MGT 510 Saudi Electronic University Management Worksheet

Description

Strategy Planning: Critical Thinking Assignment -6

Module 12: Implementing Strategy

Critical Thinking: Strategic Recommendations

Managing the multi-business corporation to meet high performance expectations is problematic. Research a company in KSA that manages multiple businesses:

Questions:

  • Explain the corporate structure and provide a review of its business portfolio.
  • What advice would you provide on the use of portfolio matrices and which portfolio matrix would you recommend: the GE McKinsey, BCG, or Ashridge matrix? Why?
  • Apply your recommended portfolio matrix and provide a portfolio analysis.
  • How does diversification create value through the linkages between businesses?

Your well-written paper should meet the following requirements:

  • Be 7 pages in length, which does not include the required title and reference pages, which are never a part of the content minimum requirements.
  • Use Saudi Electronic University academic writing standards and APA style guidelines.
  • Support your submission with course material concepts, principles, and theories from the textbook and at least two scholarly, peer-reviewed journal articles unless the assignment calls for more.
  • It is strongly encouraged that you submit all assignments into the Turnitin Originality Check before submitting it to your instructor for grading. If you are unsure how to submit an assignment into the Originality Check tool, review the Turnitin Originality Check—Student Guide for step-by-step instructions.
  • Review the grading rubric to see how you will be graded for this assignment.

=

  • The assignment must include an introduction, and in the introduction should include:
  • a) Includes a purpose statement

    b) Mentions the upcoming sections

  • The assignment must include at least 4 references in addition to course book.
  • Course book must be used for this assignment.
  • The Course book is

    Grant, R. M. (2019). Contemporary strategy analysis (10th ed.) Hoboken, NJ: John Wiley & Sons. ISBN: 9781119495727

  • Please find out the attachments
  • Make sure to cite your statements and in-text citation using APA
  • Please Use APA 7th edition,
  • Please attach copy of all references you use

  • Strategy Planning: Critical Thinking Assignment -6
    Module 12: Implementing Strategy
    Critical Thinking: Strategic Recommendations
    Managing the multi-business corporation to meet high performance
    expectations is problematic. Research a company in KSA that manages multiple
    businesses:
    Questions:
    1. Explain the corporate structure and provide a review of its business
    portfolio.
    2. What advice would you provide on the use of portfolio matrices and which
    portfolio matrix would you recommend: the GE McKinsey, BCG, or
    Ashridge matrix? Why?
    3. Apply your recommended portfolio matrix and provide a portfolio
    analysis.
    4. How does diversification create value through the linkages between
    businesses?
    –Your well-written paper should meet the following requirements:

    Be 7 pages in length, which does not include the required title and reference
    pages, which are never a part of the content minimum requirements.

    Use Saudi Electronic University academic writing standards and APA style
    guidelines.

    Support your submission with course material concepts, principles, and
    theories from the textbook and at least two scholarly, peer-reviewed journal
    articles unless the assignment calls for more.

    It is strongly encouraged that you submit all assignments into the Turnitin
    Originality Check before submitting it to your instructor for grading. If you
    are unsure how to submit an assignment into the Originality Check tool,
    review the Turnitin Originality Check—Student Guide for step-by-step
    instructions.

    Review the grading rubric to see how you will be graded for this assignment.
    ==

    The assignment must include an introduction, and in the introduction should include:
    a) Includes a purpose statement
    b) Mentions the upcoming sections


    The assignment must include at least 4 references in addition to course book.
    Course book must be used for this assignment.
    The Course book is
    Grant, R. M. (2019). Contemporary strategy analysis (10th ed.) Hoboken, NJ: John Wiley &
    Sons. ISBN: 9781119495727

    Please find out the attachments

    Make sure to cite your statements and in-text citation using APA

    Please Use APA 7th edition,

    Please attach copy of all references you use
    CONTEMPORARY STRATEGY ANALYSIS
    tenth edition
    Robert M. Grant
    John Wiley & Sons Ltd., 2019
    Chapter 13
    Implementing Corporate
    Strategy: Managing the
    Multibusiness Corporation
    1
    Implementing Corporate Strategy:
    Managing the Multibusiness Corporation
    OUTLINE
    • The Role of Corporate Management
    • Managing the Corporate Portfolio
    • Managing Linkages across Businesses
    • Managing Individual Businesses
    • Managing Change in the Multibusiness Corporation
    • Governance of Multibusiness Corporations
    Copyright © 2019 John Wiley & Sons, Inc.
    THE ROLE OF CORPORATE MANAGEMENT
    How does Corporate Management add
    Value to its Individual Businesses?
    • Managing the corporate portfolio
    —including acquisitions, divestments, and
    resource allocation
    • Managing linkages among businesses
    • Managing each individual business
    • Managing change
    Copyright © 2019 John Wiley & Sons, Inc.
    Berkshire Hathaway’s portfolio of businesses
    Insurance
    Energy
    General Re
    GEICO
    BH Primary
    BHRG
    Mid American Energy
    Northern Powergrid
    PacificCorp
    NV Energy
    Retail
    Nebraska Furniture Mart
    RC Willey Home Furnishings
    Borsheims
    Pampered Chef
    Pampered
    Chef
    Dairy Queen
    BERKSHIRE
    HATHAWAY
    INC.
    See’s Candy
    Media and
    Services
    Home Services of America
    Store Capital
    BH Media
    Business Wire
    NetJets
    © 2019 Robert M. Grant,
    www.contemporarystrategyanalysis.com
    Manufacturing
    Lubrizoil
    CTB International
    Fruit of the Loom
    Google
    Books
    Clayton Homes
    IMC
    Main Portfolio
    Investments
    • Heinz Kraft
    • Apple
    • Coca-Cola
    • Wells Fargo
    • American Express
    • Phillips 66
    • Goldman Sachs
    • Delta Airlines
    MANAGING THE CORPORATE PORTFOLIO
    The Uses of Portfolio Planning Models
    in Strategy Formulation
    • Allocating resources—indicating both the investment
    requirements of different businesses and their likely returns
    • Formulating business-unit strategy—offering generic strategy
    recommendations (e.g.: “build”, “hold”, or “harvest”)
    • Setting performance targets—indicating likely performance
    outcomes in terms of cash flow and ROI
    • Portfolio balance—guiding business portfolio changes in
    order to achieve corporate goals such as a balanced cash
    flow by combining mature and growing businesses.
    Copyright © 2019 John Wiley & Sons, Inc.
    MANAGING THE CORPORATE PORTFOLIO
    Industry Attractiveness
    The GE/McKinsey Matrix
    High
    Medium
    Low
    Low
    Medium
    High
    Business Unit Position
    Industry Attractiveness Criteria
    – Market size
    – Market growth
    – Industry profitability
    – Inflation recovery
    – Overseas sales ratio
    Copyright © 2019 John Wiley & Sons, Inc.
    Business Unit Position
    – Market share (domestic,
    global, and relative)
    – Competitive position
    – Relative profitability
    MANAGING THE CORPORATE PORTFOLIO
    HIGH
    Earnings:
    low, unstable, growing
    Earnings:
    high stable, growing
    Cash flow: negative
    Cash flow:
    neutral
    Strategy:
    Strategy:
    invest for
    growth
    analyze the
    potential to
    develop the
    business
    into a “star”
    Earnings:
    LOW
    Annual real rate of market growth (%)
    The BCG Growth-Share Matrix
    ?
    low, unstable
    Earnings:
    high stable
    Cash flow:
    neutral or negative
    Cash flow:
    high stable
    Strategy:
    divest
    Strategy:
    milk
    HIGH
    LOW
    Relative market share
    Copyright © 2019 John Wiley & Sons, Inc.
    MANAGING THE CORPORATE PORTFOLIO
    Ashridge Portfolio Display:
    The Potential for Patenting Advantage
    LOW
    HEARTLAND
    BALLAST
    Potential for value
    destruction from
    misfit between
    needs of the
    business and
    patent’s corporate
    management style
    –typical legacy
    business: good
    fit high, but limited
    potential to add
    value
    EDGE OF
    HEARTLAND
    –businesses with
    high potential
    for adding value
    — less value adding
    potential; more risk is
    of value destruction
    ALIEN TERRITORY
    VALUE TRAP
    –exit: no potential for
    value creation
    –lack of management fit
    limits potential to add
    value
    HIGH
    LOW
    HIGH
    Potential for parent to add value to the business
    © 2019 Robert M. Grant,www.contemporarystrategyanalysis.com
    MANAGING THE CORPORATE PORTFOLIO
    Do Portfolio Planning Models Help or Hinder
    Corporate Strategy Formulation?
    ADVANTAGES
    • Simplicity: Quick and easy to
    prepare
    • Big picture: Permits one page
    representation of the corporate
    portfolio & strategic positioning of
    each business
    • Analytically versatile: Applicable
    to businesses, products, countries,
    distribution channels.
    • Can be augmented: A useful
    point of departure for more
    sophisticated analysis
    Copyright © 2019 John Wiley & Sons, Inc.
    DISADVANTAGES
    • Simplicity: Oversimplifies the
    factors determining industry
    attractiveness and competitive
    advantage
    • Ambiguity: The positioning
    of a business depends
    critically upon how a market is
    defined
    • Ignores synergy: the analysis
    takes no account of any
    interdependencies between
    businesses
    MANAGING LINKAGES ACROSS BUSINESSES
    Sources of Synergy within
    the Multibusiness Corporation
    ▪ Shared corporate services: Centralizing services such as IT, HR,
    purchasing, research, facilities management exploits cost economies
    and develops capabilities
    ▪ Transferring skills between businesses: E.g. LVMH transfers brand
    management capabilities; P&G transfers technologies and product
    development skills across product sectors and across countries
    ▪ Sharing resources and activities: E.g. Virgin Group shares its brand
    across its businesses; Samsung Electronics’ globally dispersed
    design centers serve all its businesses
    BUT, Exploiting synergies is not costless: Transferring skills and
    sharing resources and activities tends to involve the corporate HQ in
    managing relationships between the businesses and complicates the
    appraisal of business performance
    Copyright © 2019 John Wiley & Sons, Inc.
    MANAGING INDIVIDUAL BUSINESSES
    The McKinsey Restructuring Pentagon
    Current
    market
    value
    1
    Current perceptions
    gap
    Company
    value as is 2
    Strategic and
    operating
    opportunities
    RESTRUCTURING
    FRAMEWORK
    Potential value
    with internal
    improvements
    Copyright © 2019 John Wiley & Sons, Inc.
    Maximum raider
    opportunity
    3
    Disposal/acquisition
    opportunities
    4
    5
    Optimal
    restructured
    value
    Total company
    opportunities
    Potential value
    with external
    improvements
    MANAGING INDIVIDUAL BUSINESSES
    Exxon’s Strategic Planning Process
    Economic Review
    Energy Review
    Stewardship
    Review
    Business
    Plans
    Discussion
    with contact
    director
    Financial
    Forecast
    Stewardship
    Basis
    Investment
    Reappraisals
    Annual
    Budget
    Approval by
    Mgmt.
    Committee
    Corporate
    Plan
    MANAGING INDIVIDUAL BUSINESSES
    Rethinking Strategic Planning
    Critiques of strategic planning:
    • Strategic planning systems don’t make strategy—strategic
    planning a ritualistic process, but most strategic decisions are
    made outside the system
    • Weak execution—procedures for converting plans into
    actions are weak. Proposals for improving execution include:
    – Strategic milestones
    – Strategy maps
    – Replacing strategic planning units by “offices of strategy
    management”
    Copyright © 2019 John Wiley & Sons, Inc.
    MANAGING INDIVIDUAL BUSINESSES
    Performance Management and Financial Control
    • Multibusiness companies have a dual planning process:
    – Strategic planning: medium and long term
    – Financial planning : short-term
    • The two are closely linked. Strategic plan is a basis for:
    – Operating budget
    – Capital expenditure budget
    – Annual performance plans
    – Strategic milestones
    • Balance between strategic and financial control:
    – Varies by firm and sector
    – There’s a trade-off between the two—more of one means
    less of the other
    Copyright © 2019 John Wiley & Sons, Inc.
    8
    MANAGING INDIVIDUAL BUSINESSES
    Strategic Planning and Financial Control as
    Alternative Modes of Corporate Control
    Two basic approaches
    Input
    control
    Output
    control
    Monitoring and approving
    business level decisions
    Setting performance targets
    and monitoring
    their achievement
    Primarily through strategic
    planning system and capital
    expenditure approval system
    Primarily through performance
    management system, including
    operating budgets, scorecards,
    milestones, and HR appraisals
    Copyright © 2019 John Wiley & Sons, Inc.
    MANAGING INDIVIDUAL BUSINESSES
    Alternative Corporate Management Styles
    Strategic planning
    Financial control
    Business
    strategy
    formulation
    Strategy formulated by
    businesses; corporate
    HQ guides and coordinates
    Strategy formulated at business
    unit level;
    HQ exerts financial control
    Controlling
    performance
    Primarily strategic goals with
    medium- to long-term horizon
    Financial budgets set annual
    targets—monitored quarterly
    Advantages
    Exploits (a) linkages among
    businesses, (b) innovation, (c)
    long-term development
    Business unit autonomy conducive
    to initiative, responsiveness, and
    efficiency
    Disadvantages
    Loss of divisional autonomy and
    initiative
    Unitary strategic view
    Tendency to persist with failing
    strategies
    Short-term focus discourages
    innovation and long-term
    development
    Limited sharing of resources and
    capabilities
    Style suited to
    Companies with few closely
    related businesses
    Capital and technologyintensive sectors with large,
    long term investment projects
    Highly diversified companies with
    low relatedness among businesses
    Mature, low-tech sectors where
    investment projects small and
    short term
    Copyright © 2019 John Wiley & Sons, Inc.
    MANAGING`CHANGE IN THE MULTBUSINESS CORPORATION
    The Challenge of Leading Change
    ❑ The Problem: Counteracting Inertia
    – The bigger and more complex the company—the greater the forces of
    inertia
    ❑ Facilitating change:
    – Adaptive tension Imposing high performance expectation on individual
    and departments can create not just stress, but dynamism and
    responsiveness that counteracts complacency (e.g. Jack Welch at GE)
    – Institutionalizing change Shift focus of strategic planning from resource
    allocation to sensing and responding to external change (e.g. IBM)
    – New business development Incubating the new businesses that will
    ultimately replace the old (Amazon, Netflix, Nokia)
    – Top-down, large-scale development initiatives—the CEO as change
    leader e.g. Samsung Electronics; Haier
    Copyright © 2019 John Wiley & Sons, Inc.
    GOVERNANCE OF MULTBUSINESS CORPORATIONS
    The Challenge of Corporate Governance

    What are the rights of shareholders?
    – To transfer shares, access company information, elect directors,
    share in the profits of the firm, vote on key strategic decisions
    – Despite potential for divisions to develop distinctive strategies and
    structures—corporate systems may impose uniformity.

    What are the responsibilities of Company Boards?
    – To act in the best interests of the company and its shareholders
    – To oversee strategy, budgets, management performance, etc.

    What’s gone wrong?
    – Failure by boards to prevent managers pursuing their interests rather
    than those of shareholders (e.g. excessive compensation)
    – Failure board to take account of social/national interest

    What other problems do multidivisional corporations face?
    – Lack of decentralization of decision making to divisional managers
    – Standardization of management systems across divisions
    Copyright © 2019 John Wiley & Sons, Inc.
    GOVERNANCE OF MULTBUSINESS CORPORATIONS
    Highest Earning CEOs of US Companies 2016
    Rank
    CEO
    Company
    Direct
    compensation
    ($m)
    1
    Thomas Rutledge
    Charter Communications
    98
    2
    Leslie Moonves
    CBS
    69
    3
    Robert A. Iger
    Walt Disney
    41
    4
    David Zaslav
    Discovery
    Communications
    37
    5
    Robert Kotick
    Activision Blizzard
    33
    6
    Brian Roberts
    Comcast Corp.
    33
    7
    Jeffrey L. Bewkes
    Time Warner
    33
    8
    Virginia Rometty
    32
    9
    Leonard Schleifer
    10
    Stephen Wynn
    IBM
    Regeneron
    Pharmaceuticals
    Wynn Resorts Ltd.
    Copyright © 2019 John Wiley & Sons, Inc.
    28
    28
    C O N T E M POR A R Y
    S T R ATE GY
    A N A LYSI S
    CONT EMPORARY
    ST RATEGY
    A NALYSIS
    TENTH EDITION
    ROBERT M. GRANT
    VP AND EDITORIAL DIRECTOR
    George Hoffman
    EDITORIAL DIRECTOR
    Veronica Visentin
    EXECUTIVE EDITOR
    Lise Johnson
    SPONSORING EDITOR
    Jennifer Manias
    SENIOR EDITORIAL MANAGER
    Leah Michael
    EDITORIAL MANAGER
    Judy Howarth
    CONTENT MANAGEMENT DIRECTOR
    Lisa Wojcik
    CONTENT MANAGER
    Nichole Urban
    SENIOR CONTENT SPECIALIST
    Nicole Repasky
    PRODUCTION EDITOR
    Indirakumari S
    COVER PHOTO CREDIT
    © iStockPhoto/Sergey_Peterman
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    ISBN: 978-1-119-49572-7 (PBK)
    ISBN: 978-1-119-49565-9 (EVALC)
    Library of Congress Cataloging-in-Publication Data
    Names: Grant, Robert M., 1948– author.
    Title: Contemporary strategy analysis / Robert M. Grant.
    Description: Tenth edition. | Hoboken, NJ : Wiley & Sons, 2018. | Includes
    index. | Description based on print version record and CIP data provided
    by publisher; resource not viewed.
    Identifiers: LCCN 2018037723 (print) | LCCN 2018041783 (ebook) | ISBN
    9781119495796 (Adobe PDF) | ISBN 9781119495673 (ePub) | ISBN 9781119495727
    (pbk.)
    Subjects: LCSH: Strategic planning.
    Classification: LCC HD30.28 (ebook) | LCC HD30.28 .G722 2018 (print) | DDC
    658.4/012—dc23
    LC record available at https://lccn.loc.gov/2018037723
    The inside back cover will contain printing identification and country of origin if omitted from this page.
    In addition, if the ISBN on the back cover differs from the ISBN on this page, the one on the back cover is
    correct.
    To Liam, Ava, Finn, Evie, Max, Lucy, and Bobby
    BRIEF CONTENTS
    Author Biography
    Preface to Tenth Edition
    PART I
    1
    INTRODUCTION
    The Concept of Strategy
    xiv
    xv
    1
    3
    PART II THE TOOLS OF STRATEGY ANALYSIS
    31
    2
    Goals, Values, and Performance
    33
    3
    Industry Analysis: The Fundamentals
    59
    4
    Further Topics in Industry and Competitive Analysis
    83
    5
    Analyzing Resources and Capabilities
    107
    6
    Organization Structure and Management Systems:
    The ­Fundamentals of Strategy Implementation
    131
    PART III  BUSINESS STRATEGY AND THE QUEST FOR
    COMPETITIVE ADVANTAGE
    153
    7
    The Sources and Dimensions of Competitive Advantage
    155
    8
    Industry Evolution and Strategic Change
    189
    9
    Technology-Based Industries and the
    Management of Innovation
    219
    PART IV
    CORPORATE STRATEGY
    249
    10 Vertical Integration and the Scope of the Firm
    251
    11 Global Strategy and the Multinational Corporation
    269
    12 Diversification Strategy
    297
    viii BRIEF CONTENTS
    13 Implementing Corporate Strategy: Managing
    the Multibusiness Firm
    315
    14 External Growth Strategies: Mergers, Acquisitions,
    and Alliances
    340
    15 Current Trends in S
    ­ trategic Management
    360
    CASES TO ACCOMPANY CONTEMPORARY STRATEGY
    ANALYSIS, TENTH EDITION
    Glossary
    Index
    637
    643
    CONTENTS
    Author Biography
    Preface to Tenth Edition
    xiv
    xv
    PART I INTRODUCTION
    1
    1
    3
    The Concept of Strategy
    Introduction and Objectives
    The Role of Strategy in Success
    The Basic Framework for Strategy Analysis
    A Brief History of Business Strategy
    Strategy Today
    How is Strategy Made? The Strategy Process
    Strategic Management of Not-For-Profit Organizations
    Summary
    Self-Study Questions
    Notes
    4
    4
    9
    11
    14
    20
    24
    26
    28
    28
    PART II THE TOOLS OF STRATEGY ANALYSIS
    31
    2
    Goals, Values, and Performance
    33
    Introduction and Objectives
    Strategy as a Quest for Value
    Profit, Cash Flow, and Enterprise Value
    Putting Performance Analysis into Practice
    Beyond Profit: Values and Corporate Social Responsibility
    Beyond Profit: Strategy and Real Options
    Summary
    Self-Study Questions
    Notes
    34
    35
    39
    42
    49
    53
    56
    57
    57
    Industry Analysis: The Fundamentals
    59
    Introduction and Objectives
    From Environmental Analysis to Industry Analysis
    Analyzing Industry Attractiveness
    Applying Industry Analysis to Forecasting Industry Profitability
    Using Industry Analysis to Develop Strategy
    Defining Industries: Where to Draw the Boundaries
    From Industry Attractiveness to Competitive Advantage:
    Identifying Key Success Factors
    60
    60
    62
    71
    74
    75
    3
    77
    x CONTENTS
    4
    5
    6
    Summary
    Self-Study Questions
    Notes
    80
    81
    81
    Further Topics in Industry and Competitive Analysis
    83
    Introduction and Objectives
    The Limits of Industry Analysis
    Beyond the Five Forces: Complements, Ecosystems, and Business Models
    Competitive Interaction: Game Theory and Competitor Analysis
    Segmentation and Strategic Groups
    Summary
    Self-Study Questions
    Notes
    84
    84
    86
    91
    98
    103
    103
    104
    Analyzing Resources and Capabilities
    107
    Introduction and Objectives
    The Role of Resources and Capabilities in Strategy Formulation
    Identifying Resources and Capabilities
    Appraising Resources and Capabilities
    Developing Strategy Implications
    Summary
    Self-Study Questions
    Notes
    108
    108
    112
    119
    123
    128
    129
    130
    Organization Structure and Management Systems:
    The ­Fundamentals of Strategy Implementation
    131
    Introduction and Objectives
    Strategy Formulation and Strategy Implementation
    The Fundamentals of Organizing: Specialization,
    Cooperation, and Coordination
    Developing Organizational Capability
    Organization Design
    Summary
    Self-Study Questions
    Notes
    132
    133
    136
    139
    142
    150
    150
    151
    PART III  BUSINESS STRATEGY AND THE QUEST
    FOR COMPETITIVE ADVANTAGE
    153
    7
    The Sources and Dimensions of Competitive Advantage
    155
    Introduction and Objectives
    How Is Competitive Advantage Established?
    How Is Competitive Advantage Sustained?
    Cost Advantage
    Differentiation Advantage
    Can Firms Pursue Both Cost and Differentiation Advantage?
    156
    156
    162
    166
    173
    184
    CONTENTS   xi
    8
    9
    Summary
    Self-Study Questions
    Notes
    185
    186
    186
    Industry Evolution and Strategic Change
    189
    Introduction and Objectives
    The Industry Life Cycle
    The Challenge of Organizational Adaptation and Strategic Change
    Managing Strategic Change
    Summary
    Self-Study Questions
    Notes
    190
    191
    198
    204
    215
    215
    216
    Technology-Based Industries and the
    Management of Innovation
    219
    Introduction and Objectives
    Competitive Advantage in Technology-Intensive Industries
    Strategies to Exploit Innovation: How and When to Enter
    Standards, Platforms, and Network Externalities
    Implementing Technology Strategies: Internal and External
    Sources of Innovation
    Implementing Technology Strategies: Organizing for Innovation
    Summary
    Self-Study Questions
    Notes
    220
    221
    227
    232
    238
    242
    245
    246
    246
    PART IV CORPORATE STRATEGY
    249
    10 Vertical Integration and the Scope of the Firm
    251
    Introduction and Objectives
    Transaction Costs and the Scope of the Firm
    The Benefits and Costs of Vertical Integration
    Designing Vertical Relationships
    Summary
    Self-Study Questions
    Notes
    11 Global Strategy and the Multinational Corporation
    Introduction and Objectives
    Implications of International Competition for Industry Analysis
    Analyzing Competitive Advantage in an International Context
    Internationalization Decisions: Locating Production
    Internationalization Decisions: Entering a Foreign Market
    Multinational Strategies: Global Integration versus
    National Differentiation
    Implementing International Strategy: Organizing the
    Multinational Corporation
    252
    252
    256
    263
    266
    266
    267
    269
    270
    271
    273
    276
    278
    281
    287
    xii CONTENTS
    Summary
    Self-Study Questions
    Notes
    12 Diversification Strategy
    Introduction and Objectives
    Motives for Diversification
    Competitive Advantage from Diversification
    Diversification and Performance
    The Meaning of Relatedness in Diversification
    Summary
    Self-Study Questions
    Notes
    293
    294
    295
    297
    298
    299
    303
    307
    309
    311
    312
    312
    13 Implementing Corporate Strategy: Managing the Multibusiness
    Firm
    315
    Introduction and Objectives
    The Role of Corporate Management
    Managing the Corporate Portfolio
    Managing Linkages Across Businesses
    Managing Individual Businesses
    Managing Change in the Multibusiness Corporation
    Governance of Multibusiness Corporations
    Summary
    Self-Study Questions
    Notes
    14 External Growth Strategies: Mergers, Acquisitions,
    and Alliances
    Introduction and Objectives
    Mergers and Acquisitions
    Strategic Alliances
    Summary
    Self-Study Questions
    Notes
    15 Current Trends in ­Strategic Management
    Introduction
    The New Environment of Business
    New Directions in Strategic Thinking
    Redesigning Organizations
    The Changing Role of Managers
    Summary
    Notes
    316
    316
    317
    319
    323
    329
    333
    337
    338
    338
    340
    341
    342
    351
    357
    357
    358
    360
    361
    361
    365
    369
    371
    372
    373
    CONTENTS   xiii
    CASES TO ACCOMPANY CONTEMPORARY STRATEGY
    ANALYSIS, TENTH EDITION
    1
    Tough Mudder Inc.: Building Leadership in Mud Runs
    375
    2
    Kering SA: Probing the Performance Gap with LVMH
    384
    3
    Pot of Gold? The US Legal Marijuana Industry
    393
    4
    The US Airline Industry in 2018
    403
    5
    The Lithium-Ion Battery Industry
    415
    6
    Walmart Inc. in 2018: The World’s Biggest Retailer Faces
    New Challenges
    428
    7
    Harley-Davidson, Inc. in 2018
    442
    8
    BP: Organizational Structure and Management Systems
    455
    9
    Starbucks Corporation, March 2018
    462
    10 Eastman Kodak’s Quest for a Digital Future
    475
    11 The New York Times: Adapting to the Digital Revolution
    492
    12 Tesla: Disrupting the Auto Industry
    503
    13 Video Game Console Industry in 2018
    515
    14 Eni SpA: The Corporate Strategy of an International
    Energy Major
    527
    15 Zara: Super-Fast Fashion
    546
    16 Manchester City: Building a Multinational Soccer Enterprise
    554
    17 Haier Group: Internationalization Strategy
    566
    18 The Virgin Group in 2018
    577
    19 Google Is Now Alphabet—But What’s the Corporate Strategy?
    587
    20 Restructuring General Electric
    600
    21 Walt Disney, 21st Century Fox, and the Challenge of New Media 617
    22 W. L. Gore & Associates: Rethinking Management
    629
    Glossary
    Index
    637
    643
    AUTHOR BIOGRAPHY
    Robert M. Grant is Professor of Strategic Management at Bocconi University, Milan,
    Italy and a Visiting Professor at Cass Business School, London. He was born in Bristol,
    England and has taught at Georgetown University, London Business School, University of British Columbia, California Polytechnic, UCLA, Insead, and University of South
    Africa. His business experience includes making tires (Firestone) and meat pies (Kraft
    Foods) and strategy consulting at American Express, Eni, BP, and other companies.
    PREFACE T O
    TENTH EDITION
    Contemporary Strategy Analysis equips managers and students of management with
    the concepts and frameworks needed to make better strategic decisions. My goal is
    a strategy text that reflects the dynamism and intellectual rigor of this ­fast-developing
    field of management and takes account of the strategy issues that companies face today.
    Contemporary Strategy Analysis endeavors to be both rigorous and relevant. While
    embodying the latest thinking in the strategy field, it aims to be accessible to students
    from different backgrounds and with varying levels of experience. I achieve this accessibility by combining clarity of exposition, concentration on the fundamentals of value
    creation, and an emphasis on practicality.
    This tenth edition maintains the book’s focus on the essential tasks of strategy: identifying the sources of superior business performance and formulating and implementing a strategy that exploits these sources of superior performance. At the same time,
    the content of the book has been revised to reflect recent developments in the business
    environment and in strategy research.
    Distinctive features of the tenth edition include:
    ●●
    ●●
    ●●
    ●●
    More explicit guidance on how to apply the tools of strategy to analyze strategic
    situations and develop strategy recommendations. See, in particular: “Applying
    Strategy Analysis” in Chapter 1, “Putting Performance Analysis into Practice”
    in Chapter 2, “Using Industry Analysis to Develop Strategy” in Chapter 3, and
    “Developing Strategy Implications” [from the analysis of resources and capabilities] in Chapter 5.
    Increased emphasis on strategy making under conditions of technological
    change—especially in digital markets where strategy analysis must take account
    of complements, network externalities, platform-based competition, and the
    application of innovative business models to complex business ecosystems (see
    Chapters 4, 8, and 9).
    Integration of stakeholder interests and corporate social responsibility within a
    view of the firm as an institution for creating value (Chapter 2).
    An updated approach to strategy implementation. While maintaining an
    integrated approach to strategy formulation and strategy implementation,
    ­Chapters 6, 8, and 13 offers a systematic approach to strategy execution that
    the role of organizational capabilities and capability development in guiding resource allocation, and the design of organizational structures and
    management systems.
    My thanks to my editorial and production team at Wiley, especially to Lise Johnson,
    Judy Howarth, and S. Indirakumari; and to Mary Fogarty and Nitish Mohan for their
    xvi PREFACE TO TENTH EDITION
    assistance. This tenth edition of Contemporary Strategy Analysis has benefitted hugely
    from feedback and suggestions from users—both instructors and students. I thank you
    and look forward to continuing my engagement with you. Please feel free to contact me at
    grant@unibocconi.com.
    Robert M. Grant
    I
    INTRODUCTION
    1 The Concept of Strategy
    1
    The Concept of Strategy
    Strategy is the great work of the organization. In situations of life or death, it is the Tao
    of survival or extinction. Its study cannot be neglected.
    —SUN TZU, THE ART OF WAR
    To shoot a great score you need a clever strategy.
    —RORY MCILROY, GOLF MONTHLY, MAY 19, 2011
    Everybody has a plan until they get punched in the mouth.
    —MIKE TYSON, FORMER WORLD HEAVYWEIGHT BOXING CHAMPION
    OUTLINE
    ◆◆
    Introduction and Objectives
    ●●
    Corporate and Business Strategy
    ◆◆
    The Role of Strategy in Success
    ●●
    Describing Strategy
    ◆◆
    The Basic Framework for Strategy Analysis
    ●●
    ◆◆
    ◆◆
    ◆◆
    Strategic Fit
    A Brief History of Business Strategy
    ●●
    Origins and Military Antecedents
    ●●
    From Corporate Planning to Strategic Management
    Strategy Today
    How Is Strategy Made? The Strategy Process
    ●●
    Design versus Emergence
    ●●
    Applying Strategy Analysis
    ◆◆
    Strategic Management of Not-For-Profit
    ­Organizations
    ◆◆
    Summary
    What Is Strategy?
    ◆◆
    ●●
    Self-Study Questions
    ●●
    Why Do Firms Need Strategy?
    ◆◆
    Notes
    ●●
    Where Do We Find Strategy?
    4 PART I INTRODUCTION
    Introduction and Objectives
    Strategy is about achieving success. This chapter explains what strategy is and why it is important to
    success, for both organizations and individuals. We will distinguish strategy from planning. Strategy is
    not a detailed plan or program of instructions; it is a unifying theme that gives coherence and direction
    to the actions and decisions of an individual or an organization.
    The principal task of this chapter will be to introduce the basic framework for strategy analysis that
    underlies this book. This framework comprises two components of strategy analysis: analysis of the
    external environment of the firm (mainly industry analysis) and analysis of the internal environment
    (primarily analysis of the firm’s resources and capabilities). We shall then examine what strategy is, how it
    has developed over time, how to describe the strategy of a business enterprise, and how organizations
    go about making strategy.
    By the time you have completed this chapter, you will be able to:
    ◆◆
    Appreciate the contribution that strategy can make to successful performance and recognize the essential components of an effective strategy.
    ◆◆
    Comprehend the basic framework of strategy analysis that underlies this book.
    ◆◆
    Recognize how strategic management has evolved over the past 60 years.
    ◆◆
    Identify and describe the strategy of a business enterprise.
    ◆◆
    Understand how strategy is made within organizations.
    ◆◆
    Recognize the distinctive features of strategic management among not-for-profit organizations.
    Since the purpose of strategy is to help us to win, we start by looking at the role of strategy in success.
    The Role of Strategy in Success
    Strategy Capsules 1.1 and 1.2 describe the careers of two individuals, Queen Elizabeth
    II and Lady Gaga, who have been outstandingly successful in leading their organizations. Although these two remarkable women operate within vastly different arenas,
    can their success be attributed to any common factors?
    For neither of them can success be attributed to overwhelmingly superior resources.
    For all of Queen Elizabeth’s formal status as head of state, she has very little real power
    and, in most respects, is a servant of the democratically elected British government.
    Lady Gaga is clearly a creative and capable entertainer, but few would claim that
    she entered the music business with outstanding talents as a vocalist, musician, or
    songwriter.
    CHAPTER 1 The Concept of Strategy   5
    Nor can their success be attributed either exclusively or primarily to luck. Both have
    experienced difficulties and setbacks at different stages of their careers. Central to their
    success, however, has been their ability to respond to events—whether positive or negative—with flexibility and clarity of direction.
    My contention is that, common to both the 60-year successful reign of Queen Elizabeth II and the short but stellar career of Lady Gaga, is the pr

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