373


IBM searches for new strategies to compete in the age of the Internet and the World Wide Web.

Case 23: Hewlett Packard: The Merger with the Compaq Corporation C389

Isaac Cohen, San Jose State University

What was the strategic rationale for the joining of resources between HP and Compaq?

Contents XXI

Case 24: Hewlett Packard Ousts Carly Fiorina C403Gareth R. Jones, Texas A&M University

Why were the merger's strategic advantages slow to be realized?

Case 25: Michael Eisner's Walt Disney Company: Part One C405


Eisner's strategies turn around Walt Disney Company's fortunes and realize the value of its resources.

Case 26: The Walt Disney Company, 1995-2005: Part Two C421Gareth R. Jones, Texas A&M University

Discusses the problems in strategy and structure that plagued the Walt Disney Company after 1995 andhelped destroy the value that Eisner had earlier created.

Case 27: First Greyhound, Then Greyhound Dial, Then Dial, Now Henkel-Dial C433


How did this company, which never had the right strategies, transform itself into a prospering success?

Case 28: Hanson PLC (A): The Acquisition Machine C448Charles W. L. Hill, University of Washington

How did this once-small British company become one of the world's largest conglomerations? Throughacquisitions!

Case 29: Hanson PLC (B): Breaking It Up C462


After two decades of dramatic growth, why did Hanson break up into a series of smaller companies?

Case 30: Philips Versus Matsushita: A New Century, a New Round C467Christopher A. Bartlett, Harvard Business School

For half a century, Philips and Matsushita have been vying for market dominance in the consumerelectronics industry. They are still at it.

Case 31: GE's Two-Decade Transformation: Jack Welch's Leadership C481Meg Wozny and Christopher A. Bartlett, Harvard Business School

How Jack Welsh transformed GE from a mediocre engineering conglomerate into one of the world's mostproductive companies.

SECTION C: Ethics Cases

Case 32: Nike's Dispute with the University of Oregon C501Rebecca J. Morris, University of Nebraska at Omaha, and Anne T. Lawrence, San Jose State University

Nike's utilization of subcontractors in Southeast Asia for shoe production gets the company into trouble withits customers.

Case 33: Etch-A-Sketch Ethics C515Charles W. L. Hill, University of Washington

The manufacturer of Etch-A-Sketch transfers production from Ohio to China—and runs into an ethicalstorm.

Case 34: Western Drug Companies and the AIDS Epidemic in South Africa C517


AIDS is ravaging South Africa. Should Western drug companies give away their AIDS treatments?

Index II

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