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Strategic Management: Competitiveness and Globalisation © 2022 Cengage Learning Australia Pty Limited
7th Edition
Dallas Hanson Copyright Notice
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13th edition by Michael A. Hitt, R. Duane Irelane and Robert F. Hoskisson Australia.
[9780357033838], Cengage Learning, 2015.
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1 2 3 4 5 6 7 25 24 23 22 21
 v

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

PART 2 Case 6: The Sunshine Coast UNESCO Biosphere

2 STRATEGIC ACTIONS: STRATEGY FORMULATION 101 Reserve and Smart City: a new governance
opportunity in a post-pandemic world? 458
4 Business-level strategy 102
Case 7: CrossFit at the crossroads 465
5 Competitive dynamics 131
Case 8: The movie exhibition industry: 2018
6 Corporate-level strategy 161 and beyond 482
7 Acquisition and restructuring strategies 189 Case 9: Pacific Drilling: the preferred offshore driller 506
8 International strategy 218 Case 10: The trivago way - growing without
growing up? 522
9 Cooperative strategy 252
Case 11: The Volkswagen emissions scandal 539
Case 12: Otis in the global elevator industry 549
PART 3
3 STRATEGIC ACTIONS: STRATEGY Case 13: Dick Smith: the fall of an Aussie icon 555
IMPLEMENTATION 283
GLOSSARY 566
10 Corporate governance 284
NAME INDEX 572
11 Organisational structure and controls 321 SUBJECT INDEX 580
12 Strategic leadership 355
13 Strategic entrepreneurship 386
vi

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

STUDY TOOLS 27 STUDY TOOLS 65

 CONTENTS vii

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

4 Business-level strategy 102 Likelihood of attack 142

First-mover incentives 142
Opening case study: Clonakilla Wines in a quality niche
Organisational size 144
position 103
Quality 144
Customers: their relationship with business-
Likelihood of response 145
level strategies 105
Type of competitive action 146
Effectively managing relationships with
Actor’s reputation 146
customers 105
Dependence on the market 147
Reach, richness and affiliation 106
Who: determining the customers to serve 107 Competitive dynamics 147
What: determining which customer needs Slow-cycle markets 147
to satisfy 107 Fast-cycle markets 148
viii CONTENTS

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

Value-neutral diversification: incentives and Effective acquisitions 206

resources 176 Restructuring 208
Incentives to diversify 177 Downsizing 208
Resources and diversification 178 Downscoping 209
Value-reducing diversification: managerial motives Leveraged buyouts 209
to diversify 179 Restructuring outcomes 209

STUDY TOOLS 182 STUDY TOOLS 211

 CONTENTS ix

8 International strategy 218 Types of major strategic alliances 255

Opening case study: An international strategy powers Strategic focus: Samsung Electric is using diversifying
ABB’s future 219 alliances to reduce its dependence on Google’s Android
operating system 256
Identifying international opportunities 221 Reasons organisations develop strategic alliances 258
Incentives to use international strategy 221
Strategic focus: Industrial clusters: geographic centres
Three basic benefits of international strategy 222 for collaborative partnering 260
International strategy types 224 Competition-reducing strategy 263
International business-level strategy 225
International corporate-level strategy 227
Business-level cooperative strategy 263
Complementary strategic alliances 264
Environmental trends 230 Competition response strategy 266
Liability of foreignness 230 Uncertainty-reducing strategy 266
Regionalisation 231 Assessing business-level cooperative strategies 266
Choice of international entry mode 232 Corporate-level cooperative strategy 267
Exporting 232 Diversifying strategic alliance 267
Licensing 233 Synergistic strategic alliance 268
Strategic alliances 234 Franchising 268
Acquisitions 235 Assessing corporate-level cooperative strategies 269
New wholly owned subsidiaries 236
Dynamics of mode of entry 236
International cooperative strategy 269
Strategic focus: Mondelez International: a global leader in Network cooperative strategy 270
snack foods 237 Alliance network types 271
Risks in an international environment 238 Competitive risks with cooperative strategies 272
Political risks 238 Managing cooperative strategies 273
Economic risks 239
STUDY TOOLS 275
The challenge of international strategies 240
Managing international strategies: size and complexity 240
PART 3
Limits to international expansion
Strategic focus: Mexico’s FEMSA: building its international
241 3 STRATEGIC ACTIONS: STRATEGY
prowess 241 IMPLEMENTATION 283
Strategic competitiveness outcomes 242 10 Corporate governance 284
International diversification and returns 242 Opening case study: General Electric’s complex
Enhanced innovation 243 diversification strategy makes evaluation difficult for
STUDY TOOLS 244 board directors 285

9 Cooperative strategy 252 Separation of ownership and managerial control 288

Agency relationships 288
Opening case study: Global cars, with a twist 253
Product diversification as an example of an
Strategic alliances as a primary type of agency problem 290
cooperative strategy 254 Agency costs and governance mechanisms 291
x CONTENTS

Ownership concentration 292 Matches between corporate-level strategies and the

Ownership structures of companies in Australia 293 multi-divisional structure 332
The increasing influence of institutional owners 293 Strategic focus: Globalisation and beer 333
Strategic focus: General Electric’s decline, new strategy
Board of directors 293
and reorganisation 339
Board of directors process 296
Matches between international strategies and
Enhancing the effectiveness of the board of directors 297
worldwide structure 340
Executive compensation 298
Matches between cooperative strategies and network
The effectiveness of executive compensation 299 structures 344
Strategic focus: Has more governance scrutiny made
large CEO compensation packages more reasonable? 300
Implementing business-level cooperative
strategies 345
Market for corporate control 301
Implementing corporate-level cooperative
International corporate governance 302 strategies 346
Corporate governance in Australia 302
Corporate governance in Germany and Japan 306
Implementing international cooperative
Corporate governance in China 307 strategies 347
Corporate governance in Spain 308 STUDY TOOLS 348
Governance mechanisms and ethical behaviour 308 12 Strategic leadership 355
Strategic focus: Rewarding top executives of one of the Opening case study: Meg Whitman: a pioneering strategic
most poorly governed banks in the world: Westpac 309 leader 356
Corporate governance and organisation performance 311
Corporate social responsibility 311
Strategic leadership and style 358
The role of executive managers 360
STUDY TOOLS 313
Executive management teams 361
11 Organisational structure and controls 321
Managerial succession 363
Opening case study: Changing McDonald’s organisational Strategic focus: Women in leadership 365
structure and controls: a path to improved performance 322
Key strategic leadership actions 366
Organisational structure and controls 323 Determining strategic direction 366
Organisational structure 324
Effectively managing the organisation’s resource
Organisational controls 325 portfolio 368
Relationships between strategy and structure 326 Sustaining an effective organisational culture 370

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

13 Strategic entrepreneurship 386 PART 4

Opening case study: Today it is gas and diesel: tomorrow 4 CASE STUDIES 411
it is likely to be electric vehicles, plug-in hybrids, and
driverless cars and trucks 387 Introduction: A summary of the case analysis process 412

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

Guide to the text

As you read this text you will find a number of features in every
chapter to enhance
4
your study of strategic management and help
PART 1: STRATEGIC MANAGEMENT INPUTS
you understand how the theory is applied in the real world.

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,

within the country. For this purpose, it has developed

Studying this chapter should provide you with the strategic management knowledge
of, McDonald’s. For example, a recent survey found that
88 per cent of people recognise the golden arches and
needed to: associate them with McDonald’s. Each day, about 69
McDonald’s hires 1.9 million employees, and it hires
approximately one million employees per year in the
with the learning objectives
indiatimes.com/industry/services/hotels-/-restaurants/vikram-bakshi-is-
USA. In 2018, its annual revenue was $21 billion and its

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-

Opening Case study

25 000

company.html, 29 January; FT Reporters, 2015, McDonald’s and its challenges

25 000
average returns
LO5 and constantly presents country-specific challenges.
describe vision and mission and discuss their value
20 000

worldwide: A market-by-market look, Financial Times, http://www.ft.com/intl/

Gain an insight into how 2
LO6 define and classify the four major stakeholder groups and describe their ability
15 000

Clever strategy is important for its continued survival and,

to influence organisations 10 000 9000
cms/s/0/f8ac22fc-a7c1-11e4-8e78-00144feab7de.html#slide0, 29 January.
LO7 describe the work of strategic leaders. 5000

strategic management
5000
2000
1000
0
1968 1972 1978 1986 1999 2020

As we can see from the opening case, McDonald’s

theories organisations
relate to the in Australia, the UK,
McDonald’s: Restaurant expansion since 1955.

real
Source: https://mcdonalds.com.au/about-maccas/maccas-story.

China, India, Japan and the USA are all world

in different competitive positions. Therefore,
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
distributor of toys. Each year, McDonald’s distributes through the case
pressures there, with high levels of rivalry from KFC.
There are now over 2000 McDonald’s outlets in China,

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

study at the beginning

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.

similar strategic competitiveness). In the USA,

eachthe organisation is now using the strategic
arches in far-flung locations around the globe. In India, where historically the brand was relatively

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

decisions and actions it undertook to pursue strategic competitiveness and above-average

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

2 terms. It may well succeed, given time.1

BK-CLA-HANSON_7E-210018-Chp01.indd 2 08/02/21 12:49 PM BK-CLA-HANSON_7E-210018-Chp01.indd 3 2/8/21 7:23 PM

The strategic management process

As explained in the opening case, McDonald’s is trying to enrich its traditional approach
FEATURES WITHIN CHAPTERS
globally with more marketing and by making its stores more responsive to local consumers’
needs. A study conducted to identify the factors that contribute to the success of top corporate
performers shows why the organisation is doing this. This study found that the top performers
KEY TERMS WITH MARGIN DEFINITIONS STRATEGIC
were entrepreneurial, were market FOCUS BOXES
oriented (possessing effective knowledge of the customers’
needs), used
16 valuable competencies
PART 1: STRATEGIC MANAGEMENT INPUTS and offered innovative products and services.
2

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

decisions and actions and earn above-average returns. The

boxes are categorised to organisation’s
emphasise the firstfocus:step in the process is to analyse
general,
of the top companies in the world based on almost any

important key terms are

criterion or set of criteria used. Because of this, Apple is
required for an organisation its external environment
ethics, and internal
technology, organisation
sustainability
rate has beenand
to determine
globalisation. its resources, capabilities
perceived exceptionally well by customers. Apple’s growth
extraordinary and its financial performance
located in the margin to achieve strategic
and core competencies – the sources of its ‘strategic inputs’.
iPhones nowWe exceedwill now analyse each of
even more impressive. And the appeal of Apple’s products
competitiveness and earn is global. For example, Apple’s
for quick reference. above-average returns the different components of the strategicwere
management process.
925 million units globally. Apple also disclosed that there
1.4 billion active devices as of January 2019.
Although there are many reasons for its success,
strategic competitiveness Strategic Apple
competitiveness is achieved
retail stores enjoy a steady flow of traffic each day.
More remarkable is that Apple’s stores in China handled
when
the primary anrestorganisation
reasons successfully formulates
with Apple’s new technology
development and innovative new products.
achieved when an and implements a Apple
value-creating strategy.
in excess of 40 000 people daily prior to the Covid-19
pandemic. has opened 510 retail stores across 25 A strategy is an integrated and coordinated set
Sources: MacRumors Staff, 2020, Keep track of Apple’s retail stores
worldwide, http://www.macrumors.com, 12 May; Above Avalon, 2019,
organisation successfully
of commitments and City;actions
Singapore Airport;designed
and Taipei, Taiwan. to exploit core competencies and gain a competitive
countries, with 271 located in the United States alone. http://www.aboveavalon.com, 30 May; Fortune, 2011, World’s most
Apple’s newest locations include: Kawasaki and Tokyo, admired companies, http://www.fortune.com, 3 March; B. Worthen,
formulates and implements a Japan; Mexico 2011, With new iPad, Apple tries to stay ahead of wave of tablet rivals,

value-creating strategy advantage. When choosingSource: a Newspix/Alan

strategy, organisations make choices among competing
Wall Street Journal, http://www.online.wsj.com, 3 March; G. A. Fowler &
Pryke N. Wingfield, 2011, Apple’s showman takes the stage, Wall Street Journal,
http://www.online.wsj.com, 3 March; Financial Times, 2011, Apple and

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,

set of commitments and http://www.online.wsj.com, 18 February.

actions designed to exploit
Strategy Now margin icons highlight companies
core competencies and gainthat
a Increasing knowledge intensity
competitive advantage
have effectively put a strategic management tool,
concept or technique into practice.
BK-CLA-HANSON_7E-210018-Chp01.indd 4
what the organisation will not do. An organisation’s strategy also demonstrates how it
differs from its competitors.
STRATEGY NOW
Knowledge (information, intelligence and expertise) is the basis of technology and its
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
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.
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
If a given set of organisations emphasise similar strategic
dimensions and use a similar strategy, these organisations
can be said to reside in the same strategic group. Other
common definitions of strategic groups typically argue
BK-CLA-HANSON_7E-210018-Chp02.indd 75
that the organisations in a given industry follow similar
5. What conclusions can you reach about why some
organisations end up where they do among various
strategic groups?
Experiential exercises
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
and development commitment and the like. It is also likely
that organisations operating in a given industry may have
very different profitability profiles, which raises the question:
if one organisation is the most profitable, why don’t all
the others in that industry attempt to move into the same
strategic group as the industry leader?
Part 1
1. Form teams and pick an industry the team finds
interesting. A list of industries and industry leaders may
be found at yahoo! Finance (http://biz.yahoo.com/ic/
ind_index.html).
2. Investigate this industry in order to create a strategic
group map. you must pick the two dimensions for your
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.
company to achieve strategic competitiveness. In order to
identify opportunities, you must be aware of trends that
affect the world around us now or that are projected to do
so in the future.
Thomas Fry, senior futurist at the Davinci Institute,
believes that the chaotic nature of interconnecting trends
and the vast array of possibilities that arise from them are
somewhat akin to watching a spinning compass needle.
END-OF-BOOK FEATURES
From the way we use phones and email and recruit new
workers to organisations, the climate for business is
changing and shifting dramatically, and at rapidly increasing
rates. Sorting out these trends and making sense of them
provides the basis for opportunity decision making. Which
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

Virgin Australia: a flight to emissions scandal 600

oblivion? 496
CASE 12
CASE 5 Otis in the global elevator
Atlassian 508 industry 611
CASE 6 CASE 13
xiv

Guide to the online resources

FOR THE INSTRUCTOR

Cengage is pleased to provide you with a selection of resources

that will help you prepare your lectures. These teaching tools
are accessible via cengage.com.au/instructors for Australia
or cengage.co.nz/instructors for New Zealand.

MINDTAP
Premium online teaching and learning tools are available on the MindTap platform – the personalised eLearning
solution.
MindTap is a flexible and easy-to-use platform that helps build student confidence and gives you a clear picture of
their progress. We partner with you to ease the transition to digital – we’re with you every step of the way.
The Cengage Mobile App puts your course directly into students’ hands with course materials available on their
smartphone or tablet. Students can read on the go, complete practice quizzes or participate in interactive real-time
activities.
MindTap for Hanson’s Strategic Management is full of innovative resources to support critical thinking, and help your
students move from memorisation to mastery! Includes:
• Hanson’s Strategic Management eBook
• ‘What would you do?’ polling questions
• Video Cases
• ‘You make the decision’ simulation activities.
MindTap is a premium purchasable eLearning tool. Contact your
Cengage learning consultant to find out how MindTap can transform
your course.

INSTRUCTOR’S MANUAL
The Instructor’s Manual includes: • instructor’s notes for experiential exercises
• knowledge objectives • instructor’s notes for MindTap including What Would
• chapter outlines You Do?, You Make the Decision and Video Cases.
• lecture notes • additional questions and exercises.
• answers to review questions

CASE STUDY RESOURCES

Case notes for each of the end-of-book case studies, a case analysis rubric and case matrix allow instructors to
assign case studies for analysis. Cases and case notes from the previous editions are also available.

TEST BANK
A bank of questions has been developed in conjunction with the text for creating quizzes, tests and exams for your
students. Create multiple test versions in an instant and deliver tests from your LMS, your classroom, or wherever you
want using Cognero. Cognero test generator is a flexible online system that allows you to import, edit and manipulate
content from the text’s test bank or elsewhere, including your own favourite test questions.
 GUIDE TO THE ONLINE RESOURCES xv

POWERPOINT™ PRESENTATIONS
Use the chapter-by-chapter PowerPoint presentations to enhance your lecture presentations and handouts to
reinforce the key principles of your subject.

ARTWORK FROM THE TEXT

Add the digital files of graphs, pictures and flowcharts into your course management system, use them in student
handouts, or copy them into your lecture presentations.

FOR THE STUDENT

MINDTAP
MindTap is the next-level online learning tool that helps you get better grades!
MindTap gives you the resources you need to study – all in one place and available when you need them. In the
MindTap Reader, you can make notes, highlight text and even find a definition directly from the page.
If your instructor has chosen MindTap for your subject this semester, log in to MindTap to:
• Get better grades
• Save time and get organised
• Connect with your instructor and peers
• Study when and where you want, online and mobile
• Complete assessment tasks as set by your instructor.
When your instructor creates a course using MindTap, they will
let you know your course key so you can access the content.
Please purchase MindTap only when directed by your instructor.
Course length is set by your instructor.
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.

The book’s focus

This book is intended for use primarily in strategic management and business policy courses. The materials
presented in the 13 chapters have been researched thoroughly. Both the academic, scholarly literature and the
business, practitioner literature were studied and then integrated to prepare this edition. The academic literature
provides the foundation to develop an accurate yet meaningful description of the strategic management process.
The business practitioner literature yields a rich base of current domestic and global examples to show how the
strategic management process’s concepts, tools and techniques are applied in different organisations.
Our discussion of the strategic management process is both traditional and contemporary. In maintaining
tradition, we examine important materials that have historically been a part of understanding strategic
management. For example, we thoroughly examine how to analyse an organisation’s external environment and
internal environment.
 PREFACE xvii

The strategic advantage

The strategic management process is critical to organisational success. As described in Chapter 1, strategic
competitiveness is achieved when an organisation develops and exploits a sustained competitive advantage.
Attaining such an advantage results in the earning of above-average returns; that is, returns that exceed those
an investor could expect from other investments with similar amounts of risk.

The competitive advantage

Success in the 21st-century competitive landscape requires specific capabilities, including the abilities to:
1 use scarce resources wisely to maintain the lowest possible costs
2 constantly anticipate frequent changes in customers’ preferences
3 adapt to rapid technological changes
4 identify, emphasise and effectively manage what an organisation does better than its competitors
5 continuously structure an organisation’s operations so objectives can be achieved more efficiently
6 successfully manage and gain commitments from a culturally diverse workforce.

The global advantage

Critical to the approach used in this text is the fact that all organisations face increasing global competition.
Organisations no longer operate in relatively safe domestic markets, as Australian supermarkets have discovered.
In the past, many companies produced large quantities of standardised products. Today, organisations typically
compete in a global economy that is complex, highly uncertain and unpredictable. To a greater degree than in a
primarily domestic economy, the global economy rewards effective performers, whereas poor performers are forced
to restructure significantly to enhance their strategic competitiveness. As noted earlier, increasing globalisation
and the technological revolution have produced a new competitive landscape in the 21st century. This landscape
presents a challenging and complex environment for organisations, but one that also has opportunities. The
importance of developing and using these capabilities should not be underestimated.

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

ABOUT THE AUTHORS

Dallas Hanson
Dallas Hanson lectured in strategic management at the University of Tasmania for many years. He has wide-
ranging intellectual (and scholastic) interests, including brand management, tourism, green strategy and
governance. He has won teaching awards for his work in strategy and enjoys the challenge of making strategy
interesting and engaging. He now advises as a strategy consultant, which continually reminds him that
organisation politics matter in the world of strategy, while logic does not always win in the process of strategy
implementation.

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

STRATEGIC MANAGEMENT AND STRATEGIC COMPETITIVENESS
OPENING CASE STUDY
McDonald’s and brand recognition
McDonald’s in Australia is part of a global empire of fast-
food restaurants. McDonald’s has achieved substantial
international success over the years, with its restaurants
spread widely throughout the world. Brand recognition
is huge: many people know about, and are customers
of, McDonald’s. For example, a recent survey found that
88 per cent of people recognise the golden arches and
associate them with McDonald’s. Each day, about 69
million people eat at a McDonald’s store, which equates
45 000
40 000
35 000
Number of restaurants
30 000
25 000
20 000
15 000
10 000
5000
2000
1000
0
1968 1972
McDonald’s: Restaurant expansion since 1955.
Given that McDonald’s includes a toy in about 20
per cent of its sales, it is considered the world’s largest
distributor of toys. Each year, McDonald’s distributes
1.5 billion toys globally, which is more than Mattel
and Hasbro. McDonald’s decided early to move into
international markets, and now one can find the golden
arches in far-flung locations around the globe.
In Australia, ‘Maccas’ (the locals’ name for the
organisation) is thriving, with flexible offerings, ‘gourmet
coffee’ and fresh-food bars. These have been successful
moves. The UK arm has also been responsive to
consumer demand; for example, it accommodates
consumers who ask what goes into their food, providing
information to staff that allows them to respond, and it
promotes jobs in the chain as upwardly mobile.
CHAPTER 1 3
to almost 0.8 per cent of the world’s population. In 2018,
McDonald’s had 37 855 total restaurants globally, located
in 120 different countries and 14 155 stores in the US
alone. China has 2223 stores compared with Japan 2975,
the UK 1261, Canada 1443 and Australia 920. Globally,
McDonald’s hires 1.9 million employees, and it hires
approximately one million employees per year in the
USA. In 2018, its annual revenue was $21 billion and its
net income was $5.9 billion.
38 000
25 000
9000
5000
1978 1986 1999 2020
Source: https://mcdonalds.com.au/about-maccas/maccas-story.
China is a promising arena but there are continuing
pressures there, with high levels of rivalry from KFC.
There are now over 2000 McDonald’s outlets in China,
which is approximately one-third the number of KFC
outlets. KFC has around 5919 stores and is presently
considered the most popular fast-food chain in China.
In India, where historically the brand was relatively
small with only 400 stores compared with China, Japan
and Australia, McDonald’s turned a corner when it
announced in May 2019 that it had finally acquired full
ownership of Connaught Plaza Restaurants. This entity
had run the global giant’s operations in north and east
India – from its long-estranged business partner Vikram
Bakshi. The association between Bakshi and McDonald’s
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 –
Connaught Plaza Restaurant – to set up outlets in the
north and the east under the franchisee model. To date,
McDonald’s has two business entities in India. Amit Jatia’s
Hardcastle Restaurants runs the McDonald’s business
in southern and western India. McDonald’s India is
committed to sourcing almost all of its products from
within the country. For this purpose, it has developed
local Indian businesses, which can supply the highest-
quality products required for its Indian operations.
The McDonald’s empire is obviously difficult to control
and constantly presents country-specific challenges.
Clever strategy is important for its continued survival and,
for the company, hopefully, its growth post the Covid-19
pandemic.
Sources: C. Smith, 2020, 50 interesting McDonald’s statistics and facts
2020, DMR Business Statistics, https://expandedramblings.com/index.php/
mcdonalds-statistics, 28 May; R. Darling, 2019, Thanks to the Happy Meal,
McDonald’s is the largest toy manufacturer, http://www.considerable.com,
6 November; 2019, KFC is most popular food chain in China, http://www.
businessinsider.com, 8 March; The Economic Times, 2019, Vikram Bakshi is
finally out, and McDonald’s India is lovin’ it, ET Online, https://economictimes.
indiatimes.com/industry/services/hotels-/-restaurants/vikram-bakshi-is-
finally-out-and-mcdonalds-india-is-lovin-it/articleshow/69309704.cms?utm_
source=contentofinterest&utm_medium=text&utm_campaign=cppst, 14 May; T.
DiChristopher, 2015, McDonald’s new CEO faces many problems, CNBC, http://
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
worldwide: A market-by-market look, Financial Times, http://www.ft.com/intl/
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

The strategic management process

As explained in the opening case, McDonald’s is trying to enrich its traditional approach globally with more
marketing and by making its stores more responsive to local consumers’ needs. A study conducted to identify
strategic the factors that contribute to the success of top corporate performers shows why the organisation is doing
management process
this. This study found that the top performers were entrepreneurial, were market oriented (possessing
the full set of
commitments, effective knowledge of the customers’ needs), used valuable competencies and offered innovative products
decisions and and services. 2
actions required for
an organisation to The types of behaviours exhibited by top performers like McDonald’s represent a strategic management
achieve strategic process (see Figure 1.1), which is a full set of commitments, decisions and actions required for an
competitiveness and organisation to achieve strategic competitiveness and earn above-average returns. The organisation’s
earn above-average
returns first step in the process is to analyse its external environment and internal organisation to determine its
strategic resources, capabilities and core competencies – the sources of its ‘strategic inputs’. We will now analyse
competitiveness each of the different components of the strategic management process.
achieved when Strategic competitiveness is achieved when an organisation successfully formulates and implements
an organisation
successfully a value-creating strategy. A strategy is an integrated and coordinated set of commitments and actions
formulates and designed to exploit core competencies and gain a competitive advantage. When choosing a strategy,
implements a value- organisations make choices among competing alternatives as the pathway for deciding how they will
creating strategy
pursue strategic competitiveness. 3
strategy
In this sense, the chosen strategy indicates what the organisation will do as well as what the
an integrated and
coordinated set of organisation will not do. An organisation’s strategy also demonstrates how it differs from its competitors.
commitments and An organisation has a competitive advantage when it implements a strategy that creates superior
actions designed
to exploit core value for customers and that its competitors are unable to duplicate or find too costly to imitate.4 An
competencies and organisation can be confident that its strategy has resulted in one or more useful competitive advantages
gain a competitive only after competitors’ efforts to duplicate its strategy have ceased or failed. In addition, an organisation
advantage
must understand that no competitive advantage is permanent, and this was witnessed in 2020 during the
Covid-19 pandemic. 5 The speed with which competitors are able to acquire the skills needed to duplicate
 CHAPTER 1 5
Strategic management and strategic competitiveness

Figure 1.1 The strategic management process

Chapter 2
The external
environment
Strategic

Strategic intent
inputs

Strategic mission

Chapter 3
The internal
organisation

Strategy formulation Strategy implementation

Chapter 4 Chapter 5 Chapter 6 Chapter 10 Chapter 11

Business-level Competitive Corporate-level Corporate Organisational
strategy dynamics strategy governance structure and
controls
Strategic
actions

Chapter 7 Chapter 8 Chapter 9 Chapter 12 Chapter 13

Acquisition and International Cooperative Strategic Strategic
restructuring strategy strategy leadership entrepreneurship
strategies

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.

The competitive landscape

The fundamental nature of competition in many of the world’s industries is changing. The reality is that
financial capital continues to be scarce and markets are increasingly volatile. 22 Because of this, the pace
of change is relentless and ever-increasing. Even determining the boundaries of an industry has become
challenging.
Managers must adopt a new mindset that values flexibility, speed, innovation, integration and the
challenges that evolve from constantly changing conditions. 23 The conditions of the competitive landscape
result in a perilous business world, one in which the investments that are required to compete on a global
scale are enormous and the consequences of failure are severe. 24 Effective use of the strategic management
process reduces the likelihood of failure for organisations as they encounter the conditions of today’s
competitive landscape.
Hypercompetition is a term often used to capture the realities of the competitive landscape. Under hypercompetition
conditions of hypercompetition, assumptions of market stability are replaced by notions of inherent a condition where
instability and change. 25 Hypercompetition results from the dynamics of strategic manoeuvring among competitors engage
in intense rivalry,
global and innovative combatants. In a hypercompetitive market, organisations often aggressively markets change
challenge their competitors in the hopes of improving their competitive position and, ultimately, their quickly and often, and
performance. 26 In recent years, internet giant Tencent Holdings Ltd of China has become one of the world’s entry barriers are low
largest technology investors. Between 2013 and mid-2018, the organisation took stakes in 277 start-ups.
Analysts believe this is a calculated strategy to crowd out rivals and to increase profits. 27
Another random document with
no related content on Scribd:
 LIST OF P L A T E S, &c.

Page
1. Map of the Empire of Marocco to face the title
2. View of the Atlas as seen from the Terraces at Mogodor 10
3. View of the Plains of Akkurmute and Jibbel Heddid 46
4. View of Mogodor 47
5. View of the Port and Entrance of ditto 48
6. View of the City of Marocco and Atlas Mountains 57
7. Camelion 99
8. Locust 103
9. Buskah 109
10. El Efah 110
11. Euphorbium Plant 134
12. Feshook ditto 136
13. Dibben Feshook 136
14. Map, shewing the track of the Caravans across Sahara 282
 C O N T E N T S.

CHAPTER I.
Page.
Geographical Divisions of the Empire of Marocco 1

CHAPTER II.
Rivers, Mountains, and Climate of Marocco 4

CHAPTER III.
Description of the different Provinces — their Soil, Culture, and Produce 13

CHAPTER IV.
Population of the Empire of Marocco. — Account of its Sea-ports, Cities,
and Inland Towns 25

CHAPTER V.
Zoology 74

CHAPTER VI.
Metallic, Mineral, and Vegetable Productions 126

CHAPTER VII.
Description of the Inhabitants of West Barbary — their Dress — Religious
Ceremonies and Opinions — their Character — Manners and Customs
— Diseases — Funerals — Etiquette of the Court — Sources of
Revenue 140

CHAPTER VIII.
Some Account of a peculiar species of Plague, which depopulated West
Barbary in 1799, and 1800, and to the effects of which the Author was
an eye-witness 171
 CHAPTER IX.
Some Observations on the Mohammedan Religion 196

CHAPTER X.
Languages of Africa — Various Dialects of the Arabic Language —
Difference between the Berebber and Shelluh Languages — Specimen
of the Mandinga — Comparison of the Shelluh Language with that of
Siwah, and also with that of the Canary Islands, and Similitude of
Customs 209

CHAPTER XI.
General Commerce of Marocco — Annual Exports and Imports of the Port
of Mogodor — Importance and Advantages of a Trade with the Empire
of Marocco — Cause of its Decline — Present State of our Relations
with the Barbary Powers 234

CHAPTER XII.
Shipwrecks on the Western Coast of Africa about Wedinoon and Sahara
— State of the British and other Captives whilst in possession of the
Saharawans, or roving Arabs of the Desert — Suggestion of the Author
for the Alleviation of their Sufferings — Mode of their Redemption 269

CHAPTER XIII.
Commercial Relations of the Empire of Marocco with Timbuctoo, and other
Districts of Soudan — Route of the Caravans to and from Soudan — Of
the City of Timbuctoo — The productive Gold Mines in its Vicinage — Of
the navigable Intercourse between Jinnie and Timbuctoo; and from the
latter to Cairo in Egypt: the whole being collected from the most
authentic and corroborating testimonies of the Guides of the Caravans,
Itinerant Merchants of Soudan, and other creditable sources of
Intelligence 282

APPENDIX p. 315
GLOSSARY p. 326
 AN AC CO UNT
OF

THE EMPIRE OF MAROCCO,

&c. &c.
 CHAPTER I.
Geographical Divisions of the Empire of Marocco.

T he empire of Marocco,[7] including Tafilelt,[8] is bounded on the

north by the Mediterranean sea; on the east by Tlemsen,[9] the
Desert of Angad, Sejin Messa,[10] and Bled-el-jerrêde;[11] on the
south by Sahara (or the Great Desert); and on the west by the
Atlantic Ocean. It may be divided into four grand divisions.
1st, The northern division, which contains the provinces of Erreef,
[12] El Garb, Benihassen, Temsena, Shawia, Tedla, and the district of

Fas;[13] these are inhabited by Arabs of various tribes, living in tents,

whose original stock inhabit Sahara; to which may be added the
various tribes of Berebbers, inhabiting the mountains of Atlas,[14]
and the intermedial plains, of which the chief clans or Kabyles are
the Girwan, Ait Imure, Zian,[15] Gibbellah, and Zimurh-Shelluh.
The principal towns of this division are, Fas (old and new city,
called by the Arabs Fas Jeddede and Fas el Balie), Mekinas, or
Mequinas, Tetuan, Tangier, Arzilla, El Araiche, Sla, or Salée, Rabat,
Al Kassar, Fedalla, Dar-el-beida, and the Sanctuary of Muley Dris
Zerone, where the Mohammedan religion was first planted in West
Barbary.
2d, The central division; which contains the provinces of Dukella
or Duquella, Abda, Shedma, Haha, and the district of Marocco.[16]
The chief towns being Marocco, Fruga, Azamore, Mazagan, Tet, Al
Waladia, Asfie, or Saffee, Sueerah, or Mogodor.[17]
3d, The southern division; containing the provinces of Draha and
Suse; which latter is inhabited by many powerful tribes or Kabyles,
the chief of which are Howara, Emsekina, Exima, Idautenan, Idaultit,
Ait-Atter, Wedinoon, Kitiwa, Ait-Bamaran, Messa, and Shtuka; of
these Howara, Wedinoon, and half of Ait-Bamaran are Arabs; the
others are Shelluhs. The principal towns of this division are Terodant,
Agadeer,[18] or Santa Cruz, Inoon, or Noon, Ifran, or Ufran, Akka,
Tatta, Messa, and Dar-Delemie.
 4th, The eastern division, which lies to the east of the Atlas, and is
called Tafilelt; it was formerly a separate kingdom. A river of the
same name passes through this territory, on the banks of which the
present Emperor’s father, Sidi Mohammed ben Abdallah, built a
magnificent palace. There are many other adjacent buildings and
houses inhabited by sherreefs, or Mohammedan princes of the
present dynasty, with their respective establishments.[19]
FOOTNOTES:
[7]Marakusha in the original Arabic; and called by the
Spaniards Marruecos.
[8]Commonly called Tafilet.
[9]In many maps called Tremecin.
[10]Commonly called Sigelmessa.
[11]Commonly called Biledulgerid.
[12]It is through this province that the chain of mountains called
the Lesser Atlas passes, viz. from Tangier to Bona, in the
Kingdom of Algiers.
[13]Commonly called Fez.
[14]The Atlas mountains are called in Arabic Jibbel Attils, i.e.
the mountains of snow; hence, probably, the word Atlas.
[15]Zian is a warlike tribe; it lately opposed an imperial army of
upwards of thirty thousand men. This Kabyle is defended from
attacks by rugged and almost inaccessible passes.
[16]By the negligence of authors Marocco has been called
Morocco, as Mohammed or Muhammed has been transformed to
Mahommed, and Mohammedan to Mahommedan.
[17]Sueerah is the proper name; Europeans have called it
Mogodor, from a saint who was buried a mile from the town,
called Sidy Mogodool, which last word, from oral tradition, has
been corrupted to Mogador, and sometimes to Mogadore.
[18]Agadeer is the Arabian name, Guertguessem the ancient
African name, and Santa Cruz is the Portugueze appellation.
[19]The modern Arabs divide Northern Africa into three grand
divisions: the first extends from the Equator to the Nile el Abeede,
or river of Nigritia, and is called Soudan, which is an African word
indicative of black, the inhabitants being of that colour: the second
extends from the river of Soudan to Bled-el-jerrêde, and is
denominated Sahara, from the aridity and flatness of the land: the
third division comprises Bled-el-jerrêde, the maritime states of
Barbary, Egypt, and Abyssinia. Some authors have affirmed that
Bled-el-jerrêde signifies the Country of Dates; others, that it
signifies the Country of Locusts; dates certainly abound there; but
the name does not imply dates. Jerâad is the Arabic for locusts;
but it is a different word from Jerrêde, which signifies dry.
 CHAPTER II.
Rivers, Mountains, and Climate of Marocco.

T he following are the principal rivers in the empire of Marocco:

The Muluwia, which separates the empire from Angad and
Tlemsen, rises at the foot of the Atlas, and, passing through the
desert of Angad, discharges itself into the Mediterranean about thirty
miles S.E. of Mellilla. This is a deep and impetuous stream,
impassable in (Liali) the period between the 20th of December and
30th of January inclusive, or the forty shortest days, as computed by
the old style; in summer it is not only fordable, but often quite dry,
and is called from that circumstance El Bahar billa ma, or, a sea
without water.
El Kose, or Luccos, at El Araiche, so called from its arched
windings, El Kose signifying in the Arabic of the western Arabs an
arch. Ships of 100 or 150 tons may enter this river at high water; it
abounds in the fish called shebbel: it is never fordable, but ferries are
constantly crossing with horses, camels, passengers and their
baggage, &c.
The Baht rises in the Atlas, and partly loses itself in the swamps
and lakes of the province of El Garb; the other branch probably falls
into the river Seboo.
The Seboo is the largest river in West Barbary; it rises in a piece
of water situated in the midst of a forest, near the foot of Atlas,
eastward of the cities of Fas and Mequinas, and winding through the
plains, passes within six miles of Fas. Another stream, proceeding
from the south of Fas, passes through the city, and discharges itself
into this river: this stream is of so much value to the Fasees, from
supplying the town with water, that it is called (Wed el Juhor) the
river of pearls. Some auxiliary streams proceeding from the territory
of Tezza fall into the Seboo in Liali (the period before mentioned).
This river is impassable except in boats, or on rafts. At Meheduma,
or Mamora, where it enters the ocean, it is a large, deep, and
navigable stream; but the port being evacuated, foreign commerce is
annihilated, and little shipping has been admitted since the
Portugueze quitted the place. This river abounds more than any
other in that rich and delicate fish called shebbel. If there were any
encouragement to industry in this country, corn might be conveyed
up the Seboo to Fas at a very low charge, whereas it is now
transported to that populous city on camels, the expense of the hire
of which often exceeds the original cost of the grain.
The Bu Regreg.—This river rises in one of the mountains of Atlas,
and proceeding through the woods and valleys of the territory of Fas,
traverses the plains of the province of Beni Hassen, and discharges
itself into the ocean between the towns of Salée and Rabat, the
former being on the northern, the latter on the southern bank: here
some of the Emperor’s sloops of war, which are denominated by his
subjects frigates, are laid up for the winter. This river is never
fordable, but ferries are constantly passing to and fro.
The Morbeya also rises in the Atlas mountains, and dividing the
territory of Fas from the province of Tedla, passes through a part of
Shawia, and afterwards separates that province and Temsena from
Duquella; dividing that part of the empire west of Atlas into two
divisions. There was a bridge over this river at a short distance from
the pass called Bulawan, built by Muley Bel Hassen, a prince of the
Mareen family; at this pass the river is crossed on rafts of rushes and
reeds, and on others consisting of inflated goat skins. Westward of
this pass, the river meanders through the plains, and enters the
ocean at the port of Azamor. The Morbeya abounds in the fish called
shebbel, the season for which is in the spring. This river not being at
any time fordable, horses and travellers, together with their baggage,
are transported across by ferries.
The Tensift.[20]—This river rises in the Atlas, east of Marocco, and
passing about five miles north of that city, it proceeds through the
territory of Marocco, Rahamena, and nearly divides the two maritime
provinces of Shedma and Abda, discharging itself into the ocean
about sixteen miles south of the town of Saffy. This river receives in
its course some tributary streams issuing from Atlas, the principal of
which is the Wed Niffis, which, flowing from the south, enters it, after
taking a northerly course through the plains of Marocco or
Sheshawa. The Tensift is an impetuous stream during the Liali, but in
summer it is fordable in several places; and at the ferry near the
mouth of the river, at low water, reaches as high as the stirrups. In
many places it is extremely deep, and dangerous to cross without a
guide; about six miles from Marocco, a bridge crosses it, which was
erected by Muley El Mansor; it is very strong but flat, with many
arches. One of the Kings of Marocco attempted to destroy this
bridge, to prevent the passage of an hostile army, but the cement
was so hard that men with pick-axes were employed several days
before they could sever the stones; and they had not time to effect
its destruction, before the army passed. The shebbel of the Tensift is
much esteemed, as is also the water, which is extremely salubrious,
and aids considerably the powers of digestion, which, from the
intense heat of the climate, are often weakened and relaxed. This
river is supposed to be the Phut of Ptolemy; on the northern bank,
where it falls into the ocean, is to be perceived the ruins of an
ancient town, probably the Asama of that Geographer.
There is a small stream two miles south of Mogodor, from whence
that town is supplied with water; and about twelve or fourteen miles
more to the south, we reach
The River Tidsi, which discharges itself into the ocean a few miles
south of Tegrewelt, or Cape Ossem, where the ancient city of Tidsi
formerly stood. Passing to the south in the plains at the foot of that
branch of Atlas which forms Afarnie, or the lofty Cape de Geer,[21]
we meet
The River Benitamer, which, with the before mentioned branch of
Atlas, divides the provinces of Haha and Suse.
Farther to the south is another river called
Wed Tamaract; and about sixteen or seventeen miles south of
that place, and about six south of Agadeer, or Santa Cruz,[22] the
majestic
 River Suse discharges itself into the ocean. This fine river rises at
Ras-el-Wed, at the foot of Atlas, about thirty miles from the city of
Terodant. The (fulahs) cultivators of land, and the gardeners of Suse
have drained off this river so much in its passage through the plains
of Howara and Exima, that it is fordable at its mouth at low water in
the summer, so that camels and other animals are enabled to cross
it with burthens on their backs: at its mouth is a bar of sand which at
low water almost separates it from the ocean. The banks of this river
are inundated in winter, but in summer are variegated with Indian
corn, wheat, barley, pasture lands, beautiful gardens, and productive
orchards. Either this river, or that of Messa, must have been the Una
of Ptolomy, which is placed in lat. 28° 30′ N. We may presume that
the Suse was anciently navigable as far as Terodant, as there are
still in the walls of the castle of that city immense large iron rings,
such as we see in maritime towns in Europe, for the purpose of
mooring ships.
Draha.—The river of this name flows from the north-east of Atlas
to the south, and passing through the province of Draha, it
disappears in the absorbing sands of Sahara. A great part of the
country through which it passes being a saline earth, its waters have
a brackish taste, like most of the rivers proceeding from Atlas, which
take their course eastward. It is small in summer, but impetuous and
impassable in winter, or at least during Liali. It is not improbable that
this river formerly continued its course westward, discharging itself
into the ocean at Wednoon, and called by the ancients Darodus; but
it often happens in Africa, particularly on the confines of any desert
country, that the course of rivers is not only changed by the
moveable hills of dry sand, but sometimes absorbed altogether, as is
now the case with the Draha, after its entrance into the Desert.
River of Messa, called Wed Messa, flows from Atlas; it is, as
before observed, a separate stream from the river Suse, and is
drained off by the (fulah) cultivators or farmers during its passage. It
was navigated by the Portugueze before they abandoned this place
for the New World. Leo Africanus has committed another error
(which has been copied by modern writers,[23] in calling the river of
Messa the river Suse,[24] which I ascertained to be quite a different
stream when I was at Messa, and thirty miles distant from the former,
though they both flow from E. to W. A bar of sand separates this river
entirely at low water from the ocean, but at flood tide it is not
fordable. Between the mouth of the river Messa and that of Suse, is
a road-stead called Tomée; the country is inhabited by the Woled
Abbusebah Arabs, who informed me, when I went there, during the
interregnum, with the (Khalif) Vice-regent Mohammed ben Delemy,
by order of the (Sherreef) Prince, that British and other vessels often
took in water there: it is called by the Arabs (Sebah biure) the place
of seven wells, of which wells three only remain, and these we found
to contain excellent water. After inspecting the place, and the nature
of the road-stead, we returned to the Vice-regent’s castle in Shtuka.
Concerning this remarkable sea-port it would be inexpedient at
present to disclose more.
River Akassa.—This river is navigable to Noon, above which it
becomes a small stream, fordable in various places; it has been
called by some Wed Noon, i.e. the river of Noon, but the proper
name is Wed Akassa; the word Wedinoon is applied to the adjacent
territory.

The Mountains of West and South Barbary are the Atlas and its
various branches, which receive different names, according to the
provinces in which they are situated. The greater Atlas, or main
chain of these mountains, extends from (Jibbel d’Zatute) Ape’s Hill to
Shtuka and Ait Bamaran, in Lower Suse, passing about thirty miles
eastward of the city of Marocco, where they are immensely high, and
covered with snow throughout the year. On a clear day, this part of
the Atlas appears at Mogodor, a distance of about a hundred and
forty miles, in the form of a saddle; and is visible at sea, several
leagues off the coast. These mountains are extremely fertile in many
places, and produce excellent fruits; having the advantage of various
climates, according to the ascent towards the snow, which,
contrasted with the verdure beneath, has a singular and picturesque
effect.
 Plate 2.

Drawn by J. G. Jackson. Engraved J. C. Stadler.

A Distant View of the Atlas Mountains East of the

City of Marocco as they appear from Mogodor on a clear
morning before the rising Sun taken from the Terras of the British
Vice Consuls House.
1 Mosque of Seedy Usif. 3 Genoese Consuls Tower.
2 Atlas Mountains, distant 140 Miles. 4 Sand Hills.

London Published June 4. 1811. by W. & G. Nicholl Pall Mall.

In many places the mountains are uninhabited, and form immense

chasms, as if they had been rent asunder by some convulsion of
nature; this is the case throughout the ridge that intersects the plains
which separate Marocco from Terodant. In this part is a narrow pass,
called Bebawan, having a chain of mountains on one side,
ascending almost perpendicularly; and on the other side, a precipice
as steep as Dover Cliff, but more than ten times the heighth. When
the army which I accompanied to Marocco crossed this defile, they
were obliged to pass rank and file, the cavalry dismounted: two
mules missed their step, and were precipitated into the abyss: the
path was not more than fifteen inches wide, cut out of a rock of
marble, in some parts extremely smooth and slippery, in others
rugged.
In the branches of the Atlas east of Marocco, are mines of copper;
and those which pass through the province of Suse produce,
besides copper, iron, lead, silver, sulphur, and salt-petre: there are
also mines of gold, mixed with antimony and lead ore. The
inhabitants of the upper region of Atlas, together with their herds
(which would otherwise perish in the snow), live four months of the
year in excavations in the mountains; viz. from November to
February, inclusive.
The climate of Marocco is healthy and invigorating; from March to
September the atmosphere is scarcely ever charged with clouds;
and even in the rainy season, viz. from September till March, there is
seldom a day wherein the sun is not seen at some interval. The heat
is cooled by sea-breezes during the former period; in the interior,
however, the heat is intense. The rainy season, which begins about
October, ends in March; but if it continue longer, it is generally
accompanied with contagious fevers. The trade winds (which begin
to blow about March, and continue till September or October) are
sometimes so violent, as to effect the nerves and limbs of the natives
who inhabit the coast. The inhabitants are robust; and some live to a
great age. The Shelluhs, or inhabitants of the mountains of Atlas,
south of Marocco, are, however, a meagre people, which proceeds,
in a great measure, from their abstemious diet, seldom indulging in
animal food, and living for the most part on barley gruel, bread, and
honey: the Arabs, the Moors, and the Berebbers, on the contrary,
live in a hospitable manner, and eat more nutritious food, though
they prefer the farinaceous kind.
FOOTNOTES:
 [20]This river is vulgarly called Wed Marakosh, or the river of
Marocco, because it passes through the district of that name; but
the proper name is Wed Tensift, or the river Tensift; and this is the
name given it by Leo Africanus (Book IX.), the only author who
has hitherto spelt the word correctly; he has however committed a
considerable error in affirming that it discharges itself into the
ocean at Saffy.
[21]A Shelluh name, expressive of a quick wind, because there
is always wind at this Cape; but ships should be extremely careful
not to approach it, in going down the coast; not but that the water
is very deep, as the Cape rises almost perpendicularly from the
ocean, but because the land is so extremely high that those ships
which approach within a league of it, are almost always becalmed
on the south side of it, and are in consequence three days in
getting down to Agadeer, whilst other vessels which keep more to
the west, reach that port in a few hours. This Cape is a western
branch of the Atlas.
[22]Leo Africanus, who undoubtedly has given us the best
description of Africa, commits an error, however, in describing this
river. “The great river of Sus, flowing out of the mountains of
Atlas, that separate the two provinces of Hea and Sus (Haha and
Suse) in sunder, runneth southward among the said mountains,
stretching unto the fields of the foresaid region, and from thence
tending westward unto a place called Guartguessen,[a] where it
dischargeth itself into the main ocean.” See 9th book of Leo
Africanus. The Cape de Geer was formerly the separation of the
provinces of Haha and Suse, but now the river of Tamaract may
be called the boundary, which is fifteen miles to the northward of
the mouth of the river Suse; and Guartguessen, or Agadeer, or
Santa Cruz, is six miles north of the river Suse. Had I not resided
three years at Santa Cruz, in sight of the river Suse, which I have
repeatedly forded in various parts, I should not have presumed to
dispute Leo’s assertion.
[a]The ancient name of Agadeer or Santa Cruz
in Leo’s time.
[23]Vide Brooks’s Gazeteer, 12th edition, title Messa.
[24]Through the three small towns of Messa runneth a certain
great river called Sus. Vide Leo Africanus, 2d book, title Town of
Messa.
 CHAPTER III.
Description of the different Provinces, their Soil, Culture, and Produce.

In describing the soil and produce of this extensive empire, we will

proceed through the various provinces, beginning with the northern,
called

ERREEF, or RIF.

This province extending along the shore of the Mediterranean sea,

produces corn and cattle in abundance; that part of it contiguous to
Tetuan produces the most delicious oranges in the world; also figs,
grapes, melons, apricots, plums, strawberries, apples, pears,
pomgranates, citrons, lemons, limes, and the refreshing fruit of the
opuntia, or prickly pear, called by the Arabs (Kermuse Ensarrah)
Christian fig. This fruit was probably first brought into the country
from the Canary Islands, as it abounds in Suse, and is called by the
Shelluhs of South Atlas, (Takanarite) the Canary fruit. A ridge of
mountains passes from Tangier, along this province to the eastward,
as far as Bona, in Algiers; these mountains are called Jibbel Erreef
by the natives, and the Lesser Atlas by Europeans.

EL GARB.

The next province is called El Garb[25] (g guttural.) It is of the same

nature with that already described; from the port of El Araiche,
eastward, as far as the foot of Atlas, is a fine champaign country,
extremely abundant in wheat and barley: here are the extensive
plains of Emsharrah Rumellah, famous for the camp of Muley
Ismael, great grandfather of the present Emperor Soliman, where he
retained his army of Bukarrie Blacks to the amount of one hundred
thousand horse. This army possessed the finest horses in the
empire. The remains of the habitations are still discernible. There is
a forest eastward of El Araiche of considerable extent, consisting
chiefly of oak, with some cork, and other valuable large trees; more
to the southward and eastward, we discover a forest of cork only, the
trees of which are as large as full grown oaks. From Mequinas to
Muley Idris Zerone, the renowned sanctuary at the foot of Atlas, east
of the city of Mequinas, the country is flat, with gentle hills
occasionally, and inhabited by the tribe of Ait Imure, a Kabyle which
dwells in straggling tents, and a warlike tribe of Berebbers. The
Emperor Seedy Mohammed, father to the reigning Emperor Soliman,
used to denominate the Ait Imure the English of Barbary.[26]

THE DISTRICT OF FAS, AND PROVINCE OF BENIHASSEN.

The country between Fas and Mequinas, and from thence to Salée,
is of the same description as the foregoing; a rich champaign,
abounding prodigiously in corn, and inhabited altogether by Arabs,
with the exception, however, of the Zimur’h Shelluh, another Kabyle
of Berebbers. In short, the whole northern[27] division of this empire
is an uninterrupted corn field; a rich black, and sometimes red soil,
without stones or clay, with scarcely any wood upon it (the forests
before mentioned, and the olive plantations and gardens about the
cities of Fas and Mequinas excepted), but incalculably productive.
The inhabitants do not use dung, but reap the corn high from the
ground, and burn the stubble, the ashes of which serve as manure.
During this period of the year, viz. August, enormous clouds of
smoke are seen mounting the declivities of hills and mountains,
penetrating without resistance the woods, and leaving nothing
behind but black ashes and cinders: these fires heat the atmosphere
considerably, as they continue burning during two months. In sowing,
the husbandmen throw the grain on the ground, and afterwards
plough it in. Oats they make no use of: beans, peas, caravances,
and Indian corn, are cultivated occasionally in lands adjacent to
rivers: the fruits are similar to those before described, and are in
great abundance, oranges being sold at a ducket or a dollar a
thousand, at Tetuan, Salée, and some other places; grapes, melons,
and figs of various kinds, and other fruits, are proportionally
abundant. Cotton of a superior quality is grown in the environs of
Salée and Rabat, also hemp. The tobacco called Mequinasi, so
much esteemed for making snuff, is the produce of the province of
Benihassen, as well as the country adjacent to the city of Mequinas.

PROVINCES OF TEMSENA, SHAWIA, DUQUELLA, ABDA, SHEDMA; AND THE

DISTRICT OF MAROCCO.

These are most productive in corn; the crop of one year would be
sufficient for the consumption of the whole empire, provided all the
ground capable of producing wheat and barley were to be sown.
These fine provinces abound in horses and horned cattle; their flocks
are numerous, and the horses of Abda are of the most select breed
in the country. The cavalry of Temsena is the best appointed of the
empire, excepting the black troops of the Emperor, called Abeed
Seedy Bukarrie.
Two falls of rain in Abda are sufficient to bring to maturity a good
crop of wheat; nor does the soil require more. The water-melons of
Duquella are of a prodigious size, and indeed everything thrives in
this prolific province: horses, horned cattle, the flocks, nay even the
dogs and cats, all appear in good condition. The inhabitants are, for
the most part, a laborious and trading people, and great speculators:
they grow tobacco for the markets of Soudan and Timbuctoo. Nearly
midway between Saffee and Marocco is a large salt lake, from which
many camels are daily loaded with salt for the interior.
The province of Shedma produces wheat and barley; its fruits are
not so rich as those of the north, or of Suse; it abounds however in
cattle. Of goats it furnishes annually an incalculable number, the
skins of which form a principal article of exportation from the port of
Mogodor; and such is the animosity and opposition often among the
merchants there, that they have sometimes given as much for the
skin, as the animal itself was sold for. Honey, wax, and tobacco are
produced in this province, the two former in great abundance; also
gum arabic, called by the Arabs Alk Tolh, but of an inferior quality to
that of the Marocco district.

PROVINCE OF HAHA.
Haha is a country of great extent, interspersed with mountains and
valleys, hills and dales, and inhabited by twelve Kabyles of Shelluhs.
This is the first province, from the shores of the Mediterranean, in
which villages and walled habitations are met with, scattered through
the country; the before mentioned provinces (with the exception of
the sea-port towns and the cities of Fas, Mequinas, Marocco, and
Muley Idris Zerone) being altogether inhabited by Arabs living in
tents. The houses of Haha are built of stone, each having a tower,
and are erected on elevated situations, forming a pleasing view to
the traveller. Here we find forests of the argan tree, which produces
olives, from the kernel of which the Shelluhs express an oil,[28] much
superior to butter for frying fish; it is also employed economically for
lamps, a pint of it burning nearly as long as double the quantity of
olive or sallad oil. Wax, gum-sandrac and arabic, almonds, bitter and
sweet, and oil of olives, are the productions of this picturesque
province, besides grapes, water-melons, citrons, pomgranates,
oranges, lemons, limes, pears, apricots, and other fruits. Barley is
more abundant than wheat. The Shelluhs of Haha are
physiognomically distinguishable (by a person who has resided any
time among them) from the Arabs of the plains, from the Moors of
the towns, and from the Berebbers of North Atlas, and even from the
Shelluhs of Suse, though in their language, manners, and mode of
living they resemble the latter. The mountains of Haha produce the
famous wood called Arar, which is proof against rot or the worm.
Some beams of this wood taken down from the roof of my dwelling-
house at Agadeer, which had been up fifty years, were found
perfectly sound, and free from decay.

PROVINCE OF SUSE.

We now come to Suse, the most extensive, and, excepting grain, the
richest province of the empire. The olive, the almond, the date, the
orange, the grape, and all the other fruits produced in the northern
provinces abound here, particularly about the city of Terodant (the
capital of Suse, formerly a kingdom), Ras-el-Wed, and in the
mountains of Edautenan.[29] The grapes of Edautenan are
exquisitely rich. Indigo grows wild in all the low lands, and is of a
vivid blue; but the natives do not perfectly understand the
preparation of it for the purpose of dying.
Suse contains many warlike tribes, among which are Howara,
Woled Abbusebah, and Ait Bamaran; these are Arabs;— Shtuka,
Elala, Edaultit, Ait Atter, Kitiwa, Msegina, and Idautenan, who are
Shelluhs.
There is not, perhaps, a finer climate in the world than that of
Suse, generally, if we except the disagreable season of the hot
winds. It is said, however, and it is a phenomenon, that at Akka rain
never falls; it is extremely hot there in the months of June, July, and
August; about the beginning of September the (Shume) hot wind
from Sahara blows with violence during three, seven, fourteen, or
twenty-one days.[30] One year, however, whilst I resided at
(Agadeer) Santa Cruz, it blew twenty-eight days; but this was an
extraordinary instance.[31] The heat is so extreme during the
prevalence of the Shume, that it is not possible to walk out; the
ground burns the feet; and the terraced roofs of the houses are
frequently peeled off by the parching heat of the wind, which
resembles that which proceeds from the mouth of an oven: at this
time clothes are oppressive. These violent winds introduce the rainy
season.
The (Lukseb) sugar-cane grows spontaneously about Terodant.
Cotton, indigo, gum, and various kinds of medicinal herbs are
produced here. The stick liquorice is so abundant that it is called (Ark
Suse) the root of Suse. The olive plantations in different parts of
Suse are extensive, and extremely productive; about Ras-el-Wed
and Terodant a traveller may proceed two days through these
plantations, which form an uninterrupted shade impenetrable to the
rays of the sun; the same may be said of the plantations of the
almond, which also abound in this province. Of corn they sow
sufficient only for their own annual consumption; and although the
whole country might be made one continued vineyard, yet they plant
but few vines; for wine being prohibited, they require no more grapes
than they can consume themselves, or dispose of in the natural
state. The Jews, however, make a little wine and brandy from the