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Claire CaponStaffordshire University

Prentice Hallp[NANCIAL TIMES

An imprint of Pearson EducationHarlow, England • London • New York • Boston • San Francisco 'TorontoSydney • Tokyo • Singapore . Hong Kong • Seoul • Taipei • New DelhiCape Town • Madrid • Mexico City • Amsterdam • Munich • Paris • Milan

List of case studies xiiPreface xiiiAn overview of Understanding Strategic Management xivTeaching with this book - module delivery xviiAbout the author xixGuided tour xxAcknowledgements xxiii

Chapter 1 WHAT IS STRATEGY? 2

Chapter objectives 2

Entry case study 1.1: Google's random genius is ho accidental strategy.Can it last? ' 3

Introduction kDefinitions of strategy 6Prescriptive and emergent strategy 13Mintzberg on strategy - 5Ps of Strategy . 16Conclusion 21Learning outcomes and summary 22

Exit case study 1.2: Royal Bank rides the dragon 2k

Discussion topic __ 26Widen your horizons 26Weblinks . • . 26Further reading 27References 27

Chapter 2 ENVIRONMENTAL ANALYSIS 28

Chapter objectives ... _ • 28

Entry case study 2.1: Investors rush to join fray to say good morning Vietnam 29

Introduction 30Understanding and analysing the external environment 31Performing external environmental analysis 32Duncan and Ginter on performing external environmental analysis 33Performing PEST- analysis • 34The political environment t 36The economic environment . . . 43The socio-cultural environment 48The technological environment 53The competitive environment and its regulation 55

Contents

The nature of competition - the five forcesConclusionLearning outcomes and summary

Exit case study 2.2: Cadbury looks to burst Wrigley bubble --

Discussion topicWiden your horizonsWeblinksFurther readingReferences

Chapter 3 MANAGING RESOURCES COMPETITIVELY

Chapter objectives

Entry case study 3.1: Human resources, minus the boring bits

IntroductionEvaluating resourcesCore competenciesThe value chainPrimary activitiesSupport activitiesLinkages in the value chain and value systemConclusionLearning outcomes and summaryExit case study 3.2: Eurostar seeks a speedy transformation

Discussion topicWiden your horizonsWeblinksFurther readingReferences

Chapter 4 ANALYSING FINANCIAL RESOURCES

Chapter objectives

Entry case study 4.1: Speedel plans IPO to finance further trials

IntroductionSources of financeShares and the London Stock ExchangeLoans, debentures and loan stockEvaluating financialperformancePerformance ratiosFinancial status ratiosStock market ratiosConclusionLearning outcomes and summary

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Contents

Exit case study 4.2: Creating links with recycled mobile phones is theEazy way to success 132

Discussion topic 133Widen your horizons . , 134Weblinks 134Further reading 134

References . 135

Chapter 5 STAKEHOLDERS, CULTURE AND CHANGE 136

Chapter objectives 136

Entry case study 5.1: Discord at British Airways 137

Introduction 138

Stakeholders and the organisation 138Analysing stakeholders 140An alternative approach to stakeholders 144Organisational culture 148The cultural web 149Changing organisational culture 152Managing a changing environment 155Strategy and successful change 161Conclusion . 164Learning outcomes and summary 165

Exit case study 5.2: Vratislav Kulhanek of Skoda 167

Discussion topic 168Widen your horizons 169Weblinks 169Further reading 169References 170

Chapter 6 MANAGEMENT AND LEADERSHIP IN ORGANISATIONS 172

Chapter objectives 172

Entry case study 6.1: Industry maps DNA of 21st-century movers andshakers . 1 7 3

Introduction • • • • . , . 174What is management? 175Managers, effectiveness and efficiency 178Managerial style and the role of trust and respect 180Leadership in organisations 183

Classification of leadership styles 185Leadership styles ~ , 186Leadership, power and stakeholders . 190

Leadership, stages and situations . 192Conclusion 194

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Contents

Learning outcomes and summary 194

Exit case study 6.2: Engineer with tools to rebuild an airline 196

Discussion topic 198Widen your horizons - 199Weblinks 199Further reading ; 199References 200

Chapter 7 DEVELOPING COMPETITIVE AND MARKETINGSTRATEGY 202

Chapter objectives , 202

Entry case study 7.1: Viacom agrees China deal 203

Introduction 204Competitive strategies 204Choosing a successful competitive strategy 208Gilbert and'Strebal's competitive strategies ' 209Faulkner and Bowman's strategy clock 210Defining and creating competitive advantage 215Methods for achieving competitive advantage "• 216Issues to consider when developing a competitive strategy 219Assessing competitors' management philosophies' 220Marketing strategy and objectives - • 223Market segmentation 226Market targeting . 231Market positioning ; . 235Conclusion 237Learning outcomes and summary 238

Exit case study 7.2: Nike overtakes Adidas in football field 240

Discussion topic 241Widen your horizons 241Weblinks . 242Further reading 242References 242

Chapter 8 GROWTH FOR SUCCESS 244

Chapter objectives ' 244

Entry case study 8.1: Procter & Gamble strengthens its clout with retailers 245

Introduction 246Organic growth : ' 247Exporting ' • 248Licensing • • 249Franchises • 250

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Contents

Strategic alliances 253Acquisitions • 260Choosing growth by acquisition 261Conclusion ,. 266Learning outcomes and summary 266

Exit case studies 8.2a and 8.2b: Napster attacks delays inEuropean music licensing; MTV in European video licensing row 269

Discussion topic 270Widen your horizons 271Weblinks 271Further reading 271References 272

Chapter 9 DEVELOPING INTERNATIONAL STRATEGY 274

Chapter objectives ^ 274

Entry case study 9.1: Disney to unveil international strategy 275

Introduction 275The international environment 277Developing an international strategy 287International human resource management 292Foreign direct investment, . 295The benefits and costs of FDI 297Characteristics and approaches to FDI 299Conclusion 306Learning outcomes and summary 306

Exit case study 9.2: Burberry tailors a fresh image in Japan 308

Discussion topic 310Widen your horizons 311Weblinks 311Further reading 311References 312

Chapter 10 STRUCTURE, CULTURE AND GROUPS INORGANISATIONS 3U

Chapter objectives 314

Entry case study 10.1: Sony takes first step towards leaner structure 315

Introduction 316Generic organisational structures • 316The centralised structures 317The decentralised structures 322Global organisations 336Determining organisational structure and culture 336

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Contents

Groups in organisations 342Conclusion 344Learning outcomes and summary 345

Exit case studies 10.2a and 10.2b: Unilever to keep dual structure; RoyalDutch/Shell to unify structure and move HQ 347

Discussion topic 348Widen your horizons ' 349Weblinks 349Further reading 349References 350

Chapter 11 STRATEGIC CONTROL 352

Chapter objectives . 352

Entry case study 11.1: Designers win the right to control spare parts 353

Introduction -̂ 354

Levels of strategic control : 354A balanced approach to strategic control 355Controlling the value chain - the support activities , 356Controlling the value chain - the primary activities 360Strategic control of the value system - related diversification 362Strategic control of the value system - unrelated diversification 365Effective strategic control systems 366Conclusion 368Learning outcomes and summary 368

Exit case study 11.2: We believe in being in control ' 370

Discussion topic 372Widen your horizons 372Weblinks 372Further reading 372

References 373

Chapter 12 MANAGING FAILURE AND TURNAROUND 374

Chapter objectives • " 374

Entry case study 12.1: Ford pares management as part of turnaround 375

Introduction • ; ••"• - 375

Symptoms of decline and failure ; 376

Causes of failure . 377

Feasibility of recovery - • . 384

Retrenchment strategies ••••••. • - '. 386

Turnaround strategies 390

Conclusion 394Learning outcomes and summary 394

Exit case study 12.2: New HP boss plans 14,500 job cuts

Discussion topicWiden your horizonsWeblinksFurther readingReferences

GlossaryIndex

Contents

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Supporting resources

Visit the Understanding Strategic Management Companion Website atwww.pearsoned.co.uk/capon to find valuable online resources.

Companion Website for students

• Self Assessment Questions to test your learning.

• Extensive links to valuable resources on the web.

• Interactive online flashcards that allow you to check definitions againstthe key terms during revision.

a An online glossary to help explain key terms.

For instructors

• Instructors manual including suggested teaching plan and notes on thecases in the text.

n Downloadable Power Point sides containing all the exhibits from thebook.

D Test bank of question material.

a Additional case studies for each chapter.

Also: The Companion Website provides the following features:

• Search tool to help locate specific items of content.

• E-mail results and profile tools to send results of quizzes to instructors.

D Online help and support to assist with website usage and trouble-shooting.

For more information please contact your local Pearson Education salesrepresentative or visit www.pearsoned.co.uk/capon.

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