need report based on 7 and 8 chapters only
Introduction : One page
Description: 15-20 pages
My understanding: 2-3 pages
Implications (Your past experience): 1-2 page
Conclusions
References: 10-12
chapter 7&8 page number 247 to 310
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GREGORY G. DESS
University of Texas at Dallas
GERRY McNAMARA
Michigan State University
ALAN B. EISNER
Pace University
SEUNG-HYUN (SEAN) LEE
University of Texas at Dallas
text & cases
ninth edition
STRATEGIC
MANAGEMENT
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STRATEGIC MANAGEMENT: TEXT AND CASES, NINTH EDITION
Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright 2019 by McGraw-
Hill Education. All rights reserved. Printed in the United States of America. Previous editions 2016,
2014, and 2012. No part of this publication may be reproduced or distributed in any form or by any means,
or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education,
including, but not limited to, in any network or other electronic storage or transmission, or broadcast for
distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside
the United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 0 LWI 21 20 19 18
ISBN 978-1-259-81395-5 (bound edition)
MHID 1-259-81395-9 (bound edition)
ISBN 978-1-259-89997-3 (loose-leaf edition)
MHID 1-259-89997-7 (loose-leaf edition)
ISBN 978-1-259-89994-2 (instructors edition)
MHID 1-259-89994-2 (instructors edition)
Portfolio Director: Michael Ablassmeir
Lead Product Developer: Kelly Delso
Product Developer: Anne Ehrenworth
Executive Marketing Manager: Debbie Clare
Content Project Managers: Harvey Yep (Core), Bruce Gin (Assessment)
Buyer: Susan K. Culbertson
Design: Matt Diamond
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Cover Image: Anatoli Styf/Shutterstock
Compositor: SPi Global
All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.
Library of Congress Cataloging-in-Publication Data
Names: Dess, Gregory G., author. | McNamara, Gerry, author. | Eisner, Alan B., author.
Title: Strategic management : text and cases / Gregory G. Dess, University of
Texas at Dallas, Gerry McNamara, Michigan State University, Alan B.
Eisner, Pace University.
Description: Ninth edition. | New York, NY : McGraw-Hill Education, [2019]
Identifiers: LCCN 2017052281 | ISBN 9781259813955 (alk. paper)
Subjects: LCSH: Strategic planning.
Classification: LCC HD30.28 .D4746 2019 | DDC 658.4/012dc23 LC record available at
https://lccn.loc.gov/2017052281
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website
does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education
does not guarantee the accuracy of the information presented at these sites.
mheducation.com/highered
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To my family, Margie and Taylor and my parents,
the late Bill and Mary Dess; and Michael Wood
To my first two academic mentorsCharles Burden
and Les Rue (of Georgia State University)
Greg
To my wonderful wife, Gaelen, my children,
Megan and AJ; and my parents, Gene and Jane
Gerry
To my family, Helaine, Rachel, and Jacob
Alan
To my family, Hannah, Paul and Stephen; and my
parents, Kenny and Inkyung.
Sean
DEDICATION
dedication
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Gregory G. Dess
is the Andrew R. Cecil Endowed Chair in Management
at the University of Texas at Dallas. His primary research
interests are in strategic management, organization-
environment relationships, and knowledge management.
He has published numerous articles on these subjects
in both academic and practitioner-oriented journals. He
also serves on the editorial boards of a wide range of
practitioner-oriented and academic journals. In August
2000, he was inducted into the Academy of Management
Journals Hall of Fame as one of its charter members.
Professor Dess has conducted executive programs in
the United States, Europe, Africa, Hong Kong, and
Australia. During 1994 he was a Fulbright Scholar in
Oporto, Portugal. In 2009, he received an honorary
doctorate from the University of Bern (Switzerland).
He received his PhD in Business Administration from
the University of Washington (Seattle) and a BIE degree
from Georgia Tech.
Gerry McNamara
is the Eli Broad Professor of Management at Michigan
State University. His research draws on cognitive and
behavioral theories to explain strategic phenomena,
including strategic decision making, mergers and
acquisitions, and environmental assessments. His
research has been published in the Academy of
Management Journal, the Strategic Management Journal,
Organization Science, Organizational Behavior and Human
Decision Processes, the Journal of Applied Psychology, the
Journal of Management, and the Journal of International
Business Studies. Gerrys research has also been
abstracted in the Wall Street Journal, Harvard Business
Review, New York Times, Bloomberg Businessweek, the
Economist, and Financial Week. He serves as an Associate
Editor for the Strategic Management Journal and
previously served as an Associate Editor for the Academy
of Management Journal. He received his PhD from the
University of Minnesota.
ABOUT THE AUTHORS
about the
authors
He GaoPhoto provided by the author
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Alan B. Eisner
is Professor of Management and Department Chair,
Management and Management Science Department,
at the Lubin School of Business, Pace University.
He received his PhD in management from the Stern
School of Business, New York University. His primary
research interests are in strategic management,
technology management, organizational learning,
and managerial decision making. He has published
research articles and cases in journals such as Advances
in Strategic Management, International Journal of
Electronic Commerce, International Journal of Technology
Management, American Business Review, Journal of
Behavioral and Applied Management, and Journal of the
International Academy for Case Studies. He is the former
Associate Editor of the Case Associations peer-reviewed
journal, The CASE Journal.
Seung-Hyun Lee
is a Professor of strategic management and international
business and the Area Coordinator of the Organization,
Strategy, and International Management area at the
Jindal School of Business, University of Texas at Dallas.
His primary research interests lie on the intersection
between strategic management and international
business spanning from foreign direct investment to
issues of microfinance and corruption. He has published
in numerous journals including Academy of Management
Review, Journal of Business Ethics, Journal of International
Business Studies, Journal of Business Venturing, and
Strategic Management Journal. He received his MBA and
PhD from the Ohio State University.
Seung-Hyun LeeAlan B. Eisner
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PREFACE
Welcome to the Ninth Edition of Strategic Management:
Text and Cases! As noted on the cover, we are happy to introduce Seung-
Hyun Lee to the author team. Greg has known Seung since we both joined the
faculty at the University of Texas at Dallas in 2002. Seung has developed a very
distinguished publication record in both strategic management and international
business/international management and he has made many important
contributions in these areas in the present edition. In particular, his international
expertise has been particularly valuable in further globalizing our book.
We appreciate the constructive and positive feedback that we have received on our
work. Heres some of the encouraging feedback we have received from our reviewers:
The Dess book comprehensively covers the fundamentals of strategy and supports concepts with
research and managerial insights.
Joshua J. Daspit, Mississippi State University
Very engaging. Students will want to read it and find it hard to put down.
Amy Grescock, University of Michigan, Flint
Very easy for students to understand. Great use of business examples throughout the text.
Debbie Gilliard, Metropolitan State University, Denver
I use Strategic Management in a capstone course required of all business majors, and students appreciate
the book because it synergizes all their business education into a meaningful and understandable whole.
My students enjoy the books readability and tight organization, as well as the contemporary examples,
case studies, discussion questions, and exercises.
William Sannwald, San Diego State University
The Dess book overcomes many of the limitations of the last book I used in many ways: (a)
presents content in a very interesting and engrossing manner without compromising the depth and
comprehensiveness, (b) inclusion of timely and interesting illustrative examples, and (c) EOC exercises
do an excellent job of complementing the chapter content.
Sucheta Nadkami, University of Cambridge
The content is current and my students would find the real-world examples to be extremely interesting.
My colleagues would want to know about it and I would make extensive use of the following features:
Learning from Mistakes, Strategy Spotlights, and Issues for Debate. I especially like the
Reflecting on Career Implications feature. Bottom line: the authors do a great job of explaining
complex material and at the same time their use of up-to-date examples promotes learning.
Jeffrey Richard Nystrom, University of Colorado at Denver
We always strive to improve our work and we are most appreciative of the extensive and
thoughtful feedback that many strategy professionals have graciously given us. We endeavored
to incorporate their ideas into the Ninth Editionand we acknowledge them by name later in
the Preface.
We believe we have made valuable improvements throughout our many revised editions of
Strategic Management. At the same time, we strive to be consistent and true to our original
overriding objective: a book that satisfies three Rsrigor, relevance, and readable. And we are
preface
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pleased that we have received feedback (such as the comments on the previous page) that is
consistent with what we are trying to accomplish.
What are some of the features in Strategic Management that reinforce the 3 Rs? First, we
build in rigor by drawing on the latest research by management scholars and insights from
management consultants to offer a current a current and comprehensive view of strategic issues.
We reinforce this rigor with our Issues for Debate and Reflecting on Career Implications. . .
that require students to develop insights on how to address complex issues and understand how
strategy concepts can enhance their career success. Second, to enhance relevance, we provide
numerous examples from management practice in the text and Strategy Spotlights (sidebars).
We also increase relevance by relating course topic and examples to current business and societal
themes, including environmental sustainability, ethics, globalization, entrepreneurship, and data
analytics. Third, we stress readability with an engaging writing style with minimal jargon to ensure
an effective learning experience. This is most clearly evident in the conversational presentations
of chapter opening Learning from Mistakes and chapter ending Issues for Debate.
Unlike other strategy texts, we provide three separate chapters that address timely topics about
which business students should have a solid understanding. These are the role of intellectual assets
in value creation (Chapter 4), entrepreneurial strategy and competitive dynamics (Chapter 8),
and fostering entrepreneurship in established organizations (Chapter 12). We also provide an
excellent and thorough chapter on how to analyze strategic management cases.
In developing Strategic Management: Text and Cases, we certainly didnt forget the instructors.
As we all know, you have a most challenging (but rewarding) job. We did our best to help you.
We provide a variety of supplementary materials that should help you in class preparation
and delivery. For example, our chapter notes do not simply summarize the material in the
text. Rather (and consistent with the concept of strategy), we ask ourselves: How can we add
value? Thus, for each chapter, we provide numerous questions to pose to help guide class
discussion, at least 12 boxed examples to supplement chapter material, and three detailed
teaching tips to further engage students. For example, we provide several useful insights on
strategic leadership from one of Gregs colleagues, Charles Hazzard (formerly Executive Vice
President, Occidental Chemical). Also, we completed the chapter notesalong with the entire
test bankourselves. That is, unlike many of our rivals, we didnt simply farm the work out
to others. Instead, we felt that such efforts help to enhance quality and consistencyas well
as demonstrate our personal commitment to provide a top-quality total package to strategy
instructors. With the Ninth Edition, we also benefited from valued input by our strategy
colleagues to further improve our work.
Lets now address some of the key substantive changes in the Ninth Edition. Then we will
cover some of the major features that we have had in previous editions.
WHATS NEW? HIGHLIGHTS OF THE NINTH EDITION
We have endeavored to add new material to the chapters that reflects the feedback we have
received from our reviewers as well as the challenges todays managers face. Thus, we all
invested an extensive amount of time carefully reviewing a wide variety of books, academic and
practitioner journals, and the business press.
We also worked hard to develop more concise and tightly written chapters. Based on feedback
from some of the reviewers, we have tightened our writing style, tried to eliminate redundant
examples, and focused more directly on what we feel is the most important content in each
chapter for our audience. The overall result is that we were able to update our material, add
valuable new content, andat the same timeshorten the length of the chapters.
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Here are some of the major changes and improvements in the Ninth Edition:
Big Data/Data Analysis. A central theme of the Ninth Edition, it has become a leading
and highly visible component of a broader technological phenomenathe emergence
of digital technology. Such initiatives have the potential to enable firms to better
customize their product and service offerings to customers while more efficiently and
fully using the resources of the company. Throughout the text, we provide examples
from a wide range of industries and government. This includes discussions of how Coca
Cola uses data analytics to produce consistent orange juice, IBMs leveraging of big
data to become a healthcare solution firm, Caterpillars use of data analytics to improve
machine reliability and to identify needed service before major machine failures, and
Digital Reasonings efforts to use data analytics to enhance the ability of firms to
control employees and avoid illegal and unethical behavior.
Greater coverage of international business/international management (IB/IM from new
co-author). As we noted at the beginning of the Preface, we have invited Seung-Hyun
Lee, an outstanding IB/IM scholar, to join the author team and we are very pleased
that he has accepted! Throughout the book we have included many concepts and
examples of IB/IM that reflects the growing role of international operations for a wide
range of industries and firms. We discuss how differences in national culture impact
the negotiation of contracts and whether or not to adapt human resource practices
when organizations cross national boundaries. We also include a discussion of how
corporate governance practices differ across countries and discuss in depth how Japan
is striving to develop balanced governance practices that incorporate elements of
U.S. practices while retaining, at its core, elements of traditional Japanese practices.
Additionally, we discuss why conglomerate firms thrive in Asian markets even as this
form of organization has gone out of favor in the United States and Europe. Finally,
we discuss research that suggests that firms in transition economies can improve their
innovative performance by focusing on learning across boundaries within the firm
compared to learning from outside partners.
Executive Insights: The Strategic Management Process. Here, we introduce a
nationally recognized leader and explore several key issues related to strategic
management. The executive is William H. McRaven, a retired four-star admiral who
leads the nations second largest system of higher education. As chief executive officer
of the UT System, he oversees 14 institutions that educate 217,000 students and employ
20,000 faculty and more than 70,000 health care professionals, researchers, and staff.
He is perhaps best known for his involvement in Operation Neptune Spear, in which
he commanded the U.S. Navy Special Forces who located and killed al Qaeda leader
Osama bin Laden. We are very grateful for his valuable contribution!
Half of the 12 opening Learning from Mistakes vignettes that lead off each chapter are
totally new. Unique to this text, they are all examples of what can go wrong, and they
serve as an excellent vehicle for clarifying and reinforcing strategy concepts. After all,
what can be learned if one simply admires perfection?
Over half of our Strategy Spotlights (sidebar examples) are brand new, and many
of the others have been thoroughly updated. Although we have reduced the number
of Spotlights from the previous edition to conserve space, we still have a total of
64by far the most in the strategy market. We focus on bringing the most important
strategy concepts to life in a concise and highly readable manner. And we work hard
to eliminate unnecessary detail that detracts from the main point we are trying to
make. Also, consistent with our previous edition, many of the Spotlights focus on two
PREFACE
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hot issues that are critical in leading todays organizations: ethics and environmental
sustainabilityas well as data analytics in this edition.
Key content changes for the chapters include:
Chapter 1 addresses three challenges for executives who are often faced with similar sets
of opposing goals which can polarize their organizations. These challenges, or paradoxes,
are called (1) the innovation paradox, the tension between existing products and new
onesstability and change; (2) the globalization paradox, the tension between global
connectedness and local needs; and, (3) the obligation paradox, the tension between
maximizing shareholder returns and creating benefits for a wide range of stakeholders
employees, customers, society, etc. We also discuss three theaters of practice that
managers need to recognize in order to optimize the positive impact of the corporate
social responsibility (CSR) initiatives. These are (1) Focusing on philanthropy,
(2) Improving operational effectiveness, and (3) Transforming the business model.
Chapter 2 introduces the concept of big data/data analyticsa technology that affects
multiple segments of the general environment. A highly visible component of the
digital economy, such technologies are altering the way business is conducted in a
wide variety of sectorsgovernment, industry, and commerce. We provide a detailed
example of how it has been used to monitor the expenditures of federal, state, and local
governments.
Chapter 3 includes a discussion on program hiring to build human capital. With
program hiring, firms offer employment to promising graduates without knowing
which specific job the employee will fill. Firms employing this tactic believe it allows
them to meet changing market conditions by hiring flexible employees who desire a
dynamic setting. We also include a discussion of how Coca Cola is leveraging data
analytics to produce orange juice that is consistent over time and can be tailored to
meet local market tastes.
Chapter 4 discusses research that has found that millennials have a different definition of
diversity and inclusion than prior generations. That is, millennials look upon diversity as
the blending of different backgrounds, experiences, and perspectives within a team, i.e.,
cognitive diversity. Earlier generationsthe X-Generation and the Boomer Generation
tended to view diversity as a representation of fairness and protection for all regardless
of gender, race, religion, etc. An important implication is that while many millennials
believe that differences of opinion enable teams to excel, relatively few of them feel that
their leaders share this perspective. The chapter also provides a detailed example of
how data analytics can increase employee retention.
Chapter 5 examines how firms can create strong competitive positions in platform
markets. In platform markets, firms act as intermediaries between buyers and sellers.
Success is largely based on the ability of the firm to be the de facto provider of this
matching process. We discuss several actions firms can take to stake out a leadership
position in these markets. In addition, we include a discussion of research outlining
how firms can develop organizational structures and policies to draw on customer
interactions to improve their innovativeness. The key finding from this research is that
it is critical for firms to empower and incent front line employees to look for and share
innovative insights they take away from customer interactions.
Chapter 6 includes a section on different forms of strategic alliances and when they are
most appropriate. In discussing the differences between contractual alliances, equity
alliances, and joint ventures, students can better understand the range of options they
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have to build cooperative arrangements with other firms and the factors that influence
the choice among these options.
Chapter 7 explains two important areas in which culture can play a key role in managing
organizations across national boundaries. First, we discuss situations in which it is best
to not adapt ones company cultureeven if it conflicts with the culture country in
which the firm operates. We provide the example of Googles human resource policy
of providing employees with lots of positive feedback during performance reviews.
Why? Google feels that this is a key reason for its outstanding success in product
innovation. Second, we address some of the challenges that managers encounter when
they negotiate contracts across national boundaries. We discuss research that identifies
several elements of negotiating behaviors that help to identify cultural differences.
Chapter 8 identifies factors investors can examine when evaluating the risk of crowdfunded
ventures. When firms raise funds through crowdfunding, they often have limited
business and financial histories and havent yet built up a clear reputation. This raises
the risks investors face. We identify some factors investors can look into to clarify the
worthiness and risk of firms who are raising financial resources through crowdfunding.
Chapter 9 discusses the increasingly important role that activist investors have in the
corporate governance of publicly-traded firms. Activist investors are investors who
take small but significant ownership stakes in large firms, typically 5 to 10 percent
ownership, and push for major strategic changes in the firm. These activist investors
are often successful, winning 70 percent of the shareholder votes they champion
and have forced the exit of leaders of several large firms. Additionally, we discuss
a corner of Wall Street where women dominate, as corporate governance heads at
major institutional investors. These institutional investors hold large blocks of stock
in all major corporations. As a result, these female leaders are in a position to push
for governance changes in these corporations to make them more responsive to the
concerns of investors, such as increasing opportunities for female corporate leaders.
Chapter 10 discusses how firms can organize to improve their innovativeness. Often
managers look to outside partners to learn new skills and access new knowledge to
improve their innovative performance. We discuss research that suggests that efforts to
look to create novel combinations of knowledge within the firm offer greater potential
to generate stronger innovation performance. The key advantage of internal knowledge
is that it is proprietary and potentially more applicable to the firms innovation efforts.
Chapter 11 includes discussions of multiple firms that have changed their leadership
and control systems to respond to challenges theyve faced. This includes Marvin
Ellisons efforts to revive JC Penney after prior bad leadership, Targets efforts to
change its supply chain system to meet changing customer demands, and the decision
procedures JC Johnson Inc. has put in place to improve its ability to lead its industry in
sustainability efforts.
Chapter 12 highlights the potential to learn from innovation failures. Too often, firms
become risk averse in their behavior in order to avoid failure. We discuss how this
can result in missing truly innovative opportunities. Drawing off research by Julian
Birkinshaw, we discuss the need for firms to get their employees to take bold innovation
actions and steps firms can take to learn from failed innovation efforts to be more
effective in future innovation efforts. We also discuss research on the consequences
of losing star innovation employees. Firms worry about the loss of key innovation
personnel, but research shows that while there are costs associated with the loss of star
PREFACE
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innovators, there are also potential benefits. Firms that lose key innovators typically
experience a loss in exploitation-oriented innovation, but they also often see an increase
in exploration-oriented innovation.
Chapter 13 provides an example of how the College of Business Administration at Towson
University successfully introduced a live business case completion across all of it
strategic management sections. The description and the case completion checklist
includes many of the elements of the analysis-decision-action cycle in case analysis that
we address in the chapter.
Chapter 13 updates our Appendix: Sources of Company and Industry Information. Here, we
owe a big debt to Ruthie Brock and Carol Byrne, library professionals at the University
of Texas at Arlington. These ladies have provided us with comprehensive and updated
information for the Ninth Edition that is organized in a range of issues. These include
competitive intelligence, annual report collections, company rankings, business websites,
and strategic and competitive analysis. Such information is invaluable in analyzing
companies and industries. We are always amazed by the diligence, competenceand good
cheerthat Ruthie and Carol demonstrate when we impose on them every two years!
We have worked hard to further enhance our excellent case package with a major focus on
fresh and current cases on familiar firms.
More than half of our cases are author-written (much more than the competition).
We have updated our users favorite cases, creating fresh stories about familiar
companies to minimize instructor preparation time and maximize freshness of
he content.
We have added several exciting new cases to the lineup including Blackberry and
Ascena (the successor company to Ann Talyor).
We have also extensively updated 28 familiar cases with the latest news.
Our cases are familiar yet fresh with new data and problems to solve.
WHAT REMAINS THE SAME: KEY FEATURES
OF EARLIER EDITIONS
Lets now briefly address some of the exciting features that remain from the earlier editions.
Traditional organizing framework with three other chapters on timely topics. Crisply
written chapters cover all of the strategy bases and address contemporary topics. First,
the chapters are divided logically into the traditional sequence: strategy analysis, strategy
formulation, and strategy implementation. Second, we include three chapters on such
timely topics as intellectual capital/knowledge management, entrepreneurial strategy
and competitive dynamics, and fostering corporate entrepreneurship and new ventures.
Learning from Mistakes chapter-opening cases. To enhance student interest, we
begin each chapter with a case that depicts an organization that has suffered a
dramatic performance drop, or outright failure, by failing to adhere to sound strategic
management concepts and principles. We believe that this feature serves to underpin
the value of the concepts in the course and that it is a preferred teaching approach to
merely providing examples of outstanding companies that always seem to get it right.
After all, isnt it better (and more challenging) to diagnose problems than admire
perfection? As Dartmouths Sydney Finkelstein, author of Why Smart Executives Fail,
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PREFACE
notes: We live in a world where success is revered, and failure is quickly pushed to the
side. However, some of the greatest opportunities to learnfor both individuals and
organizationscome from studying what goes wrong.* Well see how, for example, why
Frederica Marchionni, the CEO that Lands End hired in 2015, failed to spearhead
the revival of the brand. Her initiatives geared toward taking the brand upscale turned
out to be too much of a shock to the firms customer base as well as the firms family
culture and wholesome style. As noted by a former executive, It doesnt look like
Lands End anymore. There was never the implication that if you wore Lands End
youd be on the beach on Nantucket living the perfect life. Well also explore the
bankruptcy of storied law firm Dewey & LeBoeuf LLP. Their failure can be attributed
to three major issues: a reliance on borrowed money, making large promises about
compensation to incoming partners (which didnt sit well with their existing partners!),
and a lack of transparency about the firms financials.
Issue for Debate at the end of each chapter. We find that students become very
engaged (and often animated!) in discussing an issue that has viable alternate points
of view. It is an exciting way to drive home key strategy concepts. For example, in
Chapter 1, Seventh Generation is faced with a dilemma that confronts their values
and they must decide whether or not to provide their products to some of their largest
customers. At issue: While they sympathize (and their values are consistent) with
the striking workers at the large grocery chains, should they cross the picket lines? In
Chapter 4, we discuss an issue that can be quite controversial: Does offering financial
incentives to employees to lose weight actually work? We will explain a study by
professors and medical professionals who conducted a test to explore this issue. And, in
Chapter 7, we address Medtronics decision to acquire Covidien, an Irish-based medical
equipment manufacturer for $43 billion. Its primary motive: Lower its taxes by moving
its legal home to Irelanda country that has lower rates of taxation on corporations.
Some critics may see such a move as unethical and unpatriotic. Others would argue
that it will help the firm save on taxes and benefit their shareholders.
Insights from Research. We include six of this feature in the Ninth Editionand half
of them are entirely new. Here, we summarize key research findings on a variety of
issues and, more importantly, address their relevance for making organizations (and
managers!) more effe
