Strategic Management: Creating

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eleventh edition Page iii

STRATEGIC MANAGEMENT
Creating Competitive Advantages

Nico Muller Art/Shutterstock

GREGORY DESS
University of Texas at Dallas

GERRY McNAMARA
Michigan State University

ALAN EISNER
Clark University

STEVE SAUERWALD
University of Illinois at Chicago
 Page iv

STRATEGIC MANAGEMENT

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 Page v

dedication

To my family—Margie; Taylor; Alex, our new son-in-law; and my parents, the late Bill and
Mary Dess

To my first two academic mentors—Charles Burden and Les Rue (of Georgia State
University)
–Greg

To my wonderful wife, Gaelen, and my children, Megan and AJ

–Gerry

To my family—Helaine, Rachel, and Jacob

–Alan

To my wife, Pla, and daughters, Miriam and Layla

–Steve

We thank Seung-Hyun Lee for his contributions to previous editions and wish him the best
as he refocuses his time toward his academic research in strategic management and
international business.
 Page vi

about the authors

Gregory G. Dess

Gregory G. Dess
is the Andrew R. Cecil Endowed Chair in Management at the University of Texas at Dallas.
His primary research interests are in strategic management, organization environment
relationships, and knowledge management. He has published numerous articles on these
subjects in both academic and practitioner-oriented journals. He also serves on the editorial
boards of a wide range of practitioner-oriented and academic journals. In August 2000, he
was inducted into the Academy of Management Journal Hall of Fame as one of its charter
members. Professor Dess has conducted executive programs in the United States, Europe,
Africa, Hong Kong, and Australia. During 1994 he was a Fulbright Scholar in Oporto,
Portugal. In 2009, he received an honorary doctorate from the University of Bern
(Switzerland). He received his PhD in business administration from the University of
Washington (Seattle) and a BIE degree from Georgia Tech.

©He Gao
Gerry McNamara
is the McConnell Broad Professor of Management at Michigan State University. His
research draws on cognitive and behavioral theories to explain strategic phenomena,
including strategic decision making, mergers and acquisitions, and environmental
assessments. His research has been published in the Academy of Management Journal, the
Strategic Management Journal, Organization Science, Organizational Behavior and Human
Decision Processes, the Journal of Applied Psychology, Personnel Psychology, the Journal of
Management, and the Journal of International Business Studies. Gerry’s research has also
been abstracted in the Wall Street Journal, Harvard Business Review, New York Times,
Bloomberg BusinessWeek, the Economist, and Financial Week. He has served as an associate
editor for the Strategic Management Journal and the Academy of Management Journal. He
received his PhD from the University of Minnesota.
Page vii

Alan B. Eisner

Alan B. Eisner
is Dean of the School of Management and Professor of Management at Clark University. He
received his PhD in management from the Stern School of Business, New York University.
His primary research interests are in strategic management, technology management,
organizational learning, and managerial decision making. He has published research articles
and cases in journals such as Advances in Strategic Management, International Journal of
Electronic Commerce, International Journal of Technology Management, American Business
Review, Journal of Behavioral and Applied Management, and Global Journal of Business
Pedagogy. He is the former associate editor of the Case Association’s peer-reviewed journal,
The CASE Journal.
Steve Sauerwald

Steve Sauerwald
is an Associate Professor of Strategic Management in the College of Business at the
University of Illinois at Chicago. His research interests focus on corporate governance,
strategic leadership, and stakeholder strategy. He pursues this research program in a global
setting by examining how institutions surrounding domestic and international firms shape
organizational outcomes. His scholarship has been published in journals such as Strategic
Management Journal, Organization Science, Journal of International Business Studies, Journal
of Management, and Journal of Management Studies. His research has been covered by
Forbes, Harvard Business Review, and BBC. He received his MBA and PhD from the
University of Texas at Dallas. He was a Fulbright Scholar at the University of Texas at
Dallas and a visiting scholar at Free University Berlin.
 Page viii

preface

Welcome to the Eleventh Edition of Strategic

Management: Creating Competitive
Advantages. We always appreciate the constructive and helpful feedback that we
have received on our work. Later in this preface, we are happy to acknowledge by name the
reviewers for all 11 editions of Strategic Management. Following are some examples of the
encouraging feedback we have received:

I have found this text, after several years of using it, to be comprehensive and extremely well
structured. The many, varied real-world examples resonate with students. I see no reason to
change from an excellent text.

Karen Ford-Eickhoff, University of North Carolina-Charlotte

The textbook by Dess et al. comprehensively integrates research to explicate the strategic
management process, delivers a variety of high-quality case studies, and provides interesting
insights from executives on strategy.

Steven Dionne, Georgia State University

We find the Dess text to be an exceptionally well-suited companion for business simulations
used in the course. I use all the chapters as the fit is logical and portrays a realistic
examination of how business functions are interdependent.

Robert W. Reich, Tarleton State University

I am biased towards this text as I’ve found it invaluable for me as a student-centered teacher
who focuses on bringing as much value to my students as possible. I want each class meeting
to be as full as possible with insightful, relevant, and meaningful content that students can
immediately apply to their business comprehension. This text helps me facilitate this!

John Sanchez, University of North Carolina-Greensboro

This textbook is a rich resource for the students. The accompanying videos and cases assist
the students in applying what they learn. The concepts are always tied to corporate
examples, often using companies the students can easily identify with.

Renata Mayrhofer, Concordia University St. Paul

I have used the Dess strategic management textbook for six years and I plan to continue
using the Dess textbook. I think it is the best strategy textbook on the market today.

Robert Dintino, Rowan University

Overall, a solid textbook that organizes the strategic material clearly and concisely (and)
provides great examples of cases inside and at the end. I have been happily using the book
for the last 11 years.

Omer Gokalp, Suffolk University

I have used the previous edition of the text in my course and found it very useful. I consider
it to be the most comprehensive yet concise text on strategic management. I will continue to
use the text in the future.

Alex Makarevich, California State University-East Bay

This title brings to life core parts of the strategic process, helping students to get a better
understanding of the untidy process of strategizing. I will definitely continue to use Dess!

Isaac Wanasika, University of Northern Colorado

We always strive to improve our work and we are most appreciative of the thorough Page ix
feedback that many strategy professionals have graciously given us. The author team
has worked hard to incorporate many of their ideas into the eleventh edition.

We believe we have made valuable improvements throughout our many revised editions of
Strategic Management. At the same time, we strive to be consistent and true to our original
overriding objective: a book that satisfies three Rs—rigor, relevance, and readability. And we
are pleased that we have received feedback (such as the previously noted comments) that is
consistent with what we are trying to accomplish.
What are some of the features in Strategic Management that reinforce the three Rs? First, we
build in rigor by drawing on the latest research by management scholars and insights from
management consultants to offer a current and comprehensive view of strategic issues. We
reinforce this rigor with our Issues for Debate and Reflecting on Career Implications that
require students to develop insights on how to address complex issues and understand how
strategy concepts can enhance their career success. Second, to enhance relevance, we
provide numerous examples from management practice in the text and Strategy Spotlights
(sidebars). We also increase relevance by relating course topics and examples to current
business and societal themes, including environmental sustainability, ethics, globalization,
entrepreneurship, and data analytics. Third, we stress readability through an engaging
writing style with minimal jargon to ensure an effective learning experience. This is clearly
evident throughout the text, but in particular, in the conversational presentations of chapter
opening Learning from Mistakes and chapter ending Issues for Debate.

Unlike other strategy texts, we provide three separate chapters that address timely topics
about which business students should have a solid understanding. These are the role of
intellectual assets in value creation (Chapter 4), entrepreneurial strategy and competitive
dynamics (Chapter 8), and fostering entrepreneurship in established organizations (Chapter
12). We also provide an excellent and thorough chapter on how to analyze strategic
management cases.

In developing Strategic Management: Creating Competitive Advantages, we certainly didn’t

forget the instructors. As we all know, you have a most challenging (but rewarding) job. We
do our best to help you. We provide a variety of supplementary materials that should help
you in class preparation and delivery. For example, our chapter teaching notes do not simply
summarize the material in the text. Rather (and consistent with the concept of strategy), we
ask ourselves: “How can we add value?” Thus, for each chapter, we provide numerous
questions to help guide class discussion, at least 12 boxed examples to supplement chapter
material, and three detailed teaching tips to further engage students. Importantly, we
completed the chapter teaching notes ourselves. That is, unlike many of our rivals, we didn’t
simply farm out the work to others. Instead, we felt that creating our own teaching notes
helps to enhance quality and consistency—as well as demonstrates our personal commitment
to provide a top-quality total package to strategy instructors. With the eleventh edition, we
also benefited from valued input by our strategy colleagues to further improve our work.

Let’s now address some of the key substantive changes in the Eleventh Edition. Then we will
cover some of the major features that we have had in previous editions.
WHAT’S NEW? HIGHLIGHTS OF THE ELEVENTH
EDITION
We are happy to welcome Steve Sauerwald to the author team. Steve has developed an
extensive publication record in the areas of strategic management and corporate
governance. He pursues his research program in a global setting by examining how CEOs
and boards of directors address important corporate challenges. His addition to the author
team provides a global perspective, especially in the areas of strategic control and corporate
governance.

We have endeavored to add new material to the chapters that reflects the feedback we Page x
received from our reviewers as well as the challenges today’s managers face. Thus, we all
invested an extensive amount of time carefully reviewing a wide variety of books, academic
and practitioner journals, and the business press.

We also worked hard to develop concise chapters. Based on feedback from some of the
reviewers, we have tightened our writing style, tried to eliminate redundant examples, and
focused more directly on what we feel is the most important content in each chapter for our
audience. The overall result is that we were able to update our material, add valuable new
content, and—at the same time—shorten the length of the chapters.

Here are some of the major changes and improvements in the Eleventh Edition:
Connected Strategies. We address how firms have successfully implemented new forms of
connectivity with their customers, which involve low-friction, frequent, and customized
interactions. This enables companies to be more proactive; that is, respond to customer
needs as they arise—or even anticipate them. Thus, a win-win is created: Customers
receive a superior experience, and companies enhance their operational efficiency. A few
examples include:
Nike’s direct-to-consumer (DTC) business model, which enables the firm to create
closer relationships with its customers by, for instance, providing them with running
advice through their fitness app as well as finding out more useful information about
customer habits and preferences. (Chapter 2)
Rolls-Royce, a leading producer of jet engines, leveraging the power of its technology to
better serve its customers. Sensors generate gigabytes of data that give customers real-
time data on the many components in their engines. Compared to the old fixed-
maintenance schedule, Rolls-Royce is able to create significant cost savings by avoiding
 service that is too late or too early. Further, the sensor technologies benefit the firm’s
ongoing engineering efforts by providing information on how operational data can
impact design and production. (Chapter 3)
Wearable X, a Sydney-based startup, which helps yoga enthusiasts improve their yoga
poses without the assistance of an expensive yoga instructor. How? Its Nandi pants
feature woven-in wearable sensors that continuously measure body positions and
provide feedback. Bluetooth technology connected to users’ smartphone helps people
attain correct yoga positions through gentle vibrations. (Chapter 12)
Integrative Themes. As with our previous editions, we include multiple integrative themes
in this edition. These include the digital economy, environmental sustainability, and
ethics. Many new content issues—as well as Strategy Spotlights (our sidebars)—are used
throughout the text and cases to illustrate these important and timely topics central to the
study of strategic management. Given the salient relevance of diversity in today’s business
environment, we devote additional content to it in text material as well as in strategy
spotlights.
Insights from Executives: We received very positive feedback for our initial interview with
Usman Ghani, an internationally recognized consultant who is Chairman of Conflucore,
LLP, in our 10th edition. We are happy to include his interview in this edition. We have
also conducted interviews with three other individuals who have graciously provided us
with valuable insights. Kelly Pfiel, former vice president of PepsiCo, shares her views on
the timely topic of women in management (Chapter 4); Jasmine Crowe, social
entrepreneur, provides tips learned through her experience creating Goodr Inc., a
sustainable food-waste management company based in Atlanta, Georgia (Chapter 8); and
Jim Mapes, a former executive with several companies, including Perot Systems, shares
his views on strategic leadership. Of particular interest is his valuable learning experience
working directly with H. Ross Perot (Chapter 11).
Half of the 12 opening Learning from Mistakes vignettes that lead off each chapter Page xi
are new. Unique to this text, they are examples of what can go wrong, and they
serve as an excellent vehicle for clarifying and reinforcing strategy concepts.
Over half of our Strategy Spotlights (sidebar examples) are brand new, and many others
have been significantly updated. We offer a total of 54 Spotlights that are designed to focus
on bringing the most important strategy concepts to life in a concise and highly readable
manner. And we work hard to eliminate unnecessary detail that detracts from the main
point we are trying to make. Many Spotlights focus on hot issues that are critical in
 leading today’s organizations—ethics, environmental sustainability, the digital economy,
and connected strategies.

Key content changes for the chapters include:

Chapter 1 addresses environmental, social, and governance (ESG) investment funds. These
funds offer investors access to companies that strive to do good and avoid harm and have
attracted a new generation of investors. Although these funds have recently outperformed
traditional investment funds, many new funds espouse ESG principles on paper—but not
in spirit. We also discuss some of the different types of ESG funds.
Chapter 2 discusses the rapid rise of artificial intelligence, a salient outcome of the digital
economy and data analytics. Many top management teams are now data analytics driven,
enabling them to manage strategic uncertainties and identify strategic opportunities. AI
also helps to define key performance indicators (KPIs) that help executives monitor,
optimize, and revise strategic initiatives.
Chapter 3 introduces the concept of connected strategies, which is a central theme in this
edition. This approach enables a firm to evolve from having episodic interactions with
suppliers and customers to achieving ongoing connected relationships with them. The
firm can better anticipate supplier challenges and customer needs as well as customize
supply and delivery options. This approach can even create new business models.
Chapter 4 addresses how social capital can help firms leverage the value of both new and
former employees. Firms typically spend time onboarding new employees. However, they
often miss out on the benefits of maintaining relationships with employees who leave the
organization and who may become suppliers, boomerang employees, mentors to current
employees, and ambassadors for the firm. Like universities, many firms are benefitting
from creating active alumni organizations.
Chapter 5 discusses some of the challenges associated with achieving a competitive
advantage based on a firm’s green initiatives. Although consumer surveys typically show
that consumers are willing to pay a premium price for socially and environmentally
sustainable products and services, practice does not bear this out. Three reasons for this
gap may be that consumers may perceive the green products and services as inferior on
some attributes; they may be reluctant to change to an unfamiliar product; and, some
consumers may talk about the benefits of sustainability but not follow up with actual
purchasing behavior. We address how to potentially overcome such resistance.
Chapter 6 explains how firms can become more successful in integrating an Page xii
acquisition into their existing organization. Clearly, the success of any acquisition
isn’t determined once the deal closes. We focus on four practices that McKinsey &
Company has advocated: protecting the base business, accelerate capturing value,
institutionalizing new ways of operating, and catalyzing the transformation.
Chapter 7 addresses some of the supply-chain disruptions that arise when there are trade
tensions or global events such as the COVID-19 pandemic. Therefore, firms should
consider the risks associated with becoming dependent on a few countries for critical
inputs to their production processes.
Chapter 8 explains how some recent developments in the digital economy have enabled new
ventures to outsource many technical functions to third-party service providers, hence
reducing the need to hire technical talent. Third-party IT solutions such as cloud
computing further reduce the need to have hardware and software physically on site. The
reduction of such resource intensive investments in human capital lowers entry barriers in
many industries.
Chapter 9 addresses how companies are more likely to incorporate social objectives as part
of CEO compensation arrangements. These objectives include increasing the
representation of traditionally underrepresented groups in labor and management. Such
initiatives are believed to provide strong, formal incentives for CEOs to consider
stakeholder interests more broadly.
Chapter 10 discusses how agile teams can help organizations achieve their objectives quickly
in rapidly changing environments. Such teams help companies transform themselves from
traditional, slow-moving bureaucracies into flexible and agile organizations. We focus on
the role of “hidden stars” in making agile teams successful.
Chapter 11 discusses a salient trend that has become a greater focus for high-level
executives: enhancing diversity, equity, and inclusion (DEI) in their organizations. An
inclusive leadership approach involves not only diversity at all levels in the firm but also
the creation of an inclusive culture where traditionally underrepresented groups feel
appreciated and heard. We provide examples of what firms have done to foster inclusive
culture.
Chapter 12 explains how large companies use real options logic by investing in small startup
companies. This allows them to have a firsthand look into the promise of novel
technologies and gives them the right, but not the obligation, to acquire the nascent
technology. We discuss how such corporate venture investments can be used by non-tech
firms such as an insurance company, Aflac, and Toyota Motors.
 Chapter 13 updates our Appendix: Sources of Company and Industry Information. The
authors owe a debt of gratitude to Ms. Loreen Henry, of the University of Texas at Dallas.
She has provided us with comprehensive and updated information for the Eleventh
Edition that is organized on a wide range of issues. These include competitive
intelligence, annual report collections, company rankings, business websites, as well as
strategic and competitive analysis.

Page xiii

WHAT REMAINS THE SAME: KEY FEATURES OF

EARLIER EDITIONS
Let’s now briefly address some of the exciting features that remain from the earlier editions.
Traditional organizing framework with three other chapters on timely topics. Crisply
written chapters cover all of the strategy bases and address contemporary topics. First,
the chapters are divided logically into the traditional sequence: strategy analysis, strategy
formulation, and strategy implementation. Second, we include three chapters on such
timely topics as intellectual capital/knowledge management, entrepreneurial strategy and
competitive dynamics, and fostering corporate entrepreneurship and new ventures.
Learning from Mistakes chapter-opening cases. To enhance student interest, we begin each
chapter with a case that depicts an organization that has suffered a dramatic performance
drop, or outright failure, by failing to adhere to sound strategic management concepts and
principles. We believe this feature serves to underpin the value of the concepts in the
course and that it is a preferred teaching approach to merely providing examples of
outstanding companies that always seem to get it right. After all, isn’t it better (and more
challenging) to diagnose problems than admire perfection? As Dartmouth’s Sydney
Finkelstein, author of Why Smart Executives Fail, notes: “We live in a world where success
is revered, and failure is quickly pushed to the side. However, some of the greatest
opportunities to learn—for both individuals and organizations—come from studying what
goes wrong.”* We will see, for example, how Luckin Coffee, founded in 2017, attempted
to take on Starbucks in the fast-growing Chinese market. Luckin took a different
approach: It operated in small pickup locations, where customers place their orders via a
smartphone app. This eliminated the need for cashiers and enabled Luckin to collect data
to optimize sales. Success came quickly and the firm had an initial public offering (IPO)
on the Nasdaq stock exchange in less than two years after its founding. However, things
quickly unraveled! In April 2020, the firm revealed it had inflated its 2019 sales numbers.
Its stock plunged 75 percent overnight. A culture of financial misconduct incentivized
employees to create fake transactions to prop up sales numbers, and the firm’s leadership
failed to institute effective internal controls. Luckin was delisted from the Nasdaq
exchange in June 2020.
Issue for Debate at the end of each chapter. We find that students become very engaged
(and often animated!) in discussing an issue that has viable alternate points of view. It is
an exciting way to drive home key strategy concepts. For example, in Chapter 10 we
address a trend at many large corporations: the flattening of hierarchical organizational
structures. On the one hand, such restructuring has its advantages—it can offer cost
savings, flexibility, and quicker response times. However, some of these benefits may be
offset by negative consequences. These include the overstretching of management
attention, additional friction among managers at various levels since there are fewer
middle managers to resolve conflicts, and demotivating effects caused by reduced
opportunities for managers to advance through the management ranks. Clearly, one size
does not fit all. Firms must consider the relative benefits and costs of flattening their
structures, plus take into account such factors as a firm’s size, technology, and culture, as
well as the industry in which it competes.
Insights from Research. We include six of these features in the Eleventh Edition. Page xiv
In them, we summarize key research findings on a variety of issues and, more
importantly, address their relevance for making organizations (and managers) more
effective. For example, in Chapter 2 we discuss findings from a meta-analysis (research
combining many individual studies) to debunk several myths about older workers—a topic
of increasing importance, given the changing demographics in many developed countries.
In Chapter 4, we address a study that explored the viability of rehiring employees who
had left. Such employees, called boomerangs, may leave an organization for several
reasons that may strongly influence their willingness to return to it. And in Chapter 6, we
explore a study that investigates how closely CEOs attend to media assessments of their
actions. Using a large database of 745 large acquisitions undertaken by S&P 500 firms,
researchers find that CEOs pay attention to media evaluations of acquisitions. However,
the extent to which they are future focused or past focused influences whether and how
they learn from the media.
Reflecting on Career Implications. We provide insights that are closely aligned with and
directed to three distinct issues faced by our readers: Prepare them for a job interview
(e.g., industry analysis), help them with current employers or their career in general, or
 help them find potential employers and decide where to work. We believe this will be very
valuable to students’ professional development.
Consistent chapter format and features to reinforce learning. We have included several
features in each chapter to add value and create an enhanced learning experience. First,
each chapter begins with an overview and a list of key learning objectives. Second, as
previously noted, the opening case describes a situation in which a company’s
performance eroded because of a lack of proper application of strategy concepts. Third,
at the end of each chapter we offer four different types of questions/exercises that should
help students assess their understanding and application of material:
1. Summary review questions
2. Experiential exercises
3. Application questions and exercises
4. Ethics questions

Given the centrality of online systems to business today, each chapter contains at least one
exercise that allows students to explore the use of the internet in implementing a firm’s
strategy.
Key terms. Approximately a dozen key terms per chapter are identified in the margins of
the pages. This addition was made in response to reviewer feedback and improves
students’ understanding of core strategy concepts.
Clear articulation and illustration of key concepts. Key strategy concepts are introduced
clearly and concisely and are followed by timely and interesting examples from business
practice. Concepts include value-chain analysis, the resource-based view of the firm,
Porter’s five forces model, competitive advantage, boundaryless organizational designs,
digital strategies, corporate governance, ethics, data analytics, and entrepreneurship.
Extensive use of sidebars. We include 54 sidebars (about four per chapter) called Page xv
Strategy Spotlights. The Strategy Spotlights not only illustrate key points but also
increase the readability and appeal of new strategy concepts.
Integrative themes. The text provides a solid grounding in ethics, globalization,
environmental sustainability, and technology. These topics are central themes throughout
the book and form the basis for many of the Strategy Spotlights.
Implications of concepts for small businesses. Many of the key concepts are applied to
startup firms and smaller businesses, which is particularly important since many students
 have professional plans to work in such firms.
Not just a product, but an entire package. Strategic Management features the best chapter
teaching notes available today. Rather than merely summarizing the key points in each
chapter, we focus on value-added material to enhance the teaching (and learning)
experience. Each chapter includes dozens of questions to spur discussion, teaching tips,
in-class group exercises, and about a dozen detailed boxed examples from business
practice to provide further illustrations of key concepts.

TEACHING RESOURCES
Instructor’s Manual (IM)
Prepared by the textbook authors with valued input from our strategy colleagues, the
accompanying IM contains summary/objectives, lecture/discussion outlines, discussion
questions, extra examples not included in the text, teaching tips, reflecting on career
implications, experiential exercises, and more.

Test Bank
Revised by Christine Pence of the University of California, Riverside, the test bank contains
more than 1,000 true/false, multiple-choice, and essay questions. It is tagged with learning
objectives as well as Bloom’s Taxonomy and AACSB criteria.
Assurance of Learning. Assurance of Learning is an important element of many
accreditation standards. The Eleventh Edition is designed specifically to support your
Assurance of Learning initiatives. Each chapter in the book begins with a numbered list
of the learning objectives that appear throughout the chapter. Every test bank question is
also linked to one of these objectives, in addition to level of difficulty, topic area, Bloom’s
Taxonomy level, and AACSB skill area. Test Builder, an easy-to-use, cloud-based test bank
software, can search the test bank by these and other categories, providing an engine for
targeted Assurance of Learning analysis and assessment.
AACSB Statement. McGraw Hill is a proud corporate member of AACSB International.
Understanding the importance and value of AACSB accreditation, the Eleventh Edition
has sought to recognize the curricula guidelines detailed in the AACSB standards for
business accreditation by connecting selected questions in Dess 11e and the test bank to
the general knowledge and skill guidelines found in the AACSB standards. The statements
contained in this new edition are provided only as a guide for the users of this text. The
 AACSB leaves content coverage and assessment in the purview of individual schools, the
mission of the school, and the faculty. While this new edition and the teaching package
make no claim of any specific AACSB qualification or evaluation, we have labeled
selected questions according to the six general knowledge and skills areas.
Test Builder. We provide a comprehensive bank of test questions in a Page xvi
computerized test bank powered by Test Builder, a cloud-based tool that enables
instructors to format tests that can be printed or administered in an LMS. Available in
Connect, Test Builder offers a modern, streamlined interface for easy content
configuration that matches course needs, without requiring a download. Test Builder
allows you to:
Access all test bank content from a particular title
Easily pinpoint the most relevant content through robust filtering options
Manipulate the order of questions or scramble questions and/or answers
Pin questions to a specific location within a test
Determine your preferred treatment of algorithmic questions
Choose the layout and spacing
Add instructions and configure default settings

Test Builder provides a secure interface for better protection of content and allows for just-
in-time updates to flow directly into assessments.

PowerPoint Presentation
Prepared by Pauline Assenza of Western Connecticut State University and Drake Mullens of
Tarleton State University, more than 400 slides incorporate an outline of the chapters, tied
to learning objectives. Also included are instructor notes, multiple-choice questions that can
be used as Classroom Performance System (CPS) questions, and additional examples
outside the text to promote class discussion.

The Business Strategy Game and GLO-BUS Online Simulations

Both allow teams of students to manage companies in a head-to-head contest for global
market leadership. These simulations give students the immediate opportunity to
experiment with various strategy options and to gain proficiency in applying the concepts
and tools they have been reading about in the chapters. To find out more or to register,
please visit www.bsg-online.com or www.glo-bus.com.
 Page xvii

COURSE DESIGN AND DELIVERY RESOURCES

Craft your teaching resources to match the way you teach! With McGraw Hill Create,
www.mcgrawhillcreate.com, you can easily rearrange chapters, combine material from other
content sources, and quickly upload content you have written, like your course syllabus or
teaching notes. Find the content you need in Create by searching through thousands of
leading McGraw Hill textbooks. Arrange your book to fit your teaching style. Create even
allows you to personalize your book’s appearance by selecting the cover and adding your
name, school, and course information. Order a Create book and you’ll receive a
complimentary print review copy in three to five business days or a complimentary
electronic review copy (eComp) via e-mail in about one hour. Go to
www.mcgrawhillcreate.com today and register. Experience how McGraw Hill Create
empowers you to teach your students your way.

At McGraw Hill, we understand that getting the most from new technology can be
challenging. That’s why our services don’t stop after you purchase our products. You can e-
mail our product specialists 24 hours a day to get product training online. Or you can search
our knowledge bank of frequently asked questions on our support website. For customer
support, call 800-338-3987 or visit www.mheducation.com/contact.html. One of our technical
support analysts will be able to assist you in a timely fashion.

ACKNOWLEDGMENTS
Strategic Management represents far more than just the joint efforts of the four co-authors.
Rather, it is the product of the collaborative input of many people. Some of these individuals
are academic colleagues, others are the outstanding team of professionals at McGraw Hill,
and still others are those who are closest to us—our families. It is time to express our sincere
gratitude.

First, we’d like to acknowledge the dedicated instructors who have graciously provided their
insights since the inception of the text. Their input has been very helpful in both pointing
out errors in the manuscript and suggesting areas that needed further development as
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Another random document with
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—A groove must be plowed the full length of a piece to work it to
advantage. Where a mortise-and-tenon joint is to be made in which
the grooved surface is to become a part, the tenon must be so cut as
to allow its filling the groove. The mortise should be cut before the
groove is plowed. The tenon, after being worked the full width, is
gaged from the face edge to a width equal to the length of the
mortise and worked to that size. Fig. 183.

Fig. 183.

Especial care must be taken in gluing up the frame that no glue

shall get into the grooves or on the edges of the panel.
109. Rabbeting.—Fig. 184 shows a corner of a frame rabbeted to
receive a glass. Rabbets are best worked with
either a rabbet plane or the combination plane. In rabbeting across
the grain the spur must be set parallel with the edges of the cutter.
 Fig. 184. Fig. 185.

Since the parts of the frame are rabbeted the full length for
convenience, a special joint is necessary at the corners. The
mortises are cut before the rabbets are worked. The tenons are laid
out so that the shoulder on one side shall extend as far beyond the
shoulder on the opposite side as the rabbet is deep. Fig. 185.
Where rabbeting must be worked with a chisel alone, Fig. 186
illustrates the manner of loosening up the wood preparatory to
removing it, when the rabbet extends along the grain of the wood.
 Fig. 186.

To place glass panels in rabbets, first place a slight cushion of

putty in the rabbet that the glass may rest against it. A light cushion
between the glass and the fillet will serve to keep the glass from
breaking and will keep it from rattling. Fig. 187.
 Fig. 187.

110. Fitting a Door.—A door is a frame with a panel or a

combination of panels. The names of the parts
of a door and their relative positions are indicated in Fig. 188.
Fig. 188.
 Fig. 189.

(1) Mark with a trysquare and saw off the lugs, the parts of the
stiles which project beyond the rails. (2) Plane an edge of the door
until it fits a side of the frame against which it is to be hung. If the
frame is straight, this edge may be planed straight. It is not wise to
take for granted the squareness or straightness of a frame. A test or
series of tests may first be made with square and straight-edge. A
mechanic, however, usually planes an edge until it fits the frame,
testing by holding the door against the frame as near to its position
as its size will allow. (3) Plane the bottom or top edge of the door
until it fits the frame properly when the first planed edge is in
position. (4) Measure the width of the frame at its top and bottom,
Fig. 189, and transfer these dimensions to the top and bottom of the
door, connecting them with a straight edge. When approaching the
line, in planing, place the door against the frame often enough to see
where the allowances must be made for irregularities in the frame.
(5) The length of the frame may next be measured on each side and
these dimensions transferred to the door. Connect them with a
straight edge and plane and fit as was directed in the third step.
A door to work well must not be fitted perfectly tight; it must have a
little “play,” the amount depending upon the size of the door.
The edge of the door which is to swing free is usually planed
slightly lower at the back arris than at the front. An examination of
the movement of an ordinary house door will show the reason for
this.
111. Hinging a Door.—The hinges most commonly used in
cabinet making and carpentry are the kind
known as butts. Where the door stands in a vertical position, hinges
in which the two parts are joined by a loose pin are generally used.
By removing the pins the door may be removed without taking the
screws out of the hinge. Such hinges are more easily applied than
those with the fixed pin.

Fig. 190. Fig. 191.

(1) Place the door in position; keep it tight against the top and the
hinge side of the frame. (2) Measure from top and bottom of the door
to locate the position for the top of the higher hinge and the bottom
of the lower hinge. Usually, the lower hinge is placed somewhat
farther from the bottom than the higher hinge is from the top. (3) With
the knife or chisel mark on both door and frame at the points just
located, Fig. 190. (4) Take out the door, place the hinge as in Fig.
191, and mark along the ends, with a knife. In a similar manner mark
the frame. Make certain that the openings on door and on frame are
laid off so as to correspond before proceeding further. (6) Set the
gage for the depth the hinge is to be sunk and gage both door and
frame. (7) Set another gage for width of openings and gage both
door and frame, keeping the head of the gage against the front of the
door. (8) Chisel out these gains on door and frame. (9) If loose-pin
butts are used, separate the parts and fasten them in place. Use a
brad awl to make openings for the screws. To insure the hinges’
pulling tight against the side of the gain make the holes just a little
nearer the back side of the screw hole of the hinge. Put the door in
place and insert the pins. It is a good mechanic who can make a
door hang properly the first time it is put up. It is better, therefore, to
insert but one or two screws in each part of a hinge until the door
has been tried. (10) If the door hangs away from the frame on the
hinge side, take it off; take off hinge on door or frame, or both if the
crack is large; chisel the gain deeper at its front. By chiseling at the
front only and feathering the cut towards the back, the gain needs to
be cut but about one-half as deep as if the whole hinge were sunk. If
the door should fail to shut because the hinge edge strikes the frame
too soon, the screws of the offending hinge must be loosened and a
piece of heavy paper or cardboard inserted along the entire edge of
the gain. Fasten the screws and cut off the surplus paper with a
knife. If plain butt hinges are used the operations are similar to those
just described except that the whole hinge must be fastened to the
door and the door held in place while fastening the hinges to the
frame.
112. Locks.—Locks which are fastened upon the surface of a
door are called rim locks. Those which are set into
mortises cut in the edge of the door are called mortise locks. Locks
are placed somewhat above the middle of the door for convenience
as well as appearance. Three styles of cabinet locks such as are
used on drawers and small boxes are shown in Fig. 192.
 Fig. 192.

The manner of applying a cabinet lock will be suggested by the

lock itself. On surface locks, (1) the lock is held against the inside of
the door or drawer and the position of the keyhole is marked. (2)
This hole is bored. (3) The lock is screwed in place, and (4) the
escutcheon fastened to the outer or front surface. If a face plate is
used, the door is closed, the position marked, after which the door is
opened and the plate is set. The face plate is mortised into the frame
so that its outer surface shall be slightly lower than that of the wood.
With a lock such as the box lock, Fig. 192, sufficient wood must be
removed from the mortise so that the bolt may act properly before
the plate is screwed fast.
 PART III.
WOOD AND WOOD FINISHING.

Chapter X.
Wood.

113. Structure.—For convenience, tree structure is usually

studied (1) in transverse or cross section, (2)
radially, (3) tangentially.
V.—Vessels or pores.
T.S.—Tangential Section.
C.S.—
„ „
Transverse
 R.S.—Radial „ „

Fig. 193.

A transverse section is obtained by cutting a log at right angles to

its length; a radial section by cutting it along the radius; a tangential
section by making a cut at right angles to a radius. Fig. 193.

Fig. 194.

If we should cut transversely a young tree, a sprout, or branch of

an oak or similar tree, we should find it composed of three layers of
tissue (1) pith or medulla, (2) wood, (3) bark, Fig. 194. These
tissues, if magnified, would be found composed of little closed tubes
or cells. Fig. 195.
Examine the end of a log cut from a tree such as the oak; we shall
find that the center, which in the young tree was soft, has become
hard and dry, and that upon it are marked a series of concentric rings
—rings having a common center. These rings are known as annual
rings because one is added each year.
Usually, about three-quarters of the rings from the center outward
will be found to have a different color from the remaining ones.
These inner rings form what is called heartwood. The wood of the
remaining rings will be found softer and to contain a larger proportion
of sap. This part is called sapwood. Young trees are composed
mainly of sapwood. As the tree grows older more of it is changed to
heartwood, the heartwood becoming greater in proportion to the
sapwood with age.

Fig. 195.
 Upon examining these rings each will be found to be made up of
two layers; one a light, soft, open, rapid growth formed in the spring,
the other, a dark, hard, close, slow growth formed in the summer.

Fig. 196.

Frequently, the center of the annual rings is not in the center of the
log. Fig. 196. This is due to the action of the sun in attracting more
nourishment to one side than to the other.
Surrounding the sapwood is the bark. The inner part of the bark is
called bast and is of a stringy or fibrous nature. Bark is largely dead
matter formed from bast, Fig. 195. Its function is to protect the living
tissues.
Between the bast and the last ring of the woody tissue is a thin
layer called the cambium. This layer is the living and growing part of
the tree. Its cells multiply by division and form new wood cells on the
inside and new bast cells on the outside.
 Heartwood is dead so far as any change in its cells is concerned.
Its purpose is merely to stiffen and support the weight of the tree.
Sapwood, on the other hand, has many active cells which assist in
the life processes of the tree, tho only in the outer layer of cells, the
cambium, does the actual growing or increasing process take place.
Again examining the end of the log, we shall find bright lines
radiating from the center. They are composed of the same substance
as the pith or medulla and are called pith or medullary rays. These
rays are present in all trees which grow by adding ring upon ring but
in some they are hardly visible. The purpose of these horizontal cells
is to bind the vertical cells together and to assist in distributing and
storing up plant food.

Fig. 197.

Fig. 197 shows a log cut longitudinally or lengthwise. The lines we

call grain, it will be seen, are the edges of the annual rings, the light
streaks being an edge view of the spring layer and the dark streaks
an edge view of the summer or autumn wood.
 Fig. 198.

Knots are formed by the massing or knotting of the fibers of the

tree through the growth of a branch. Fig. 198 shows the manner in
which the fibers are turned. This packing of the fibers is what causes
a knot to be so much harder than the rest of the wood.
114. Growth.—Sap is the life blood of the tree. In the winter when
most of the trees are bare of leaves there is but very
little circulation of the sap. The coming of spring with its increase of
heat and light, causes the tree to begin to take on new life; that is,
the sap begins to circulate. This movement of sap causes the roots
to absorb from the soil certain elements such as hydrogen, oxygen,
nitrogen and carbon, also mineral salts in solution. The liquid thus
absorbed works its way upward, mainly by way of the sapwood and
medullary cells. Upon reaching the cambium layer, the nourishment
which it provides causes the cells to expand, divide and generate
new cells. It also causes the buds to take the form of leaves.
When the sap reaches the leaves a chemical change takes place.
This change takes place only in the presence of heat and light, and
is caused by the action of a substance called chlorophyll. The
importance of the work performed by chlorophyll cannot be
overestimated. Nearly all plant life depends upon it to change
mineral substance into food. Animals find food in plant life because
of this change.
Assimilation is the process of taking up and breaking up, by the
leaves, of carbonic acid gas with which the cells containing
chlorophyll come in contact. Carbon, one of the elements, is
retained, but oxygen, the other element, is returned to the air.
Carbon is combined with the oxygen and hydrogen of the water,
which came up from the roots, to form new chemical compounds.
Nitrogen and earthy parts, which came with the water, are also
present.
Chlorophyll gives to leaves and young bark their green color.
The roots of the trees are constantly drinking plant food in the
daytime of spring and early summer. From midsummer until the end
of summer the amount of moisture taken in is very small so that the
flow of sap almost ceases.
The leaves, however, are full of sap which, not being further
thinned by the upward flow, becomes thickened thru the addition of
carbonic acid gas and the loss of oxygen.
Toward the end of summer this thickened sap sinks to the under
side of the leaf and gradually flows out of the leaf and down thru the
bast of the branch and trunk, where another process of digestion
takes place. One part of this descending sap which has been partly
digested in the leaves and partly in the living tissues of root, trunk
and branch, spreads over the wood formed in the spring and forms
the summer wood. The second part is changed to bark. What is not
used at once is stored until needed.
The leaves upon losing their sap change color, wither and drop off.
By the end of autumn the downward flow of changed sap from the
leaves is completed and the tree has prepared itself for the coming
winter.
It must be remembered that the foregoing changes are made
gradually. After the first movement of the sap in the early spring has
nourished the buds into leaves of a size sufficient to perform work,
there begins a downward movement of food materials—slight at first,
to be sure, but ever increasing in volume until the leaves are doing
full duty. We may say, therefore, that the upward movement of the
sap thru the sapwood and the downward flow of food materials thru
the bast takes place at the same time, their changes being of relative
volumes rather than of time.
115. Respiration and Transpiration.—Plants, like animals,
breathe; like animals they
breathe in oxygen and breathe out carbonic acid gas. Respiration
which is but another name for breathing, goes on day and night, but
is far less active than assimilation, which takes place only during the
day. Consequently more carbonic acid gas is taken in than is given
out except at night when, to a slight extent, the reverse takes place,
small quantities of carbonic acid gas being given off and oxygen
taken in.
Very small openings in the bark called lenticles, furnish breathing
places. Oxygen is also taken in thru the leaves.
Transpiration is the evaporation of water from all parts of the tree
above ground, principally from the leaves.
The amount of water absorbed by the roots is greatly in excess of
what is needed. That fresh supplies of earthy matter may reach the
leaves, the excess of water must be got rid of. In trees with very thick
bark, transpiration takes place thru the lenticles in the bottom of the
deep cracks.
116. Moisture.—Water is present in all wood. It may be found (1)
in the cavities of the lifeless cells, fibers and
vessels; (2) in the cell walls; and (3) in the living cells of which it
forms over ninety per cent. Sapwood contains more water than
heartwood.
Water-filled wood lacks the strength of wood from which the
greater part of the moisture has been expelled by evaporation.
117. Shrinkage.
—Water in the cell walls—it makes no difference whether the cells
are filled or empty—causes their enlargement and consequently an
increase in the volume of the block or plank. The removal of this
water by evaporation causes the walls to shrink; the plank becomes
smaller and lighter. Thick walled cells shrink more than thin ones and
summer wood more than spring wood. Cell walls do not shrink
lengthwise and since the length of a cell is often a hundred or more
times as great as its diameter the small shrinkage in the thickness of
the cell walls at A and B, in Fig. 199, is not sufficient to make any
noticeable change in the length of the timber.

Fig. 199. Fig. 200.

Since the cells of the pith or medullary rays extend at right angles
to the main body, Fig. 200, their smaller shrinkage along the radius
of the log opposes the shrinkage of the longitudinal fibers. This is
one reason why a log shrinks more circumferentially, that is along
the rings, than it does radially or along the radii. A second cause lies
in the fact that greatly shrinking bands of summer wood are
interrupted, along the radii, by as many bands of slower shrinking
spring wood, while they are continuous along the rings.

Fig. 201.

This tendency of the log to shrink tangentially or along the radii

leads to permanent checks. Fig. 201 A. It causes logs sawed into
boards to take forms as shown in Fig. 201 B.
Warping is caused by uneven shrinkage. Sapwood, as a rule,
shrinks more than heartwood of the same weight. The wood of pine,