Strategic Management

Sixth Edition Strategic Management Richard Lynch PEARSON Hariow, England London New York Boston San Francisco * Toronto Sydney Auckland Singapore Hong Kong Tokyo Seoul Taipej New Delhi Cape Town Sao Paulo Mexico City Madrid Amsterdam Munich Paris Milan

Contents About the sixth edition How to use this book Guided tour Guide to the main focus of case studies Acknowledgements Publisher's acknowledgements Parti INTRODUCTION Chapter 1 Strategic management Case study 1.1 1.1 What is strategic management? 1.2 The main topics covered in strategy Case study 1.2 1.3 Core areas of strategic management 1.4 Context, content and process 1.5 Process: linking the three core areas 1.6 Green strategy" 1.7 Strategy development in public and non-profit organisations 1.8 International dimensions in strategic /' management Case study 1.3 Chapter 2 A review of theory and practice Case study 2.1 2.1 Prescriptive strategic management in theory and practice Case study 2.2 2.2 Emergent strategic management in theory and practice Case study 2.3 2.3 Some prescriptive theories of strategic management Case study 2.4 2.4 Some emergent theories of strategic management XIII xix xx xxiii xxvi xxix 4 FT 5 7 9 13 15 17 19 22 24 25 26 28 29 30 30 31 33 33 34 35 38 40 43 45 52 53 2.5 The purpose of the organisation: stakeholders, ethics and green strategy 59 Case study 2.5 61 64 65, 66 66 67 Part 2 STRATEGIC ANALYSIS AND PURPOSE Chapter 3 Analysing the strategic environment 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 Case study 3.1 Exploring the competitive environment Strategic environment - the basics Degree of turbulence in the environment Green strategy Analysing the general environment Case study 3.2 Analysing the stages of market growth Case study 3.3 Key factors for success in an industry Analysing the competitive industry environment - the contribution of Porter Analysing the co-operative environment Analysing one or more immediate competitors in depth Analysing the customer and market segmentation Case study 3.4 Conclusions Case study 3.5 Chapter 4 Analysing resources and capabilities Case study 4.1 72 73 73 74 77 78 80 82 87 88 91 95 98 104 107 109 112 115 116 118 119 120 121 121 123 123 124 VII

4.1 Analysing resources and capabilities 127 4.2 Why does an organisation possess any resources at all? The make-or-buy decision 132 Case study 4.2 134 4.3 Resource analysis and adding value 136 4.4 Adding value: the value chain and the value system - the contribution of Porter 137 4.5 Adding value: Green strategy and the value chain 143 Case study 4.3, 146 4.6 Resource analysis and competitive advantage - the resource-based view 150 4.7 Identifying which resources and capabilities deliver sustainable competitive advantage 157 4.8 Resource and capability analysis - improving competitive advantage 162 Case study 4.4 165 " 168 168 170 170 171 Chapter 5 Strategy dynamics 173 173 Case study 5.1 174 5.1 Interpretive dynamics: the changing purpose of the organisation 175 Case study 5.2 178 5.2 Interpretive dynamics: the organisation's changing and uncertain environment 181 Case study 5.3 186 5.3 Interpretive dynamics: fast-moving markets 188 5.4 Interpretive dynamics: resource development 191 Case study 5.4 197 5.5 Proactive dynamics: developing a dynamic business framework 200 5.6 Proactive dynamics: aggressive competitive strategies 203 5.7 Proactive dynamics: developing co-operation 208 5.8 Proactive dynamics: using game theory 211 214 214 216 217 217 Chapter 6 Prescriptive purpose delivered through mission, objectives and ethics 220 220 Case study 6.1 221 6.1 Shaping the purpose of the organisation 223 6.2 Developing a strategic vision for the future 226 Case study 6.2 229 6.3 Stakeholder power analysis 232 Case study 6.3 235 6.4 Corporate governance and the purpose of the organisation 238 6.5 Purpose shaped by ethics and corporate social responsibility 243 6.6 Developing the mission 247 Case study 6.4 250 6.7 Developing the objectives 252 255 256 257 257 258 Chapter 7 Purpose emerging from knowledge, technology and innovation 260 260 Case study 7.1 261 7.1 Understanding and measuring knowledge 262 Case study 7.2 268 7.2 Knowledge creation and purpose 270 Case study 7.3 275 7.3 Using technology to develop purpose and competitive advantage 276 Case study 7.4 281 7.4 Innovation and purpose 283 Case study 7.5 286 7.5 How to innovate: the 'ideas' process 289 294 294 295 296 296 Part 3 DEVELOPING THE STRATEGY Chapter 8 Developing business-level strategy options 300 300 Case study 8.1 302 viii

8.1 Purpose and the SWOT analysis - the contribution of Andrews 8.2 Environment-based options: generic strategies - the contribution of Porter Case study 8.2 Case study 8.3 8.3 Environment-based strategic options: the market options matrix 8.4 Environment-based strategic options: the expansion method matrix Case study 8.4 8.5 Resource-based strategic options: the value chain 8.6 Resource-based strategic options: the resource-based view 8.7 Resource-based strategic options: cost reduction 8.8 Options related to green strategy Chapter 9 Developing corporate-level strategy options Case study 9.1 9.1 Corporate-level strategy: the benefits and costs of diversifying 9.2 Corporate options: degrees of diversification 9.3 Corporate strategy and the role of the centre - the principle of parenting Case study 9.2 9.4 Corporate strategy: decisions about the company's diversified portfolio of products Case study 9.3 9.5 The tools of corporate-level options: from acquisitions to restructuring Chapter 10 Strategy evaluation and development: the prescriptive process Case study 10.1 304 305 310 312 315 320 324 328 330 333 338 339 340 341 341 342 344 344 345 348 352 353 356 360 365 369 371 372 373 373 374 376 376 377 CONTENTS 10.1 Prescriptive strategy content: evaluation against six criteria 379 Case study 10.2 385 10.2 Strategy evaluation: procedures and techniques 387 10.3 Applying empirical evidence and guidelines 393 Case study 10.3 397 10.4 The classic prescriptive model of strategic management: exploring the process 402 10.5 Evaluating and selecting green strategy options 405 Case study 10.4 408 412 413 414 Appendix 415 415 416 Chapter 11 Finding the strategic route : mainly emergent approaches 418 418 Case study 11.1 419 11.1 The importance of strategy context 420 Case study 11.2 423 11.2 The survival-based strategic route 426 11.3 The uncertainty-based strategic route 428 Case study 11.3 431 11.4 The network-based strategic route 436 Case study 11.4 440 11.5 The learning-based strategic route 441 11.6 International considerations 448 450 450 452 452 453 Chapter 12 Organisational structure, style and people issues Case study 12.1 12.1 Strategy before structure? 12.2 Building the organisation's structure; basic principles 455 455 456 459 463 IX

12.3 The choice of management style and culture Case study 12.2 12.4 Types of organisational structure 12.5 Organisational structures for innovation Case study 12.3 12.6 Motivation and staffing in strategy implementation Part 4 THE IMPLEMENTATION PROCESS Chapter 13 Implementing and controlling the strategic plan Case study 13.1 13.1 The nature and limitations of the implementation process 13.2 Objectives; task setting and communicating the strategy Case study 13.2 13.3 Resource allocation Case study 13.3 13.4 Information, monitoring and control 13.5 The Balance Scorecard: the contribution of Kaplan and Norton Case study 13.4 13.6 Prescriptive strategic planning Chapter 14 Developing and implementing customer-driven strategy 468 473 476 481 484 486 488 488 490 490 490 494 494 495 497 502 505 508 509 512 514 519 520 525 525 527 527 528 529 529 Case study 14.1 530 14.1 Customers and customer-driven strategy - the contribution of Theodore Levitt 532 14.2 Customer profiling and sustainable competitive advantage 535 Case study 14.2 540 14.3 Strategy implications: analysing and implementing branding and reputation 542 14.4 Strategy implications: communicating with customers and stakeholders 544 14.5 Strategy implications: strategic pricing and value for money 546 14.6 Strategy implications: quality objectives and customers 550 Case study 14.3 553 557 557 559 559 559 Chapter 15 Managing strategic change 561 561 Case study 15.1 562 15.1 The basic concept of strategic change 564 15.2 Analysing the causes of strategic change 568 Case study 15.2 569 15.3 Prescriptive approaches to managing strategic change 574 Case study 15.3 577 15.4 Emergent approaches to managing change 578 Case study 15.4 583 15.5 Developing a strategic change programme 586 590 590 592 592 593 Part 5 DIFFERENT STRATEGY CONTEXTS AND BUILDING A COHESIVE STRATEGY Chapter 16 Strategic leadership 596 596 Case study 16.1 597 16.1 What is strategic leadership 599 16.2 What makes a successful leader? 600 Case study 16.2 605 16.3 How leaders shape organisations using culture and style 608 16.4 How leaders cope with power 614 Case study 16.3 616 16.5 Successful strategic leadership 619 622 622 623

624 624 Chapter 17 Entrepreneurial strategy 626 626 Case study 17.1 627 17.1 Entrepreneurial strategy: theory and practice 629 17.2 Entrepreneurial strategy: personal aspects and risk taking 633 Case study 17.2 636 17.3 The four drivers of entrepreneurial strategy: imagination, ideas, invention, and innovation 638 17.4 Entrepreneurial strategy: competitive advantage and ownership 640 Case study 17.3 643 17.5 Implementing entrepreneurial strategy 644 647 647 649 650 650 Chapter 18 Government, public sector and not-for-profit strategies 652 652 Case study 18.1 / 654 18.1 Analysing the strategic environment in public sector strategy 656 18.2 Analysing resources in the public and not-for-profit sectors 662 Case study 18.2 667 18.3 Exploring the purpose of public and not-for-profit organisations 669 18.4 Context, content and process in public sector strategy 671 18.5 Implementation in public sector strategy 674 Case study 18.3 676 681 681 684 Acknowledgements 684. 684 685 Chapter 19 International expansion and globalisation strategies 687 687 Case study 19.1 688 19.1 International expansion and globalisation: their meaning and importance 690 Case study 19.2 695 19.2 World trade and the international expansion strategies of companies 699 19.3 Influence of institutions involved in international trade 703 Case study 19.3 706 19.4 International and global expansion strategies: the company perspective 711 19.5 International and global expansion strategies: organisation structures 717 19.6 Developing international relationships such as alliances and joint ventures 721 724 725 726 726 727 Chapter 20 Building a cohesive strategy 729 729 Case study 20.1 730 20.1 Cohesion in prescriptive and emergent processes 732 20.2 Building a cohesive strategy - a worked example 734 Case study 20.2 739 20.3 Developing the business model 741 20.4 Longer-term strategy issues 742 Case study 20.3 745. 747 747 748 748 749 Part 6 INTEGRATIVE AND LONGER CASE STUDIES How to analyse and prepare strategy cases 752 1 Europe's leading airlines: budget strategy or bust? 754 2 Global beer and lager: exploring strategies in a mature market 761 3 SABMiller: South Africa goes quietly global 765 4 Prescriptive and emergent strategy? Risks and challenges for global car companies - including green strategies 769 5 Competitive prescriptive strategy - the battle between the top five car companies 776 XI

6 Competitive and new entry strategies: tricky time for Tata Motors 781 7 Strategic change: the rise and fall of CEO Carly Fiorina at Hewlett-Packard 788 8 Strategy development: what can companies learn from 'Chainsaw Al'? 795 9 Sorting out Sony: restoring the profits and the innovative fire 797 10 Emergent strategy: what's the new smart strategy for PCs, media tablets and mobiles?. 807 11 Public sector strategy: how Galileo ended up in serious trouble 12 Emergent strategy: who will stop Apple's dominance of the music delivery business? Glossary Index 814 817 822 832 Supporting resources Visit www.pearsoned.co.uk/lynch to find valuable online resources Companion Website for students Video summaries of each chapter Videos to accompany the long case studies Additional material, including further cases studies, questions and checklists, to expand your knowledge and aid your understanding Case Study Guide offering help with reading, analysing and presenting cases A searchable online glossary to explain key terms For instructors Complete, downloadable Instructor's Manual, including teaching notes on the book and the case studies A bank of additional case studies from the previous edition of the book PowerPoint slides that can be downloaded and used as OHTs For more information please contact your local Pearson Education sales consultant or visit www.pearsoned.co.uk/lynch XII