THIRD EDITION

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STRATEGY
Process, Content, Context

AN INTERNATIONAL PERSPECTIVE

B O B D E W I T Maastricht School of Management, The Netherlands

R O N M E Y E R Rotterdam School of Management, Erasmus University, The Netherlands

THOIVISOIM

Australia • Canada • Mexico . Singapore • Spain • United Kingdom . United States

 CONTENTS

List of exhibits xm
Acknowledgements XV
Preface xvii

SECTION STRATEGY i
1 INTRODUCTION 3
The nature of strategy 3
Identifying the strategy issues , 4
Structuring the strategy debates 12
Developing an international perspective 18
Readings 22
Reading 1.1 The first strategists by S. Cummings 24
Reading 1.2 Complexity: The nature of real world problems by R. Mason
and I. Mitroff 26
Reading 1.3 Using paradox to build management and organization theories
by M. Poole and A. Van de Ven 32
Reading 1.4 Cultural contraints in management theories by G. Hofstede 37
Further reading 45
References 45

SECTION STRATEGY PROCESS 49

2 STRATEGIC THINKING 51
Introduction 51
The issue of strategic reasoning 52
The paradox of logic and creativity 57
Perspectives on strategic thinking 62

Introduction to the debate and readings 68

Reading 2.1 The concept of corporate strategy by K. Andrews 71
Reading 2.2 The mind of the strategist by K. Ohmae 75
Reading 2.3 Strategy as design by J. Liedtka 82
viii CONTENTS

Reading 2.4 Decision-making: It's not what you think by H. Mintzberg

and F. Westley 93
Strategic thinking in international perspective 98
Further reading 100
References 101

3 STRATEGY F O R M A T I O N 105
Introduction 105
The issue of realized strategy 105
The paradox of deliberateness and emergence 111
Perspectives on strategy formation 116
Introduction to the debate and readings 124
Reading 3.1 Managing the strategy process by B. Chakravarthy
and P. Lorange 127
Reading 3.2 Logical incrementalism by J. Quinn 131
Reading 3.3 Conceptual models and decision-making by G. Allison 138
Reading 3.4 From scenario thinking to strategic action by I. Wilson 150
Strategy formation in international perspective 155
Further reading 158
References 159

4 STRATEGIC C H A N G E 163
Introduction 163
The issue of strategic renewal 164
The paradox of revolution and evolution 170
Perspectives on strategic change 176
Introductionto the debate and readings 182
Reading 4.1 Reengineering work: Don't automate, obliterate by M. Hammer 184
Reading 4.2 Kaizen by M. Imai 191
Reading 4.3 Convergence and upheaval by M. Tushman, W. Newman
and E. Romanelli 199
Reading 4.4 Implementation: The core task of change management
by W. KrUger 206
Strategic change in international perspective 218
Further reading 222
References 223
 CONTENTS ix

SECTION STRATEGY CONTENT 227

D OO

1 5 B U S I N E S S LEVEL S T R A T E G Y
Introduction , . .
231
231
The issue of competitive advantage , 231
The paradox of markets and resources 245
Perspectives on business level strategy 249

Introduction to the debate and readings 255

Reading 5.1 Competitive strategy by M. Porter 258
Reading 5.2 Strategy from the inside out by D. Miller, R. Eiseristat
. and N. Foote 267
Reading 5.3 The capabilities of market-driven organizations by G. Day 277
Reading 5.4 Firm resources and sustained competitive advantage
by J. Barney 285
Business level strategy in international perspective 293
Further reading 294
References 294

C O R P O R A T E LEVEL S T R A T E G Y 297
Introduction 297
The issue of corporate configuration 297
The paradox of responsiveness and synergy 302
Perspectives on corporate level strategy 310

Introduction to the debate and readings , 316

Reading 6.1 Strategy and the business portfolio by B. Hedley 319
Reading 6.2 The core competence of the corporation by C.K. Prahalad
and G. Hamel 325
Reading 6.3 Understanding acquisition integration approaches
by P. Haspeslagh and D. Jemison 334
Reading 6.4 Seeking synergies by A. Campbell and M. Goold 340
Corporate level strategy in international perspective 353
Further reading 355
References 356

NETWORK LEVEL STRATEGY 359

Introduction 359
The issue of inter-organizational relationships 359
The paradox of competition and cooperation 368
Perspectives on network level strategy 373
 CONTENTS

Introduction to the debate and readings 379

Reading 7.1 Collaborate with your competitors - and win by G. Hamel,
Y. Doz and C.K. Prahalad 383
Reading 7.2 Creating a strategic center to manage a web of partners
by G. Lorenzoni and C. Baden-Fuller 388
Reading 7.3 Coevolution in business ecosystems by J.F. Moore 397
Reading 7.4 How to make strategic alliances work by J.H. Dyer, P. Kale
and H. Singh 402
Network level strategy in international perspective 409
Further reading 413
References 414

SECTION
STRATEGY CONTEXT , 419

8 THE INDUSTRY CONTEXT 421

Introduction 421
The issue of industry development 422
The paradox of compliance and choice 429
Perspectives on the industry context 432

Introduction to the debate and readings 437

Reading 8.1 Industry evolution by M. Porter 441
Reading 8.2 The firm matters, not the industry by C. Baden-Fuller
and J. Stopford 446
Reading 8.3 Living on the fault line by G.A. Moore 451
Reading 8.4 Strategy, value innovation, and the knowledge economy
by W. Kim and R. Mauborgne 464

The industry context in international perspective 471

Further reading 473
References 474

9 THE ORGANIZATIONAL CONTEXT 477

Introduction 477
The issue of organizational development 478
The paradox of control and chaos 481
Perspectives on the organizational context 485

Introduction to the debate and readings " 492

Reading 9.1 Defining leadership and explicating the process by R. Cyert 496
Reading 9.2 Strategy as order emerging from chaos by R. Stacey 500
Reading 9.3 Building learning organizations by P. Senge 505
Reading 9.4 The knowing-doing gap by J. Pfeffer and R. Sutton 512
 CONTENTS xi

The organizational context in international perspective 526

Further reading 527
References 528

10 T H E I N T E R N A T I O N A L C O N T E X T 534
Introduction 534
The issue of international configuration 535
The paradox of globalization and localization 542
Perspectives on the international context 549

Introduction to the debate and readings 554

Reading 10.1 The globalization of markets by T. Levitt 557
Reading 10.2 The myth of globalization by S. Douglas and Y. Wind 562
Reading 10.3 The competitive advantage of nations by M. Porter 569
Reading 10.4 Transnational management by C. Bartlett and S. Ghoshal 577
The international context in international perspective 585
Further reading 586
References 587

SECTION PURPOSE 589

11 O R G A N I Z A T I O N A L P U R P O S E 590
Introduction 590
The issue of corporate mission 591
The paradox of profitability and responsibility 597
Perspectives on organizational purpose 601

Introduction to the debate and readings 606

Reading 11.1 Shareholder value and corporate purpose by A. Rappaport 610
Reading 11.2 Stockholders and stakeholders by E. Freeman and D. Reed 616
Reading 11.3 The corporate board: Confronting the paradoxes by A. Demb
and F. Neubauer 621
Reading 11.4 Whose company is it? by M. Yoshimori 630
Further reading 639
References 640
xii CONTENTS

CASES 645

1 FedEx Corporation A. F. Farhoomand and P. Ng 647

2 Honda Motors A. Mair 663
3 Virgin R. Dick, M. Kets de Vries and R. de Vitry d'Avaucourt 680
4 Toyoko Inn Group M. Dodd 702
5 PowerGen D. Jennings 709
6 Kao Corporation S. Ghoshal and C. Butler 721
7 Continental H. Bruch and B. Vogel 738
8 Caterpillar /. Cohen 755
9 Metro H.A. Hazard 113
10 Grupo Elektra L.F. Monteiro, D. Arnold and G. Herrero 778
11 Lego Mindstorms D. Oliver, J. Roos and B. Victor 795
12 Shell and Billiton B. de Wit, R. Renner and J. Lok 803
13 LoJack and Micrologic D. Wylie, M. Morton and U. Srinivasa Rangan 818
14 Proteome Systems M. Ashiya and J. West 827
15 Swatch F. Weisbrod and C. Gilligan 847
16 Ducati G. Gavetti 854
17 Chicago Museum H. Husock 872
18 Trilogy University M. Paley and T.J. DeLong 883
19A Cap Gemini Sogeti T. Elfring 892
19B Cap Gemini Sogeti R. Meyer, H. Amoussou and T. Elfring 901
20 Kentucky Fried Chicken J.A. Krug 909
21 Cirque du Soleil M. Williamson, W. C. Kim, R. Mauborgne
and B.M. Bensaou 928
22 Nike and the University of Oregon R. J. Morris and A. T. Lawrence 933

Index 941