Saudi Electronic University Module 10 Haier Company Strategy Discussion Questions

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For this week’s discussion, read the case study found in your textbook (Case 17): Haier Group: Internationalization Strategy. Remember, a case study is a puzzle to be solved, so before reading and answering the specific case and study questions, develop your proposed solution by following these five steps: 1. 2. 3. 4. 5. 1. 2. 3. 4. Read the case study to identify the key issues and underlying issues. These issues are the principles and concepts of the course area which apply to the situation described in the case study. Record the facts from the case study which are relevant to the principles and concepts of the course area issues. The case may have extraneous information not relevant to the current course area. Your ability to differentiate between relevant and irrelevant information is an important aspect of case analysis, as it will inform the focus of your answers. Describe in some detail the actions that would address or correct the situation. Consider how you would support your solution with examples from experience or current real-life examples or cases from textbooks. Complete this initial analysis and then read the discussion questions. Typically, you will already have the answers to the questions but with a broader consideration. At this point, you can add the details and/or analytical tools required to solve the case. Case Study Questions: Compare and contrast the appliance strategies used by another multinational appliance company such as LG, Samsung, Bosch-Siemens, Electrolux, Whirlpool, etc. and Haier. What is Haier’s internationalization strategy? Does Haier’s international strategy appear to be effective? Is it likely that Haier’s success and management practices can be applied outside of China? Why or why not? Embed course material concepts, principles, and theories (require supporting citations) in your initial response along with at least one scholarly, peer-reviewed journal article. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references. Use Saudi Electronic University academic writing standards and APA style guidelines. You are required to reply to at least two peer discussion question post answers to this weekly discussion question and/or your instructor’s response to your posting. These post replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post answer. Normal course dialogue doesn’t fulfill these two peer replies but is expected throughout the course. Answering all course questions is also required. References and in-text citations should be in 7th-APA style. 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 This book was set in 10/12pt ITC Garamond Std by SPi Global and printed and bound by Quad Graphics. Founded in 1807, John Wiley & Sons, Inc. has been a valued source of knowledge and understanding for more than 200 years, helping people around the world meet their needs and fulfill their aspirations. Our company is built on a foundation of principles that include responsibility to the communities we serve and where we live and work. In 2008, we launched a Corporate Citizenship Initiative, a global effort to address the environmental, social, economic, and ethical challenges we face in our business. Among the issues we are addressing are carbon impact, paper specifications and procurement, ethical conduct within our business and among our vendors, and community and charitable support. For more information, please visit our website: Copyright © 2019, 2016, 2013, 2006, 2000 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923 (Web site: Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, (201) 748-6011, fax (201) 748-6008, or online at: Evaluation copies are provided to qualified academics and professionals for review purposes only, for use in their courses during the next academic year. These copies are licensed and may not be sold or transferred to a third party. Upon completion of the review period, please return the evaluation copy to Wiley. Return instructions and a free of charge return shipping label are available at: If you have chosen to adopt this textbook for use in your course, please accept this book as your complimentary desk copy. Outside of the United States, please contact your local sales representative. 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 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 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: a...
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Running head: HAIER COMPANY


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Haier decided to enter into markets in developed countries where competition is high,
and the customers are sophisticated. This makes them improve their products due to the high
demand for high quality. LG focuses on establishing a firm and unique brand identity ar...

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