Management Question

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 1
Strategic Management (MGT 401)
Due Date: 05/10/2024 @ 23:59
Course Name: Strategic Management
Student’s Name:
Course Code: MGT 401
Student’s ID Number:
Semester: First
CRN:
Academic Year:2024-25-1st
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
Marks Obtained/Out of 10
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
•
•
•
•
•
•
•
•
The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Learning Outcomes:
CLO1- Recognize the basic concepts and terminology used in Strategic Management.
CLO2-Describe the different issues related to environmental scanning, strategy formulation, and
strategy implementation in diversified organizations
CLO5-Demonstrate how executive leadership is an important part of strategic management .
Assignment Question(s): (2.5 marks for each question)
1. Why is strategic management important for a corporation’s competitive advantage?
2. How does strategic management typically evolve in a corporation? Give examples
3. Why does a corporation need a board of directors? What is the relationship between
corporate governance and social responsibility? Give examples from the actual
market.
4. Choose any corporation from the Saudi market and discuss the forces driving its
industry competition (review chapter 4-slide 18).
Notes:
– Your answers MUST include at least four scholarly peer-reviewed references, using a proper
referencing style (APA). Remember that these scholarly references can be found in the Saudi
Digital Library (SDL).
– Make sure to support your statements with logic and argument, citing all sources referenced.
Answers
1. Answer-
2. Answer-
‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 1
Strategic Management (MGT 401)
Due Date: 05/10/2024 @ 23:59
Course Name: Strategic Management
Student’s Name:
Course Code: MGT 401
Student’s ID Number:
Semester: First
CRN:
Academic Year:2024-25-1st
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
Marks Obtained/Out of 10
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
•
•
•
•
•
•
•
•
The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Learning Outcomes:
CLO1- Recognize the basic concepts and terminology used in Strategic Management.
CLO2-Describe the different issues related to environmental scanning, strategy formulation, and
strategy implementation in diversified organizations
CLO5-Demonstrate how executive leadership is an important part of strategic management .
Assignment Question(s): (2.5 marks for each question)
1. Why is strategic management important for a corporation’s competitive advantage?
2. How does strategic management typically evolve in a corporation? Give examples
3. Why does a corporation need a board of directors? What is the relationship between
corporate governance and social responsibility? Give examples from the actual
market.
4. Choose any corporation from the Saudi market and discuss the forces driving its
industry competition (review chapter 4-slide 18).
Notes:
– Your answers MUST include at least four scholarly peer-reviewed references, using a proper
referencing style (APA). Remember that these scholarly references can be found in the Saudi
Digital Library (SDL).
– Make sure to support your statements with logic and argument, citing all sources referenced.
Answers
1. Answer-
2. Answer-
Strategic Management and Business Policy
Globalization, Innovation, and Sustainability
For these Global Editions, the editorial team at Pearson has
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Strategic Management
and Business Policy
Globalization, Innovation, and Sustainability
FOURTEENTH edition
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Wheelen
Hunger
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Strategic
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Globalization, Innovation,
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Thomas L. Wheelen
Formerly with University of Virginia,
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Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear
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ISBN 10: 1-292-06081-6
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Brief Contents
PART one Introduction to Strategic Management and Business Policy 35
CHAPTER
CHAPTER
CHAPTER
1   Basic Concepts of Strategic Management 36
2   Corporate Governance 74
3   Social Responsibility and Ethics in Strategic Management 102
PART two Scanning the Environment 123
CHAPTER
CHAPTER
4   Environmental Scanning and Industry Analysis 124
5   Internal Scanning: Organizational Analysis 160
PART three Strategy Formulation 195
CHAPTER
CHAPTER
CHAPTER
6   Strategy Formulation: Situation Analysis and Business Strategy 196
7   Strategy Formulation: Corporate Strategy 218
8   Strategy Formulation: Functional Strategy and Strategic Choice 248
PART four Strategy Implementation and Control 277
9   Strategy Implementation: Organizing for Action 278
C H A P T E R 1 0   Strategy Implementation: Staffing and Directing 308
C H A P T E R 1 1   Evaluation and Control 336
CHAPTER
PART five Introduction to Case Analysis 365
C H A P T E R 1 2  
Suggestions for Case Analysis 366
PART six Cases in Strategic Management 393
Glossary  803
Name Index  815
Subject Index  820
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Contents
Preface  23
About the Authors   31
PART one Introduction to Strategic Management and Business Policy  35
CHAPTER
1
Basic Concepts of Strategic Management  36
The Study of Strategic Management   38
Phases of Strategic Management  38
Benefits of Strategic Management  39
Globalization, Innovation, and Sustainability: Challenges to Strategic Management   41
Impact of Globalization  42
Impact of Innovation  43
Global Issue: REGIONAL TRADE ASSOCIATIONS REPLACE NATIONAL TRADE BARRIERS  43
Impact of Sustainability  44
Theories of Organizational Adaptation   45
Creating a Learning Organization   46
Basic Model of Strategic Management   47
Environmental Scanning  48
Strategy Formulation  50
Strategy Implementation  53
Evaluation and Control  55
Feedback/Learning Process  55
Initiation of Strategy: Triggering Events   56
Strategic Decision Making   57
What Makes a Decision Strategic  57
Mintzberg’s Modes of Strategic Decision Making  58
Strategic Decision-Making Process: Aid to Better Decisions  59
The Strategic Audit: Aid to Strategic Decision Making   60
End of Chapter Summary  61
Appendix 1.A Strategic Audit of a Corporation  66
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CONTENTS
CHAPTER
2
Corporate Governance  74
Role of the Board of Directors   77
Responsibilities of the Board  78
Members of a Board of Directors  80
Innovation Issue: JCPenney and Innovation   81
Strategy Highlight: AGENCY THEORY VERSUS STEWARDSHIP THEORY
IN CORPORATE GOVERNANCE  83
Nomination and Election of Board Members  86
Organization of the Board  87
Impact of the Sarbanes–Oxley Act on U.S. Corporate Governance  88
Global Issue: GLOBAL BUSINESS BOARD ACTIVISM AT YAHOO!  90
Trends in Corporate Governance  91
The Role of Top Management   92
Responsibilities of Top Management  92
Sustainability Issue: CEO PAY AND CORPORATE PERFORMANCE  93
End of Chapter Summary  96
CHAPTER
3
Social Responsibility and Ethics in Strategic Management  102
Social Responsibilities of Strategic Decision Makers   104
Responsibilities of a Business Firm  104
Sustainability  107
Corporate Stakeholders  108
Sustainability Issue: MARKS & SPENCER LEADS THE WAY  108
Strategy Highlight: JOHNSON & JOHNSON CREDO  111
Ethical Decision Making   111
Some Reasons for Unethical Behavior  112
Global Issue: HOW RULE-BASED AND RELATIONSHIP-BASED GOVERNANCE SYSTEMS
AFFECT ETHICAL BEHAVIOR  113
Innovation Issue: Turning a Need into a Business to Solve the Need   115
Encouraging Ethical Behavior  116
End of Chapter Summary  118
PART two Scanning the Environment  123
CHAPTER
4
Environmental Scanning and Industry Analysis  124
Environmental Scanning  126
Identifying External Environmental Variables  126
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CONTENTS
9
Sustainability Issue: GREEN SUPERCARS  128
Global Issue: SUVs POWER ON IN CHINA  136
Identifying External Strategic Factors  137
Industry Analysis: Analyzing the Task Environment   138
Porter’s Approach to Industry Analysis  138
Industry Evolution  142
Innovation Issue: TAKING STOCK OF AN OBSESSION   143
Categorizing International Industries  143
International Risk Assessment  144
Strategic Groups  144
Strategic Types  146
Hypercompetition  146
Using Key Success Factors to Create an Industry Matrix  147
Competitive Intelligence  148
Sources of Competitive Intelligence  149
Strategy Highlight: EVALUATING COMPETITIVE INTELLIGENCE  150
Monitoring Competitors for Strategic Planning  151
Forecasting  152
Danger of Assumptions  152
Useful Forecasting Techniques  152
The Strategic Audit: A Checklist for Environmental Scanning   154
Synthesis of External Factors—EFAS   154
End of Chapter Summary  156
CHAPTER
5
Internal Scanning: Organizational Analysis  160
A Resource-Based Approach to Organizational Analysis   162
Core and Distinctive Competencies  162
Using Resources to Gain Competitive Advantage  163
Determining the Sustainability of an Advantage  164
Business Models  166
Value-Chain Analysis  167
Industry Value-Chain Analysis  168
Corporate Value-Chain Analysis  169
Scanning Functional Resources and Capabilities   170
Basic Organizational Structures  171
Corporate Culture: The Company Way  172
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CONTENTS
Global Issue: MANAGING CORPORATE CULTURE FOR GLOBAL COMPETITIVE
ADVANTAGE: ABB VS. PANASONIC  174
Strategic Marketing Issues  174
Innovation Issue: DoCoMo Moves against the Grain   176
Strategic Financial Issues  177
Strategic Research and Development (R&D) Issues  178
Strategic Operations Issues  180
Strategic Human Resource (HRM) Issues  181
Sustainability Issue: THE OLYMPIC GAMES—SOCHI 2014 AND RIO 2016  184
Strategic Information Systems/Technology Issues  185
The Strategic Audit: A Checklist for Organizational Analysis   187
Synthesis of Internal Factors   187
End of Chapter Summary  189
PART three Strategy Formulation  195
CHAPTER
6
Strategy Formulation: Situation Analysis and Business Strategy  196
Situational Analysis: SWOT Approach   198
Generating a Strategic Factors Analysis Summary (SFAS) Matrix  198
Finding a Propitious Niche  199
Review of Mission and Objectives   202
Business Strategies  203
Porter’s Competitive Strategies  203
Global Issue: THE NIKE SHOE STRATEGY VS. THE NEW BALANCE SHOE STRATEGY  205
Innovation Issue: CHEGG and College Textbooks   208
Cooperative Strategies  209
Sustainability Issue: STRATEGIC SUSTAINABILITY—ESPN  210
End of Chapter Summary  214
CHAPTER
7
Strategy Formulation: Corporate Strategy  218
Corporate Strategy  220
Directional Strategy  220
Growth Strategies  221
Strategy Highlight: TRANSACTION COST ECONOMICS ANALYZES VERTICAL
GROWTH STRATEGY  225
International Entry Options for Horizontal Growth  226
Global Issue: GLOBAL EXPANSION IS NOT ALWAYS A PATH TO EXPANSION  226
Controversies in Directional Growth Strategies  230
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CONTENTS
11
Stability Strategies  231
Retrenchment Strategies  232
Portfolio Analysis  234
Bcg Growth-Share Matrix  234
Sustainability Issue: GENERAL MOTORS AND THE ELECTRIC CAR  236
Advantages and Limitations of Portfolio Analysis  237
Managing a Strategic Alliance Portfolio  238
Corporate Parenting  239
Innovation Issue: To Red Hat or Not?   239
Developing a Corporate Parenting Strategy  240
Horizontal Strategy and Multipoint Competition  241
End of Chapter Summary  241
CHAPTER
8
Strategy Formulation: Functional Strategy and Strategic Choice  248
Functional Strategy  250
Marketing Strategy  250
Financial Strategy  251
Research and Development (R&D) Strategy  253
Operations Strategy  254
Global Issue: WHY DOESN’T STARBUCKS WANT TO EXPAND TO ITALY?  255
Purchasing Strategy  256
Sustainability Issue: HOW HOT IS HOT?  257
Logistics Strategy  258
Innovation Issue: When an Innovation Fails to Live Up to Expectations   258
Human Resource Management (HRM) Strategy  259
Information Technology Strategy  259
The Sourcing Decision: Location of Functions   260
Strategies to Avoid   263
Strategic Choice: Selecting the Best Strategy   263
Constructing Corporate Scenarios  264
The Process of Strategic Choice  269
Developing Policies  270
End of Chapter Summary  271
PART four Strategy Implementation and Control  277
CHAPTER
9
Strategy Implementation: Organizing for Action  278
Strategy Implementation  280
Who Implements Strategy?   281
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CONTENTS
What Must Be Done?   282
Developing Programs, Budgets, and Procedures  282
Sustainability Issue: A BETTER BOTTLE—ECOLOGIC BRANDS  283
Achieving Synergy  286
How Is Strategy to Be Implemented? Organizing for Action   287
Structure Follows Strategy  287
Stages of Corporate Development  288
Innovation Issues: The P&G Innovation Machine Stumbles   289
Organizational Life Cycle  292
Advanced Types of Organizational Structures  294
Reengineering and Strategy Implementation  297
Six Sigma  298
Designing Jobs to Implement Strategy  299
International Issues in Strategy Implementation   300
International Strategic Alliances  300
Stages of International Development  301
Global Issue: OUTSOURCING COMES FULL CIRCLE  302
Centralization Versus Decentralization  302
End of Chapter Summary  304
CHAPTER
10
Strategy Implementation: Staffing and Directing  308
Staffing  310
Staffing Follows Strategy  311
Selection and Management Development  313
Innovation Issue: HOW TO KEEP APPLE “COOL”   313
Problems in Retrenchment  315
International Issues in Staffing  317
Leading  319
Sustainability Issue: PANERA AND THE “PANERA CARES COMMUNITY CAFÉ”  319
Managing Corporate Culture  320
Action Planning  324
Management by Objectives  326
Total Quality Management  326
International Considerations in Leading  327
Global Issue: CULTURAL DIFFERENCES CREATE IMPLEMENTATION
PROBLEMS IN MERGER  329
End of Chapter Summary  330
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CONTENTS
CHAPTER
11
13
Evaluation and Control  336
Evaluation and Control in Strategic Management   338
Measuring Performance  338
Appropriate Measures  338
Types of Controls  339
Innovation Issue: REUSE OF ELECTRIC VEHICLE BATTERIES   340
Activity-Based Costing  341
Enterprise Risk Management  342
Primary Measures of Corporate Performance  342
Balanced Scorecard Approach: Using Key Performance Measures  345
Sustainability Issue: E-RECEIPTS  345
Primary Measures of Divisional and Functional Performance  347
Responsibility Centers  348
Using Benchmarking to Evaluate Performance  349
International Measurement Issues  350
Global Issue: COUNTERFEIT GOODS AND PIRATED SOFTWARE: A GLOBAL PROBLEM  352
Strategic Information Systems   352
Enterprise Resource Planning (ERP)  353
Radio Frequency Identification (RFID)  353
Divisional and Functional is Support  354
Problems in Measuring Performance   354
Short-Term Orientation  354
Goal Displacement  356
Guidelines for Proper Control   357
Strategic Incentive Management   357
End of Chapter Summary  359
PART five
CHAPTER
12
Introduction to Case Analysis  365
Suggestions for Case Analysis  366
The Case Method   368
Researching the Case Situation   368
Financial Analysis: A Place to Begin   369
Analyzing Financial Statements  369
Common-Size Statements  373
Z-Value and the Index of Sustainable Growth  373
Useful Economic Measures  374
Format for Case Analysis: The Strategic Audit   375
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CONTENTS
End of Chapter Summary  377
Appendix 12.A Resources for Case Research  379
Appendix 12.B Suggested Case Analysis Methodology Using the Strategic Audit  381
Appendix 12.C Example of Student-Written Strategic Audit  384
PART six
Cases in Strategic Management   393
SECTION A
case 1
Corporate Governance: Executive Leadership
he Recalcitrant Director at Byte Products, Inc.: Corporate Legality versus
T
Corporate Responsibility  399
(Contributors: Dan R. Dalton, Richard A. Cosier, and Cathy A. Enz)
A plant location decision forces a confrontation between the board of directors and the CEO
regarding an issue in social responsibility and ethics.
case 2
The Wallace Group  405
(Contributor: Laurence J. Stybel)
Managers question the company’s strategic direction and how it is being managed by its founder and
CEO. Company growth has resulted not only in disorganization and confusion among employees, but
in poor overall performance. How should the board deal with the company’s founder?
SECTION B
case 3
Business Ethics
Everyone Does It  415
(Contributors: Steven M. Cox and Shawana P. Johnson)
When Jim Willis, Marketing VP, learns that the launch date for the company’s new satellite will be late
by at least a year, he is told by the company’s president to continue using the earlier published date
for the launch. When Jim protests that the use of an incorrect date to market contracts is unethical,
he is told that spacecraft are never launched on time and that it is common industry practice to list
unrealistic launch dates. If a realistic date was used, no one would contract with the company.
case 4
The Audit  419
(Contributors: Gamewell D. Gantt, George A. Johnson, and John A. Kilpatrick)
A questionable accounting practice by the company being audited puts a new CPA in a difficult
position. Although the practice is clearly wrong, she is being pressured by her manager to ignore it
because it is common in the industry.
SECTION C
case 5
Corporate Social Responsibility
arly Warning or False Sense of Security? Concussion Risk and the Case of the
E
Impact-Sensing Football Chinstrap  421
(Contributors: Clifton D. Petty, and Michael R. Shirley)
new
In 2009, Battle Sports Science, headquartered in Omaha, Nebraska, was built with a focus on
“enhancing safety for athletes.” Specifically, the company wanted to protect young athletes who might
have suffered a concussion. Battle Sports Science attempted to gain market attention for its US$149.99
impact indicator (chin strap) through endorsements, and had enlisted a number of NFL players. The
company hoped to sell the device to sports programs (schools) as well as to individual players.
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SECTION D
15
International Issues in Strategic Management
case 6 A123 Systems: A New Lithium-Ion Battery System for Electric
and Hybrid Cars  425
(Contributor: Alan N. Hoffman)
new
case 7
In 2007, A123 was developing its hybrid electric vehicle business. A123 entered into a partnership
with Cobasys to introduce lithium-ion batteries into the automotive market. A123 also entered into an
agreement with GM to use their batteries in the Saturn Vue Plug-in Hybrid development program and
to co-develop a lithium-ion battery for the Chevrolet Volt. A123 faced cash flow shortages after its
2009 IPO and its ultimate survival was threatened by its diminishing funds for continued operations.
Guajilote Cooperativo Forestal, Honduras  441
(Contributors: Nathan Nebbe and J. David Hunger)
This forestry cooperative has the right to harvest, transport, and sell fallen mahogany trees in
La Muralla National Park of Honduras. Although the cooperative has been successful thus far, it is
facing some serious issues: low prices for its product, illegal logging, deforestation by poor farmers,
and possible world trade restrictions on the sale of mahogany.
SECTION E
General Issues in Strategic Management
I N D U S T R Y O N E :    INTERNET COMPANIES
case 8
Google Inc. (2010): The Future of the Internet Search Engine  447
(Contributor: Patricia A. Ryan)
Google, an online company that provides a reliable Internet search engine, was founded in 1998 and
soon replaced Yahoo as the market leader in Internet search engines. By 2010, Google was one of
the strongest brands in the world. Nevertheless, its growth by acquisition strategy was showing signs
of weakness. Its 2006 acquisition of YouTube had thus far not generated significant revenue growth.
Groupon, a shopping Web site, rebuffed Google’s acquisition attempt in 2010. Is it time for a strategic
change?
case 9
Amazon.com, Inc.: Retailing Giant to High-Tech Player?  461
(Contributor: Alan N. Hoffman)
new
case 10
In 2012, more than half of all Amazon sales came from computers, mobile devices including the
Kindle, Kindle Fire, and Kindle Touch, and other electronics, as well as general merchandise from
home and garden supplies to groceries, apparel, jewelry, health and beauty products, sports and
outdoor equipment, tools, and auto and industrial supplies. Amazon was at a crossroads with regard
to its push into technology versus its general merchandise. Amazon also faced other challenges,
including those from state governments that wanted it to collect sales taxes so it would not adversely
compete against local businesses.
lue Nile, Inc.: “Stuck in the Middle” of the Diamond Engagement
B
Ring Market  473
(Contributor: Alan N. Hoffman)
new
Blue Nile Inc. has developed into the largest online retailer of diamond engagement rings. Unlike
traditional jewelry retailers, Blue Nile operates completely store-front-free, without in-person
consultation services. The business conducts all sales online or by phone, and sales include both
engagement (70%) and non-engagement (30%) categories. Blue Nile’s vision is to educate its
customer base so customers can make an informed, confident decision no matter what event they
are celebrating. It wants to make the entire diamond-buying process easy and hassle-free.
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I N D U S T R Y T W O :    ENTERTAINMENT AND LEISURE
case 11
Groupon Inc.: Daily Deal or Lasting Success?  489
(Contributors: Nick Falcone, Eric Halbruner, Ellie A. Fogarty, and Joyce Vincelette)
new
case 12
Groupon began as a local Chicago discount service and became a global phenomenon seemingly
overnight. It was a great idea. The company was the first of its kind and changed the way consumers
spend, shop, and think about discounts. But how could Groupon, based on such innovation and having
experienced such exceptional growth, be in such a precarious position? A wave of competition had
swelled, including the likes of technology giants and both general and niche daily deals services, all
replicating Groupon’s business model. How could Groupon compete against large companies and
their expansive resources?
Netflix Inc.: The 2011 Rebranding/Price Increase Debacle  509
(Contributor: Alan N. Hoffman)
new
case 13
On September 18, 2011, Netflix CEO and co-founder Reed Hastings announced on the Netflix blog
that the company was splitting its DVD delivery service from its online streaming service, rebranding
its DVD delivery service Qwikster, as a way to differentiate it from its online streaming service, and
creating a new Web site for it. Three weeks later, in response to customer outrage and confusion,
Hastings rescinded the decision to rebrand the DVD delivery service Qwikster and reintegrated it
into Netflix. Nevertheless, only five weeks after the initial split, Netflix acknowledged that it had lost
800,000 U.S. subscribers and expected to lose many more, thanks both to the Qwikster debacle and the
price hike the company had decided was necessary to cover increasing content costs.
Carnival Corporation & plc (2010)  521
(Contributors: Michael J. Keeffe, John K. Ross III, Sherry K. Ross, Bill J. Middlebrook,
and Thomas L. Wheelen)
With its “fun ship,” Carnival Cruises changed the way people think of ocean cruises. The cruise
became more important than the destination. Through acquisition, Carnival expanded its product line
to encompass an entire range of industry offerings. How can Carnival continue to grow in the industry
it now dominates?
case 14
Zynga, Inc. (2011): Whose Turn Is It?  541
(Contributors: Zachary Burkhalter, Daniel Zuller, Concetta Bagnato, Joyce Vincelette,
and Ellie A. Fogarty)
new
Zynga built its company around social gaming. This new type of gaming transformed the gaming
industry on multiple levels and across various platforms. Zynga originally built its games using the
Facebook platform and then capitalized on the company’s unique method of social networking to
capture audiences around the world. However, this strong reliance on Facebook and changes in
consumer gaming practices caused some concern among outside investors as to the future of Zynga.
I N D U S T R Y T H R E E :    FOOD AND BEVERAGE
case 15
he Boston Beer Company: Brewers of Samuel Adams Boston Lager
T
(Mini Case)  561
(Contributor: Alan N. Hoffman)
The Boston Beer Company, founded in 1984 by Jim Koch, is viewed as pioneer in the American craft
beer revolution. Brewing over one million barrels of 25 different styles of beer, Boston Beer is the
sixth-largest brewer in the United States. Even though overall domestic beer sales declined 1.2% in
2010, sales of craft beer have increased 20% since 2002, with Boston Beer’s increasing 22% from
2007 to 2009. How can the company continue its rapid growth in a mature industry?
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case 16
17
Panera Bread Company (2010): Still Rising Fortunes?  565
(Contributors: Joyce P. Vincelette and Ellie A. Fogarty)
Panera Bread is a successful bakery-café known for its quality soups and sandwiches. Even though
Panera’s revenues and net earnings have been rising rapidly, new unit expansion throughout North
America has fueled this growth. Will revenue growth stop once expansion slows? The retirement
of CEO Ronald Shaich, the master baker who created the “starter” for the company’s phenomenal
growth, is an opportunity to rethink Panera’s growth strategy.
case 17 Whole Foods Market (2010): How to Grow in an Increasingly
Competitive Market? (Mini Case)  589
(Contributors: Patricia Harasta and Alan N. Hoffman)
Whole Foods Market is the world’s leading retailer of natural and organic foods. The company
differentiates itself from competitors by focusing on innovation, quality, and service excellence,
allowing it to charge premium prices. Although the company dominates the natural/organic foods
category in North America, it is facing increasing competition from larger food retailers like WalMart, who are adding natural/organic foods to their offerings.
case 18
Burger King (Mini Case)  595
(Contributor: J. David Hunger)
Founded in Florida in 1953, Burger King has always trailed behind McDonald’s as the second-largest
fast-food hamburger chain in the world. Although its total revenues dropped only slightly from 2009,
its 2010 profits dropped significantly, due to high expenses. Burger King’s purchase by an investment
group in 2010 was an opportunity to rethink the firm’s strategy.
case 19
Church & Dwight: Time to Rethink the Portfolio?  599
(Contributor: Roy A. Cook)
Church & Dwight, the maker of ARM & HAMMER Baking Soda, has used brand extension to
successfully market multiple consumer products based on sodium bicarbonate. Searching for a new
growth strategy, the firm turned to acquisitions. Can management successfully achieve a balancing act
based on finding growth through expanded uses of sodium bicarbonate while assimilating a divergent
group of consumer products into an expanding international footprint?
I N D U S T R Y F O U R :    APPAREL
case 20
Under Armour  609
(Contributors: Ram Subramanian and Pradeep Gopalakrishna)
new
case 21
Under Armour’s footwear sales declined by 4.5% during the second quarter of 2009 and showed
a 16.6% decline in the first six months of 2010 compared to 2009. This was in contrast to its
performance apparel, the company’s core category, which saw a 32.2% uptick over 2009. Under
Armour had tremendous growth opportunities in the apparel category in China. However, CEO Kevin
Plank wanted Under Armour to be a leading player in the field of athletic footwear.
TOMS Shoes (Mini Case)  621
(Contributor: J. David Hunger)
Founded in 2006 by Blake Mycoskie, TOMS Shoes is an American footwear company based in Santa
Monica, California. Although TOMS Shoes is a for-profit business, its mission is more like that of a
not-for-profit organization. The firm’s reason for existence is to donate to children in need one new
pair of shoes for every pair of shoes sold. By 2010, the company had sold over one million pairs of
shoes. How should the company plan its future growth?
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case 22
Best Buy Co. Inc. (2009): A Sustainable Customer-Centricity Model?  625
(Contributor: Alan N. Hoffman)
Best Buy, the largest consumer electronics retailer in the United States, operates 4000 stores in North
America, China, and Turkey. It distinguishes itself from competitors by deploying a differentiation
strategy based on superior service rather than low price. The recent recession has stressed its finances
and the quality of its customer service. How can Best Buy continue to have innovative products, topnotch employees, and superior customer service while facing increased competition, operational costs,
and financial stress?
I N D U S T R Y F I V E :    SPECIALTY RETAILING
case 23
Rosetta Stone Inc.: Changing the Way People Learn Languages  639
(Contributors: Christine B. Buenafe and Joyce P. Vincelette)
Rosetta Stone’s mission was to change the way people learn languages. The company blended
language learning with technology at a time when globalization connected more and more individuals
and institutions to each other. How should the company move forward? Would it be appropriate for
Rosetta Stone to offer products like audio books or services in order to increase market share? Which
international markets could provide the company with a successful future?
case 24
Dollar General Corporation: 2011 Growth Expansion Plans (Mini Case)  655
(Contributor: Kathryn E. Wheelen)
With annual revenues of US$12.7 billion and 9200 stores in 35 states, Dollar General is the largest
of the discount “dollar stores” in the United States. Although far smaller than its “big brothers”
Wal-Mart and Target, Dollar General has done very well during the recent economic recession. In
2011, it planned to open 625 new stores in three new states. Given that the company has a substantial
long-term debt, is this the right time to expand its operations?
case 25
iRobot: Finding the Right Market Mix?  661
(Contributor: Alan N. Hoffman)
Founded in 1990, iRobot was one of the first companies to introduce robotic technology into the
consumer market. Employing over 500 robotic professionals, the firm planned to lead the robotics
industry. Unfortunately, its largest revenue source, home care robots, is a luxury good and vulnerable
to recessions. Many of iRobot’s patents are due to expire by 2019. The firm is highly dependent upon
suppliers to make its consumer products and the U.S. government for its military sales. What is the
best strategy for its future success?
SECTION f
I N D U S T R Y si x : Transportation
case 26
Tesla Motors, Inc.: The First U.S. Car Company IPO Since 1956  671
(Contributor: Alan N. Hoffman)
new
case 27
Tesla Motors was founded in 2004 to produce electric automobiles. Its first car, the Tesla Roadster,
sold for US$101,000. It could accelerate from 0 to 60 mph in 3.9 seconds, and cruise for 236 miles
on a single charge. In contrast to existing automakers, Tesla sold and serviced its cars through the
Internet and its own Tesla stores. With the goal of building a full line of electric vehicles, Tesla Motors
faces increasing competition from established automakers. How can Tesla Motors succeed in an
industry dominated by giant global competitors?
Delta Air Lines (2012): Navigating an Uncertain Environment  687
(Contributors: Alan N. Hoffman and J. David Hunger)
new
Delta used mergers and acquisitions (M&A) successfully to solidify its strong position as a leader in
the airline industry. It has gone through five M&As since 1953, including the most recent acquisition
of Northwest Airlines (Northwest), which turned Delta into an airline with major operations in every
region of the world. The Northwest merger took a toll on Delta’s financial position, however, by
contributing to its high long-term debt.
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19
In 2012, top management began cautiously exploring opportunities for entering new markets, routes,
and partnerships in order to boost market share. Management was also searching for ways to reduce
costs and expenses in an industry that was rapidly consolidating into fewer major national and
international players. Delta is considering purchasing from Conoco.
case 28
TomTom: New Competition Everywhere!  707
(Contributor: Alan N. Hoffman)
TomTom, an Amsterdam-based company that provides navigation services and devices, led the
navigation systems market in Europe and is second in popularity in the United States. However, the
company is facing increasing competition from other platforms using GPS technology, like cell phones
and Smartphones with built-in navigation functions. As its primary markets in the United States and
Europe mature, how can the company ensure its future growth and success?
SECTION G
I N D U S T R Y S E V E N :    MANUFACTURING
case 29
eneral Electric, GE Capital, and the Financial Crisis of 2008: The Best of the
G
Worst in the Financial Sector?  721
(Contributor: Alan N. Hoffman)
new
case 30
The financial services industry was, by definition, volatile, and GE Capital was particularly hard
hit by the economic recession of 2008. With the credit markets illiquid and financial markets falling,
GE Capital found it was overexposed to commercial real estate and foreign residential mortgages.
At this point, GE’s parent corporation stepped in, began reorganizing GE Capital, and significantly
downsized the unit. GE Capital hoped to see continued sustainable earnings growth with growing
margins and lower portfolio risk, and to return money to investors and resume paying dividends to its
parent company
AB Electrolux: Challenging Times in the Appliance Industry  737
(Contributor: Alan N. Hoffman)
new
AB Electrolux is currently the world’s second-largest appliance maker, behind Whirlpool. Electrolux
has over 50,000 employees in more than 50 countries around the world. Its headquarters are in
Stockholm, Sweden.
As the social and demographic trends continue to evolve, so do the opportunities afforded to
Electrolux. The most significant demographic shift globally is the growing middle class in Asia, which
includes families with incomes between US$6000 and US$30,000. It is estimated that by 2020 there
will be one billion more people in the global middle class than there were in 2010. Correlated with
rising incomes worldwide, homeownership has also increased at a substantial rate, giving rise to
increased demand for consumer durables such as refrigerators, washing machines, and dishwashers.
I N D U S T R Y E I G H T :    INFORMATION TECHNOLOGY
case 31
Apple Inc.: Performance in a Zero-Sum World Economy  749
(Contributors: Moustafa H. Abdelsamad, Hitesh (John) Adhia, David B. Croll, Bernard A.
Morin, Lawrence C. Pettit Jr., Kathryn E. Wheelen, Richard D. Wheelen, Thomas L.
Wheelen II, and Thomas L. Wheelen)
By the 1990s, Apple, the first company to mass-market a personal computer, had become a minor
player in an industry dominated by Microsoft. After being expelled from the company in 1985, founder
Steve Jobs returned as CEO in 1997 to reenergize the firm. The introduction of the iPod in 2001,
followed by the iPad, catapulted Apple back into the spotlight. However, in 2011 Jobs was forced to
take his third medical leave, leading to questions regarding his ability to lead Apple. How can Apple
continue its success? How dependent is the company on Steve Jobs?
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case 32
Dell Inc.: Changing the Business Model (Mini Case)  771
(Contributor: J. David Hunger)
Dell, once the largest PC vendor in the world, is now battling with Acer for second place in the global
PC market. Its chief advantages—direct marketing and power over suppliers—no longer provides
a competitive advantage. The industry’s focus has shifted from desktop PCs to mobile computing,
software, and technology services, areas of relative weakness for Dell. Is it time for Dell to change
its strategy?
case 33
Logitech (Mini Case)  777
(Contributor: Alan N. Hoffman)
Logitech, the world’s leading provider of computer peripherals, was on the forefront of mouse,
keyboard, and videoconferencing technology. By 2010, however, Logitech’s products were threatened
by new technologies, such as touchpads, that could replace both the mouse and keyboard. As the
peripherals market begins to disintegrate, Logitech is considering a change in strategy.
case 34
Daktronics (A): The U.S. Digital Signage Industry 2010  783
(Contributors: Joseph Kavanaugh, Joshua Warne, and Carol J. Cumber)
new
The billboard, sign, and outdoor advertising industry in the United States is almost as old as the
Colonies. Lighted billboards, roadside signs, neon lights, and other forms of display are part of our
everyday environment. The newest segment of the industry, digital signage, is driven by 21st-century
technologies in computers, peripherals, graphics, and new sources of light—liquid crystal display
(LCD), light-emitting diodes (LED), and others. Less than 20 years old, the digital segment (sales of
US$2.14 billion) was estimated to be 17.8% of the outdoor signage industry in 2008. This note reviews
the digital signage industry and explores the forces that are driving this emerging segment of the
advertising, messaging, and sign industry.
Glossary  803
Name Index  815
Subject Index  820
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Dedicated to
SPECIAL DEDICATION TO TOM WHEELEN
Tom originated this book in the late 1970s and with his friend David Hunger brought the first edition
to fruition in 1982. What a ride it has been! After battling bone cancer, Tom died in Saint Petersburg,
Florida, on December 24, 2011. It was Tom’s idea from the very beginning to include the latest research
and useful material written in such a way that the typical student could read and understand the book
without outside assistance. That has been a key reason for the success of the book through its many
­editions. Tom’s last months were spent working with the two new co-authors to map out the direction for
the 14th edition. We thank you, Tom, and bid you a fond farewell! This 14th edition is for you.
J. David Hunger
Alan N. Hoffman
Charles E. Bamford
This is a special dedication to Thomas L. Wheelen, co-author, father, and best friend,
May 30, 1935 – December 24, 2011. This is the 14th edition of SMBP the creation you and
Mr. Hunger started due to your friendship at the McIntire School of Commerce at UVA with that
adjoining door! It is not very often that two co-authors become the best of friends, but you both did.
That was a very special gift that Tom treasured until the end. We are so glad you were able to meet as
the dynamic foursome to discuss the 14th edition of SMBP! The new addition of co-authors
Alan Hoffman and Chuck Bamford gave you and Mr. Hunger the ability to relax and smell the roses.
We have come full circle with you being back at UVA! You were an amazing friend, visionary,
teacher, and leader! Thank you for pushing us to be who we are today! You were very blessed to
have two children as your best friends! You will never know how much you are missed!
Dad – chailleann againn go mbainfidh tú agus grá agat. Tá do Spiorad na hÉireann le linn i gcónaí!
GNPD KEW and RDW
Betty, Kari and Jeff, Maddie and Megan, Suzi and Nick, Summer and Kacey, Lori,
Merry, Dylan, and newborn Edan. Also to Wolfie (arf!).
David Hunger
To Will Hoffman, the greatest son in the world. . . . and to our saint Wendy Appel.
In memory of my good friend, Tom Wheelen, via con dios. Thank you, Tom and David.
Alan Hoffman
To Yvonne, for your support, advice, encouragement, love, and confidence. To David and Tom, for your
confidence, council, and mental energy in the revision of this remarkable text.
Chuck Bamford
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Preface
Welcome to the 14th edition of Strategic Management and Business Policy! All of the
­chapters have been updated, and most of the cases are new and different. We have added
several brand-new cases (Early Warning: Concussion Risk and the Case of the Impact
Sensing Chinstrap, A123, Amazon, Blue Nile, Groupon, Netflix, Zynga, Under Armour,
General Electric, AB Electrolux, Tesla Motors, Delta Airlines, and The U.S. Digital
Signage Industry Note) for a total of 13 new cases! Many of the cases are exclusive to this
edition! Although we still make a distinction between full-length and mini cases, we have
interwoven them throughout the book to better identify them with their industries.
This edition revamps the theme that runs throughout all 12 chapters. We utilize a threelegged approach consisting of globalization, innovation, and sustainability. These three
strategic issues comprise the cornerstone that all organizations must build upon to push their
businesses forward. Each chapter incorporates specific vignettes about these three themes.
We continue to be the most comprehensive and practical strategy book on the market, with
chapters ranging from corporate governance and social responsibility to competitive strategy, functional strategy, and strategic alliances.
Features New to this 14th Edition
For the first time in 30 years, the 14th edition has added two new authors to the text. Alan
Hoffman, a major contributor to the 13th edition, is a former textbook author and worldrenowned author of strategy business cases, and Chuck Bamford, who was a student of Tom
Wheelen and David Hunger back in 1980 at the University of Virginia (McIntire School of
Commerce), has authored four other textbooks. They join J. David Hunger and bring a fresh
perspective to this extraordinarily well-researched and practically crafted text. In that vein,
this edition of the text has:
Vignettes on Sustainability (which is widely defined as Business Sustainability),
­Globalization (which we view as an expectation of business), and Innovation (which is
the single most important element in achieving competitive advantage) appear in every
chapter of the text.
■ Every example, chapter opening, and story has been updated. This includes chapter
­opening vignettes examining companies such as: Five Guys, RIM (BlackBerry), HP’s
Board of Directors, Tata Motors, Costco, and Pfizer among many others.
■ Resource-based analysis (Chapter 5) has been added to the toolbox of students’ understanding of competitive advantage.
■ Extensive additions have been made to the text on strategy research.
■ Current consulting practices have been added to the topics of strategy formulation and
strategy implementation.
■ Thirteen new full-length cases have been added:
■
Twelve new comprehensive cases and one new Industry Note have been added to support
the 13 popular full-length cases and 8 mini-cases carried forward from past editions. Thirteen of the cases in the 14th edition are brand new and one case is an updated favorite from
23
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Pref ace 
past editions. Of the 34 cases appearing in this book, 20 are exclusive and do not appear in
other books.
One of the new cases deals with corporate social responsibility issues (Early Warning:
Concussion Risk and the Case of the Impact Sensing Chinstrap).
■ Two of the new cases deal with international issues (A123, AB Electrolux).
■ Two of the new cases involve Internet companies (Amazon, Blue Nile).
■ Three of the new cases deal with Entertainment and Leisure (Groupon, Netflix,
and Zynga).
■ One new case deals with sports and apparel clothing (Under Armour).
■ One new Industry Note concerns digital signage. (Daktronics).
■ One new case concerns the financial crisis of 2008 (GE Capital).
■ Two new cases deal with transportation (Delta Airlines, Tesla Motors)
■
How this Book is Different from
other Strategy Textbooks
This book contains a Strategic Management Model that runs through the first 11 chapters
and is made operational through the Strategic Audit, a complete case analysis methodology.
The Strategic Audit provides a professional framework for case analysis in terms of external
and internal factors and takes the student through the generation of strategic alternatives and
implementation programs.
To help the student synthesize the many factors in a complex strategy case, we developed three useful techniques:
The External Factor Analysis (EFAS) Table in Chapter 4
This reduces the external opportunities and threats to the 8 to 10 most important external
factors facing management.
■ The Internal Factor Analysis (IFAS) Table in Chapter 5
This reduces the internal strengths and weaknesses to the 8 to 10 most important internal
factors facing management.
■ The Strategic Factor Analysis Summary (SFAS) Matrix in Chapter 6
This condenses the 16 to 20 factors generated in the EFAS and IFAS tables into the 8 to
10 most important (strategic) factors facing the company. These strategic factors become
the basis for generating alternatives and act as a recommendation for the company’s
­future direction.
■
Suggestions for case analysis are provided in Appendix 12.B (end of Chapter 12) and
contain step-by-step procedures on how to use a strategic audit in analyzing a case. This
appendix includes an example of a student-written strategic audit. Thousands of students
around the world have applied this methodology to case analysis with great success. The
Case Instructor’s Manual contains examples of student-written strategic audits for each of
the full-length comprehensive strategy cases.
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Features
This edition contains many of the same features and content that helped make previous
­editions successful. Some of the features include the following:
CHAPTER
■
1
basic concepts of
Strategic
Management
Environmental
Scanning:
Gathering
Information
External
Mission
Natural
Environment:
Reason for
existence
Resources and
climate
After reading this chapter, you should be able to:
■
■
■
Strategy
Formulation:
Strategy
Implementation:
Evaluation
and Control:
Developing
Long-range Plans
Putting Strategy
into Action
Monitoring
Performance
Understand the benefits of strategic
management
Explain how globalization and environmental sustainability influence strategic
management
■
■
■
Understand the basic model of strategic
management and its components
Identify some common triggering events
that act as stimuli for strategic change
Understand strategic decision-making
modes
Use the strategic audit as a method of analyzing corporate functions and activities
The 21st-century story of the power of strategic planning and
implementation for Ford Motor Company really starts in January 2006.
Ford announced a US$1.6 billion loss in North American operations and a continuing loss of market share. Then CEO and grandson of the founder, William Clay (Bill) Ford
General forces
Task
Environment:
announced the “Way Forward”—a surprisingly clear strategy document to lead the company
Strategies
Plan to
achieve
the
hi
he
mission &
objectives
Industry analysis
PART
back to profitability by 2008 and reduce costs by over US$6 billion by 2010. The entire document was only 16 pages long and clearly laid out the way that Ford was going to change the
Policies
Broad
guidelines
id li
for decision
making
Internal
direction of the company. This was a corporate-level change document in the classic planning
Programs
and Tactics
Activities
d d to
needed
accomplishh
a plan
mode of strategy.
Budgets
Cost of the
programs
Procedures
Sequence
off steps
needed to
do the job
Structure:
Chain of command
Culture:
by the third quarter of 2006 was a staggering US$5.6 billion loss that would end up being a
loss of over US$12 billion before the year was out. Bill Ford and the Board of Directors realized
Performance
that they needed a CEO who could really implement the plan. Someone with an operations
Actual results
approach and the willingness to make the tough decisions required by that plan. They tapped
Resources:
Alan Mulally, the President and CEO of Boeing’s Commercial Airlines unit. He stated that “These
Assets, skills,
competencies,
knowledge
business results are clearly unacceptable. We are committed to dealing decisively with the fundamental business reality that customer demand is shifting to smaller, more efficient vehicles.”
Introduction to
Mulally immediately eliminated the Ford dividend which had been a staple of the
blue chip company for decades. He sold off Volvo, Aston-Martin, Jaguar, and Land
Feedback/Learning: Make corrections as needed
Rover to other companies and sold most of Ford’s stock holdings in Mazda. He shut down
the historic Mercury line of vehicles and focused all of the company’s energy on two
MyManagementLab
®
vehicle lines: Ford and Lincoln. In what now looks even more brilliant than it did at the
Improve Your Grade!
CH A P T E R 2
Over 10 million students improved their results using the Pearson MyLabs.Visit mymanagementlab.com
for simulations, tutorials, and end-of-chapter problems.
time, he secured US$23.6 billion in lines of credit to help the company through the change.
Corporate GovernanceIt turned45out to be prescient. When the other American automobile companies saw their
sales plummet in 2009, Ford was able to thrive. In fact, Ford was the only American auto
Monitor: By acting through its committees, a board can keep abreast of developments
inside and outside the corporation, bringing to management’s attention developments it
might have overlooked. A board should at the minimum carry out this task.
■ Evaluate and influence: A board can examine management’s proposals, decisions, and
actions; agree or disagree with them; give advice and offer suggestions; and outline alternatives. More active boards perform this task in addition to monitoring.
■ Initiate and determine: A board can delineate a corporation’s mission and specify strategic options to its management. Only the most active boards take on this task in addition
■
to the two previous ones.
■
Board of Directors’ Continuum
A board of directors is involved in strategic management to the extent that it carries out the
three tasks of monitoring, evaluating and influencing, and initiating and determining. The
board of directors’ continuum shown in Figure 2–1 shows the possible degree of involvement (from low to high) in the strategic management process. Boards can range from phantom
boards with no real involvement to catalyst boards with a very high degree of involvement.9
CHthat
A P Tactive
E R 3board
Social
Responsibility
and Ethicsmanagement
in Strategic Management
71
Research suggests
involvement
in strategic
is positively related
to a corporation’s financial performance and its credit rating.10
Highly
boards
tend tothus
be very
active.
take their
tasks of monitoring,
efficiency
of involved
a business.
Friedman
referred
to They
the social
responsibility
of businessevaluas a
ating
and
influencing,
and
initiating
and
determining
very
seriously;
they
provide
advice
when
“fundamentally subversive doctrine” and stated that:
necessary and keep management alert. As depicted in Figure 2–1, their heavy involvement in
There is one and only one social responsibility of business—to use its resources and engage in
the strategic management process places them in the active participation or even catalyst posiactivities designed to increase its profits so long as it stays within the rules of the game, which
tions.
Although 74% of public corporations have periodic board meetings devoted primarily to
is to say, engages in open and free competition without deception or fraud.1
the review of overall company strategy, the boards may not have had much influence in genFollowing
theglobal
management
Coca-Cola
was clearly
of
erating
the planFriedman’s
itself.11 Thereasoning,
same 2011
survey ofofdirectors
by McKinsey
& guilty
Company
misusing
corporate
assets and negatively
affecting
shareholder
wealth.proposed
The millions
spent41%
in
found that
44% of respondents
reviewed and
approved
management’s
strategy,
social
services
couldwith
havemanagement,
been investedand
in new
development
or given
back as divideveloped
strategy
11% product
developed
strategy, which
management
was
dends
to the shareholders.
Coca-Cola’s
management
acting
on its own,
shareholders
then assigned
to execute.Instead
Those of
boards
reporting
high influence
typically
shared
a common
could have decided which charities to support.
Carroll’s Four Responsibilities of Business
FIGURE 2–1 Board of Directors’ Continuum
Friedman’s contention that the primary goal of business is profit maximization is only one side
of an ongoing debate regarding corporate social responsibility (CSR). According to William J.
DEGREE OF INVOLVEMENT IN STRATEGIC MANAGEMENT
Byron, Distinguished Professor of Ethics at Georgetown University and past President of
Low
Catholic University of America, profits are merely a means to an end, not anHigh
end in itself.
(Passive)
(Active)
Just as a person needs food to survive and grow, so does a business corporation
need profits
to survive
and grow. Minimal
“Maximizing profits
is like maximizing
food.” Thus, contends Byron,
Rubber
Nominal
Active
2
Phantom maximization
Stamp of profits
Review
Participation
cannot be theParticipation
primary obligation
of business.Catalyst
As shown in Figure 3–1, Archie Carroll proposed that the managers of business organiNever knows
Permits officers Formally reviews Involved to a
Approves,
Takes the3
have all
four responsibilities:
legal, ethical,
andand
discretionary.
what to do, zations
if
to make
selected issueseconomic,
limited degree
questions,
leading role in
anything; no
degree of 1.
involvement.
decisions. It
that officers
in the perfor-
makes final de-
3
The strategic audit, a way
to operationalize the strategic
­decision-making process, serves
as a checklist in case analysis.
(Chapter 1)
FIGURE 3–1
Corporate governance is examined in terms of
the roles, responsibilities, and interactions of
top management and the board of directors and
includes the impact of the Sarbanes–Oxley Act.
(Chapter 2)
■
Social responsibility and managerial ethics are examined in detail in terms of how they affect strategic decision
­making. They include the process of stakeholder analysis
and the concept of social capital. (Chapter 3)
establishing
Discretionary
Social
Responsibilities
Ethical
Economic
Strategic
Management
and Business
Policy
■
Economic
organization’s
to produce goods
votes as theresponsibilities
bring to its of a business
mance or
review cisions management
on misand are
modifying
and
services
to society so
that thekey
firm sion,
maystrategy,
repay its creditors
and increase the
officers
recom-of value
attention.
of selected
the mission,
mend on
policies, and
objectives,
decisions,
wealth
ofaction
its shareholders.
issues.
indicators, or
objectives. Has
strategy, and
2. Legal responsibilities are defined
by governments
in board
laws that management
programs
of
active
policies. It has is expected
managment.
committees.
a very
activepeople based
to obey. For example, U.S. business
firms are required
to hire and
promote
Performs fiscal
on their credentials rather than to discriminate on
non-job-relatedstrategy
characteristics such as
and managecommittee.
race, gender, or religion.
ment audits.
3. Ethical responsibilities of an organization’s management are to follow the generally held
SOURCE: T. L. Wheelen and J. D. Hunger, “Board of Directors’ Continuum,” Copyright © 1994 by Wheelen and Hunger Associates. Reprinted
beliefs about behavior in a society. For example, society generally expects firms to work
by permission.
with the employees and the community in planning for layoffs, even though no law may
require this. The affected people can get very upset if an organization’s management fails
to act according to generally prevailing ethical values.
4. Discretionary responsibilities are the purely voluntary obligations a corporation assumes.
Examples are philanthropic contributions, training the hard-core unemployed, and providing day-care centers. The difference between ethical and discretionary responsibilities
is that few people expect an organization to fulfill discretionary responsibilities, whereas
many expect an organization to fulfill ethical ones.4
Responsibilities
of Business
1
For the next nine months, the company attempted to implement the plan, and the result
Beliefs, expectations,
values
2
A strategic management model
runs throughout the first 11 chapters
as a unifying concept. (Explained in
Chapter 1)
Ford—A Study in Strategic Planning
Objectives
What
results
l to
accomplish
h
by when
Societal
Environment:
Learning Objectives
Legal
SOURCE: Suggested by Archie Carroll in A. B. Carroll, “A Three Dimensional Conceptual Model of Corporate
Performance,” Academy of Management Review (October 1979), pp. 497–505; A. B. Carroll, “Managing Ethically
with Global Stakeholders: A Present and Future Challenge,” Academy of Management Executive (May 2004),
pp. 114–120; and A. B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of
Organizational Stakeholders,” Business Horizons (July–August 1991), pp. 39–48.
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Pref ace 
Equal emphasis is placed on environmental scanning of the societal
environment as well as on the task environment. Topics include forecasting and Miles and Snow’s typology in addition to competitive
intelligence techniques and Porter’s industry analysis. (Chapter 4)
■ Core and distinctive competencies are examined within the
framework of the resource-based view of the firm. (Chapter 5)
■ Organizational analysis includes material on business models,
supply chain management, and corporate reputation. (Chapter 5)
■ Internal and external strategic factors are emphasized through the
use of specially designed EFAS, IFAS, and SFAS tables.
(Chapters 4, 5, and 6)
■ Functional strategies are examined in light of outsourcing.
(Chapter 8)
■
CHAPTER
9
strategy
implementation:
organizing for Action
Environmental
Scanning:
Gathering
Information
External
Mission
Natural
Environment:
Reason for
existence
Resources and
climate
Societal
Environment:
Strategy
Formulation:
Strategy
Implementation:
Evaluation
and Control:
Developing
Long-range Plans
Putting Strategy
into Action
Monitoring
Performance
Develop programs, budgets, and procedures to implement strategic change
■
Understand the importance of achieving
synergy during strategy implementation
List the stages of corporate development
and the structure that characterizes each
stage
■
■
Identify the blocks to changing from one
stage to another
■
Construct matrix and network structures
to support flexible and nimble organizational strategies
■
Decide when and if programs such as
reengineering, Six Sigma, and job redesign are appropriate methods of strategy
implementation
Understand the centralization versus
decentralization issue in multinational
corporations
■
For nearly five decades, Wal-Mart’s “everyday low prices” and low-cost position
had enabled it to rapidly grow to dominate North America’s retailing landscape.
By 2012, however, its U.S. division generated only 2.2% growth in its same-store
General forces
Task
Environment:
Industry analysis
Internal
the people’s car in India and then offer it in other developing markets, management has
really retrenched and the Nano looks to be based in India for a long time to come.
A Resource-Based Approach to Organizational Analysis
Scanning and analyzing the external environment for opportunities and threats is necessary
for the firm to be able to understand its competitive environment and its place in that environment; however, it is not enough to provide an organization with a competitive advantage.
Once this external examination has been completed, the attention must turn to look within the
corporation itself to identify internal strategic factors—critical strengths and weaknesses that
are likely to determine whether a firm will be able to take advantage of opportunities while
avoiding threats. This internal scanning, often referred to as organizational analysis, is concerned with identifying, developing, and taking advantage of an organization’s resources and
competencies.
CORE AND DISTINCTIVE COMPETENCIES
Resources are an organization’s assets and are thus the basic building blocks of the organization. They include tangible assets (such as its plant, equipment, finances, and location),
human assets (the number of employees, their skills, and motivation), and intangible assets (such as its technology [patents and copyrights], culture, and reputation).1 Capabilities
refer to a corporation’s ability to exploit its resources. They consist of business processes
and routines that manage the interaction among resources to turn inputs into outputs. For
example, a company’s marketing capability can be based on the interaction among its marketing specialists, distribution channels, and salespeople. A capability is functionally based
and is resident in a particular function. Thus, there are marketing capabilities, manufacturing
capabilities, and human resource management capabilities. When these capabilities are constantly being changed and reconfigured to make them more adaptive to an uncertain environment, they are called dynamic capabilities.2 A competency is a cross-functional integration
and coordination of capabilities. For example, a competency in new product development
in one division of a corporation may be the consequence of integrating information systems
capabilities, marketing capabilities, R&D capabilities, and production capabilities within
the division. A core competency is a collection of competencies that crosses divisional
boundaries, is widespread within the corporation, and is something that the corporation can
do exceedingly well. Thus, new product development is a core competency if it goes beyond
one division.3 For example, a core competency of Avon Products is its expertise in doorto-door selling. FedEx has a core competency in its application of information technology
to all its operations. A company must continually reinvest in a core competency or risk its
becoming a core rigidity or deficiency—that is, a strength that over time matures and may
become a weakness.4 Although it is typically not an asset in the accounting sense, a core
competency is a very valuable resource—it does not “wear out” with use. In general, the
■
Two chapters deal with issues in strategy implementation, such as organizational and job design, as well as
strategy-manager fit, action planning,
corporate culture, and international
strategic alliances. (Chapters 9 and 10)
■
A separate chapter on evaluation and
control explains the importance of
­measurement and incentives to organizational performance.
(Chapter 11)
sales even as the recession was fading. Target, Macy’s, Kohl’s Costco, GAP, Kroger,
and even The Home Depot were all growing faster than Wal-Mart. At about the same time,
Strategies
Plan to
achieve
the
hi
he
mission &
objectives
Microsoft, whose software had grown to dominate personal computers worldwide, saw its
revenue growth over the five-year period from 2007 to 2012 slow to just 6.6%. The company’s
Policies
Broad
guidelines
id li
for decision
making
stock price had been virtually flat since 2002, an indication that investors no longer perceived
Programs
and Tactics
Activities
d d to
needed
accomplishh
a plan
Microsoft as a growth company. What had happened to these two successful companies? Was
Budgets
Cost of the
programs
this an isolated phenomenon? What could be done, if anything, to reinvigorate these giants?
A research study by Matthew Olson, Derek van Bever, and Seth Verry attempts to provide
Procedures
Sequence
off steps
needed to
do the job
Structure:
Chain of command
Culture:
Resources:
they found that 87% of the firms had suffered one or more serious declines in sales and profits.
Actual results
Beliefs, expectations,
values
Assets, skills,
competencies,
knowledge
an answer. After analyzing the experiences of 500 successful companies over a 50-year period,
Performance
CHAPTER
This included a diverse set of corporations, such as Levi Strauss, 3M, Apple, Bank One, Caterpillar,
10
Daimler-Benz, Toys“R”Us, and Volvo. After years of prolonged growth in sales and profits,
revenue growth at each of these firms suddenly stopped and even turned negative! Olson, van
strategy
implementation:
Staffing and Directing
Scanning the Environment
SOURCES: S. Philip, “Chairman Tata Seeks to Salvage World’s Cheapest Nano Car,” Bloomberg (August 21,
2012), (www.bloomberg.com/news/2012-08-21/chairman-tata-seeks-to-salvage-world-s-cheapest-nan-carhtml); A. K. Mishra, “Tata’s Nano:Fire!” Forbes (May 21, 2010), (www.forbes.com/2010/05/20/forbes-indiawheels-of-fire-tata-motors.html); D. Welch and N. Lakshman, “My Other Car Is a Tata,” Business Week
(January 14, 2008), pp. 33–34.
After reading this chapter, you should be able to:
■
P ART 2
approximately 75,000 Nanos a year. Although Tata Motors had intended to initially sell
Learning Objectives
Objectives
What
results
l to
accomplish
h
by when
128
Learning Objectives
Bever, and Verry called these long-term reversals in company growth stall points. On average,
corporations lost 74% of their market capitalization in the decade surrounding a growth stall.
After
reading
Even though the CEO and other members of top management were typically
replaced,
onlythis chapter, you should be able to:
Feedback/Learning: Make corrections as needed
46% of the firms were able to return to moderate or high growth within the
decade. When
■ Understand
the link between strategy and
■
of this group was able to return to moderate or high growth.
■
slow growth was allowed to persist for more than 10 years, the delay was usuallystaffing
fatal. Only
7%
decisions
MyManagementLab®
■
Match the appropriate manager to the
strategy
At Levi Strauss & Company, for example, sales topped US$7 billion in 1996—extending
Improve Your Grade!
■ Understand how to implement an effecgrowth that had more than doubled over the previous decade. From that high-water
mark,
Over 10 million students improved their results using the Pearson MyLabs.Visit mymanagement.com
for simulations, tutorials, and end-of-chapter problems.
244
Environmental
Scanning:
Gathering
Information
External
Mission
Natural
Environment:
Reason for
existence
Resources and
climate
Societal
Environment:
Strategy
Formulation:
Strategy
Implementation:
Evaluation
and Control:
Developing
Long-range Plans
Putting Strategy
into Action
Monitoring
Performance
■
tive downsizing program
Discuss important issues in effectively
staffing and directing
international
245
expansion
Assess and manage the corporate culture’s
fit with a new strategy
Formulate effective action plans when
MBO and TQM are determined to
be appropriate methods of strategy
implementation
Costco: Leading from the Front
Costco was founded in 1983 upon several simple foundations, such as marking
everything up by no more than 15% (ever), paying and treating employees well,
and providing a more upscale experience in the warehouse retail world. Today, the
company is the largest (by sales) in the industry despite having fewer store locations
Objectives
What
results
l to
accomplish
h
by when
General forces
Task
Environment:
Industry analysis
Internal
than its rival Sam’s Club. In 2011, the company racked up sales of US$93 billion and had more
Strategies
Plan to
achieve
the
hi
he
mission &
objectives
than 60 million members who pay for the privilege of shopping there.
One of the most stunning elements of the Costco success story is the way it has handled
Policies
Broad
guidelines
id li
for decision
making
the staffing and leading elements of the business. Employees at the company make an average
Programs
and Tactics
Activities
d d to
needed
accomplishh
a plan
salary of US$20.89/hour and 88% of employees receive health care benefits even though half
Budgets
Cost of the
programs
are part-time employees. During the recession that hit the globe from 2008–2011, the company
Procedures
Sequence
off steps
needed to
do the job
Structure:
Chain of command
Culture:
had no layoffs. This has meant that the company enjoys some of the lowest turnover in an inPerformance
dustry plagued by turnover. Employees at Costco know what they are doing and actively help
Actual results
customers.
Beliefs, expectations,
values
Interestingly, the staffing model morphs into leading with the approach that the company
takes to executive compensation. The former CEO and co-founder of Costco had a salary of
Resources:
Assets, skills,
competencies,
knowledge
only US$325,000/year and his total compensation package was US$2.2 million when the average for Fortune 500 CEOs in 2012 was US$9.6 million. The senior management team is similarly
compensated, leading to an “all in for the good of the company” approach to the business.
In addition to leading with salary, the CEO made it a part of his yearly effort to visit all
Feedback/Learning: Make corrections as needed
MyManagementLab®
Improve Your Grade!
Over 10 million students improved their results using the Pearson MyLabs.Visit mymanagementlab.com
for simulations, tutorials, and end-of-chapter problems.
560 stores in nine countries. This visible leading-from-the-front approach caught employees off
guard when he would repeatedly jump in and work at the stores: cleaning, stocking, giving
out food, and working the food court. In fact, the company has held tightly to the idea that a
hot dog and soda should cost a patron no more than US$1.50. That was the price in 1985 when
they opened their first hotdog stand in a store, and it is the price today. Costco sells more than
90 million hotdogs a year.
274
275
■
Suggestions for in-depth case analysis provide a complete listing of financial ratios, recommendations for oral and written analysis, and ideas for further research.
(Chapter 12)
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■
The strategic audit worksheet is based on the
­time-tested strategic audit and is designed to help students organize and structure daily case ­preparation
in a brief period of time. The worksheet works
­exceedingly well for checking the level of daily student case preparation—especially for open class discussions of cases. (Chapter 12)
FIGURE 12–1
Strategic Audit
Worksheet
27
Analysis
Strategic Audit Heading
I.
(+) Factors
(−) Factors
Comments
Current Situation
B. Strategic Posture:
Current Mission
Current Objectives
Current Strategies
Current Policies
SWOT Analysis Begins:
II.
End of Ch
Using
ment
be abl
of info
manag
the re
throug
A. Past Corporate Performance Indexes
Corporate Governance
A. Board of Directors
MyManagement
B. Top Management
III. External Environment (EFAS):
Opportunities and Threats (SWOT)
Go to mymanagementlab.com
A. Natural Environment
B. Societal Environment
IV.
C. Task Environment (Industry Analysis)
KEY TERMS
A. Corporate Structure
activity ratio (p. 335)
Altman’s Z-Value Bankruptcy F
(p. 339)
annual report (p. 335)
common-size statement (p. 339
constant dollars (p. 340)
Internal Environment (IFAS):
Strengths and Weaknesses (SWOT)
B. Corporate Culture
C. Corporate Resources
1. Marketing
2. Finance
3. Research and Development
4. Operations and Logistics
MyManagement
5. Human Resources
V.
Go to mymanagementlab.com
6. Information Technology
1-1. What ratios would you
1-2. What are the five crucia
1-3. MyManagementLab On
Analysis of Strategic Factors (SFAS)
A. Key Internal and External
Strategic Factors (SWOT)
B. Review of Mission and Objectives
SWOT Analysis Ends. Recommendation Begins:
VI. Alternatives and Recommendations
DISCUSSION
A. Strategic Alternatives—pros and cons
1-4. Why should you begin a
analysis? When are othe
B. Recommended Strategy
VII. Implementation
1-5. What are common-size
their value to case analy
VIII. Evaluation and Control
CHAPTER 5
Internal Scanning: Organizational Analysis
NOTE: See the complete Strategic Audit on pages 34–41. It lists the pages in the book that discuss each of the eight
headings.
SOURCE: T. L. Wheelen and J. D. Hunger, “Strategic Audit Worksheet.” Copyright © 1985, 1986, 1987, 1988, 1989,
2005, and 2009 by T. L. Wheelen. Copyright © 1989, 2005, and 2009 by Wheelen and Hunger Associates. Revised
1991, 1994, and 1997. Reprinted by permission. Additional copies available for classroom use in Part D of the Case
Instructor’s Manual and on the Prentice Hall Web site (www.prenhall.com/wheelen).
155
End of Chapter SUMMA R Y
342
Every day, about 17 truckloads of used diesel engines and other parts are dumped at a receiving facility at Caterpillar’s remanufacturing plant in Corinth, Mississippi. The filthy iron
engines are then broken down by two workers, who manually hammer and drill for half a day
until they have taken every bolt off the engine and put each component into its own bin. The
engines are then cleaned and remade at half of the cost of a new engine and sold for a tidy
profit. This system works at Caterpillar because, as a general rule, 70% of the cost to build
■
something new is in the materials and 30% is in the labor. Remanufacturing simply starts the
manufacturing process over again with materials that are essentially free and which already
contain most of the energy costs needed to make them. The would-be discards become fodder
for the next product, eliminating waste, and cutting costs. Caterpillar’s management was so
impressed by the remanufacturing operation that they made the business a separate division
in 2005. The unit earned more than US$1 billion in sales in 2005 and in 2012 employed more
than 8500 workers in 16 countries.
Caterpillar’s remanufacturing unit was successful not only because of its capability of
wringing productivity out of materials and labor, but also because it designed its products for
reuse. Before they are built new, remanufactured products must be designed for disassembly.
In order to achieve this, Caterpillar asks its designers to check a “Reman” box on Caterpillar’s
product development checklist. The company also needs to know where its products are being
used in order to take them back—known as the art of reverse logistics. This is achieved by
Caterpillar’s excellent relationship with its dealers throughout the world, as well as through financial incentives. For example, when a customer orders a crankshaft, that customer is offered
a remanufactured one for half the cost of a new one—assuming the customer turns in the old
crankshaft to Caterpillar. The products also should be built for performance with little regard
for changing fashion. Since diesel engines change little from year to year, a remanufactured
engine is very similar to a new engine and might perform even better.
Monitoring the external environment is only one part of environmental scanning. Strategists also need to scan a corporation’s internal environment to identify its resources, capabilities, and competencies. What are its strengths and weaknesses? At Caterpillar, management
clearly noted that the environment was changing in a way to make its remanufactured product
270distribution
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Strategy
Implementation and Control
more desirable. It took advantage of its strengths in manufacturing and
a
recycling service for its current customers and a low-cost alternative product for those who
could not afford a new Caterpillar engine. It also happened to be an environmentally friendly,
sustainable business model. Caterpillar’s management felt that remanufacturing thus provided them with a strategic advantage over competitors who don’t remanufacture. This is an
example of a company using its capabilities in key functional areas to expand its business byStrategy implementation is where “the rubber hits the road.” Environmental scanning and
moving into a new profitable position on its value chain.87
An experiential exercise focusing on the
material covered in each chapter helps the
reader apply strategic concepts to an actual
situation.
■
A list of key terms and the pages
in which they are discussed let
the reader keep track of important
­concepts as they are introduced in
ManagementLab®
eachMy
chapter.
Go to
mymanagementlab.com to complete the problems marked with this icon
.
End of Chapter SUMMARY
KEY TERMS
brand (p. 142)
business model (p. 132)
capabilities (p. 128)
capital budgeting (p. 143)
competency (p. 128)
conglomerate structure (p. 138)
continuum of sustainability (p. xx)
core competencies (p. 128)
corporate culture (p. 138)
strategy formulation are crucial to strategic management but are only the beginning of the
process. The failure to carry a strategic plan into the day-to-day operations of the workplace is
a major reason why strategic planning often fails to achieve its objectives. It is discouraging to
note that in one study nearly 70% of the strategic plans were never successfully implemented.84
For a strategy to be successfully implemented, it must be made action-oriented. This is
done through a series of programs that are funded through specific budgets and contain new
detailed procedures. This is what Sergio Marchionne did when he implemented a turnaround
strategy as the new Fiat Group CEO in 2004. He attacked the lethargic, bureaucratic system
by flattening Fiat’s structure and giving younger managers a larger amount of authority and
responsibility. He and other managers worked to reduce the number of auto platforms from
19 to six by 2012. The time from the completion of the design process to new car production
was cut from 26 to 18 months. By 2008, the Fiat auto unit was again profitable. Marchionne
reintroduced Fiat to the United States market in 2012 after a 27-year absence.85
This chapter explains how jobs and organizational units can be designed to support a
change in strategy. We will continue with staffing and directing issues in strategy implementation in the next chapter.
MyManagementLab®
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KEY TERMS
budget (p. 251)
cellular/modular organization (p. 263)
geographic-area structure (p. 269)
job design (p. 265)
matrix of change (p. xx)
matrix structure (p. 260)
multinational corporation (MNC)
(p. 266)
network structure (p. 262)
organizational life cycle (p. 258)
procedure (p. 252)
product-group structure (p. 269)
program (p. 248)
reengineering(p. 263)
Six Sigma (p. 264)
stages of corporate development
(p. 255)
stages of international development
(p. 267)
strategy implementation (p. 246)
structure follows strategy (p. 253)
synergy (p. 252)
virtual organization (p. 262)
MyManagementLab®
Go to mymanagementlab.com for Auto-graded writing questions as well as the following Assisted-graded writing questions:
1-1. How do timing tactics impact the strategy implementation efforts of a company?
1-2. What issues would you consider to be the most important for a company that is considering the use of a functional structure?
1-3. MyManagementLab Only—comprehensive writing assignment for this chapter.
DISCUSSION QUESTIONS
1-4. How should a corporation attempt to achieve synergy
1-7. Is reengineering just another management fad, or does
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1-5. How should an owner-manager prepare a company for
1-8. How is the cellular/modular structure different from
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Learning objectives begin each chapter.
Timely, well-researched, and class-tested cases deal with interesting companies and
industries. Many of the cases are about well-known, publicly held corporations—ideal
subjects for further research by students wishing to “update” the cases.
Both the text and the cases have been class-tested in strategy courses and revised based
on feedback from students and instructors. The first 11 chapters are organized around a
strategic management model that begins each chapter and provides a structure for both content and case analysis. We emphasize those concepts that have proven to be most useful in
understanding strategic decision making and in conducting case analysis. Our goal was to
make the text as comprehensive as possible without getting bogged down in any one area.
Extensive endnote references are provided for those who wish to learn more about any particular topic. All cases are about actual organizations. The firms range in size from large,
established multinationals to small, entrepreneurial ventures, and cover a broad variety of
issues. As an aid to case analysis, we propose the strategic audit as an analytical technique.
Supplements
Instructor Resource Center
At www.pearsonglobaleditions.com/Wheelen, instructors can access teaching resources
available with this text in a downloadable, digital format. Registration is simple and gives you
immediate access to new titles and editions. Please contact your Pearson sales representative
for your access code. As a registered faculty member, you can download resource files and
receive immediate access and instructions for installing course management content on your
campus server. In case you ever need assistance, our dedicated technical support team is ready
to assist instructors with questions about the media supplements that accompany this text. Visit
for answers to frequently asked questions and toll-free user
support phone numbers. The Instructor Resource Center provides the following electronic
resources.
Instructor’s Manuals
Two comprehensive Instructor’s Manuals have been carefully constructed to accompany this
book. The first one accompanies the concepts chapters; the second one accompanies the cases.
Concepts Instructor’s Manual
To aid in discussing the 12 strategy chapters, the Concepts Instructor’s Manual includes:
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Suggestions for Teaching Strategic Management: These include various teaching methods and suggested course syllabi.
■
Chapter Notes: These include summaries of each chapter, suggested answers to discussion questions, and suggestions for using end-of-chapter cases/exercises and part-ending
cases, plus additional discussion questions (with answers) and lecture modules.
Case Instructor’s Manual
To aid in case method teaching, the Case Instructor’s Manual includes detailed suggestions
for its use, teaching objectives, and examples of student analyses for each of the full-length
comprehensive cases. This is the most comprehensive instructor’s manual available in strategic
management. A standardized format is provided for each case:
1. Case Abstract
2. Case Issues and Subjects
3. Steps Covered in the Strategic Decision-Making Process
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4. Case Objectives
5. Suggested Classroom Approaches
6. Discussion Questions
7. Case Author’s Teaching Note (if available)
8. Student-Written Strategic Audit (if appropriate)
9. EFAS, IFAS, and SFAS Exhibits
10. Financial Analysis—ratios and common-size income statements (if appropriate)
PowerPoint Slides
PowerPoint slides, provided in a comprehensive package of text outlines and figures corresponding to the text, are designed to aid the educator and supplement in-class lectures.
Test Item File
The Test Item File contains over 1200 questions, including multiple-choice, true/false, and
essay questions. Each question is followed by the correct answer, AACSB category, and
difficulty rating.
TestGen
TestGen software is preloaded with all of the Test Item File questions. It allows instructors to
manually or randomly view test questions, and to add, delete, or modify test-bank questions
as needed to create multiple tests.
VIDEO LIBRARY
Videos illustrating the most important subject topics are available at:
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MyLab – available for instructors and students, provides round the clock instant access to
videos and corresponding assessment and simulations for Pearson textbooks.
Contact your local Pearson representative to request access.
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