Strategy Planning Critical Thinking

timer Asked: Jan 28th, 2021

Question Description

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Critical Thinking: Industry Analysis

To prepare for this assignment, review Figures 3.1, 3.2, 3.3, 3.5, and 3.6 from your textbook. Select a Saudi Arabian company, identify the industry in which it competes, and identify its three main competitors. Complete an Industry Analysis by answering the following questions.

  1. Analyze and predict industry profitability:
    1. Apply a detailed Porter’s Five Forces framework with a graphic representation (Figure 3.3) and written explanation for your selected company in relation to the Five Forces.
    2. Given the Five Forces analysis outcomes, predict the level of industry profitability expressed as high, intermediate, or low.
  2. Implications for strategy:
    1. What strategies can the rival companies adopt to reduce competitive pressure and improve industry profitability?
    2. Which strategies do you recommend for your company to improve its competitiveness, position, and earnings?
  3. Identifying Key Success Factors (KSFs)—What are the KSFs of your company?
    1. See Figure 3.6. Who are the customers and what do they want?
    2. See Figure 3.6. How does the company survive competition?
    3. Has your company’s KSFs changed over time?

Your well-written paper should meet the following requirements:

  • Be 6 to 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.

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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: 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 presence of a soundly formulated and effectively implemented strategy. While these strategies did not exist as explicit plans, for both Queen Elizabeth and Lady Gaga we can discern a consistency of direction based upon clear goals and an ability to bend circumstances toward their desired outcomes. Elizabeth Windsor’s strategy as queen of the UK ...
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