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Strategic Management Competitiveness and Globalisation 7Th Asia Pacific Edition Dallas Hanson All Chapter
Strategic Management Competitiveness and Globalisation 7Th Asia Pacific Edition Dallas Hanson All Chapter
BRIEF CONTENTS
PART 1 PART 4
1 STRATEGIC MANAGEMENT INPUTS 1 4 CASE STUDIES 411
1 Strategic management and strategic Introduction: A summary of the case analysis process 412
competitiveness 2
Case 1: JB Hi-Fi Ltd acquisition of The Good Guys 415
2 The external environment: opportunities,
Case 2: Challenges at Australia Post 426
threats, industry competition and competitor
analysis 34 Case 3: Nyrstar NV: a case study in a failed vertical
integration strategy 432
3 The internal organisation: resources, capabilities,
core competencies and competitive advantages 72 Case 4: Pfizer 442
Case 5: Atlassian 454
CONTENTS
GUIDE TO THE TEXT XII 2 The external environment: opportunities,
GUIDE TO THE ONLINE RESOURCES XIV threats, industry competition and competitor
PREFACE XVI analysis 34
ABOUT THE AUTHORS XVIII Opening case study: Drilling for oil: risks and rewards 35
ACKNOWLEDGEMENTS XXI The general, industry and competitor
environments 38
PART 1
1 STRATEGIC MANAGEMENT INPUTS 1
External environmental analysis
Scanning
39
40
1 Strategic management and strategic Monitoring 40
competitiveness 2 Forecasting 41
Assessing 41
Opening case study: McDonald’s and brand recognition 3
The strategic management process 4 Segments of the general environment 41
The demographic segment 42
The competitive landscape 7 The economic segment 44
The global economy 8 The political/legal segment 46
Strategic focus: Starbucks is a new economy The sociocultural segment 47
multinational yet has had failures in key markets 9 The technological segment 49
The march of globalisation 10 The global segment 50
Technology and technological changes 11 The physical environment segment 51
Strategic focus: Strategic focus: Target (Tar-zhey) is trying to navigate in
The core of Apple: technology and innovation 14 a new and rapidly changing competitive landscape 52
The I/O model of above-average returns 15 Industry environment analysis 53
The resource-based model of above-average Threat of new entrants 54
returns 17 Bargaining power of suppliers 57
Vision and mission 19 Bargaining power of buyers 57
Vision 19 Threat of substitute products 58
Mission 20 Strategic focus: German performance/luxury cars: if
you’ve seen one, have you seen them all? 58
Stakeholders 21 Intensity of rivalry among competitors 59
Classifications of stakeholders 21
Interpreting industry analyses 61
Strategic leaders 23 Strategic groups 61
The work of effective strategic leaders 24
Predicting outcomes of strategic decisions 25 Competitor analysis 62
Ethical dimensions 25 Ethical considerations 64
3 The internal organisation: resources, capabilities, How: determining core competencies necessary to
core competencies and competitive advantages 72 satisfy customer needs 108
Opening case study: Large pharmaceutical companies, The purpose of a business-level strategy 109
big data analytics, artificial intelligence and core Business models and their relationship with
competencies: a brave new world 73
business-level strategies 109
Analysing the internal organisation 75 Types of business-level strategies 110
The context of internal analysis 75 Cost leadership strategy 112
Creating value 76 Differentiation strategy 115
The challenge of analysing the internal organisation 77 Focus strategies 119
Resources, capabilities and core competencies 79 Integrated cost leadership/differentiation strategy 120
Strategic focus: Tangible and intangible resources as the Strategic focus: Apple vs Samsung vs Huawei: the battle
base for core competencies 80 for smart technology 121
Resources 80
STUDY TOOLS 125
Capabilities 83
Core competencies 83 5 Competitive dynamics 131
Building core competencies 84 Opening case study: Tesco PLC: a case study in
competitive behaviour 132
Strategic focus: Procter & Gamble: using capabilities and
core competencies to create value for customers 85 A model of competitive rivalry 134
The four criteria of sustainable competitive advantage 86 Competitor analysis 135
Value chain analysis 89 Market commonality 136
Competencies, strengths, weaknesses and Strategic focus: Competitive rivalry in fast fashion: a
strategic decisions 92 constant stream of actions and responses 137
Resource similarity 138
STUDY TOOLS 94
Drivers of competitive actions and responses 139
PART 2 Competitive rivalry 141
2 STRATEGIC ACTIONS: STRATEGY FORMULATION 101 Strategic and tactical actions 141
Strategic focus: The emergence of competitive rivalry 7 Acquisition and restructuring strategies 189
among battery manufacturers: who will establish the
Opening case study: Strategic acquisitions and a people-
most attractive market position? 150
focused integration of those acquisitions are vital
Standard-cycle markets 152 capabilities of Atlassian 190
STUDY TOOLS 153 The popularity of merger and acquisition
6 Corporate-level strategy 161 strategies 192
Mergers, acquisitions and takeovers: what are the
Opening case study: The quintessential diversified
differences? 192
organisation 162
Purpose of corporate-level strategies 163 Reasons for acquisitions 193
Increased market power 193
Levels of diversification 164 Overcoming entry barriers 195
Low levels of diversification 165 Strategic focus: Cross-border acquisitions by
Moderate and high levels of diversification 166 organisations from emerging economies:
Strategic focus: Acciona’s related diversification and leveraging resources to gain a larger global footprint and
renewable energy growth 166 market power 196
Reasons for diversification 167 Cost of new product development and increased speed
to market 198
Value-creating diversification: related constrained
Lower risk compared to developing new products 199
and related linked diversification 169
Increased diversification 199
Operational relatedness: sharing activities 170
Reshaping the organisation’s competitive scope 200
Corporate relatedness: transferring of core
Learning and developing new capabilities 200
competencies 170
Market power 171 Problems in achieving acquisition success 201
Strategic focus: Alphabet’s evolution through Integration difficulties 201
diversification 172 Inadequate evaluation of target 202
Simultaneous operational relatedness and corporate Large or extraordinary debt 203
relatedness 174 Inability to achieve synergy or harvest benefits 203
Unrelated diversification 174 Too much diversification 204
Efficient internal capital market allocation 174 Managers overly focused on acquisitions 205
Restructuring of assets 176 Too large 205
Evolutionary patterns of strategy and Strategic focus: Organisational culture: is it really that
important? 372
organisational structure 327
Emphasising ethical practices 373
Simple structure 328
Leadership and corporate social responsibility 374
Functional structure 328
Establishing balanced organisational controls 375
Multi-divisional structure 328
Matches between business-level strategies and the STUDY TOOLS 378
functional structure 329
CONTENTS xi
Entrepreneurship and entrepreneurial Case 1: JB Hi-Fi Ltd acquisition of The Good Guys 415
opportunities 389 Case 2: Challenges at Australia Post 426
Innovation 389
Case 3: Nyrstar NV: a case study in a failed vertical
Product innovation 391
integration strategy 432
Entrepreneurs 391
Case 4: Pfizer 442
International entrepreneurship 392
Internal innovation 393 Case 5: Atlassian 454
Incremental and radical innovation 393 Case 6: The Sunshine Coast UNESCO Biosphere
Implementing internal innovations 394 Reserve and Smart City: a new governance
Cross-functional product development teams 395 opportunity in a post-pandemic world? 458
Facilitating integration and innovation 396
Case 7: CrossFit at the crossroads 465
Creating value from internal innovation 396
Innovation through cooperative strategies 397 Case 8: The movie exhibition industry: 2018
and beyond 482
Strategic focus: Social networking websites facilitate
innovation: application software innovation 398 Case 9: Pacific Drilling: the preferred offshore driller 506
Innovation through acquisitions 399 Case 10: The trivago way - growing
Strategic focus: Will these acquisitions lead to innovation
without growing up? 522
success or to strategic failure? 400
Creating value through strategic Case 11: The Volkswagen emissions scandal 539
entrepreneurship 401 Case 12: Otis in the global elevator industry 549
STUDY TOOLS 403 Case 13: Dick Smith: the fall of an Aussie icon 555
GLOSSARY 566
NAME INDEX 572
SUBJECT INDEX 580
xii
CHAPTER-OPENING FEATURES
two partners formed a 50:50 joint venture company – for the company, hopefully, its growth post the Covid-19
Connaught Plaza Restaurant – to set up outlets in the pandemic.
north and the east under the franchisee model. To date, CHAPTER 1 3 Sources: C. Smith, 2020, 50 interesting McDonald’s statistics and facts
STRATEGIC MANAGEMENT AND STRATEGIC COMPETITIVENESS
McDonald’s has two business entities in India. Amit Jatia’s 2020, DMR Business Statistics, https://expandedramblings.com/index.php/
OPENING CASE STUDY 2
1 Knowledge objectives
mcdonalds-statistics, 28 May; R. Darling, 2019, Thanks to the Happy Meal,
Strategic management and strategic
Hardcastle Restaurants runs the McDonald’s business 1
McDonald’s and brand recognition McDonald’s is the largest toy manufacturer, http://www.considerable.com,
competitiveness in southern and western India. McDonald’s India is McDonald’s in Australia is part of a global empire of fast- to almost 0.8 per cent of the world’s population. In 2018, Identify the key concepts
6 November; 2019, KFC is most popular food chain in China, http://www.
food restaurants. McDonald’s has achieved substantial McDonald’s had 37 855 total restaurants globally located
businessinsider.com, 8 March; The Economic Times, 2019, Vikram Bakshi is
committed to sourcing almost all of its products from that the chapter will cover
international success over the years, with its restaurants in 120 different countries and 14 155 stores in the US
1
spread widely throughout the world. Brand recognition alone. China has 2223 stores compared with Japan 2975,
finally out, and McDonald’s India is lovin’ it, ET Online, https://economictimes.
CHAPTER
Learning Objectives is huge: many people know about, and are customers the UK 1261, Canada 1443 and Australia 920. Globally,
local Indian businesses, which can supply the highest- million people eat at a McDonald’s store, which equates net income was $5.9 billion. finally-out-and-mcdonalds-india-is-lovin-it/articleshow/69309704.cms?utm_
LO1
LO2
analyse the components of the strategic management process
describe the competitive landscape and explain how globalisation and
45 000
that start each chapter.
source=contentofinterest&utm_medium=text&utm_campaign=cppst, 14 May; T.
LO3
quality products required for its Indian operations.
technological changes shape it
use the industrial organisation (I/O) model to explain how companies can earn
40 000
35 000
38 000
DiChristopher, 2015, McDonald’s new CEO faces many problems, CNBC, http://
above-average returns
The McDonald’s empire is obviously difficult to control www.cnbc.com/2015/01/29/how-mcdonalds-new-ceo-can-turn-around-the-
Number of restaurants
30 000
LO4 use the resource-based model to explain how companies can earn above-
strategic management
5000
2000
1000
0
1968 1972 1978 1986 1999 2020
real
Source: https://mcdonalds.com.au/about-maccas/maccas-story.
we can conclude that they are not equally competitive (i.e. they are
ofunable to achieve
1.5 billion toys globally, which is more than Mattel which is approximately one-third the number of KFC
chapter.
In Australia, ‘Maccas’ (the locals’ name for the small with only 400 stores compared with China, Japan
organisation) is thriving, with flexible offerings, ‘gourmet and Australia, McDonald’s turned a corner when it
management process (see Figure 1.1) as the foundation for changes to the commitments,
coffee’ and fresh-food bars. These have been successful announced in May 2019 that it had finally acquired full
moves. The UK arm has also been responsive to ownership of Connaught Plaza Restaurants. This entity
consumer demand; for example, it accommodates had run the global giant’s operations in north and east
Examine
The types the waysexhibited
of behaviours in which bykeytop conceptsperformers are appliedlike McDonald’s in represent a
strategic management a business context, using
strategic management process (see Figurereal situations
century, based on the fact that and familiar
1.1), which is a full set of commitments,
Apple under his leadership
Definitions or had transformed four industries, three of them in a
process
decisions local and international
and actions companies.
required for an organisation
decade. In addition, Thein 2020 Strategic
toFast
achieve Focus
strategic
Company named Apple in
competitiveness
explanations of the full set of commitments, the World’s Most Innovative Companies list. Apple is one
alternativesthe
asintroduction
the pathway for deciding how they will pursue strategic competitiveness. 3
Apple has achieved phenomenal success with the tablets, http://www.ft.com, 1 March; N. Louth, 2011, Finding value in
strategy Apple’s core, Financial Times, http://www.ft.com, 25 February; M. Helft,
STRATEGY NOW
of innovative products and brand
2011, After iPad’s head start, rival tablets are poised to flood offices,
maintenance. The late Steve Jobs was selected by Fortune
an integrated and coordinated
In this sense, the chosen strategy indicates what the organisation will do as well as
New York Times, http://www.nytimes.com, 20 February; L. Chao, 2011,
magazine as the CEO of the first decade of the 21st New Shanghai Apple store will be biggest in China, Wall Street Journal,
actions designed to exploit what the organisation will not do. An organisation’s strategy also demonstrates how it
Strategy Now margin icons highlight companies
core competencies and gainthat
a Increasing knowledge intensity
differs from its competitors.
STRATEGY NOW
Knowledge (information, intelligence and expertise) is the basis of technology and its
competitive advantage
have effectively put a strategic management tool,
Apple’s drive to innovate
application. In the competitive landscape of the 21st century, knowledge is a critical
organisational resource and an increasingly valuable source of competitive advantage.75
concept or technique into practice. Indeed, starting in the 1980s, the basis of competition shifted from hard assets to
intangible resources; for example, ‘Walmart transformed retailing through its proprietary
approach to supply chain management and its information rich relationships with customers
and suppliers’.76 Relationships with customers and suppliers are an example of an intangible
resource.
BK-CLA-HANSON_7E-210018-Chp01.indd 4 Knowledge is gained through experience, observation and inference, and is an intangible 08/
resource. The value of intangible resources, including knowledge, is growing as a proportion
of total shareholder value in today’s competitive landscape.77 In fact, the Brookings
Institution estimates that intangible resources contribute approximately 85 per cent of
that value.78 The probability of achieving strategic competitiveness is enhanced for the
organisation that develops the ability to capture intelligence, transform it into useable
knowledge and diffuse it rapidly throughout the company.79 Therefore, organisations
must develop (e.g. through training programs) and acquire (e.g. by hiring educated and
experienced employees) knowledge, integrate it into the organisation to create capabilities,
and then apply it to gain a competitive advantage. 80
GUIDE TO THE TEXT xiii
CHAPTER 2 75
END-OF-CHAPTER FEATURES
THE ExTERnAL EnvIROnmEnT: OPPORTUnITIES, THREATS, InDUSTRy COmPETITIOn AnD COmPETITOR AnALySIS
CHAPTER 2 75
THE ExTERnAL EnvIROnmEnT: OPPORTUnITIES, THREATS, InDUSTRy COmPETITIOn AnD COmPETITOR AnALySIS
STUDy TOOLS
STUDy TOOLS
SUMMARY
SUMMARY
At the end of each chapter you’ll find several tools to help you to
LO1 The organisation’s external environment is challenging
CHAPTER 2
THE ExTERnAL EnvIROnmEnT: OPPORTUnITIES, THREATS, InDUSTRy COmPETITIOn AnD COmPETITOR AnALySIS
model of competition comprises the threat of
75
review, practise
STUDy and extend your knowledge of the key learning objectives.
and complex. The external environment has three
LO1 The organisation’s external environment is challenging
TOOLS
major parts: the general environment (elements in
and complex. The external environment has three
entry, the power of suppliers, the power of buyers,
model of competition comprises the threat of
product substitutes and the intensity of rivalry
entry, the power of suppliers, the power of buyers,
the broader society that affect industries and their among competitors. By studying these forces, the
major parts: the general environment (elements in product substitutes and the intensity of rivalry
organisations), the industry environment (factors that organisation can find a position in an industry where
the broader society that affect industries and their among competitors. By studying these forces, the
influence an organisation, its competitive actions and it can influence the forces in its favour or where it can
SUMMARY
organisations), the industry environment (factors that
responses, and the industry’s profit potential) and the
organisation can find a position in an industry where
buffer itself against the power of the forces in order
influence an organisation, its competitive actions and it can influence the forces in its favour or where it can
LO1 The
competitor environment
organisation’s external(inenvironment
which the organisation
is challenging to achieve
model strategic competitiveness
of competition comprises the threatand earnof above-
responses, and the industry’s profit potential) and the buffer itself against the power of the forces in order
analyses
and eachThe
complex. major competitor’s
external future has
environment objectives,
three average
entry, thereturns.
power of suppliers, the power of buyers,
competitor environment (in which the organisation to achieve strategic competitiveness and earn above-
currentparts:
major strategies, assumptions
the general environmentand capabilities).
(elements in LO5 average
product substitutes and the intensity of rivalry
analyses each major competitor’s future objectives,
LO2 the
Thebroader
external
current
society that affect
environmental
strategies, assumptions
industries
analysis and has
process theirfour
and capabilities).
Industries
among
are populated with different strategic
returns.
groups.competitors.
A strategic group By studying these forces,
is a collection
LO5 Industries are populated with different strategic
of the Summary
organisations),
steps: scanning,the industry environment (factors that organisation
organisationscan find a position in an industry
alongwhere
monitoring,
Through environmental
forecasting and
LO2 The external environmental analysis process has four
influence an organisation, its competitive
analyses,
assessing.
actions and
the organisation
steps: scanning, monitoring, forecasting and assessing.
it can influence
following similar strategies
groups. A strategic group is a collection of
the forcesrivalry
dimensions. Competitive in its favour or where
is greater
organisations following similar strategies along similar
similar
withinitacan The end-of-chapter summary lists key points from
responses, and the industry’s profit potential) and the buffer itself against
thanthe power strategic
of the forces in order
identifies opportunities and threats.
Through environmental analyses, the organisation
competitor environment (in which the organisation
LO3 identifies
The general environment has seven segments:
strategic group between
dimensions. Competitive rivalry is greater within a
to achieve strategic competitiveness and earn above-
LO6 strategic
Competitor analysis
groups.
the chapter, providing a snapshot of the important
opportunities and threats. group thanfocuses
between onstrategic
each company
groups.against
analyses each major competitor’s future objectives, average returns.
demographic, economic, political/legal, sociocultural,
LO3 current
The general environment
strategies, has seven
assumptions and segments:
capabilities).
technological, global and physical. For each segment,
which an organisation directly competes. Critical to
LO6 Competitor analysis focuses on each company against
LO5 Industries
an effectiveare populated
competitor with different
analysis strategic
is gathering data and
concepts covered.
demographic, economic, political/legal, sociocultural, which an organisation directly competes. Critical to
LO2 The external environmental
the organisation analysis
has to determine process
the strategichas four groups.
informationA strategic
that can group
help is
thea organisation
collection of understand
technological, global and physical. For each segment, an effective competitor analysis is gathering data and
steps:
relevance of environmental changes andand
scanning, monitoring, forecasting assessing.
trends. organisations
its competitors’ following
intentionssimilar strategies
and the strategicalong similar
implications
the organisation has to determine the strategic information that can help the organisation understand
Through environmental analyses, the organisation dimensions.
resulting from Competitive rivalry is greater
them. Organisations within a
must follow
LO4 Compared with the general environment,
relevance of environmental changes and trends. the its competitors’ intentions and the strategic implications
identifies opportunities and threats. strategic
mandatory group
lawsthan
and between
regulations strategic
as wellgroups.
as ethical
industry environment has a more direct effect on resulting from them. Organisations must follow
LO4 Compared with the general environment, the
LO3 The general environment
the organisation’s strategichas seven The
actions. segments:
five forces LO6 Competitor
guidelines when gathering
analysis focusescompetitor intelligence.
on each company against
industry environment has a more direct effect on mandatory laws and regulations as well as ethical
demographic, economic, political/legal, sociocultural, which an organisation directly competes. Critical to
the organisation’s strategic actions. The five forces guidelines when gathering competitor intelligence.
technological, global and physical. For each segment, an effective competitor analysis is gathering data and
KEY TERMS
the organisation has to determine the strategic
relevance of environmental changes and trends.
information that can help the organisation understand
its competitors’ intentions and the strategic implications Key terms
KEY TERMS
competitor intelligence general environment opportunity sociocultural segment
LO4 Compared with the general environment, the
complementors
competitor intelligence
industry
global segment
environment has general environment
a more direct effect on
resulting from them. Organisations must follow
physical
opportunityenvironment
mandatory laws and regulationsstrategic group
sociocultural
as well segment
as ethical
Review the important terminology from the chapter
segment
demographic
complementors segment strategicglobal
the organisation’s
economic environment
industry
industry
segment
actions. The five forces guidelines
physical environment
political/legal
segment segment
technological
when gathering strategic
competitor group segment
intelligence.
margin with the Key terms list.
demographic segment industry environment threat
technological segment
economic environment industry environment political/legal segment threat
KEY TERMS
REVIEW QUESTIONS
competitor intelligence general environment opportunity sociocultural segment
REVIEW
1.
complementors QUESTIONS
Why is it important for an organisation to study and
global segment 4. What
physical are the seven segments
environment of the group
strategic general
understand the external environment? environment? Explain the differences among them. Is
segment
Review questions
1. Why is it important
demographic segment for an organisation
industry to study and 4. What are the seven segments of the general
technological segment
2. understand
What are thethedifferences between the general any segment more important than another?
economic environment external environment?
industry environment environment?
political/legal segmentExplain the differences
threat among them. Is
environment and the industry environment? Why are 5. any
Howsegment
do the five forces of competition in an industry
2. What are the differences between the general
these differences important?
environment and the industry environment? Why are
more important than another?
affect its profit potential? Explain.
5. How do the five forces of competition in an industry
These questions promote the application and critical
REVIEW QUESTIONS
3. these
What are the four important?
differences steps in the external environmental 6. affect
What is itsthe importance
profit ofExplain.
potential? collecting and interpreting
analysis of theories and practices as well as encourage
analysis process? What does the organisation want to data and information about competitors? What practices
3. Why
1. Whatisare the four steps
it important inorganisation
for an the external to
environmental
study and 6. What
4. What are
is thetheimportance of collecting
seven segments and interpreting
of the general
learn when using this process?
analysis process?
understand What does
the external the organisation want to
environment?
should an organisation use to gather competitor
data and information
environment? Explain about
intelligence, and why?
competitors?
the differences among What practices
them. Is group discussion.
learn when using this process? should
any an organisation
segment use to than
more important gather competitor
another?
2. What are the differences between the general
intelligence, and why?
76 environment and the industry
PART 1: STRATEGIC MANAGEMENTenvironment?
INPUTS Why are 5. How do the five forces of competition in an industry
these differences important? affect its profit potential? Explain.
3. What are the four steps in the external environmental 6. What is the importance of collecting and interpreting
analysis process? What does the organisation want to data and information about competitors? What practices
EXPERIENTIAL
learn when using thisEXERCISES
BK-CLA-HANSON_7E-210018-Chp02.indd 75 2/9/21 1:13 PM
process? should an organisation use to gather competitor
BK-CLA-HANSON_7E-210018-Chp02.indd 75 intelligence, and why? 2/9/21 1:13 PM
Exercise 1: Strategic group mapping 5. What conclusions can you reach about why some
If a given set of organisations emphasise similar strategic organisations end up where they do among various
dimensions and use a similar strategy, these organisations
can be said to reside in the same strategic group. Other
strategic groups?
Experiential exercises
common definitions of strategic groups typically argue
BK-CLA-HANSON_7E-210018-Chp02.indd 75
that the organisations in a given industry follow similar
Exercise 2: What does the future look like?
A critical ingredient in studying the general environment
These exercises emphasise applied learning, giving
2/9/21 1:13 PM
strategies, such as pricing, degree of specialisation, research is identifying opportunities and threats. An opportunity is
a condition in the environment that, if exploited, helps a
students the opportunity to put knowledge into practice.
and development commitment and the like. It is also likely
that organisations operating in a given industry may have company to achieve strategic competitiveness. In order to
very different profitability profiles, which raises the question: identify opportunities, you must be aware of trends that
if one organisation is the most profitable, why don’t all affect the world around us now or that are projected to do
the others in that industry attempt to move into the same so in the future.
strategic group as the industry leader? Thomas Fry, senior futurist at the Davinci Institute,
believes that the chaotic nature of interconnecting trends
Part 1 and the vast array of possibilities that arise from them are
1. Form teams and pick an industry the team finds somewhat akin to watching a spinning compass needle.
interesting. A list of industries and industry leaders may
be found at yahoo! Finance (http://biz.yahoo.com/ic/
END-OF-BOOK FEATURES
From the way we use phones and email and recruit new
workers to organisations, the climate for business is
ind_index.html). changing and shifting dramatically, and at rapidly increasing
rates. Sorting out these trends and making sense of them
2. Investigate this industry in order to create a strategic
provides the basis for opportunity decision making. Which
group map. you must pick the two dimensions for your
Case Studies
PART 4
ones will dominate and which ones will fade? Understanding
map that best represent the key success factors in this
this is crucial for business success.
3.
industry (e.g. R&D investments, pricing, geographic reach).
For each organisation listed on your map, investigate its
your challenge (either individually or as a group) is to Apply the case analyses process to in-depth case
identify a trend, technology, entertainment or design that is
overall financial performance, not only historically, but
also its five-year growth forecast. (This information is
likely to alter the way in which business is conducted in the studies. Thirteen case studies are provided to
future. Once you have identified this, be prepared to discuss
also available at yahoo! Finance and other locations.) which of the six dimensions of the general environment this demonstrate theory in practice.
will affect. (There may be more than one.)
Part 2
Prepare a presentation to the class that discusses your CASE STUDIES
•
• Describe the impact.
List some business opportunities that will come from
Each case includes a Case Link identifying the
findings and answers the following key issues or questions:
1. Who are the most direct competitors and on what INTRODUCTION
basis
this.
CASE 7 relevant chapters where key concepts explored in the
• Identify some existing organisations that stand to
A summary of the
do they mostly compete? That is, why did you choose case
benefit. CrossFit at the crossroads 520 case are introduced in the book.
the competitive dimensions that you did? analysis process
• 466
What, if any, are the ethical implications?
2. How does profitability stack up between strategic CASE 8
you should consult a wide variety of sources. For
groups? Which groups are most profitable, and CASE
why? 1 The movie exhibition
example, the Gartner Group and mcKinsey & Co. both
3. What would it take for an organisation to move JB fromHi-Fi Ltd acquisition of industry: 2015 and
produce market research and forecasts for business. There
The Good Guys
an underperforming (in terms of profitability) strategic is also a host of469 beyond tools and addresses.
web forecasting 538
group to a more profitable strategic group? How likely is These include TED (see http://www.ted.com for videos of its
it that this could happen? CASE 2 discussions), which hostsCASE 9
an annual conference for path-
Challenges atbreaking
4. Think about one of the organisations in a particular Australia Pacific the
new ideas. Similarly, drilling: theInstitute, Institute
Davinci
strategic group. Are there any opportunities for Post
this 480and preferred
for Global Futures a wide rangeoffshore driller
of others have 565
their own
organisation that you see because of your strategic unique visions of tomorrow’s environment.
group mapping? CASE 3 CASE 10
Nyrstar NV: a case study in The trivago way – growing
a failed vertical integration without growing up? 582
strategy 486
CASE 11
BK-CLA-HANSON_7E-210018-Chp02.indd 76 CASE 4 The Volkswagen 2/9/21 1:13 PM
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GUIDE TO THE ONLINE RESOURCES xv
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xvi
PREFACE
This new seventh Asia–Pacific edition of Strategic Management: Competitiveness and Globalisation has been updated
to include new material and cases from Australia, New Zealand and the Asia–Pacific region. It continues to
integrate ‘cutting edge’ research and content from the US authors Hitt, Ireland and Hoskisson.
Features
• Australian and Asia–Pacific material in all chapters
• chapter opening cases and ‘Strategic focus’ segments
• organisation-specific examples that are integrated with each chapter’s topic
• inclusion of public sector and community organisation examples
• substantial emphasis on use of the internet and e-commerce
• substantial emphasis on corporate governance
• coverage of strategic issues in the 21st-century competitive landscape, including a strong emphasis on the
competition created through e-commerce ventures and start-ups
• global coverage with an emphasis on the international context
• new and current research integrated throughout the chapters’ conceptual presentations
• review questions, including application discussion questions and ethics questions at the end of each chapter
• experiential exercises
• a summary of the case analysis process.
The book emphasises a global outlook with comprehensive coverage of Australian and international concepts
and issues. The book contains a wealth of references. Drawn from the business literature and academic research,
these materials are used to present current and accurate descriptions of how organisations use the strategic
management process. Our goal while preparing this book has been to present you, our readers, with a complete,
accurate and up-to-date explanation of the strategic management process as it is used in the global economy. We
have sought to include enough local content to stimulate interest, and enough international content to reflect the
nature of current strategic management.
Final comment
Organisations face exciting and dynamic competitive challenges in the 21st century. These challenges, and
effective responses to them, are explored in Strategic Management: Competitiveness and Globalisation. The strategic
management process conceptualised in this text offers valuable insights and knowledge to those committed to
meeting successfully the challenge of dynamic competition. Thinking strategically – as this book challenges you
to do – increases the likelihood that you will assist your organisation to achieve strategic success. In addition,
continuous practice with strategic thinking and the use of the strategic management process gives you skills and
knowledge that will contribute to career advancement and success. Finally, we want to wish you all the best and
nothing other than complete success in all of your endeavours.
Dallas Hanson
Hobart
xviii
Kim Backhouse
Kim Backhouse has lectured in strategic management, law and other business units for the past two decades in
the Faculty of Business and Faculty of Law at the University of Tasmania. Kim has also facilitated units in legal
and risk for the Australian Institute of Company Directors and runs short courses on governance through the Law
School at the University of Tasmania. Kim is passionate about research and teaching in strategic management
and governance and enjoyed being part of Dr Hanson’s teaching team in strategy for many years. Dr Backhouse
has published in a variety of journals on governance and corporate social responsibility. She has won teaching
awards for many years for her work in strategy and organisational behaviour. Dr Backhouse also works in part-time
executive roles outside of the academic landscape and consults regularly to boards on complex governance issues.
Kim has a current practising certificate from the Law Society of Tasmania, Fellow of the Governance Institute
of Australia and is a current board member of the Governance Institute of Australia (Tas). Kim currently sits on
several not-for-profit boards such as ACHAT and has been sitting on various boards for the past two decades.
David Leaney
David Leaney lectures in strategic management at post-graduate level at the Australian National University
(ANU) and the Australian Graduate School of Management (AGSM) at the University of NSW. He also lectures
in marketing and global supply chain management at post-graduate and under-graduate levels. David brings a
practitioner’s perspective, fuelled by his work as a management consultant and his role as the Managing Director
of Strategium – an IT and business strategy consultancy. David is the chair of several private company boards
in professional services and technology, and advises clients in the public sector, defence, utilities, banking and
the retail sector. He is sought as a facilitator for executive workshops and the development of corporate strategy
and organisational change management. David is a Fellow of the Institute of Managers and Leaders (FIML) and
a Certified Management Consultant (CMC).
Michael A. Hitt
Texas A&M University
Michael A. Hitt is a Distinguished Professor and holds the Joe B. Foster Chair in Business Leadership at Texas A&M
University. He received his PhD from the University of Colorado and has more than 260 publications, including
26 co-authored or co-edited books. He has been recognised as one of the 10 most cited scholars in management
ABOUT THE AUTHORS xix
over a 25-year period in an article published in the 2008 volume of the Journal of Management. He is co-editor of
numerous management, organisation, strategy and development books and has served on the editorial review
boards of multiple journals, including the Academy of Management Journal, Academy of Management Executive, Journal
of Applied Psychology, Journal of Management, Journal of World Business and Journal of Applied Behavioral Sciences.
In addition, Professor Hitt has served as Consulting Editor and Editor of the Academy of Management Journal and
is currently a co-editor of the Strategic Entrepreneurship Journal. He is the current past president of the Strategic
Management Society, is a past president of the Academy of Management and is a Fellow in the Academy of
Management and in the Strategic Management Society. He received an honorary doctorate from the Universidad
Carlos III de Madrid and is an Honorary Professor and Honorary Dean at Xi’an Jiao Tong University. He has received
the Irwin Outstanding Educator Award and the Distinguished Service Award from the Academy of Management
and has received best paper awards for articles published in the Academy of Management Journal, Academy of
Management Executive and Journal of Management.
R. Duane Ireland
University of Richmond
R. Duane Ireland is a Distinguished Professor and holds the Conn Chair in New Ventures Leadership at the Mays
Business School, Texas A&M University, where he previously served as head of the management department.
He teaches strategic management courses to undergraduate, masters, doctoral and executive students and
has more than 175 publications, including more than a dozen books. His research on diversification, corporate
entrepreneurship and strategic entrepreneurship has been published in Academy of Management Journal, Academy
of Management Executive, Strategic Management Journal, Journal of Management, Strategic Entrepreneurship Journal,
Entrepreneurship Theory and Practice and Journal of Management Studies, among others. He has served on editorial
review boards for the Academy of Management Journal, Journal of Management, Journal of Business Venturing, Journal
of Business Strategy and European Management Journal. He is current editor of the Academy of Management Journal
and has completed editorial terms for Academy of Management Journal, Academy of Management Executive and
Entrepreneurship Theory and Practice. He has co-edited special issues of Academy of Management Review, Academy
of Management Executive, Journal of Business Venturing and Organizational Research Methods.
Professor Ireland has received awards for the best article published in Academy of Management Executive and
Academy of Management Journal. He is a Fellow of the Academy of Management and 21st Century Entrepreneurship
Research Scholar, and served a three-year term as Representative-at-Large for the Academy of Management’s
Board of Governors. He received the Award for Outstanding Intellectual Contributions to Competitiveness Research
from the American Society for Competitiveness and the USASBE Scholar in Corporate Entrepreneurship Award.
Robert E. Hoskisson
The University of Oklahoma
Robert E. Hoskisson is the George R. Brown Chair of Strategic Management at the Jesse H. Jones Graduate School
of Business, Rice University. He received his PhD from the University of California-Irvine. Dr Hoskisson’s research
topics focus on corporate governance, acquisitions and divestitures, corporate and international diversification
xx ABOUT THE AUTHORS
and cooperative strategy. He teaches courses in corporate and international strategic management, cooperative
strategy and strategy consulting. Dr Hoskisson’s research has appeared in more than 120 publications, including
the Academy of Management Journal, Strategic Management Journal, Journal of Management, Journal of International
Business Studies, Journal of Management Studies and the Academy of Management Executive. He has co-authored
26 books, including recent books on business strategic and competitive advantage, and is currently Associate
Editor of the Strategic Management Journal and Consulting Editor for the Journal of International Business Studies. He
also serves on the Editorial Review board for the Academy of Management Journal. Professor Hoskisson has served
on editorial boards for the Academy of Management Journal, Journal of Management, Journal of Management Studies
and Entrepreneurship Theory and Practice, among others. He is Special Professor at the University of Nottingham
and Honorary Professor at Xi’an Jiao Tong University.
Professor Hoskisson is also a Fellow of the Strategic Management Society and has received awards from the
American Society for Competitiveness and the Marriott School of Management, Brigham Young University.
He completed three years of service as Representative-at-Large for the Board of Governors of the Academy of
Management and currently serves on the Board of Directors of the Strategic Management Society.
xxi
ACKNOWLEDGEMENTS
To my wonderful wife Meg for supporting me in consulting full-time, running three companies, teaching at two
universities, and adding a textbook to my list of additional interests.
David Leaney
This has been a long journey and a heartfelt thanks to my children who have patiently waited on the sidelines for
me to complete my part and who forfeited many weekends with their mother, in pursuit of academic excellence.
I would like to thank Dallas Hanson for his continued support of my academic career and to my dear friends who
have supported me from afar: Dr Kevin Radecki (USA) and Fran Scherrer (Spain). I hope you enjoy this edition.
Kim Backhouse
Cengage would also like to thank Greg Zooeff and Francis Hartnett for contributing new case studies to this
edition, and would also like to thank the following reviewers for their incisive and helpful feedback:
• Nguyen Viet Ngo – Australian National University
• Elisa Backer – Federation University Australia
• Gary Mankelow – University of Newcastle
• David Robinson – Holmes Institute
• Fiona Hurd – Auckland University of Technology
• Harsha Sarvaiya – Griffith University
• Austin Norman – Victoria University
• Ralitza Bell – Australian Catholic University, North Sydney
• Lisa Daniel – University of the Sunshine Coast
• Stuart Middleton – University of Queensland
• Georges Baume – University of Adelaide.
Every effort has been made to trace and acknowledge copyright. However, if any infringement has occurred,
the publishers tender their apologies and invite the copyright holders to contact them.
PART 1
1
STRATEGIC MANAGEMENT
INPUTS
1 Strategic management and strategic
competitiveness 2
2 The external environment:
opportunities, threats, industry
competition, and competitor
analysis 34
3 The internal organisation: resources,
capabilities, core competencies,
and competitive advantages 72
1
1
CHAPTER Strategic management and strategic
competitiveness
Learning Objectives
Studying this chapter should provide you with the strategic management knowledge
needed to:
LO1 analyse the components of the strategic management process
LO2 describe the competitive landscape and explain how globalisation and
technological changes shape it
LO3 use the industrial organisation (I/O) model to explain how companies can earn
above-average returns
LO4 use the resource-based model to explain how companies can earn above-
average returns
LO5 describe vision and mission and discuss their value
LO6 define and classify the four major stakeholder groups and describe their ability
to influence organisations
LO7 describe the work of strategic leaders.
2
CHAPTER 1 3
STRATEGIC MANAGEMENT AND STRATEGIC COMPETITIVENESS
McDonald’s in Australia is part of a global empire of fast- to almost 0.8 per cent of the world’s population. In 2018,
food restaurants. McDonald’s has achieved substantial McDonald’s had 37 855 total restaurants globally, located
international success over the years, with its restaurants in 120 different countries and 14 155 stores in the US
spread widely throughout the world. Brand recognition alone. China has 2223 stores compared with Japan 2975,
is huge: many people know about, and are customers the UK 1261, Canada 1443 and Australia 920. Globally,
of, McDonald’s. For example, a recent survey found that McDonald’s hires 1.9 million employees, and it hires
88 per cent of people recognise the golden arches and approximately one million employees per year in the
associate them with McDonald’s. Each day, about 69 USA. In 2018, its annual revenue was $21 billion and its
million people eat at a McDonald’s store, which equates net income was $5.9 billion.
45 000
40 000
38 000
35 000
Number of restaurants
30 000
25 000
25 000
20 000
15 000
10 000 9000
5000 5000
2000
1000
0
1968 1972 1978 1986 1999 2020
McDonald’s: Restaurant expansion since 1955.
Source: https://mcdonalds.com.au/about-maccas/maccas-story.
Given that McDonald’s includes a toy in about 20 China is a promising arena but there are continuing
per cent of its sales, it is considered the world’s largest pressures there, with high levels of rivalry from KFC.
distributor of toys. Each year, McDonald’s distributes There are now over 2000 McDonald’s outlets in China,
1.5 billion toys globally, which is more than Mattel which is approximately one-third the number of KFC
and Hasbro. McDonald’s decided early to move into outlets. KFC has around 5919 stores and is presently
international markets, and now one can find the golden considered the most popular fast-food chain in China.
arches in far-flung locations around the globe. In India, where historically the brand was relatively
In Australia, ‘Maccas’ (the locals’ name for the small with only 400 stores compared with China, Japan
organisation) is thriving, with flexible offerings, ‘gourmet and Australia, McDonald’s turned a corner when it
coffee’ and fresh-food bars. These have been successful announced in May 2019 that it had finally acquired full
moves. The UK arm has also been responsive to ownership of Connaught Plaza Restaurants. This entity
consumer demand; for example, it accommodates had run the global giant’s operations in north and east
consumers who ask what goes into their food, providing India – from its long-estranged business partner Vikram
information to staff that allows them to respond, and it Bakshi. The association between Bakshi and McDonald’s
promotes jobs in the chain as upwardly mobile. commenced in 1995 when, under a 25-year deal, the
4 PART 1: STRATEGIC MANAGEMENT INPUTS
two partners formed a 50:50 joint venture company – for the company, hopefully, its growth post the Covid-19
Connaught Plaza Restaurant – to set up outlets in the pandemic.
north and the east under the franchisee model. To date, Sources: C. Smith, 2020, 50 interesting McDonald’s statistics and facts
McDonald’s has two business entities in India. Amit Jatia’s 2020, DMR Business Statistics, https://expandedramblings.com/index.php/
mcdonalds-statistics, 28 May; R. Darling, 2019, Thanks to the Happy Meal,
Hardcastle Restaurants runs the McDonald’s business McDonald’s is the largest toy manufacturer, http://www.considerable.com,
in southern and western India. McDonald’s India is 6 November; 2019, KFC is most popular food chain in China, http://www.
businessinsider.com, 8 March; The Economic Times, 2019, Vikram Bakshi is
committed to sourcing almost all of its products from
finally out, and McDonald’s India is lovin’ it, ET Online, https://economictimes.
within the country. For this purpose, it has developed indiatimes.com/industry/services/hotels-/-restaurants/vikram-bakshi-is-
local Indian businesses, which can supply the highest- finally-out-and-mcdonalds-india-is-lovin-it/articleshow/69309704.cms?utm_
source=contentofinterest&utm_medium=text&utm_campaign=cppst, 14 May; T.
quality products required for its Indian operations. DiChristopher, 2015, McDonald’s new CEO faces many problems, CNBC, http://
The McDonald’s empire is obviously difficult to control www.cnbc.com/2015/01/29/how-mcdonalds-new-ceo-can-turn-around-the-
company.html, 29 January; FT Reporters, 2015, McDonald’s and its challenges
and constantly presents country-specific challenges.
worldwide: A market-by-market look, Financial Times, http://www.ft.com/intl/
Clever strategy is important for its continued survival and, cms/s/0/f8ac22fc-a7c1-11e4-8e78-00144feab7de.html#slide0, 29 January.
As we can see from the opening case, McDonald’s organisations in Australia, the UK, China, India, Japan
and the USA are all in different competitive positions. Therefore, we can conclude that they are not equally
competitive (i.e. they are unable to achieve similar strategic competitiveness). In the USA, the organisation
is now using the strategic management process (see Figure 1.1) as the foundation for changes to the
commitments, decisions and actions it undertook to pursue strategic competitiveness and above-average
terms. It may well succeed, given time.1
Chapter 2
The external
environment
Strategic
Strategic intent
inputs
Strategic mission
Chapter 3
The internal
organisation
Strategic competitiveness
outcomes
Strategic
Above-average returns
Feedback
the benefits of an organisation’s value-creating strategy determines how long the competitive advantage
will last.6
Above-average returns are returns in excess of what an investor expects to earn from other investments above-average
with a similar amount of risk. Risk is an investor’s uncertainty about the economic gains or losses that will returns
result from a particular investment.7 The most successful organisations learn how to effectively manage returns in excess
of what an investor
risk. Effectively managing risks reduces investors’ uncertainty about the results of their investment. 8 expects to earn from
Returns are often measured in terms of accounting figures, such as return on assets, return on equity other investments
or return on sales. Alternatively, returns can be measured on the basis of stock market returns, such with a similar amount
of risk
as monthly returns (the end-of-the-period stock price minus the beginning stock price, divided by the
beginning stock price, yielding a percentage return). In smaller, new venture organisations, returns are risk
sometimes measured in terms of the amount and speed of growth (e.g. in annual sales) rather than more an investor’s
uncertainty about the
traditional profitability measures9 because new ventures require time to earn acceptable returns (in the economic gains or
form of return on assets and so forth) on investors’ investments.10 losses that will result
from a particular
Understanding how to exploit a competitive advantage is important for organisations seeking to earn investment
above-average returns.11 Organisations without a competitive advantage or that are not competing in an
6 PART 1: STRATEGIC MANAGEMENT INPUTS
average returns attractive industry earn, at best, average returns. Average returns are returns equal to those an investor
returns equal to those expects to earn from other investments with a similar amount of risk. In the long run, an inability to earn
an investor expects at least average returns results first in decline and, eventually, failure. Failure occurs because investors
to earn from other
investments with a withdraw their investments from those organisations earning less-than-average returns. As we noted
similar amount of risk above, there are no guarantees of permanent success. Even considering its excellent current performance,
McDonald’s still must be careful not to become overconfident, and continue its quest to be the leader in its
markets.
With the information gained from external and internal analyses, the organisation develops its vision
and mission and formulates one or more strategies. To implement its strategies, the organisation takes actions
towards achieving strategic competitiveness and above-average returns. Effective strategic actions that take
place in the context of carefully integrated strategy formulation and implementation efforts result in positive
outcomes. This dynamic strategic management process must be maintained as ever-changing markets and
competitive structures are coordinated with an organisation’s continuously evolving strategic inputs.12
In the remaining chapters of this book, we use the strategic management process to explain what
organisations do to achieve strategic competitiveness and earn above-average returns. These explanations
demonstrate why some organisations consistently achieve competitive success while others fail to do so.13
As you will see, the reality of global competition is a critical part of the strategic management process and
significantly influences organisations’ performances.14 Indeed, learning how to successfully compete in the
globalised world is one of the most significant challenges for organisations competing in the 21st century.15
Several topics are discussed in this chapter. First, we describe the current competitive landscape. This
global economy challenging landscape has been created primarily by the emergence of a global economy, globalisation
one in which goods, resulting from that economy, rapid technological changes and the Covid-19 pandemic. Next, we examine
services, people, skills two models that organisations use to gather the information and knowledge required to choose and
and ideas move freely
across geographic then effectively implement their strategies. The insights gained from these models also serve as the
borders foundation for forming the organisation’s vision and mission. The first model (the industrial organisation
or I/O model) suggests that the external environment is the primary determinant of an organisation’s
strategic actions. Identifying and then competing successfully in an attractive (i.e. profitable) industry
or segment of an industry are the keys to competitive success when using this model.16 The second model
(resource based) suggests that an organisation’s unique resources and capabilities are the critical link to
strategic competitiveness.17 Thus, the first model is concerned primarily with the organisation’s external
environment, while the second model is concerned primarily with the organisation’s internal environment.
After discussing vision and mission, direction-setting statements that influence the choice and use of
strategies, we describe the stakeholders that organisations serve. The degree to which stakeholders’ needs
can be met increases when organisations achieve strategic competitiveness and earn above-average returns.
Closing the chapter are introductions to strategic leaders and the elements of the strategic management
process.
For ease, this book is divided into three parts. In Part 1, we describe what organisations do to
analyse their external environment (Chapter 2) and internal organisation (Chapter 3). These analyses
are completed to identify marketplace opportunities and threats in the external environment (Chapter
2), and to decide how to use the resources, capabilities, core competencies and competitive advantages in
the organisation’s internal organisation to pursue opportunities and overcome threats (Chapter 3). The
analyses explained in Chapters 2 and 3 comprise the well-known SWOT analyses (strengths, weaknesses,
opportunities and threats).18 (In our analysis, the important ‘strengths’ concept is made more sophisticated
by using the ideas of capabilities and core competencies.) With knowledge about its external environment
and internal organisation, the organisation forms its strategy considering the organisation’s vision and
mission.
The organisation’s strategic inputs (see Figure 1.1) provide the foundation for choosing one or more
strategies and deciding how to implement them. As suggested in Figure 1.1 by the horizontal arrow linking
the two types of strategic actions, formulation and implementation must be simultaneously integrated
CHAPTER 1 7
Strategic management and strategic competitiveness
to successfully use the strategic management process. Integration happens as decision makers think
about implementation issues when choosing strategies and as they think about possible changes to the
organisation’s strategies while implementing a currently chosen strategy.
In Part 2 of this book, we discuss the different strategies organisations may choose to use. First,
we examine business-level strategies (Chapter 4). A business-level strategy describes the actions an
organisation takes to exploit its competitive advantage over rivals. A company competing in a single
product market (e.g. a locally owned grocery store operating in only one location) has one business-level
strategy, while a diversified organisation competing in multiple product markets forms a business-level
strategy for each of its businesses. In Chapter 5, we describe the actions and reactions that occur among
organisations in marketplace competition. Competitors typically respond to and try to anticipate each
other’s actions. The dynamics of competition affect the strategies organisations choose, as well as how
they try to implement the chosen strategies.19
For the diversified organisation, corporate-level strategy (Chapter 6) is concerned with determining
the businesses in which the company intends to compete as well as how to manage its different businesses.
Other topics vital to strategy formulation, particularly in the diversified company, include acquiring other
businesses and, as appropriate, restructuring the organisation’s portfolio of businesses (Chapter 7) and
selecting an international strategy (Chapter 8). With cooperative strategies (Chapter 9), organisations
form a partnership to share their resources and capabilities in order to develop a competitive advantage.
Cooperative strategies are becoming increasingly important as organisations seek ways to compete in the
global economy’s array of different markets. 20
To examine actions taken to implement strategies, we consider several topics in Part 3. First, we
examine the different mechanisms used to govern organisations (Chapter 10). With demands for
improved corporate governance being voiced by many stakeholders in the current business environment,
organisations are challenged to learn how to simultaneously satisfy their stakeholders’ different
interests. 21 Finally, the organisational structure and actions needed to control an organisation’s operations
(Chapter 11), the patterns of strategic leadership appropriate for today’s organisations and competitive
environments (Chapter 12), and strategic entrepreneurship (Chapter 13) as a path to continuous innovation
are addressed.
Several factors create hypercompetitive environments and influence the nature of the competitive
landscape. The emergence of a global economy and technology – specifically rapid technological change –
have been the two primary drivers of hypercompetitive environments and the nature of today’s competitive
landscape.
15.8 million subscribers between March and April 2020, more than double the amount that was predicted
and representing a huge growth of over 22 per cent during the 12-month period to 2020. Netflix also saw a
quarterly revenue of US$5.76 billion in 2020. 37 According to market research organisation HarrisX, Netflix
is a long way ahead of its competitors; however, the organisation is mindful that there are challenges
ahead, as noted in a recent article: ‘when you’re number one, it’s always difficult to grow as fast as your
competitors or whoever’s trailing you’. 38
India, one of the world’s largest democracies, has an economy that also is growing rapidly and now
ranks as the fifth largest in the world, and it has a very fast-growing population. 39 Simultaneously, many
organisations in emerging economies are moving into international markets and are now regarded as
multinational organisations. Barriers to entering foreign markets still exist. The statistics detailing the
nature of the global economy reflect the realities of a hypercompetitive business environment and challenge
individual organisations to think seriously about the markets in which they will compete; the case of
Netflix is a good example.
its future in Europe, the company is adapting to the Sources: S. Lock, 2019, Starbucks stores:
US and international 2005 to 2019, http://www.statista.com;
European café culture. This means that Starbucks is http://www.financesonline.com, Number of Starbucks
building larger stores with additional seating to allow worldwide 2020: facts, statistics, and trends;
people to meet and spend time in its stores, as it L. L. Thomala, 2020, Number of Starbucks stores in China from 2005 to
2019, Statista.com, 27 May; L. MacLellan, 2019, The countries with the
has done in Asia. It has implemented other practices most Starbucks locations, Quartz, http://www.qz.com, 30 January; A.
and products that adapt even more to local (country) Turner, 2018, Why there are almost no Starbucks in Australia, CNBC,
http://www.cnbc.com, 25 July; J. Gertner, 2013, For infusing a steady
cultures and tastes (e.g. in France and England). stream of new ideas to revive its business, Fast Company, http://www.
In addition to Starbucks’ international thrust, it fastcompany.com; A. Gasparro, 2013, Starbucks enjoys sales jolt from
also engages in significant innovation and strategic its US, China stores, Wall Street Journal, http://www.wsj.com, 24 January;
J. Noble, 2013, Starbucks takes on Vietnam coffee culture, Financial
actions to add to its product line. In recent years, it Times, http://www.ft.com, 3 January; A. Gasparro, 2012, Starbucks:
has introduced Via, an instant coffee, and a single- China to become no. 2 market, Wall Street Journal, http://www.wsj.com,
6 December; 2012, A look at Starbucks’ U.S. presence over the years,
cup coffee maker (named the Verismo) that allows
Bloomberg Businessweek, http://www.businessweek.com, 5 December; L.
customers to make their own lattes at home. Another Burkitt, 2012, Starbucks plays to local Chinese tastes, Wall Street Journal,
attempt to add to its product line was evidenced by http://www.wsj.com, 26 November; J. Jargon, 2012, Starbucks CEO: ‘We
will do for tea what we did for coffee’, Wall Street Journal, http://www.
its acquisition of the tea chain Teavana. In fact, it paid wsj.com, 14 November; V. Bajaj, 2012, Starbucks opens in India with
US$620 million to acquire the Atlanta-based company. pomp and tempered ambition, New York Times, http://www.nytimes.
com, 19 October; S. Strom, 2012, Starbucks to introduce single-serve
In recent times, it also acquired a juice maker, Evolution
coffee maker, New York Times, http://www.nytimes.com, 20 September;
Fresh, and Bay Bread, the operator of La Boulange L. Alderman, 2012, In Europe, Starbucks adjusts to a café culture, New
bakeries. Starbucks’ variety of beverage and food York Times, http://www.nytimes.com, 30 March.
companies now includes: Seattle’s Best Coffee, Teavana,
Tazo, Evolution Fresh, Torrefazione Italia Coffee and
Ethos Water.
capable of meeting, if not exceeding, global standards typically have the capability to earn above-average
returns.
Although globalisation offers potential benefits to organisations, it is not without risks. Collectively,
the risks of participating outside of an organisation’s domestic country in the global economy are labelled
a ‘liability of foreignness’.45
The increasing opportunities available in emerging economies is a major driver of growth in the size
of the global economy. Important emerging economies include the BRIC countries (Brazil, Russia, India
and China),46 the VISTA countries (Vietnam, Indonesia, South Africa, Turkey and Argentina),47 as well as
Mexico and Thailand. Demonstrating the growth in size of some of these economies was the 2018 prediction
that, by 2050, Indonesia, Brazil, Russia and Mexico would be the fourth-, fifth-, sixth- and seventh-largest
economies in the world by size, respectively. If this were to happen, by 2050 the size of these emerging
economies would exceed those of Japan, Germany, the UK and France.48 Emerging economy organisations
now compete in global markets, some with increasing success. 49 Indeed, the emergence of MNCs in
international markets forces large MNCs based in developed markets to enrich their own capabilities to
compete effectively in global markets. 50
One risk of entering the global market is the amount of time typically required for organisations to
learn how to compete in markets that are new to them. An organisation’s performance can suffer until
this knowledge is either developed locally or transferred from the home market to the newly established
global location. 51 Additionally, an organisation’s performance may suffer with substantial amounts of
globalisation. In this instance, an organisation may over-diversify internationally and this may have
strong negative effects on overall performance.
Thus, entry into international markets, even for organisations with substantial experience in the global
economy, requires effective use of the strategic management process. It is also important to note that even
though global markets are an attractive strategic option for some companies, they are not the only source
of strategic competitiveness. In fact, for most organisations – even those capable of competing successfully
in global markets – it is critical to remain committed to and strategically competitive in both domestic
and international markets by staying attuned to technological opportunities and potential competitive
disruptions that innovations create. 52 The challenge is also to be responsive to local needs, something
Starbucks failed to do in Australia. Starbucks is now emphasising both product innovation and international
expansion as means of growing profitably.
It took the telephone 35 years to get into 25 per cent of all homes in the United States. It
took TV 26 years. It took radio 22 years. It took PCs 16 years. It took the internet 7 years.54
12 PART 1: STRATEGIC MANAGEMENT INPUTS
The impact of technological changes on organisations and industries is broad and significant. For
example, in the not-too-distant past, people rented movies on videotapes from global retail stores such as
Blockbuster. Blockbuster has just one store that remains open globally, located in Oregon, USA. Fifteen years
earlier there were 9000 stores. Today, customers on a global basis use electronic means almost exclusively
to rent movies (such as via Foxtel) and games (e.g. Fortnite). The publishing industry (books, journals,
magazines and newspapers) is moving rapidly from hard copy to electronic formats. Many organisations in
these industries, operating with a more traditional business model, are suffering. These changes are also
affecting other industries, from trucking to mail services.
Perpetual innovation is a term used to describe how rapidly and consistently new, information-
intensive technologies replace older ones. The shorter product life cycles resulting from the rapid
diffusion of new technologies place a competitive premium on being able to quickly introduce new,
innovative goods and services into the marketplace. 55
In fact, when products become somewhat indistinguishable because of the widespread and rapid
diffusion of technologies, speed to market with innovative products may be the primary source of
competitive advantage (see Chapter 5). 56 Indeed, some argue that the global economy is increasingly
driven by, or revolves around, constant innovations. Not surprisingly, such innovations must be derived
from an understanding of global standards and expectations of product functionality. 57 Although some
argue that large established organisations may have trouble innovating, evidence suggests that today
these organisations are developing radically new technologies that transform old industries or create new
ones. 58 Apple is an excellent example of a large established organisation capable of radical innovation.
Also, in order to diffuse the technology and enhance the value of an innovation, additional organisations
need to be innovative in their use of the new technology, building it into their products. 59 Although
mature organisations may have trouble innovating, evidence suggests that today these organisations
are developing radically new technologies that transform old industries or create new ones.60 In 2018, for
example, Boston Consulting Group identified the 50 most innovative companies in the world. The first five
organisations on this list are large companies: Apple, Google, Microsoft, Amazon and Samsung.61 Wireless
AirPods, ARKit (the organisation’s augmented-reality framework) and HomePod (an intelligent speaker)
are some of the innovative products Apple has introduced and for which some recognise it as the most
innovative company in the world.62
Another indicator of rapid technology diffusion is that it now may take only 12 to 18 months for
organisations to gather information about their competitors’ research and development and product
decisions. 63 In the global economy, competitors can sometimes imitate an organisation’s successful
competitive actions within a few days. In this sense, the rate of technological diffusion has reduced the
competitive benefits of patents. Today, patents may be an effective way of protecting proprietary technology
in a small number of industries such as pharmaceuticals. Indeed, many organisations competing in the
electronics industry often do not apply for patents, in order to prevent competitors from gaining access to
the technological knowledge included in the patent application.
Disruptive technologies – technologies that destroy the value of an existing technology and create
new markets 64 – surface frequently in today’s competitive markets. Think of the new markets created by
the technologies underlying the development of products such as the iPad and AirPods. These types of
products are thought by some to represent radical or breakthrough innovations. 65 (We talk more about
radical innovations in Chapter 13.) A disruptive or radical technology can create what is essentially a new
industry or it can harm industry incumbents. However, some incumbents are able to adapt due to their
superior resources, experience and ability to gain access to the new technology through multiple sources
(e.g. alliances, acquisitions and ongoing internal research).66 Clearly, Apple has developed and introduced
‘disruptive technologies’ such as the iPad and AirPods, and in so doing changed several industries. For
example, the iPod and its complementary iTunes have revolutionised how music is sold to, and used by,
consumers. In conjunction with other complementary and competitive products (e.g. Amazon’s Kindle),
CHAPTER 1 13
Strategic management and strategic competitiveness
the iPad has contributed to and sped up major changes in the publishing industry, which, as noted earlier, is
moving more and more from hard copies to electronic books. Apple’s new technologies and products are also
contributing to the new ‘information age’. Thus, Apple provides an example of entrepreneurship through
technology emergence across multiple industries.67
value in today’s competitive landscape.77 In fact, the Brookings Institution estimates that intangible
resources contribute approximately 85 per cent of that value.78 The probability of achieving strategic
competitiveness is enhanced for the organisation that develops the ability to capture intelligence,
transform it into useable knowledge and diffuse it rapidly throughout the company.79 Therefore,
organisations must develop (e.g. through training programs) and acquire (e.g. by hiring educated and
experienced employees) knowledge, integrate it into the organisation to create capabilities, and then
apply it to gain a competitive advantage. 80
A strong knowledge base is necessary to create innovations. Organisations lacking the appropriate
strategic flexibility
internal knowledge resources are less likely to invest money in research and development. 81 Organisations
a set of capabilities
must continue to learn (building their knowledge stock) because knowledge spillovers to competitors are used to respond to
common. There are several ways in which knowledge spillovers occur, including the hiring of professional various demands and
staff and managers by competitors. 82 Because of the potential for spillovers, organisations must move opportunities existing
in a dynamic and
quickly to use their knowledge in productive ways. In addition, organisations must build routines that uncertain competitive
facilitate the diffusion of local knowledge throughout the organisation for use everywhere that it has environment
value. 83 Organisations are better able to do these things when they have
strategic flexibility.
Strategic flexibility is a set of capabilities used to respond to various
demands and opportunities existing in a dynamic and uncertain competitive
environment. Thus, strategic flexibility involves coping with uncertainty
and its accompanying risks. 84 Organisations should try to develop strategic
flexibility in all areas of their operations. However, those working within
organisations to develop strategic flexibility should understand that the
task is not easy, largely because of inertia that can build up over time. An
organisation’s focus and past core competencies may actually slow the rate
of change and its aptitude for strategic flexibility. 85
To be strategically f lexible on a continuing basis, and to gain the
competitive benefits of such flexibility, an organisation has to develop the
capacity to learn. Continuous learning provides the organisation with new and
up-to-date skill sets that allow it to adapt to its environment as it encounters The pricing landscape of ISPs evolves based upon the
advent of streaming video and the increased use of
changes. 86 Organisations capable of rapidly and broadly applying what they
iPads and other tablet and mobile devices.
have learned exhibit the strategic flexibility and the capacity to change in
ways that will increase the probability of successfully dealing with uncertain,
Source: iStockphoto/hocus-focus
hypercompetitive environments.
segment of that industry are assumed to control similar strategically relevant resources and to pursue
similar strategies in light of those resources. Third, resources used to implement strategies are assumed
to be highly mobile across organisations, so any resource differences that might develop between
organisations will be short-lived. Fourth, organisational decision makers are assumed to be rational and
committed to acting in the organisation’s best interests, as shown by their profit-maximising behaviours. 90
The I/O model challenges organisations to find the most attractive industry in which to compete. Because
most organisations are assumed to have similar valuable resources that are mobile across companies,
their performance generally can be increased only when they operate in the industry with the highest
profit potential and learn how to use their resources to implement the strategy required by the industry’s
structural characteristics. 91
The five forces model of competition is an analytical tool used to assist organisations find the industry
that is the most attractive for them. The model (explained in Chapter 2) encompasses several variables and
tries to capture the complexity of competition. The five forces model suggests that an industry’s profitability
(i.e. its rate of return on invested capital relative to its cost of capital) is a function of interactions among
five forces: suppliers, buyers, competitive rivalry among organisations currently in the industry, product
substitutes, and potential entrants to the industry. 92
Organisations use the five forces model to identify the attractiveness of an industry (as measured by
its profitability potential) as well as the most advantageous position for the organisation to take in that
industry, given the industry’s structural characteristics. 93 Typically, the model suggests that organisations
may earn above-average returns by producing either standardised goods or services at costs below those
of competitors (a cost leadership strategy) or by producing differentiated goods or services for which
customers are willing to pay a price premium (a differentiation strategy). (Cost leadership and product
differentiation strategies are discussed in Chapter 4.) Operating in an unattractive industry does not
mean profits cannot be made. The fact that ‘the fast food industry is becoming a “zero-sum industry” as
companies battle for the same pool of customers’ 94 suggests that fast-food giant McDonald’s is competing
in a relatively unattractive industry. However, by focusing on product innovations and enhancing existing
facilities while buying properties in different global markets at attractive prices to selectively build new
stores, McDonald’s is positioned in the fast-food (or quick-service) restaurant industry to earn above-
average returns. There may be bumps in the road of profit, but McDonald’s has demonstrated that it can
change and succeed.
As shown in Figure 1.2, the I/O model suggests that above-average returns are earned when
organisations are able to effectively study the external environment as the foundation for identifying
an attractive industry and implementing the appropriate strategy. For example, in some industries,
organisations can reduce competitive rivalry and erect barriers to entry by forming joint ventures. Because
of these outcomes, the joint ventures increase profitability in the industry. 95 Companies that develop or
acquire the internal skills needed to implement strategies required by the external environment are likely to
succeed, while those that do not are likely to fail. 96 Hence, this model suggests that returns are determined
primarily by external characteristics rather than by the organisation’s unique internal resources and
capabilities.
Research findings support the I/O model in that approximately 20 per cent of an organisation’s
profitability is explained by the industry in which it chooses to compete. However, this research also shows
that 36 per cent of the variance in profitability can be attributed to the organisation’s characteristics
and actions. 97 These findings suggest that the external environment and an organisation’s resources,
capabilities, core competencies and competitive advantages (see Chapter 3) influence its ability to achieve
strategic competitiveness and earn above-average returns.
As shown in Figure 1.2, the I/O model assumes that an organisation’s strategy is a set of commitments
and actions flowing from the characteristics of the industry in which it has decided to compete.
The resource-based model, discussed next, takes a different view of the major influences on an
organisation’s choice of strategy.
CHAPTER 1 17
Strategic management and strategic competitiveness
Superior returns
Earning of above-average returns
resources
For example, Apple’s R&D function is one of its core competencies. Amazon’s distribution function is also
considered a core competency. There is little doubt that the ability to produce innovative new products
that are perceived as valuable in the marketplace is a core competence for Apple, as suggested in the earlier
‘Strategic focus’ feature.
According to the resource-based model, differences in an organisation’s performances across time are due
primarily to its unique resources and capabilities rather than the industry’s structural characteristics. This
model also assumes that an organisation acquires different resources and develops unique capabilities based
on how it combines and uses the resources; that resources and certain capabilities are not highly mobile
across organisations; and that the differences in resources and capabilities are the basis of competitive
advantage.101 Through continued use, capabilities become stronger and more difficult for competitors to
understand and imitate. As a source of competitive advantage, a capability ‘should be neither so simple
that it is highly imitable, nor so complex that it defies internal steering and control’.102
The resource-based model of superior returns is shown in Figure 1.3. This model suggests that the
strategy the organisation chooses should allow it to use its competitive advantages in an attractive industry
(the I/O model is used to identify an attractive industry).
Superior returns
Earning of above-average returns
Not all of an organisation’s resources and capabilities have the potential to be the foundation for a
competitive advantage. This potential is realised when resources and capabilities are valuable, rare,
costly to imitate and non-substitutable.103 Resources are valuable when they allow an organisation to take
advantage of opportunities or neutralise threats in its external environment. They are rare when possessed
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Strategic management and strategic competitiveness
by few (if any) current and potential competitors. Resources are costly to imitate when other organisations
either cannot obtain them or are at a cost disadvantage in obtaining them compared with the organisation
that already possesses them. And they are non-substitutable when they have no structural equivalents.
Many resources can either be imitated or substituted over time. Therefore, it is difficult to achieve and
sustain a competitive advantage based on resources alone.104 Individual resources are often integrated to
produce integrated configurations in order to build capabilities. These capabilities are more likely to have
these four attributes.105 When these four criteria are met, however, resources and capabilities become core
competencies.
As noted previously, research shows that both the industry environment and an organisation’s
internal assets affect that organisation’s performance over time.106 Thus, to form a vision and mission,
and subsequently to select one or more strategies and determine how to implement them, organisations
use both the I/O and resource-based models.107 In fact, these models complement each other in that one
(I/O) focuses outside the organisation while the other (resource-based) focuses inside the organisation.
Next, we discuss the forming of the organisation’s vision and mission: the actions taken after the
organisation understands the realities of its external environment (Chapter 2) and internal organisation
(Chapter 3).
Vision
Vision is a picture of what the organisation wants to be and, in broad terms, what it wants to ultimately vision
achieve.108 A vision statement articulates the ideal description of an organisation and gives shape to its a picture of what the
intended future. In other words, a vision statement points the organisation in the direction of where it would organisation wants
to be and, in broad
like to be in the years to come.109 An effective vision stretches and challenges people as well. Carmine Gallo, terms, what it wants
in her book about Steve Jobs, Apple’s phenomenally successful CEO, argues that one of the reasons Apple is to ultimately achieve
so innovative was Jobs’ vision for the company. She suggests that he thought bigger than, and differently
from, most people – she describes it as ‘putting a dent in the universe’. To be innovative, she explains that
one has to think differently about their products and customers – ‘sell dreams not products’ – and differently
about the story to ‘create great expectations’.110 Interestingly, many new entrepreneurs are highly optimistic
when they develop their ventures.111
It is also important to note that vision statements reflect an organisation’s values and aspirations and
are intended to capture the heart and mind of each employee and, hopefully, many of its other stakeholders.
An organisation’s vision tends to be enduring, while its mission can change with new environmental
conditions. A vision statement tends to be relatively short and concise, making it easily remembered.
Examples of vision statements include the following:
The Red Cross, born of a desire to bring assistance without discrimination to the wounded
on the battlefield, endeavors – in its international and national capacity – to prevent and
alleviate human suffering wherever it may be found. Its purpose is to protect life and
health and to ensure respect for the human being.113
The Red Cross
We aim to be the airline of choice for customers with specific needs, by providing a travel
experience that is comfortable and hassle free, whilst ensuring the safety of passengers
and our staff.114
Qantas
As an organisation’s most important and prominent strategic leader, the CEO is responsible for working
STRATEGY NOW with others to form the organisation’s vision. Experience shows that the most effective vision statement
Red Cross’s results when the CEO involves a host of stakeholders (e.g. other top-level managers, employees working
sustainability in different parts of the organisation, suppliers and customers) to develop it. In addition, to help the
vision organisation reach its desired future state, a vision statement should be clearly tied to the conditions in
the organisation’s external environment and internal organisation. Moreover, the decisions and actions
of those involved with developing the vision, especially the CEO and the other top-level managers, must
be consistent with that vision.
Mission
mission The vision is the foundation for the organisation’s mission. A mission specifies the business or businesses
specifies the business in which the organisation intends to compete and the customers it intends to serve.115 The organisation’s
or businesses in which mission is more concrete than its vision. However, similar to the vision, a mission should establish an
the organisation
intends to compete organisation’s individuality and should be inspiring and relevant to all stakeholders.116 Together, the vision
and the customers it and mission provide the foundation that the organisation needs to choose and implement one or more
intends to serve strategies. The probability of forming an effective mission increases when employees have a strong sense
of the ethical standards that guide their behaviours as they work to help the organisation reach its vision.117
Thus, business ethics are a vital part of the organisation’s discussions to decide what it wants to become
(its vision) as well as who it intends to serve and how it desires to serve those individuals and groups (its
mission).118
Even though the final responsibility for forming the organisation’s mission rests with the CEO, they
and other top-level managers often involve more people in developing the mission. The main reason is that
the mission deals more directly with product markets and customers, and middle- and first-level managers
and other employees have more direct contact with customers and the markets in which they are served.
McDonald’s mission statement, for example, flows from its vision of being the world’s best quick-service
restaurant:
Be the best employer for our people in each community around the world; deliver
operational excellence to our customers in each of our restaurants.119
McDonald’s
Some say that vision and mission statements provide little value. One expert believes: ‘Most vision
statements are either too vague, too broad in scope, or riddled with superlatives’.120 Clearly, vision and
mission statements that are poorly developed do not provide the direction an organisation needs to take
appropriate strategic actions. Still, as shown in Figure 1.1, an organisation’s vision and mission are
critical aspects of the strategic inputs required to engage in strategic actions that help to achieve strategic
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Strategic management and strategic competitiveness
competitiveness and earn above-average returns. Therefore, organisations must accept the challenge of
forming effective vision and mission statements.
Stakeholders
Every organisation involves a system of primary stakeholder groups with whom it establishes and
manages relationships.121 Stakeholders are the individuals, groups and organisations who may affect the stakeholders
organisation’s vision and mission, who are affected by the strategic outcomes achieved, and who have the individuals and
groups who can affect
enforceable claims on the organisation’s performance.122 Claims on an organisation’s performance are
and are affected
enforced through the stakeholders’ ability to withhold participation essential to the organisation’s survival, by the strategic
competitiveness and profitability.123 Stakeholders continue to support an organisation when its performance outcomes achieved
and who have
meets or exceeds their expectations.124 Also, research suggests that organisations that effectively manage
enforceable claims
stakeholder relationships outperform those that do not. Stakeholder relationships therefore can be managed on an organisation’s
to be a source of competitive advantage.125 performance
Although organisations have dependency relationships with their stakeholders, they are not equally
dependent on all stakeholders at all times.126 As a consequence, not every stakeholder has the same level
of influence.127 The more critical and valued a stakeholder’s participation, the greater an organisation’s
dependence on it. Greater dependence, in turn, gives the stakeholder more potential influence over an
organisation’s commitments, decisions and actions. Managers must find ways to either accommodate or
insulate the organisation from the demands of stakeholders controlling critical resources.128
Classifications of stakeholders
The parties involved with an organisation’s operations can be separated into at least four groups.129 As
shown in Figure 1.4, there are the capital market stakeholders (shareholders and the major suppliers
of an organisation’s capital), the product market stakeholders (the organisation’s primary customers,
suppliers, host communities and unions representing the workforce), the organisational stakeholders (all
of an organisation’s employees, including both non-managerial and managerial personnel) and the natural
environment (as represented by activist groups).
Each stakeholder group expects those making strategic decisions in an organisation to provide the
leadership through which its valued objectives will be reached.130 The objectives of the various stakeholder
groups often differ from one another, sometimes placing those involved with an organisation’s strategic
22 PART 1: STRATEGIC MANAGEMENT INPUTS
management process in situations where trade-offs have to be made. The most obvious stakeholders are
shareholders: individuals and groups who have invested capital in an organisation in the expectation of
earning a positive return on their investments. These stakeholders’ rights are grounded in laws governing
private property and private enterprise.
In contrast to shareholders, another group of stakeholders – the organisation’s customers – prefer that
investors receive a minimum return on their investments. Customers could have their interests maximised
when the quality and reliability of an organisation’s products are improved, but without high prices. High
returns to customers, therefore, might come at the expense of lower returns for capital market stakeholders.
Because of potential conflicts, each organisation must carefully manage its stakeholders. First, an
organisation must thoroughly identify and understand all important stakeholders. Second, it must prioritise
them in case it cannot satisfy all of them. Power is the most critical criterion in prioritising stakeholders.
Other criteria might include the urgency of satisfying each particular stakeholder group and the degree of
importance of each to the organisation.131
When the organisation earns above-average returns, the challenge of effectively managing stakeholder
relationships is lessened substantially. With the capability and flexibility provided by above-average
returns, an organisation can more easily satisfy multiple stakeholders simultaneously. When the
organisation earns only average returns, it is unable to maximise the interests of all stakeholders. The
objective then becomes one of at least minimally satisfying each stakeholder.
Trade-off decisions are made in light of how important the support of each stakeholder group is to the
organisation. For example, environmental groups may be very important to organisations in the energy
industry but less important to professional service organisations.132 An organisation earning below-average
returns does not have the capacity to minimally satisfy all stakeholders. The managerial challenge in this
case is to make trade-offs that minimise the amount of support lost from stakeholders. Societal values
also influence the general weightings allocated among the four stakeholder groups shown in Figure 1.4.
Although all the groups are served by organisations in the major industrialised nations, the priorities in
their service vary because of cultural differences. Next, we present additional details about each of the
major stakeholder groups.
„Meister Douwe,” viel vroedsman Grada daarop in, „die het wel
eerder de planke mis weest. Ferleden jaar song er foor it bordtsje in
’e kerk: „Aller oogen wachten”, op ’n Karsmorgen.”
Bij dezen uitval begon de geheele raad van Dokkum te lachen, maar
de burgemeester niet. Die moest zijne deftigheid ophouden, en hij
sprak weêr:
„Als er dan niemand fan de Heeren is, die mij eenige inlichting in de
saak geven kan, soo laat dan eens de beide stadsboden boven
komen, of die ons in dit gefal ook nog souden kunnen dienen.”
Toen werd er ook nog een kleermaker, een oude Duitscher, ten
raadhuize geroepen. Maar toen die man den kreeft in de mand zag
liggen, toen werd hij nog bleeker om zijne smalle kaken als tien
bleeke kleermakers met elkanderen, en hij riep het uit: „Gott beware,
Her Pirgemeister! soll mich die sweernoot straffen, wenn ich solchen
Peest langer in de Stadt von Dokkom tolden sollte. Et is de Teufel,
prave Herren! de lebendige Teufel. On wann ikke Pirgemeister war,
ik that den Hundsfot in de Graft gooyen on versupen him.”
Ook andere Friezen, die van ’t eiland Ameland, moeten zich zulk
eenen oneerlijken spotnaam laten welgevallen, naar aanleiding van
het wapenschild hunner woonplaats. Het wapenschild van het
Ameland vertoont op de eene helft drie balken, op de andere eene
halve maan. Dies noemen de andere Friezen de Amelanders
B a l k e t s j e a v e n , B a l k e d i e v e n , en zingen hen ook dit
spotrijmke toe:
De Amelander schalken,
Die stalen eens drie balken,
’s Avonds in den maneschijn,
Daarom zal ’t hun wapen zijn.
De Amelanner Guten,
Dy komme hjir mei skuten:
Hja geane foar de finsters stean
En kypje troch de ruten.
De Winamer Katten
Jeye de Mullumer Rotten
Troch de Harnser kloksgatten.
De ingezetenen van het dorp Grouw hebben den naam van een
vroolijk en levenslustig volkje te zijn, en gaarne, als het, [41]pas of
ook geen pas geeft, eens een deuntje te dansen. Oudtijds was daar
eens een gezelschap jongvolk bijeen, en, wijl er juist dien dag een
reizende speelman in het dorp gekomen was, die daar ook
overnachten zoude, zoo brachten de jongelui dien man in de
herberg, en weldra kwamen de beenen van den vloer, en draaiden
en zwaaiden ze lustig rond. De speelman moest betaald worden, en
dat deden de Grouwsters ook. Maar zij hadden nog van dansen niet
genoeg; al weêr en al weêr moest de speelman vedelen, tot laat in
den avond, tot middernacht. Eindelijk had niemand van het
gezelschap nog geld in den zak, om den vedelaar te betalen. Maar
een van de jongelingen, de zoon van eenen kaaskoopman, wist wel
raad. Hij haalde uit zijns vaders pakhuis eene groote nagelkaas, om
die den speelman als loon te geven. Deze nam daarmede gaarne
genoegen—maar of de vader, des anderen daags, toen het geval
uitkwam, dit ook deed, meen ik te moeten betwijfelen.