Strategic Management and Organizational Goals Discussion Review the discussion of “strategic leaders” at the beginning of Chapter 2. Strategic leadership i

Strategic Management and Organizational Goals Discussion Review the discussion of “strategic leaders” at the beginning of Chapter 2. Strategic leadership involves the use of power and influence to direct and manage others in pursuit of an organization’s goals. Typically the most important strategic leaders are leaders and key managers in established corporations and entrepreneurs who build their own companies.

I. In no more than 650 words (two and a half pages double-spaced), answer the following questions:

Do you want to be a strategic leader at some point in your career?
Do you agree with the description in Chapter 2 of what a strategic leader should be and do?
Whether you want to be a strategic leader or not, describe a goal in your life. If it is not a business or career goal, tell how it relates to your career.
Why do you want to pursue this goal? What might stop you?
What do you hope to get out of a course in strategic management that might help you overcome the obstacles and reach the goal?

II. At the end of the paper, list 3 companies, preferably small-to-mid-sized firms. 1
page i
page ii
2
page iii
3
page iv
STRATEGIC MANAGEMENT, FOURTH EDITION
Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright
© 2019 by McGraw-Hill Education. All rights reserved. Printed in the United States of
America. Previous editions © 2017, 2015, and 2013. No part of this publication may
be reproduced or distributed in any form or by any means, or stored in a database or
retrieval system, without the prior written consent of McGraw-Hill Education,
including, but not limited to, in any network or other electronic storage or
transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to
customers outside the United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 LWI 21 20 19 18
Bound:
ISBN 978-1-259-92762-1 (student edition)
MHID 1-259-92762-8 (student edition)
ISBN 978-1-260-14192-4 (instructor edition)
MHID 1-260-14192-6 (instructor edition)
Looseleaf:
ISBN 978-1-260-14186-3
MHID 1-260-14186-1
Product Developers: Lai T. Moy
Executive Marketing Manager: Debbie Clare
Content Project Managers: Mary E. Powers (Core), Keri Johnson (Assessment)
Buyer: Susan K. Culbertson
Design: Matt Diamond
Content Licensing Specialists: Brianna Kirschbaum
Cover Image: (leadership concept on white background): ©ISerg/iStock/Getty
Images RF; (globe):
©sankai/iStock/Getty Images RF
Compositor: SPi Global
4
All credits appearing on page or at the end of the book are considered to be an
extension of the copyright page.
Library of Congress Cataloging-in-Publication Data
Names: Rothaermel, Frank T., author.
Title: Strategic management: concepts / Frank T. Rothaermel, Georgia
Institute of Technology.
Description: Fourth Edition. | Dubuque: McGraw-Hill Education, 2018. |
Revised edition of the author’s Strategic management, [2017]
Identifiers: LCCN 2017049706 | ISBN 9781259927621 (paperback)
Subjects: LCSH: Strategic planning. | Management. | BISAC: BUSINESS &
ECONOMICS / Management.
Classification: LCC HD30.28 .R6646 2018 | DDC 658.4/012—dc23 LC record
available
at https://lccn.loc.gov/2017049706
The Internet addresses listed in the text were accurate at the time of publication. The
inclusion of a website does not indicate an endorsement by the authors or McGrawHill Education, and McGraw-Hill Education does not guarantee the accuracy of the
information presented at these sites.
mheducation.com/highered
5
page v
DEDICATION
To my eternal family for their love, support, and sacrifice: Kelleyn, Harris,
Winston, Roman, Adelaide, Avery, and Ivy.
—FRANK T. ROTHAERMEL
6
page vi
CONTENTS
IN BRIEF
PART ONE
/
PART TWO
/
PART
THREE /
ANALYSIS 2
CHAPTER 1
What Is Strategy? 4
CHAPTER 2
Strategic Leadership: Managing the Strategy
Process 30
CHAPTER 3
External Analysis: Industry Structure,
Competitive Forces, and Strategic Groups
64
CHAPTER 4
Internal Analysis: Resources, Capabilities,
and Core Competencies 106
CHAPTER 5
Competitive Advantage, Firm Performance,
and Business Models 144
FORMULATION 180
CHAPTER 6
Business Strategy: Differentiation, Cost
Leadership, and Blue Oceans 182
CHAPTER 7
Business Strategy: Innovation,
Entrepreneurship, and Platforms 218
CHAPTER 8
Corporate Strategy: Vertical Integration and
Diversification 264
CHAPTER 9
Corporate Strategy: Strategic Alliances,
Mergers, and Acquisitions 308
CHAPTER
10
Global Strategy: Competing Around the
World 338
IMPLEMENTATION 376
7
PART
FOUR /
CHAPTER
11
Organizational Design: Structure, Culture,
and Control 378
CHAPTER
12
Corporate Governance and Business Ethics
418
MINICASES 447
HOW TO CONDUCT A CASE ANALYSIS 528
PART FIVE
/
FULLLENGTH
CASES
Available through McGraw-Hill Create
www.McGrawHillCreate.com/Rothaermel
8
page vii
MINICASES
& FULLLENGTH
CASES
MINICASES /
1
Michael Phelps: The Role of Strategy in Olympics and Business 448
2
PepsiCo’s Indra Nooyi: Performance with Purpose 450
3
Yahoo: From Internet Darling to Fire Sale 453
4
How the Strategy Process Killed Innovation at Microsoft 456
5
Apple: The iPhone Turns 10, so What’s Next? 459
6
Nike’s Core Competency: The Risky Business of Creating Heroes 463
7
Dynamic Capabilities at IBM 466
8
Starbucks after Schultz: How to Sustain a Competitive Advantage? 470
9
Business Model Innovation: How Dollar Shave Club Disrupted Gillette
474
10
Competing on Business Models: Google vs. Microsoft 476
11
Can Amazon Trim the Fat at Whole Foods? 481
12
LEGO’s Turnaround: Brick by Brick 484
13
Cirque du Soleil: Searching for a New Blue Ocean 488
14
Wikipedia: Disrupting the Encyclopedia Business 491
15
Disney: Building Billion-Dollar Franchises 494
16
Hollywood Goes Global 498
17
Samsung Electronics: Burned by Success? 503
18
Does GM’s Future Lie in China? 509
19
Flipkart vs. Amazon in India: Who’s Winning? 512
20
Alibaba—China’s Ecommerce Giant: Challenging Amazon? 516
21
HP’s Boardroom Drama and Divorce 520
22
UBS: A Pattern of Ethics Scandals 524
9
FULL-LENGTH CASES /
All available through McGraw-Hill Create,
www.McGrawHillCreate.com/Rothaermel
Uber Technologies*
Starbucks Corporation*
Netflix, Inc.*
Walmart*
The Walt Disney Company*
Tesla, Inc. ?
Apple Inc. ?
Amazon.com, Inc. ?
Best Buy Co., Inc. ?
Facebook, Inc. ?
McDonald’s Corporation ?
Alphabet’s Google ?
Delta Air Lines, Inc. ?
UPS in India ?
The Movie Exhibition Industry ?+
Space X* +
Kickstarter: Using Crowdfunding to Launch
a New Board Game +
Better World Books and the Triple Bottom Line
General Electric after GE Capital
IBM at the Crossroads
Merck & Co., Inc.
Grok: Action Intelligence for Fast Data
Make or Break at RIM: Launching BlackBerry 10
* NEW TO THE THIRD EDITION ? REVISED AND UPDATED FOR
THE THIRD EDITION + THIRD-PARTY CASE
10
page viii
CHAPTERCASES
& STRATEGY
HIGHLIGHTS
CHAPTERCASES /
1
Tesla’s Secret Strategy 5
2
Sheryl Sandberg: Leaning in at Facebook 31
3
Airbnb: Disrupting the Hotel Industry 65
4
Dr. Dre’s Core Competency: Coolness Factor 107
5
The Quest for Competitive Advantage: Apple vs. Microsoft 145
6
JetBlue Airways: Finding a New Blue Ocean? 183
7
Netflix: Disrupting the TV Industry 219
8
Amazon.com: To Infinity and Beyond 265
9
Little Lyft Gets Big Alliance Partners 309
10
Sweden’s IKEA: The World’s Most Profitable Retailer 339
11
Zappos: Of Happiness and Holacracy 379
12
Uber: Most Ethically Challenged Tech Company? 419
STRATEGY HIGHLIGHTS /
1.1
Teach for America: How Wendy Kopp Inspires Future Leaders 12
1.2
Merck: Reconfirming Its Core Values 18
2.1
Starbucks CEO: “It’s Not What We Do” 44
2.2
BP “Grossly Negligent” in Gulf of Mexico Disaster 55
3.1
BlackBerry’s Bust 71
3.2
The Five Forces in the Airline Industry 75
4.1
Applying VRIO: The Rise and Fall of Groupon 119
4.2
When Will P&G Play to Win Again? 125
5.1
Interface: The World’s First Sustainable Company 165
5.2
Threadless: Leveraging Crowdsourcing to Design Cool T-Shirts 166
11
6.1
Dr. Shetty: “The Henry Ford of Heart Surgery” 200
6.2
How JCPenney Sailed Deeper into the Red Ocean 208
7.1
Standards Battle: Which Automotive Technology Will Win? 230
7.2
GE’s Innovation Mantra: Disrupt Yourself! 248
8.1
Is Coke Becoming a Monster? 276
8.2
The Tata Group: Integration at the Corporate Level 289
9.1
How Tesla Used Alliances Strategically 315
9.2
Kraft’s Specialty: Hostile Takeovers 326
10.1
The Gulf Airlines Are Landing in the United States 347
10.2
Walmart Retreats from Germany, and Lidl Invades the United States
351
11.1
W.L. Gore & Associates: Informality and Innovation 386
11.2
Sony vs. Apple: Whatever Happened to Sony? 400
12.1
GE’s Board of Directors 430
12.2
Why the Mild Response to Goldman Sachs and Securities Fraud? 435
12
page ix
CONTENTS
PART ONE /
ANALYSIS 2
CHAPTER 1
WHAT IS STRATEGY? 4
CHAPTERCASE 1
/
Tesla’s Secret Strategy 5
1.1 What Strategy Is: Gaining and Sustaining Competitive
Advantage 6
What Is Competitive Advantage? 8
1.2 Vision, Mission, and Values 11
Vision 11
Mission 13
Values 17
1.3 The AFI Strategy Framework 19
1.4 Implications for Strategic Leaders 20
CHAPTERCASE 1 / Consider This… 21
CHAPTER 2
STRATEGIC LEADERSHIP: MANAGING THE STRATEGY
PROCESS 30
CHAPTERCASE 2
/
Sheryl Sandberg: Leaning in at Facebook 31
2.1 Strategic Leadership 32
What Do Strategic Leaders Do? 33
How Do You Become a Strategic Leader? 33
The Strategy Process Across Levels: Corporate, Business, and
13
Functional Managers 36
2.2 The Strategic Management Process 38
Top-Down Strategic Planning 38
Scenario Planning 39
Strategy as Planned Emergence: Top-Down and Bottom-Up 41
2.3 Stakeholders and Competitive Advantage 47
Stakeholder Strategy 48
Stakeholder Impact Analysis 50
2.4 Implications for Strategic Leaders 55
CHAPTERCASE 2 / Consider This… 56
CHAPTER 3
EXTERNAL ANALYSIS: INDUSTRY STRUCTURE, COMPETITIVE
FORCES, AND STRATEGIC GROUPS 64
CHAPTERCASE 3
/
Airbnb: Disrupting the Hotel Industry 65
3.1 The PESTEL Framework 67
Political Factors 68
Economic Factors 68
Sociocultural Factors 70
Technological Factors 70
Ecological Factors 70
Legal Factors 72
3.2 Industry Structure and Firm Strategy: The Five Forces Model 73
Industry vs. Firm Effects In Determining Firm Performance 73
Competition In the Five Forces Model 74
The Threat of Entry 76
The Power of Suppliers 79
The Power of Buyers 80
The Threat of Substitutes 82
Rivalry Among Existing Competitors 83
A Sixth Force: The Strategic Role of Complements 88
3.3 Changes over Time: Entry Choices and Industry Dynamics 90
Entry Choices 90
Industry Dynamics 92
14
3.4 Performance Differences within the Same Industry: Strategic
Groups 93
The Strategic Group Model 93
Mobility Barriers 95
3.5 Implications for Strategic Leaders 96
CHAPTERCASE 3 / Consider This… 97
CHAPTER 4
INTERNAL ANALYSIS: RESOURCES, CAPABILITIES, AND CORE
COMPETENCIES 106
CHAPTERCASE 4
/
Dr. Dre’s Core Competency: Coolness Factor 107
4.1 Core Competencies 110
page x
4.2 The Resource-Based View 113
Two Critical Assumptions 114
The Vrio Framework 115
Isolating Mechanisms: How to Sustain A Competitive Advantage 120
4.3 The Dynamic Capabilities Perspective 124
4.4 The Value Chain and Strategic Activity Systems 128
The Value Chain 128
Strategic Activity Systems 130
4.5 Implications for Strategic Leaders 133
Using Swot Analysis to Generate Insights From External and Internal
Analysis 134
CHAPTERCASE 4 / Consider This… 135
CHAPTER 5
COMPETITIVE ADVANTAGE, FIRM PERFORMANCE, AND BUSINESS
MODELS 144
CHAPTERCASE 5
/
The Quest for Competitive Advantage: Apple vs. Microsoft 145
5.1 Competitive Advantage and Firm Performance 146
15
Accounting Profitability 146
Shareholder Value Creation 153
Economic Value Creation 155
The Balanced Scorecard 161
The Triple Bottom Line 164
5.2 Business Models: Putting Strategy into Action 165
The Why, What, Who, and How of Business Models Framework 167
Popular Business Models 168
Dynamic Nature of Business Models 170
5.3 Implications for Strategic Leaders 171
CHAPTERCASE 5 / Consider This… 172
PART TWO /
FORMULATION 180
CHAPTER 6
BUSINESS STRATEGY: DIFFERENTIATION, COST LEADERSHIP, AND
BLUE OCEANS 182
CHAPTERCASE 6
/
JetBlue Airways: Finding a New Blue Ocean? 183
6.1 Business-Level Strategy: How to Compete for Advantage 185
Strategic Position 186
Generic Business Strategies 186
6.2 Differentiation Strategy: Understanding Value Drivers 188
Product Features 191
Customer Service 191
Complements 191
6.3 Cost-Leadership Strategy: Understanding Cost Drivers 192
Cost of Input Factors 194
Economies of Scale 194
Learning Curve 196
Experience Curve 199
6.4 Business-Level Strategy and the Five Forces: Benefits and
Risks 201
16
Differentiation Strategy: Benefits and Risks 201
Cost-Leadership Strategy: Benefits and Risks 203
6.5 Blue Ocean Strategy: Combining Differentiation and Cost
Leadership 204
Value Innovation 205
Blue Ocean Strategy Gone Bad: “Stuck In the Middle” 207
6.6 Implications for Strategic Leaders 210
CHAPTERCASE 6 / Consider This… 211
CHAPTER 7
BUSINESS STRATEGY: INNOVATION, ENTREPRENEURSHIP, AND
PLATFORMS 218
CHAPTERCASE 7
/
Netflix: Disrupting the TV Industry 219
7.1 Competition Driven by Innovation 221
The Innovation Process 222
7.2 Strategic and Social Entrepreneurship 225
7.3 Innovation and the Industry Life Cycle 227
Introduction Stage 228
Growth Stage 230
Shakeout Stage 233
Maturity Stage 234
Decline Stage 234
Crossing the Chasm 235
7.4 Types of Innovation 242
Incremental vs. Radical Innovation 243
Architectural vs. Disruptive Innovation 245
7.5 Platform Strategy 249
The Platform vs. Pipeline Business Models 249
The Platform Ecosystem 250
7.6 Implications for Strategic Leaders 254
CHAPTERCASE 7 / Consider This… 254
17
page xi
CHAPTER 8
CORPORATE STRATEGY: VERTICAL INTEGRATION AND
DIVERSIFICATION 264
CHAPTERCASE 8
/
Amazon.com: To Infinity and Beyond 265
8.1 What Is Corporate Strategy? 268
Why Firms Need to Grow 268
Three Dimensions of Corporate Strategy 269
8.2 The Boundaries of the Firm 271
Firms vs. Markets: Make or Buy? 272
Alternatives on the Make-or-Buy Continuum 274
8.3 Vertical Integration along the Industry Value Chain 278
Types of Vertical Integration 279
Benefits and Risks of Vertical Integration 281
When Does Vertical Integration Make Sense? 283
Alternatives to Vertical Integration 284
8.4 Corporate Diversification: Expanding Beyond a Single Market
285
Types of Corporate Diversification 287
Leveraging Core Competencies for Corporate Diversification 291
Corporate Diversification and Firm Performance 293
8.5 Implications for Strategic Leaders 297
CHAPTERCASE 8 / Consider This… 298
CHAPTER 9
CORPORATE STRATEGY: STRATEGIC ALLIANCES, MERGERS, AND
ACQUISITIONS 308
CHAPTERCASE 9
/
Little Lyft Gets Big Alliance Partners 309
9.1 How Firms Achieve Growth 310
The Build-Borrow-Buy Framework 310
9.2 Strategic Alliances 313
Why Do Firms Enter Strategic Alliances? 314
18
Governing Strategic Alliances 317
Alliance Management Capability 320
9.3 Mergers and Acquisitions 323
Why Do Firms Merge With Competitors? 323
Why Do Firms Acquire Other Firms? 325
M&A and Competitive Advantage 327
9.4 Implications for Strategic Leaders 329
CHAPTERCASE 9 / Consider This… 330
CHAPTER 10
GLOBAL STRATEGY: COMPETING AROUND THE WORLD 338
CHAPTERCASE 10
/
Sweden’s IKEA: The World’s Most Profitable Retailer 339
10.1 What Is Globalization? 342
Stages of Globalization 343
State of Globalization 344
10.2 Going Global: Why? 346
Advantages of Going Global 346
Disadvantages of Going Global 350
10.3 Going Global: Where and How? 353
Where In the World to Compete? The Cage Distance Framework 353
How Do MNES Enter Foreign Markets? 357
10.4 Cost Reductions vs. Local Responsiveness: The IntegrationResponsiveness Framework 358
International Strategy 359
Multidomestic Strategy 360
Global-Standardization Strategy 360
Transnational Strategy 361
10.5 National Competitive Advantage: World Leadership in Specific
Industries 362
Porter’s Diamond Framework 364
10.6 Implications for Strategic Leaders 366
CHAPTERCASE 10 / Consider This… 367
19
PART THREE /
IMPLEMENTATION 376
CHAPTER 11
ORGANIZATIONAL DESIGN: STRUCTURE, CULTURE, AND
CONTROL 378
CHAPTERCASE 11
/
Zappos: Of Happiness and Holacracy 379
11.1 Organizational Design and Competitive Advantage 381
Organizational Inertia: The Failure of Established Firms 382
Organizational Structure 384
Mechanistic vs. Organic Organizations 385
11.2 Strategy and Structure 387
page xii
Simple Structure 387
Functional Structure 388
Multidivisional Structure 390
Matrix Structure 394
11.3 Organizing for Innovation 398
11.4 Organizational Culture: Values, Norms, and Artifacts 401
Where Do Organizational Cultures Come From? 403
How Does Organizational Culture Change? 404
Organizational Culture and Competitive Advantage 405
11.5 Strategic Control-and-Reward Systems 407
Input Controls 408
Output Controls 408
11.6 Implications for Strategic Leaders 409
CHAPTERCASE 11 / Consider This… 410
CHAPTER 12
CORPORATE GOVERNANCE AND BUSINESS ETHICS 418
CHAPTERCASE 12
/
Uber: Most Ethically Challenged Tech Company? 419
20
12.1 The Shared Value Creation Framework 421
Public Stock Companies and Shareholder Capitalism 421
Creating Shared Value 423
12.2 Corporate Governance 425
Agency Theory 426
The Board of Directors 428
Other Governance Mechanisms 430
12.3 Strategy and Business Ethics 433
Bad Apples vs. Bad Barrels 434
12.4 Implications for Strategic Leaders 437
CHAPTERCASE 12 / Consider This… 438
PART FOUR /
MINICASES 447
PART FIVE / FULLLENGTH CASES
All available through McGraw-Hill Create,
www.McGrawHillCreate.com/Rothaermel
Company Index 539
Name Index 545
Subject Index 547
21
page xiii
ABOUT
THE
AUTHOR
Frank T. Rothaermel
Georgia Institute of Technology
©Tony Benner
FRANK T. ROTHAERMEL (PH.D.) is a Professor of Strategy & Innovation,
holds the Russell and Nancy McDonough Chair in the Scheller College of
Business at the Georgia Institute of Technology (GT), and is an Alfred P.
Sloan Industry Studies Fellow. He received a National Science Foundation
(NSF) CAREER award, which “is a Foundation-wide activity that offers the
National Science Foundation’s most prestigious awards in support of . . .
22
those teacher-scholars who most effectively integrate research and
education” (NSF CAREER Award description).
Frank’s research interests lie in the areas of strategy, innovation, and
entrepreneurship. Frank has published over 30 articles in leading academic
journals such as the Strategic Management Journal, Organization Science,
Academy of Management Journal, Academy of Management Review, and
elsewhere. Based on having published papers in the top 1 percent based
on citations, Thomson Reuters identified Frank as one of the “world’s most
influential scientific minds.” He is listed among the top-100 scholars based
on impact over more than a decade in both economics and business.
Bloomberg Businessweek named Frank one of Georgia Tech’s Prominent
Faculty in its national survey of business schools. The Kauffman
Foundation views Frank as one of the world’s 75 thought leaders in
entrepreneurship and innovation.
Frank has received several recognitions for his research, including the
Sloan Industry Studies Best Paper Award, the Academy of Management
Newman Award, the Strategic Management Society Conference Best
Paper Prize, the DRUID Conference Best Paper Award, the Israel Strategy
Conference Best Paper Prize, and is the inaugural recipient of the Byars
Faculty Excellence Award. Frank currently serves (or served) on the
editorial boards of the Strategic Management Journal, Organization
Science, Academy of Management Journal, Academy of Management
Review, and Strategic Organization.
Frank regularly translates his research findings for wider audiences in
articles in the MIT Sloan Management Review, The Wall Street Journal,
Forbes, and elsewhere. To inform his research Frank has conducted
extensive field work and executive training with leading corporations such
as Amgen, Daimler, Eli Lilly, Equifax, GE Energy, GE Healthcare, Hyundai
Heavy Industries (South Korea), Kimberly-Clark, Microsoft, McKesson,
NCR, Turner (TBS), UPS, among others.
Frank has a wide range of executive education experience, including
teaching in programs at GE Management Development Institute
(Crotonville, NY), Georgia Institute of Technology, Georgetown University,
ICN Business School (France), Politecnico di Milano (Italy), St. Gallen
University (Switzerland), and the University of Washington. He received
numerous teaching awards for excellence in the classroom including the
GT-wide Georgia Power Professor of Excellence award.
When launched in 2012, Frank’s Strategic Management text received the
McGraw-Hill 1st Edition of the Year Award in Business & Economics. His
Strategic Management text has been translated into Mandarin, Korean, and
Greek. Se…
Purchase answer to see full
attachment