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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.
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Kingdom of Saudi
Arabia
Ministry of Education
Saudi Electronic
University
المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية اإللكترونية
College of Administrative and Financial Sciences
Assignment 2
Strategic Management (MGT 401)
Deadline: 11/11/2023 @ 23:59
Course Name: Strategic Management
Student’s Name:
Course Code: MGT401
Student’s ID Number:
Semester: First
CRN:
Academic Year:2023-24
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
Marks Obtained
/Out of 10
Level of Marks: High/Middle/Low
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.
Assignment No. 2: Case Study
Learning Outcomes:
▪
▪
▪
▪
Describe the different issues related to environmental scanning, strategy formulation, and strategy
implementation in diversified organizations- CLO2
Explain the contribution of functional, business, and corporate strategies in the competitive advantage
of the organization-CLO3.
Distinguish between different types and levels of strategy and strategy implementation-CLO4
Communicate issues, results, and recommendations coherently, and effectively regarding appropriate
strategies for different situations-CLO6
Read carefully case study No. 24 from your textbook (Best Buy Co. Inc:
Sustainable Customer Centricity Model?) and answer the following
questions:
1. Identify opportunities and threats as well as strengths and weaknesses of the company
(draw a SWOT matrix). 2pts
2. What is the competitive strategy used by Best Buy? Justify your answer. 2pts
3. What are the main functional strategies used by this company? Are they successful?
Justify 2pts
4. What are the different difficulties faced by the company to maintain and reinforce its
competitive advantage? 2pts
5. Suggest some recommendations or solutions to Best Buy to improve its competitive
advantage. 2pts
Notes:
✓ Copy/paste the phrases from the text is not acceptable. You must use your own
words.
✓ Using the terminology developed in the course of strategic Management is highly
valued.
ANSWERS
Strategic Management and Business Policy
Globalization, Innovation, and Sustainability
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Authorized adaptation from the United States edition, entitled Strategic Management and Business Policy,
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ISBN 10: 1-292-06081-6
ISBN 13: 978-1-292-06081-1
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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
5
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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
7
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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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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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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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CONTENTS
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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CONTENTS
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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CONTENTS
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 sl
