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Contents
Preface xv Exercise 1B: Enter Coca-Cola Vitals into the Strategic Planning
Template 38
Acknowledgments xxv Set 2: Strategic Planning for My University 38
Exercise 1C: Perform SWOT Analysis for My University 38
About the Authors xxvii Set 3: Strategic Planning to Enhance My Employability 39
Exercise 1D: Perform SWOT Analysis on Myself 39
PART 1 Overview of Strategic Set 4: Individual versus Group Strategic Planning 39
Management 2 Exercise 1E: How Detrimental Are Various Pitfalls in Strategic
Planning? 39
Chapter 1 The Nature of Strategic
Management 3
PART 2 Strategy Formulation 42
What Is Strategic Management? 4
EXEMPLARY STRATEGIST SHOWCASED: COACH VINCE Chapter 2 Business Vision and Mission 43
LOMBARDI 4 Core Values Statements: What Is Our Foundation? 44
Strategic Planning 5 • The Strategic-Management Model 6 EXEMPLARY STRATEGIST SHOWCASED: FREDERICK W. SMITH,
ETHICS CAPSULE 1: WHAT ETHICS VARIABLE IS MOST FOUNDER AND CEO OF FEDEX CORPORATION 44
IMPORTANT IN DOING BUSINESS? 7 GLOBAL CAPSULE 2: LINKEDIN: CLEAR CORE VALUES, VISION,
Stages of Strategic Management 7 AND MISSION LEAD TO GLOBAL PROMINENCE 45
Integrating Analysis and Intuition 8 Vision Statements: What Do We Want to Become? 45
Adapting to Change 9 Characteristics of a Vision Statement 46
GLOBAL CAPSULE 1: MOBIKE: GLOBAL BIKE RENTING TAKES Vision Statement Analysis 47
OFF LIKE A JET PLANE 10 Mission Statements: What Is Our Business? 47
Key Terms in Strategic Management 10 Characteristics of a Mission Statement 48
Competitive Advantage 10 • Strategists 10 Components of a Mission Statement 49
• Vision and Mission Statements 11 • External
Opportunities and Threats 12 • Internal Strengths and ETHICS CAPSULE 2: FACEBOOK: CHANGING OUR MISSION TO
Weaknesses 12 • Long-Term Objectives 13 ENHANCE OUR ETHICS AND INTEGRITY 51
• Strategies 13 • SWOT Analysis 14 • Annual The Importance (Benefits) of Vision and Mission
Objectives 14 • Policies 16 Statements 51
Benefits of Engaging in Strategic Management 16 The Process of Developing Vision and Mission Statements 53
Financial Benefits 17 • Nonfinancial Benefits 17 Evaluating and Writing Mission Statements 53
Why Some Firms Do No Strategic Planning 18 IMPLICATIONS FOR STRATEGISTS 55
Pitfalls in Strategic Planning 18 IMPLICATIONS FOR STUDENTS 56
Comparing Business and Military Strategies 18 Chapter Summary 56
Developing Employability Skills 20 Key Terms and Concepts 57
IMPLICATIONS FOR STRATEGISTS 21 Issues for Review and Discussion 57
IMPLICATIONS FOR STUDENTS 22 ASSURANCE-OF-LEARNING EXERCISES 58
Chapter Summary 23 Set 1: Strategic Planning for Coca-Cola 58
Key Terms and Concepts 23 Exercise 2A: Develop an Improved Coca-Cola Vision Statement 58
Issues for Review and Discussion 24 Exercise 2B: Develop an Improved Coca-Cola Mission Statement 58
MINI-CASE ON TESLA, INC. (TSLA): WHAT AMERICAN COMPANY Exercise 2C: Compare Coca-Cola’s Mission Statement to a Rival
DOES THE BEST JOB OF STRATEGIC PLANNING, AND HOW IS IT Firm’s 59
DONE? 25 Set 2: Strategic Planning for My University 59
Web Resources 26 Exercise 2D: Compare Your University’s Vision and Mission Statements to
Those of a Rival Institution 59
Current Readings 26
Set 3: Strategic Planning for Myself 59
Endnotes 27
Exercise 2E: Develop a Vision and Mission Statement for
THE COHESION CASE: COCA-COLA COMPANY, 2018 28 Yourself 59
ASSURANCE-OF-LEARNING EXERCISES 37 Set 4: Individual versus Group Strategic Planning 60
Set 1: Strategic Planning for Coca-Cola 37 Exercise 2F: What Is the Relative Importance of Each of the Nine
Exercise 1A: Gather Strategy Information for Coca-Cola Company 37 Components of a Mission Statement? 60
vii
viii CONTENTS
MINI-CASE ON FORD MOTOR COMPANY (F): EVALUATE Exercise 3H: What External Forces Are Most Important In Strategic
FORD’S VISION FOR THE FUTURE AND MISSION FOR THE Planning? 90
PRESENT 61 MINI-CASE ON SAM’S CLUB: SAM’S CLUB IS BOOMING IN
Web Resources 62 CHINA 91
Current Readings 62 Web Resources 92
Endnotes 63 Current Readings 92
Endnotes 93
Chapter 3 The External Assessment 65
EXEMPLARY STRATEGIST SHOWCASED: BEN SILBERMANN, Chapter 4 The Internal Assessment 95
CEO AND COFOUNDER OF PINTEREST 66 The Internal Assessment Phase of Strategy Formulation 96
The External Assessment Phase of Strategy Formulation 67 EXEMPLARY STRATEGIST SHOWCASED: ELON MUSK, CEO
Key External Forces 67 • The Actionable-Quantitative- AND COFOUNDER OF TESLA, INC. AND SPACE EXPLORATION
Comparative-Divisional (AQCD) Test 67 TECHNOLOGIES CORPORATION (SPACEX) 96
10 External Forces that Impact Organizations 68 Resource-Based View 97 • Key Internal Forces 97
Economic Forces 68 • Social, Cultural, Demographic, and ETHICS CAPSULE 4: THE SAGEBRUSH LIZARD VERSUS THE BIG
Environment (SCDE) Forces 69 • Political, Governmental, and
OIL MAN 98
Legal Forces 69
ETHICS CAPSULE 3: PRESERVE ALASKA WILDLIFE OR BOOST
Management 98
ALASKA ECONOMY? 70 Planning 99 • Organizing 99 • Motivating 99
• Controlling 100 • Integrating Strategy and
Technological Forces 71 • Competitive Forces 72
Culture 101 • Management Audit Checklist of Questions 102
GLOBAL CAPSULE 3: WHAT COMPANY IS GROWING FASTEST
Marketing 103
GLOBALLY? 73
Marketing Research and Target Market Analysis 103 • Product
Porter’s Five-Forces Model 73 Planning 104 • Pricing 105 • Promotion 105
Rivalry Among Competing Firms 74 • Potential Entry of New Com- GLOBAL CAPSULE 4: BITCOIN: THE NEW GLOBAL
petitors 75 • Potential Development of Substitute
CURRENCY 106
Products 75 • Bargaining Power of Suppliers 75 • Bargaining
Power of Consumers 76 Channels of Distribution 106 • Marketing Audit
Checklist of Questions 107
Key Sources of Information for an External Audit 77
Finance and Accounting 107
Forecasting and Making Assumptions 77
Finance and Accounting 107 • Financial Ratios 108
Making Assumptions 78
• Finance and Accounting Audit Checklist 110
The External Factor Evaluation Matrix 79
Management Information Systems 112
Steps to Develop an EFE Matrix 79 • Step 1: Develop a Full and
Business Analytics 112
Narrow List of Key External Factors 79 • Step 2: Assign Weights
to Key External Factors 80 • Step 3: Assign Ratings to Key External The Internal Factor Evaluation (IFE) Matrix 113
Factors 80 • Step 4: Obtain Weighted Scores 80 • Step 5: The Actionable-Quantitative-Comparative-Divisional (AQCD)
Obtain Total Weighted Score 80 • An Example EFE Matrix 81 Test 113 • Steps in Developing an IFE Matrix 114 • Step 1:
The Competitive Profile Matrix 82 Develop a Full and Narrow List of Key Internal Factors 114 • Step 2:
Assign Weights to Key Internal Factors 114 • Step 3: Assign
IMPLICATIONS FOR STRATEGISTS 84
Ratings to Key Internal Factors 114 • Step 4: Obtain Weighted
IMPLICATIONS FOR STUDENTS 85 Scores 115 • Step 5: Obtain Total Weighted Score 115 • An
Chapter Summary 86 Example IFE Matrix 116
Key Terms and Concepts 86 IMPLICATIONS FOR STRATEGISTS 117
Issues for Review and Discussion 86 IMPLICATIONS FOR STUDENTS 118
ASSURANCE-OF-LEARNING EXERCISES 87 Chapter Summary 118
Set 1: Strategic Planning for Coca-Cola 87 Key Terms and Concepts 119
Exercise 3A: Develop an EFE Matrix for Coca-Cola 87 Issues for Review and Discussion 119
Exercise 3B: Develop a Competitive Profile Matrix for Coca-Cola 88 ASSURANCE-OF-LEARNING EXERCISES 121
Set 2: Strategic Planning for My University 88 Set 1: Strategic Planning for Coca-Cola 121
Exercise 3C: Develop an EFE Matrix for Your College or University 88 Exercise 4A: Perform a Financial Ratio Analysis for Coca-Cola 121
Exercise 3D: Develop a Competitive Profile Matrix for Your College or Exercise 4B: Construct an IFE Matrix for Coca-Cola 121
University 88
Set 2: Strategic Planning for My University 121
Set 3: Strategic Planning to Enhance My Employability 89
Exercise 4C: Construct an IFE Matrix for Your College or University 121
Exercise 3E: How Competitive Is Your State Among All States for Finding
a Job? 89 Set 3: Strategic Planning for Myself 122
Exercise 3F: Compare and Contrast CareerBuilder, Glassdoor, Monster Exercise 4D: Construct an IFE Matrix for Yourself 122
Jobs, and ZipRecruiter 89 Set 4: Individual versus Group Strategic Planning 122
Exercise 3G: A Template Competency Test 89 Exercise 4E: What Internal Functional Areas Are Most Important to
Set 4: Individual versus Group Strategic Planning 90 Examine in Strategic Planning? 122
CONTENTS ix
MINI-CASE ON PROCTER & GAMBLE (P&G) COMPANY: Exercise 5D: The Key to Personal Strategic Planning: Simultaneously
WHAT COMPANY IS BEST MANAGED IN THE UNITED Build and Borrow 157
STATES? 123 Set 4: Individual versus Group Strategic Planning 157
Web Resources 124 Exercise 5E: What Is the Best Mix of Strategies for Coca-Cola
Current Readings 124 Company? 157
Endnotes 125 MINI-CASE ON FACEBOOK (FB): SHOULD FACEBOOK
ACQUIRE, COOPERATE, OR JUST STAY FIERCE RIVALS WITH
Chapter 5 Strategies in Action 127 LINKEDIN? 159
Long-Term Objectives 128 Web Resources 159
Characteristics and Benefits of Objectives 128 Current Readings 160
EXEMPLARY STRATEGIST SHOWCASED: TIM COOK, CEO OF Endnotes 160
APPLE, INC. 128
Financial versus Strategic Objectives 129 • Avoid Managing by Chapter 6 Strategy Analysis and Choice 163
Crisis, Hope, Extrapolation, and Mystery (CHEM) 130 Strategy Analysis and Choice 164
Types of Strategies 130 EXEMPLARY STRATEGIST SHOWCASED: DAVID GREEN, CEO
Levels of Strategies 131 OF HOBBY LOBBY 164
Integration Strategies 132 The Process of Generating and Selecting Strategies 165
Forward Integration 132 • Backward Integration 133 The Strategy-Formulation Analytical Framework 165
• Horizontal Integration 134 Stage 1: The Input Stage 166 • Stage 2: The Matching
Intensive Strategies 135 Stage 166 • Stage 3: The Decision Stage 166
Market Penetration 135 • Market Development 135 The SWOT Matrix 167
GLOBAL CAPSULE 5: HOW CAN A FIRM DETERMINE WHERE TO ETHICS CAPSULE 6: AS WE STRATEGIZE WE MUST NOT
INITIATE NEW BUSINESS? USE GROSS DOMESTIC PRODUCT JEOPARDIZE ANIMAL WELFARE 168
(GDP) AS A GUIDE. 136
The Strategic Position and Action Evaluation (SPACE)
Product Development 136 Matrix 169
Diversification Strategies 137 Steps in Performing SPACE Analysis 170 • SPACE Matrix
Related Diversification 138 • Unrelated Diversification 138 Quadrants 171 • SPACE Matrix 174
Defensive Strategies 138 The Boston Consulting Group (BCG) Matrix 174
Retrenchment 138 • Divestiture 139 • Liquidation 140 The Internal-External (IE) Matrix 178
Value Chain Analysis and Benchmarking 141 The Grand Strategy Matrix 180
Benchmarking 143 The Decision Stage: The QSPM 182
Michael Porter’s Two Generic Strategies 144 Positive Features and Limitations of the QSPM 186
Cost Leadership 144 • Differentiation 145
How to Estimate Costs Associated with
Means for Achieving Strategies 146 Recommendations 186
BUILD from Within to Grow 146 • BORROW from Others to GLOBAL CAPSULE 6: INDIA’S ECONOMY IS BOOMING 186
Grow 146 • BUY Others to Grow 148
Cultural Aspects of Strategy Analysis and Choice 188
ETHICS CAPSULE 5: ARE CEOS LESS ETHICAL TODAY THAN IN
THE PAST? 148 The Politics of Strategy Analysis and Choice 188
First-Mover Advantages 149 IMPLICATIONS FOR STRATEGISTS 189
Strategic Management in Nonprofit and Small Firms 150 IMPLICATIONS FOR STUDENTS 190
Educational Institutions 150 • Governmental Agencies and Chapter Summary 190
Departments 151 • Small Firms 151 Key Terms and Concepts 191
IMPLICATIONS FOR STRATEGISTS 152 Issues for Review and Discussion 191
IMPLICATIONS FOR STUDENTS 153 ASSURANCE-OF-LEARNING EXERCISES 193
Chapter Summary 153 Set 1: Strategic Planning for Coca-Cola 193
Key Terms and Concepts 154 Exercise 6A: Perform a SWOT Analysis for Coca-Cola 193
Issues for Review and Discussion 154 Exercise 6B: Develop a SPACE Matrix for Coca-Cola 193
ASSURANCE-OF-LEARNING EXERCISES 155 Exercise 6C: Develop a BCG Matrix for Coca-Cola 194
Set 1: Strategic Planning for Coca-Cola 155 Exercise 6D: Develop a QSPM for Coca-Cola 194
Exercise 5A: Develop Hypothetical Coca-Cola Company Set 2: Strategic Planning for My University 194
Strategies 155
Exercise 6E: Develop a BCG Matrix for My University 194
Exercise 5B: Should Coca-Cola Build, Borrow, or Buy
in 2020–2021? 156
Exercise 6F: Perform QSPM Analysis on Myself 195
Set 2: Strategic Planning for My University 156
Exercise 5C: Develop Alternative Strategies for Your University 156 Exercise 6G: A Template Competency Test 195
Set 3: Strategic Planning for Myself 157 Set 4: Individual versus Group Strategic Planning 196
x CONTENTS
Exercise 6H: How Severe Are Various Subjective Threats in Set 3: Strategic Planning to Enhance My Employability 234
Strategic Planning? 196 Exercise 7D: Marketing Yourself to Best Achieve Your Career
MINI-CASE ON THE BOSTON CONSULTING GROUP: WHAT Objectives 234
AMERICAN FIRM HELPS THE MOST COMPANIES DO STRATEGIC Set 4: Individual versus Group Strategic Planning 235
PLANNING? 197 Exercise 7E: What Are the Most Important Benefits of Having a Diverse
Web Resources 198 Workforce? 235
Current Readings 198 MINI-CASE 7 ON DE BEERS GROUP OF COMPANIES: DE BEERS
Endnotes 199 SHIFTS ITS MARKET SEGMENTATION STRATEGY 236
Web Resources 237
PART 3 Strategy Implementation 200 Current Readings 238
Endnotes 239
Chapter 7 Implementing Strategies: Manage-
ment and Marketing Issues 201 Chapter 8 Implementing Strategies: Finance and
EXEMPLARY STRATEGIST SHOWCASED: INDRA NOOYI, Accounting Issues 241
FORMER CEO OF PEPSICO 202 EXEMPLARY STRATEGIST SHOWCASED: JAMIE DIMON, CEO
Transitioning from Formulating to Implementing JPMORGAN CHASE 242
Strategies 203 Capital Structure 243
The Need for Clear Annual Objectives 203 EPS/EBIT Analysis: Steps to Complete 244 • EPS/EBIT Analysis: An
Establish Policies 205 Example 245 • EPS/EBIT Analysis: Limitations 247
ETHICS CAPSULE 7: DO FIRMS NEED A POLICY AGAINST Projected Financial Statements 247
WORKPLACE PHUBBING? 207 The Free Excel Strategic Planning Template at
www.strategyclub.com 248
Allocate Resources and Manage Conflict 207
Allocate Resources 207 • Manage Conflict 208 ETHICS CAPSULE 8: PROJECTED FINANCIAL STATEMENT
MANIPULATION 249
Match Structure with Strategy 208
GLOBAL CAPSULE 8: THE LEAST (AND MOST) CORRUPT
Types of Organizational Structure 209
COUNTRIES IN THE WORLD FOR DOING BUSINESS 249
The Functional Structure 209 • The Divisional
Steps to Develop Projected Financial Statements 250 • Nonprofit
Structure 210 • The Strategic Business Unit
Organizations 251 • P&G’s Actual Financial
Structure 212 • The Matrix Structure 212
Statements 251 • P&G’s Projected Financial
Do’s and Don’ts in Developing Organizational Charts 214 Statements 253 • P&G’s Retained Earnings Data Table 255
How to Depict an Organizational Chart 215 Corporate Valuation 256
Strategic Production/Operations Issues 217 Corporate Valuation Methods 256
Restructuring and Reengineering 218 • Manage Resistance to Manage Financial Ratios, IPOs, and Bonds 258
Change 218 • Decide Where and How to Produce Goods 219
Financial Ratio Analyses 258 • Go Public with an
Strategic Human Resource Issues 219 IPO? 259 • Issue Bonds to Raise Capital? 260
Link Performance and Pay to Strategy 220 • Balance Work Life IMPLICATIONS FOR STRATEGISTS 260
and Home Life 220 • Promote Diversity 221 • Use Caution
in Hiring a Rival’s Employees 222 • Create a Strategy-Supportive IMPLICATIONS FOR STUDENTS 261
Culture 222 • Use Caution in Monitoring Employees’ Social Chapter Summary 262
Media 223 • Develop a Corporate Well-Being Program 224 Key Terms and Concepts 262
Strategic Marketing Issues 224 Issues for Review and Discussion 262
Segment and Target Markets Effectively 224 • Product ASSURANCE-OF-LEARNING EXERCISES 263
Positioning 225 • Perceptual Mapping 226 Set 1: Strategic Planning for Coca-Cola 263
GLOBAL CAPSULE 7: FOUR GUIDELINES TO FOLLOW IN GLOBAL Exercise 8A: Perform an EPS/EBIT Analysis for Coca-Cola 263
MARKETING 226 Exercise 8B: Prepare Projected Financial Statements for Coca-Cola 264
Engage Customers in Social Media 228 Exercise 8C: Determine the Cash Value of Coca-Cola 264
IMPLICATIONS FOR STRATEGISTS 229 Exercise 8D: Prepare Projected Financial Ratios for Coca-Cola 264
IMPLICATIONS FOR STUDENTS 230 Set 2: Strategic Planning for My University 265
Chapter Summary 231 Exercise 8E: Determine the Cash Value of My University 265
Key Terms and Concepts 231 Set 3: Strategic Planning to Enhance My Employability 265
Issues for Review and Discussion 231 Exercise 8F: Developing Personal Financial Statements 265
ASSURANCE-OF-LEARNING EXERCISES 233 Exercise 8G: A Template Competency Test 265
Set 1: Strategic Planning for Coca-Cola 233 Set 4: Individual versus Group Strategic Planning 266
Exercise 7A: Compare and Contrast Coca-Cola’s Marketing Expenses Exercise 8H: How Severe Are the Seven Limitations to EPS/EBIT
versus Rival Firms 233 Analysis? 266
Exercise 7B: Diagram an Existing and Proposed Organizational Chart for MINI-CASE ON HASBRO, INC.: NERF WANTS TO TAKE OVER
Coca-Cola 233 BARBIE DOLL: THE CASE OF HASBRO, INC. 268
Set 2: Strategic Planning for My University 234 Web Resources 268
Exercise 7C: Develop a Perceptual Map for My University 234 Current Readings 268
CONTENTS xi
PART 4 Strategy Evaluation and Whistle-Blowing 303 • Avoid Bribery 304 • Workplace
Romance 304
Governance 270
Environmental Sustainability 306
Chapter 9 Strategy Evaluation and GLOBAL CAPSULE 10: INDIA IS TURNING GARBAGE INTO
Governance 271 CASH 306
The Strategy-Evaluation Process 272 Sustainability Reports and the Environmental Protection Agency
EXEMPLARY STRATEGIST SHOWCASED: ANTHONY WOOD, (EPA) 307 • International Standardization Organization (ISO)
Certification 308
FOUNDER AND CEO OF ROKU, INC. 272
GLOBAL CAPSULE 9: WHAT COUNTRY’S NEW STRATEGY IS
Corporate Social Responsibility (CSR) 310
CALLED “VISION 2030”? 274 ETHICS CAPSULE 10: TOMS SHOES, INC.: SHOES ARE MAGIC,
PUT SHOES ON EVERY CHILD ON THE PLANET 311
Three Strategy-Evaluation Activities 274
Food Suppliers and Livestock Welfare 311 • Wildlife
Reviewing Bases of Strategy 275 • Measuring Organizational
Welfare 312 • What Firms Are the Best CSR Stewards? 312
Performance 276 • Taking Corrective Actions 278
The Balanced Scorecard 279
IMPLICATIONS FOR STUDENTS 314
Boards of Directors: Governance Issues 280
Challenges in Strategic Management 282 Chapter Summary 315
The Art or Science Issue 283 • The Visible or Hidden Issue 283 Key Terms and Concepts 315
ETHICS CAPSULE 9: ACHIEVING EXEMPLARY BUSINESS ETHICS
Issues for Review and Discussion 315
THROUGH EXEMPLARY TRANSPARENCY 284 ASSURANCE-OF-LEARNING EXERCISES 316
Promote Workplace Democracy 284 • Contingency Planning 285 Set 1: Strategic Planning for Coca-Cola 316
• Auditing 286 Exercise 10A: Does Coca-Cola or PepsiCo Win On Sustainability? 316
Guidelines for Effective Strategic Management 286 Set 2: Strategic Planning for My University 317
Exercise 10B: How Does My University Compare to Others on the Use of
Green Power? 317
IMPLICATIONS FOR STUDENTS 289 Set 3: Strategic Planning for Myself 317
Chapter Summary 290 Exercise 10C: What Is My Business Ethics Quotient? 317
Key Terms and Concepts 290 Set 4: Individual versus Group Strategic Planning 318
Issues for Review and Discussion 290 Exercise 10D: How Potentially Severe Are the Various Reasons Why
ASSURANCE-OF-LEARNING EXERCISES 291 Workplace Romance Should Be Discouraged? 318
Set 1: Strategic Planning for Coca-Cola 291 MINI-CASE ON CHICK-FIL-A: WHAT COMPANY HAS THE MOST
Exercise 9A: Develop a Balanced Scorecard for Coca-Cola 291 ETHICAL BUSINESS CULTURE? 319
Set 2: Strategic Planning for My University 292 Web Resources 320
Exercise 9B: Prepare a Strategy Evaluation Report for My Current Readings 320
University 292 Endnotes 321
Chapter 11 Global and International Issues 323
Exercise 9C: A Balanced Scorecard to Evaluate My Professional versus
Personal Objectives 292 The Nature of Doing Business Globally 324
Set 4: Individual versus Group Strategic Planning 293 EXEMPLARY STRATEGIST: ANDRE CALANTZOPOULOS, CEO OF
Exercise 9D: How Important Are Various Guidelines for Effective PHILIP MORRIS INTERNATIONAL 324
Strategic Management? 293 Multinational Firms 325 • Labor Unions across
Europe 326 • Tax Rates 326
MINI-CASE ON TJX COMPANIES, INC. (TJX): SECRET STRATEGIC
PLANNING WORKS GREAT FOR TJX 295 Advantages and Disadvantages of Doing Business
Web Resources 296 Globally 327
Current Readings 296 The Global Challenge 328
Endnotes 297 Outsourcing and Reshoring 329
U.S. versus Foreign Business Culture 330
Communication Differences across Countries 332
PART 5 Key Strategic-Management
Business Culture across Countries 333
Topics 298
Mexico 333
Chapter 10 Business Ethics, Environmental ETHICS CAPSULE 11: WHICH TWO U.S.-BASED AIRLINES ARE
Sustainability, and Corporate Social WORST ON CUSTOMER SERVICE? 333
Responsibility 299 Japan 334 • China 334 • India 335
EXEMPLARY STRATEGIST SHOWCASED: BILL GATES, FORMER Business Climate across Countries 335
CEO AND CHAIRMAN OF MICROSOFT CORPORATION 300 Africa 336 • China 337 • Indonesia 337 •
Why “good Ethics Is Good Business” 301 India 337
Does It Pay to Be Ethical? 301 • How to Establish an Ethics GLOBAL CAPSULE 11: CHINA AIMS FOR SUPERIORITY IN
Culture 302 QUANTUM COMPUTING 338
Whistle-Blowing, Bribery, and Workplace Romance 303 Mexico 338
xii CONTENTS
IMPLICATIONS FOR STRATEGISTS 339 PART 6 Strategic-Management Case

IMPLICATIONS FOR STUDENTS 339 Analysis 348
Chapter Summary 340
Key Terms and Concepts 340 How to Prepare and Present a Case
Issues for Review and Discussion 340 Analysis 349
Guidelines for Preparing to Discuss a Case in Class 350
ASSURANCE-OF-LEARNING EXERCISES 341
Be Practical 350 • Be Thorough 351 • Be
Set 1: Strategic Planning for Coca-Cola 341
Realistic 351 • Be Specific 351 • Be Original 351
Exercise 11A: Business Culture Variation across Countries: A Report for
Coca-Cola Company 341 Listen and Contribute 351
Exercise 11B: Coca-Cola Wants to Further Penetrate Africa. Can You Help Developing and Delivering a Written Case Analysis 352
Them? 342 Making an Oral Presentation 353
Set 2: Strategic Planning for My University 342 Controlling Your Voice 353 • Managing Body
Exercise 11C: Does My University Recruit in Foreign Countries? 342 Language 353 • Speaking from Slides 354 • Answering
Set 3: Strategic Planning to Enhance My Employability 342 Questions 354 • Presenting a Case Analysis Orally 354
Exercise 11D: How Well-Traveled Are You Compared to Your Tips for Success in Case Analysis 354
Colleagues? 342 ASSURANCE-OF-LEARNING EXERCISE 355
Set 4: Individual versus Group Strategic Planning 343 Strategic Planning to Enhance My Employability: How Important Are
Exercise 11E: How Important Are Various Potential Advantages Various Reasons to Use the Free Excel Strategic Planning Template at
to Initiating, Continuing, or Expanding a Firm’s International www.strategyclub.com? 355
Operations? 343
MINI-CASE ON LYNK & COMPANY: YOU MAY DRIVE A LYNK Glossary 615
SOON 345
Web Resources 346 Name Index 623
Current Readings 346
Endnotes 347 Subject Index 629
Cases
Service Companies
Clothing Stores
1. Macy’s, Inc. (M) 357
2. The Gap, Inc. (GPS) 366
Supply Stores
3. Lowe’s Companies, Inc. (LOW) 375
4. Office Depot, Inc. (ODP) 383
5. Dick’s Sporting Goods (DKS) 391
Financial Institutions
6. Bank of America Corporation (BAC) 400
7. JPMorgan & Chase & Co. (JPM) 409
Restaurants
8. Chipotle Mexican Grill, Inc. (CMG) 417
9. Cracker Barrel Old Country Store, Inc. (CBRL) 425
10. Domino’s Pizza, Inc. (DPZ) 433
Medical
11. PetMed Express, Inc. (PETS) 443
12. CVS Health Corporation (CVS) 450
13. Ulta Beauty, Inc. (ULTA) 457
Hospitality/Entertainment
14. The Walt Disney Company (DIS) 465
15. Caesars Entertainment Corporation (CZR) 475
Airlines
16. Spirit Airlines, Inc. (SAVE) 484
17. Southwest Airlines Company (LUV) 492
Online Technology
18. Microsoft Corporation (MSFT) 501
19. Amazon.com (AMZN) 508
Manufacturing Companies
Sports
20. Nike, Inc. (NKE) 519
21. Under Armour, Inc. (UA) 528
22. Polaris Industries, Inc. (PII) 538
Personal Care
23. Esteé Lauder Companies (EL) 545
24. L’Oréal S.A. (LRLCF) 554
xiii
xiv CASES
Diversified Machinery
25. General Electric, Inc. (GE) 562
26. Whirlpool Corporation (WHR) 573
Food and Drink

27. Starbucks Corporation (SBUX) 580
28. PepsiCo, Inc. (PEP) 588
Nonprofit Organizations
29. National Audubon Society (www.audubon.org) 599
30. Ducks Unlimited (www.ducks.org) 608
Preface
New to This Edition

With this edition we have updated 40 percent of the chapter material, 11 end-of-chapter mini-
cases, and virtually all new examples in the chapters. Specifically, new material includes the
following items outlined in this section.
Chapter 1 Cohesion Case on Coca-Cola THE COHESION CASE

Company (2018) Coca-Cola Company, 2018
Students apply strategy concepts to Coca-Cola BY FRED R. DAVID
through 25 new, innovative Assurance-of-Learning www.coca-cola.com, KO

Headquartered in Atlanta, Georgia, Coca-Cola Company (Coke) is the world’s largest producer
Exercises provided at the end of chapters. Coca-Cola and distributor of beverages, marketing over 500 nonalcoholic brands in more than 200 countries.
Coke has 21 billion-dollar brands, 19 of which are available in lower- and no-sugar options. Four
is one of the most successful, well-known, and best- of the top five beverages sold globally are Coke products: 1) Coca-Cola, 2) Diet Coke, 3) Fanta,
and 4) Sprite. Other Coke products include Dasani waters, Fanta, Gold Peak teas and coffees,
managed global companies in the world. Honest Tea, Powerade sports drinks, Simply juices, Glaceau Smartwater, Sprite, and Zico coconut
water. However, company’s revenues for 2017 declined 15 percent, so rumblings are spreading
within the firm.
Mini-Cases MINI-CASE ON THE BOSTON CONSULTING GROUP

11 new mini-cases, one at the end of each chapter.
Complete with questions designed to apply WHAT AMERICAN FIRM HELPS THE
Pressmaster/Shutterstock
MOST COMPANIES DO STRATEGIC
chapter concepts, the new mini-cases focus on the PLANNING?
following companies: The answer to the question posed above might be the Boston Consulting Group (BCG) headquartered
in Boston, Massachusetts. A worldwide management-consulting firm founded in 1963, BCG had rev-
• Chapter 1: Tesla, Inc. enues of $6.3 billion in 2017 and more than 16,000 employees. BCG’s President and CEO is Rich
Lesser. BCG was ranked third among Fortune’s “100 Best Companies to Work For” in 2017 and was
• Chapter 2: Ford Motor Company ranked first among Consulting Magazine’s 2016 “Best Firms to Work For.”
In formulating strategies, some firms use BCG’s Advantage Matrix to portray on the x-axis the
• Chapter 3: Sam’s Club “size of a firm’s competitive advantage (Low versus High)” and on the y-axis “the number of ap-
proaches a firm can use to achieve competitive advantage (Low versus High).” Based on these two
• Chapter 4: Procter & Gamble (P&G) axes, strategic implications for firms located in one of four quadrants can be labeled, according to
• Chapter 5: Facebook, Inc.

BCG, as: Fragmented, Specialization, Volume, and Stalemate, as illustrated below:
• Chapter 6: Boston Consulting Group

• Chapter 7: De Beers Group
• Chapter 8: Hasbro, Inc.
• Chapter 9: TJX Companies, Inc.
• Chapter 10: Chick-fil-A
• Chapter 11: Lynk & Company
Chapter Capsules—All NEW EXEMPLARY STRATEGIST SHOWCASED
Within each chapter, a new EXEMPLARY Anthony Wood, Founder and CEO
of Roku, Inc.
STRATEGIST, GLOBAL CAPSULE and
Andriy Popov/123RF
ETHICS CAPSULE are provided. ETHICS CAPSULE 10
Strategist Capsules—one at the beginning TOMS Shoes, Inc.: Shoes Are Magic, Put Shoes on Every Child on the Planet
respective shoe or pair of sunglasses purchased. Another key te -
of each chapter to showcase an individual that
Yongju Kwon/Shutterstock
net of TOMS’ business model is its nonprofit foundation, Friends

of TOMS, which organizes and leads several meaningful service
is employing strategic management exception- activities, including the One Day Without Shoes initiative aimed at
raising global awareness of health risks associated with not wear -
ing shoes. Supporters of TOMS have the opportunity to volunteer
ally well. for service trips to countries where the company’s donations will be
distributed to local communities in need. On their website, www
Global Capsules—provided to showcase

.tomscampusprograms.com, TOMS provides students with infor-
mation related to how they too can become involved with the
GLOBAL CAPSULE 6 company’s philanthropic efforts. TOMS Shoes showcases how good
the strategic relevance of material to global op-

Headquartered in Santa Monica, California, TOMS Shoes exhibits
ethics, sustainability, and social responsibility is good business; the
high social responsibility, excellent business ethics, and a daily com-
company not only has excellent financial performance but is doing
India’s Economy Is Booming
mitment to fair-labor practices and environmentally sustainable
noticeably well in all three areas of the triple-bottom line perfor -
erations, issues, and conditions. design and manufacturing. Founded by Blake Mycoskie, TOMS
emphasizes philanthropy as an integral part of its - business model— mance (profits, people, and planet).
as evidenced with its “One for One” program through which the
Ethics Capsules—developed to accent the
Source: Based on http://www.toms.com/about-toms#companyInfo and
company donates a pair of shoes or provides vision care with every https://www.privco.com/private-company/toms-shoes#.
fact that “good ethics is good business” across

all aspects of the strategic-management process.
Hywards/Shutterstock
xv
xvi PREFACE
Exemplary Strategist Capsules Global Capsules focus on the Ethics Capsules address the
Chapter focus on the following people: following topics: following issues:
1 Legendary Coach of the Green Bay Mobike: Global Bike Renting Takes off What Ethics Variable Is Most Important
Packers—Vince Lombardi Like a Jet Plane in Doing Business?
2 CEO and Founder of FedEx LinkedIn: Clear Core Values, Facebook: Changing Our Mission to
Corporation—Frederick Smith Vision, and Mission Lead to Global Enhance Our Ethics and Integrity
Prominence
3 CEO and Co-founder of Pinterest— What Company Is Growing Fastest Preserve Alaska Wildlife or Boost Alaska
Ben Silbermann Globally? Economy?
4 CEO and Cofounder of Tesla and Bitcoin: The New Global Currency The Sagebrush Lizard versus the Big Oil
SpaceX—Elon Musk Man
5 CEO of Apple, Inc.—Tim Cook How Can a Firm Determine Where To Are CEOs Less Ethical Today Than in
Initiate New Business? Use GDP as a the Past?
Guide
6 CEO of Hobby Lobby—David Green India’s Economy Is Booming As We Strategize We Must Not
Jeopardize Animal Welfare
7 Former CEO of PepsiCo—Indra Four Guidelines to Follow in Global Do Firms Need a Policy Against
Nooyi Marketing Workplace Phubbing?
8 CEO of JPMorgan Chase, Jamie The Least (and Most) Corrupt Projected Financial Statement
Dimon Countries in the World for Doing Manipulation
Business
9 CEO and Founder of Roku Inc.— What Country’s New Strategy Is Achieving Exemplary Business Ethics
Anthony Wood Called “Vision 2030”? Through Exemplary Transparency
10 CEO (former) and Chairman of India Is Turning Garbage Into Cash TOMS Shoes, Inc.: Shoes Are Magic, Put
Microsoft—Bill Gates Shoes on Every Child on the Planet
11 CEO of Philip Morris International— China Aims for Superiority in Which Two U.S.-Based Airlines Are
Andre Calantzopoulos Quantum Computing Worst on Customer Service?
Assurance-of-Learning Exercises —nearly all new and, for the first time ever, organized into
four sets as follows that apply chapter concepts, tools, and techniques:
Set 1: Strategic Planning for Coca-Cola—25 exercises apply chapter material to the Coca-
Cola Cohesion Case to prepare students for doing case analysis on for-profit companies.
Set 2: Strategic Planning for My University—12 exercises apply chapter material to your
college or university to prepare students for doing case analysis on nonprofit organizations.
Set 3: Strategic Planning to Enhance My Employability—14 exercises apply chapter
material to individuals instead of companies to prepare students for making career choices.
Set 4: Individual versus Group Strategic Planning—11 exercises apply chapter material
by comparing the effectiveness of individual versus group decisions; these are fun, in-class
group exercises that yield “a winning individual and winning group” for each activity.
Detailed Chapter-by-Chapter Changes

Chapter 1: THE NATURE OF STRATEGIC MANAGEMENT—SWOT analysis is intro-
duced; the integrative comprehensive strategic-management model is repositioned to the
opening page of each chapter; the model is enhanced to accent the process of strategic
planning being fluid rather than merely a sequence of silo activities.
Chapter 2: BUSINESS VISION AND MISSION—new material is provided on core value state-
ments; new examples abound throughout.
Chapter 3: THE EXTERNAL ASSESSMENT—new material is provided on Porter’s Five-Forces
Model; more guidance is provided regarding how to assign weights and ratings in matrices;
new examples abound throughout; the ratings for a Competitive Profile Matrix now match
the EFE Matrix in form and meaning.
PREFACE xvii
Chapter 4: THE INTERNAL ASSESSMENT—this chapter has been revamped and shortened;
the marketing material is enhanced; new examples abound throughout; the ratings for an IFE
Matrix now match the EFE Matrix ratings in form and meaning.
Chapter 5: STRATEGIES IN ACTION—new material includes Blue Ocean Strategy, Value
Chain Analysis, Porter’s Two Generic Strategies, and the need for firms to “BUILD, BOR-
ROW, or BUY.”
Chapter 6: STRATEGY ANALYSIS AND CHOICE—the presentation of this chapter that in-
cludes SWOT, BCG, IE, SPACE, GRAND, and QSPM analyses is enhanced and shortened;
two new pages reveal how to estimate costs of recommendations.
Chapter 7: IMPLEMENTING STRATEGIES: MANAGEMENT AND MARKETING ISSUES—
the title of this chapter changed to reflect new marketing material; our new coauthor is a
marketing professor at Baylor University; this chapter is fully updated and enhanced, espe-
cially with new target marketing, segmentation, and positioning analyses.
Chapter 8: IMPLEMENTING STRATEGIES: FINANCE AND ACCOUNTING ISSUES—the
title of this chapter changed since marketing material moved; there is enhanced presentation
of financial and accounting tools, such as EPS/EBIT analysis, Corporate Valuation, and Pro-
jected Financial Statements; a new running example for P&G is provided; numerous author
comments are given regarding the strategic planning template at www.strategyclub.com.
Chapter 9: STRATEGY EVALUATION AND GOVERNANCE—the title of this chapter changed
due to excellent new material on corporate governance being presented.
Chapter 10: BUSINESS ETHICS, ENVIRONMENTAL SUSTAINABILITY, AND CORPORATE
SOCIAL RESPONSIBILITY—this chapter provides updated and new coverage of ethics, work-
place romance, hiring away rival firms’ employees, wildlife welfare, and sustainability. This text
reveals why “good ethics is good business” and why this is a strategic issue. The sustainability
discussion is improved to promote and encourage firms to conduct operations with respect for
the environment, an important concern for consumers, companies, society, and AACSB.
Chapter 11: GLOBAL AND INTERNATIONAL ISSUES—this chapter is enhanced and short-
ened but provides new coverage of cultural and conceptual strategic-management differ-
ences across countries. Doing business globally has become a necessity in most industries.
Part 6: STRATEGIC MANAGEMENT CASE ANALYSIS—this section that follows all chapters has
been totally re-written to be more concise and revealing for students performing case analysis.
22 Author-Created Video Assignments in the MyLab

We have added 11 videos introducing the content of each chapter and 11 videos discussing a
variety of important topics such as mission statement delivery, BCG matrix, corporate evaluation,
etc. created by the author. Each video is associated with multiple-choice questions to help students
assess their learning.
Solving Teaching and Learning Challenges

The primary challenge facing strategy professors is to keep students engaged while making sure
business skills are learned. This text leads all others in being practical, skills-oriented, and unfolding
in the same manner as the process of actually doing strategic planning unfolds. Students and pro-
fessors alike appreciate this practical approach presented in a concise, conversational, and exciting
manner—beginning with the integrative model of the strategic-management process that unifies all
chapters. All of the 11 end-of-chapter Mini-Cases, 471 Review Questions, and 62 Assurance-of-
Learning Exercises are designed specifically to apply chapter concepts.
The Case Rationale

Case analysis remains the primary learning vehicle used in most strategic-management classes,
for five important reasons:
1. Analyzing cases gives students the opportunity to work in teams to evaluate the internal operations
and external issues facing various organizations and to craft strategies that can lead these firms to
xviii PREFACE
success. Working in teams gives students practical

experience in solving problems as part of a group.
In the business world, important decisions are gen-
erally made within groups; strategic-management
students learn to deal with overly aggressive group
members as well as timid, noncontributing group
members. This experience is valuable because
strategic-management students are near graduation
and soon enter the working world full-time.
2. Analyzing cases enables students to improve
their oral and written communication skills as
well as their analytical and interpersonal skills
by proposing and defending particular courses
of action for the case companies.
3. Analyzing cases allows students to view a com-
pany, its competitors, and its industry concur-
rently, thus simulating the complex business
world. Through case analysis, students learn
how to apply concepts, evaluate situations, for-
mulate strategies, and resolve implementation
problems.
4. Analyzing cases allows students to apply con-
Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 1
(February 1989): 91. See also Anik Ratnaningsih, Nadjadji Anwar, Patdono Suwignjo, and Putu cepts learned in many business courses. Students
Artama Wiguna, “Balance Scorecard of David’s Strategic Modeling at Industrial Business for National
Construction Contractor of Indonesia,” Journal of Mathematics and Technology, no. 4 (October 2010): 20. gain experience dealing with a wide range of or-
ganizational problems that impact all the business
functions.
5. Analyzing cases gives students practice in applying concepts, evaluating situations, formu-
lating a “game plan,” and resolving implementation problems in a variety of business and
industry settings.
The New Concepts-by-Cases Matrix

All 30 cases facilitate coverage of all strategy concepts, but as revealed by shaded cells, some
cases especially exemplify particular key strategy concepts. The shaded cells reveal which con-
cepts are tested with multiple-choice questions in the MyLab. The Concepts-by-Cases matrix
enables professors to effectively utilize different cases to assure student learning of various chap-
ter concepts. Note from the shaded boxes that two, three, or four cases are used to test each
strategic-management concept. This new, innovative ancillary promises to elevate the case learn-
ing method to new heights in teaching strategic management.
The Case MyLab Testing Feature

The Concepts-by-Cases matrix facilitates student learning of 30 key strategic-management con-
cepts applied to 30 cases. The Case MyLab Testing feature assures that the students can test
their understanding of cases and the key strategic-management concepts, thus serving as a great
mechanism for professors to achieve AACSB Assurance-of-Learning Objectives. This new test-
ing feature simplifies grading for professors in both traditional and online class settings.
This MyLab assessment includes 25 multiple-choice questions for each case, comprised of
10 Basic questions that simply test whether the student read the case before class, and 15 Applied
questions that test the student’s ability to apply various strategic-management concepts. The 15
Applied questions are presented in three sets of five that pertain to key concepts of particular
importance for the respective case. This testing feature enables professors to determine, before
class if desired, whether students (1) read the case in Basic terms, and/or (2) are able to Apply
strategy concepts to resolve issues in the case. For example, the MyLab case Basic question may
be: In what country is Domino's Pizza headquartered? Whereas a MyLab case Applied question
may be: What are three aspects of the organizational chart given in the Domino's Pizza case that
violate strategic-management guidelines?
PREFACE xix
Mini Sims put students in professional roles and give them the opportunity
to apply course concepts and develop decision-making skills through real-world
business challenges.
These branching Mini Sims strengthen a student’s ability to think critically,
help students understand the impact of their decisions, engage students in active
learning, and provide students with immediate feedback
on their decisions.
Each decision point connects to the Learning
Objective in the eText.
Students tell us they enjoy

learning through Mini Sims!
The Chapter Warm-up assessment helps you hold your students

accountable for READING and demonstrating their knowledge on key
concepts in each chapter before coming to class.
Chapter Quizzes
Every chapter has quizzes written by the textbook authors so you can as-
sess your students’ understanding of chapter learning objectives.
The David Approach Is Unique

This textbook is globally considered to be the most practical, skills-oriented strategic manage-
ment textbook on the market. All chapters unfold from a widely used integrative model of strate-
gic planning, so students learn the “process of doing strategic planning,” rather than focusing on
seminal theories in strategy. The David approach is “learning by doing”—students develop skills
that can enhance their own employability through numerous features, such as 62 new Assurance-
of-Learning end-of-chapter exercises in this edition.
xx CONCEPTS-BY-CASES MATRIX
Management Concepts
Strategy Model/Process
Value Chain Analysis
Porter’s Two Generic

Competitive Profile
Porter’s Five Forces
Benchmarking
Strategy Types
Vision/Mission
Key Strategic
Statements
EFE Matrix
IFE Matrix
Strategies
Matrix
3 3 5 4 5 4 3 5 4 3
Service Companies
Case 1 Macy’s Inc.
Case 2 The Gap, Inc.
Case 3 Lowe’s Companies, Inc.
Case 4 Office Depot, Inc.
Case 5 Dick’s Sporting Goods
Case 6 Bank of America Corporation
Case 7 JPMorgan Chase & Co.
Case 8 Chipotle Mexican Grill, Inc.
Case 9 Cracker Barrel Old Country Store, Inc.
Case 10 Domino’s Pizza, Inc.
Case 11 PetMed Express, Inc.
Case 12 CVS Health Corporation
Case 13 Ulta Beauty, Inc.
Case 14 The Walt Disney Company
Case 15 Caesars Entertainment Corporation
Case 16 Spirit Airlines, Inc.
Case 17 Southwest Airlines Company
Case 18 Microsoft Corporation
Case 19 Amazon.com
Manufacturing Companies
Case 20 Nike, Inc.
Case 21 Under Armour, Inc.
Case 22 Polaris Industries, Inc.
Case 23 The Esteé Lauder Companies
Case 24 L’Oréal S.A.
Case 25 General Electric, Inc.
Case 26 Whirlpool Corporation
Case 27 Starbucks Corporation
Case 28 PepsiCo, Inc.
Nonprofit Organizations
Case 29 National Audubon Society
Case 30 Ducks Unlimited
2
First Mover Advantages
4
SWOT Matrix
4
SPACE Matrix
5
BCG & IE Matrices
3
Grand Strategy & QSPM
4
Organizational Structure
2
Organizational Culture
Market Segmentation &

3
Product Position
5
EPS-EBIT Analysis
Projected Financial
6
Statements
5
Company Valuation
3
Balanced Scorecard
1
Governance
2
Business Ethics
Environmental
2
Sustainability
CONCEPTS-BY-CASES MATRIX
xxi
xxii PREFACE
In addition, we offer more coverage on important topics, such as business ethics, social re-
sponsibility, and sustainability, than any other strategic-management textbook, including topics
such as bribery, workplace romance, devising codes of ethics, taking a position (or not) on so-
cial issues, and preserving wildlife—topics that
other textbooks do not mention, even though
companies continually face strategic decisions The Association to Advance Collegiate
in these areas. Schools of Business (AACSB) Interna-
We also offer more overage of global/international increasingly advocates a more
tional issues than any other strategic-management skills-oriented, practical approach
textbook, including topics such as how business in business books, which this text
provides, rather than a theory-based
culture, taxes, tariffs, political stability, and eco-
approach.
nomic conditions vary across countries—all
framed from a strategic-planning perspective.
Lastly, this textbook is trusted across five
continents to provide students (and managers) the latest skills and concepts needed to effectively
formulate and efficiently implement a strategic plan—a game plan, if you will—that can lead to
sustainable competitive advantages for any type of business. This text meets all AACSB Inter-
national guidelines for the strategic-management course at both the graduate and undergraduate
levels, and previous editions have been used at more than 500 colleges and universities globally.
Developing Employability Skills

Using this text, students learn how to actually do strategic planning—this is a huge employability
skill because employers recognize the benefits of employees having an understanding of what a
firm is trying to achieve and why. Nearly all students using this text also use the free strategic-
planning template at the www.strategyclub.com author website; many students include this skill
on their resume to showcase their experience using this Excel software commonly used by busi-
nesses for doing actual strategic planning.
Instructor Teaching Resources

The following supplements are available with this text:
Supplements available
to instructors at www.
pearsonhighered.com Features of the Supplement
Chapter Instructor’s Resource • Chapter-by-chapter summaries
Manual • Chapter Outlines with teaching tips
authored by Forest David • Answers to end-of-chapter Review Questions
• Answers to the end-of-chapter Assurance-of-Learning Exercises
• Answers to the end-of-chapter two Mini-Case Questions
• Examples and activities not in the main book
Case Instructor’s Manual • Case abstract followed by a complete strategic plan for the firm
authored by Forest David • Vision and mission statements
• External and internal assessments with ratio analyses
• Analyses that include SWOT, BCG, IE, SPACE, GRAND, QSPM
• Recommendations and projected financial statements
Test Bank Over 1,500 multiple-choice and true/false questions with these annotations:
authored by Ramachandran • Difficulty level (1 for straight recall, 2 for some analysis, 3 for complex analysis)
Subramanian from Stetson • Type (multiple-choice, true/false, and essay questions)
University • Learning Objective (the concept the question supports)
• AACSB learning standard (Written and Oral Communication; Ethical Understanding and Reasoning;
Analytical Thinking; Information Technology; Interpersonal Relations and Teamwork; Diverse and
Multicultural Work; Reflective Thinking; Application of Knowledge)
PREFACE xxiii
Supplements available
to instructors at www.
pearsonhighered.com Features of the Supplement
Computerized TestGen TestGen allows instructors to:
• Customize, save, and generate classroom tests
• Edit, add, or delete questions from the Test Item files
• Analyze test results
• Organize a database of tests and student results.
PowerPoint Presentation PowerPoints meet accessibility standards for students with disabilities. Features include, but are not
authored by Ramachandran limited to:
Subramanian from Stetson • Keyboard and Screen Reader access
University • Alternative text for images
• High color contrast between background and foreground colors
• Image Library includes graphs, tables, and equations.
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mound some 40 feet in height with a diameter of 250 yards, is an
inner fortress. Quarters for the troops have been constructed along
the eastern wall where there is now accommodation for 1000 men.
Gun towers stand at the four corners of the main wall and an infantry
platform runs round the inner face of the square, a few feet below
the parapet. At an angle of the inner fortress and slightly higher than
the fortress itself is the citadel, some 80 yards square, where a last
stand would be made. The walls and bastions of this are about 15
feet high and gun platforms have been constructed at the corners.
Bala Murghab, a sister fortress, is smaller than Maruchak and lies
about 46 miles south-east of Pendjeh. The principal work consists of
a fort 120 yards square, situated on a mound itself 30 feet in height;
the walls of the fort rise a further 15 feet. An underground passage
from it leads to the river and there are quarters for 200 cavalry, 300
infantry and one battery of artillery, besides storehouses and a
magazine. The interior of the fort in its present size does not afford
accommodation for the existing garrison, all of whom are Irregulars
with the exception of the officers. The larger proportion of the
mounted men have their lines outside the walls. On a mound, which
hitherto has marked the ruins of an ancient citadel, a more
commodious fort has been constructed. It stands at the bend of the
river, covering Robat-i-Ishmail and protecting the entrance to the
Mangan defile. Its dimensions provide for a square of 200 yards, with
walls 25 feet in height and an inner defence work standing some 50
feet higher.
meshed traders at pendjeh
Independent of the regular garrison at Herat, there is a levy roll for

the Bala Murghab district of 1000 mounted and dismounted men.
Two hundred of the former are supposed always to be mustered as
Bala Murghab finds details for a number of outlying fatigues,
including pickets at the fords and certain mounted patrols. In the
immediate vicinity of the fort there is a settlement containing several
thousand families. It should be remembered that the garrison at this
point is comprised of Afghan Irregulars, who still retain their old titles
and organisation. Their company strength is 100 and each company
is quite independent of the remaining ones. Five companies form the
command of a Sarhang, whose superior officer is a Sartip. Each
company commander is known as a Sad Bashi; and for every ten
men there is a Dah Bashi. In the regular Afghan army the
commissioned ranks are known by the English equivalent; but in
general the military organisation, whether regular or irregular in men
as in matériel, is hopeless.
No point in the Murghab region is more important than the
Pendjeh oasis as an agricultural colony. It is principally confined to
the limits of a single valley, some 25 miles in length and 2 miles in
breadth. Dotted about its spreading expanse there are a number of
tiny settlements, containing in all some eight to nine thousand
households. The areas under cultivation do not return sufficient grain
to support so large a population; there is, therefore, a constant
migration of Pendjeh Sariks to the adjacent valleys of Kushk and
Maruchak as well as to the more distant oases of Yulatan and
Tejend, where they have become ardent agriculturists.
The settlers in the Pendjeh valley are divided into five sections.
Although united by tribal ties intercommunal jealousies are
responsible for continuous discord. The richest and most influential
section is that of the Soktis, who occupy the land on the western
bank of the Murghab between Pendjeh, Kuhnah and Sari Yazi, a
distance of some 35 miles. The Harzagis settlement, lying on the
same bank, extends between Takhta Bazar and Maruchak; between
these two large settlements are the areas occupied by the
Khorassanlis. The two remaining sections, the Bairach and the
Alishah, share the opposite bank.
The occupation of the Pendjeh valley by the Sariks took place
about thirty years ago, when they were turned out of Merv by certain
of the Tekke tribes. At first the Soktis were the sole possessors of the
district; but, as other parties came in detachments from Merv, the
different sections, increasing in numbers and in strength, were able
to enforce upon the earlier arrivals a general division of the valley.
Under existing arrangements the Pendjeh oasis has developed, the
advent of the railway having attracted the attention of the Russians
to its agricultural capacity. There must be now some 75,000 acres
under cultivation, the entire area owing its fertility to the Murghab
river, whose waters are confined by the Band-i-Nadir.
The Yulatan oasis, which is inhabited by those Sarik Turcomans
who moved from the Pendjeh valley, similarly possesses an unfailing
supply of water from the huge dam, Band-i-Kazakli. This is drawn
from the Murghab river by a canal and affords water to 125,000
acres, at a velocity of 1500 feet per second. The depth of the canal
is sufficient to carry a camel off its legs. Near the site of the dam are
the ruins of the Sultan-i-band, a work far vaster than any of the
present day. It gave 28 feet head of water and made the fields and
gardens of Old Merv the most fertile region upon the globe’s surface.
The Sultan-i-band was destroyed in 1784 by the Amir Murad of
Bokhara, an act which completely ruined the prosperity of Merv. Just
a century later the Tsar, to whose private estates the site of Old Merv
belongs, ordered the construction of an anicut 13 miles up stream.
The work was carried out by Colonel Kashtalinski, superintendent of
the State domains at Bairam Ali. It includes a dam which gives 14
feet head of water and it is connected with a series of storage
basins, feeding a central canal 20 miles long. This in its turn supplies
35 miles of secondary canals and 105 miles of distributaries. The
cost of these splendid operations was about £105,000; an
expenditure which was declared by an eminent English authority on
irrigation to be one-fifth of what a similar work would entail in India. It
is in contemplation to restore the Sultan-i-band at an estimated cost
of £210,000, by which a further measure of prosperity will be
assured to the locality. The area thus irrigated amounts to 15,000
acres; 5000 of which are under cotton, while 3675 grow wheat and
barley. The whole is let out to Turcomans and Bokharans. The
mountains of cotton waiting for transport by rail in the season are a
standing proof of the excellence of crops, which are said to return
but little short of one hundredfold. The demand for farms within this
fertile area is so great that the natives compete for the privilege of
holding one at a rent in kind amounting to a quarter of the gross
produce. In spite of prohibitions subletting is very rife and one plot
frequently supports several families.
CHAPTER VII
HERAT AND THE WESTERN BORDER

The inception of the policy by which our relations with Afghanistan
are controlled at the present time is due to the reflective intuition of
Alexander Burnes[11] who, in 1831, when attached to the Teheran
Mission under Sir John Macdonald, felt the necessity of combating
the growing influence of Russia in Afghanistan. Circumstances,
emanating from the presence of the Russian Mission under Prince
Menzikoff at Teheran in 1826, disclosed the policy of Russia towards
Persia and Afghanistan to be following two channels: the one, real,
immediate and acquisitive; the other, remote, artificial and aiming at
intimidation. The influence of these two methods of approach was
inimical alike to Persia and Afghanistan, as also to the interests of
India; to their existence may be traced the causes of the Russo-
Persian War. The results of this campaign with Russia, in which the
Shah was engaged from 1826 to 1828, left Persia smarting under its
loss of prestige, broken up into a number of petty principalities and
ready to attempt armed incursions across the frontier by way of
restoring its good name. Khiva and then Herat in turn were
considered, selection finally falling upon Herat as the object of
attack. The expedition was begun; but owing to the death of Abbas
Mirza, the father of the Prince Royal Mahomed Mirza who conducted
the expedition, it was withdrawn and for the time being further action
was deferred. In the meantime, affairs in Persia had attracted the
attention of India; and, as the weakness of the Persian state
increased, Russian diplomacy became more active. Distinguished by
a marked hostility to England, the policy of Russia aimed at stirring
up the tribes of Afghanistan. With this end in view Russian advice
counselled Mahomed Mirza Shah to resume the operations against
Herat at the same time that a Russian Mission was despatched to
Kabul. The intimate association with the affairs of Persia and
Afghanistan, which distinguished the position of Russia at this date,
is interesting since it reveals how closely our Afghan and our Persian
policies were interwoven, the one re-acting on the other with
sympathetic consequence. There is, also, equal evidence of the
influence exercised over India by the machinations of Russian
diplomacy.
The existence of Russian influence at Kabul and behind the Herat
expedition of 1837-38 synchronised with the formal enunciation of
the policy by which, since 1838 down to 1906, our relations with
Afghanistan have been governed. Indeed, no sooner was the
Persian expedition of 1837-38 launched against Herat than the
Government of India awoke to the urgency of the situation. Lord
Auckland, embodying in more concrete shape the spirit of the idea
put forward by Alexander Burnes in 1831, proclaimed upon
November 8, 1838, the necessity of establishing a permanent barrier
against schemes of aggression upon our north-west frontier. A treaty
of alliance was made with Ranjit Singh and Shah Shujah and an
expedition, ostensibly prepared for the relief of Herat but not without
the intention of checking the growing influence of Russia in Persia
and Afghanistan, crossed the Indus under the leadership of General
Keane. Kandahar was occupied and Kabul entered in 1839, when
Shah Shujah was proclaimed. Unfortunately, owing to one of those
singular mistakes of judgment which, by their very frequency, confirm
the impression that our success in Asia is more by good fortune than
good management, Kabul was evacuated in the winter of 1841-42
and the beneficial possibilities of the occupation of Kabul dissipated
in a disgraceful and signally disastrous retirement.
In respect of Herat, Persian designs upon the fortress were by no
means crushed by the effect of the campaign—the first Afghan War
of 1838-1842. Within ten years—in 1851—disturbances, arising out
of the death of the Khan of Herat, caused the new ruler to throw
himself once more upon the support of Persia. This situation gave
rise to the Anglo-Persian Convention January 1853, by which the
independence of Herat and its continuation in Afghan hands was
assured. This step, although indicating the importance which the
Government of India attached to Herat and giving direct confirmation
to the pronouncement of Lord Auckland in 1838, was not sufficient to
secure immunity to the Herat Khanate from Persian interference.
Three years later—March 1856—the Government of Persia, taking
advantage of a rupture of relations with Great Britain which had
occurred in the previous December, despatched a force to Herat.
The occupation of the city which followed was short-lived, an émeute
occurring in which the Persian flag was replaced by that of the
British. Within a few months the espousers of the English cause,
receiving no encouragement from the Imperial Government, hauled
down their flag and Herat passed once more into Persian hands.
Surrendered to Persia on October 25, 1856, it was evacuated finally
and restored to Afghanistan July 27, 1857, under pressure of the
expeditionary column which disembarked at Karachi in the Persian
Gulf on December 4, 1856.
This war, concluded by a treaty of peace signed in Paris March 4,
1857, marks an important epoch in our history with Afghanistan. It
denoted the resumption of relations which had been in abeyance
since 1842, preparing the way for that treaty of alliance which was
signed at Peshawar with Dost Mahommed on January 27, 1857. By
this engagement the assistance of the Afghans, in return for a
monthly subsidy during the continuation of the war of 1856, was
secured against the Persians. As events proved no such help was
required. Although hostilities ceased within six weeks of the date of
the agreement the monthly subsidy, beginning in the autumn of
1856, was continued until September 30, 1858, the accidence of the
Indian mutiny dictating the prudence of preserving friendly relations
with Kabul until the very disquieting influences, which were then at
work, had been allayed. Relations with Afghanistan continued until
1863 to follow a course more or less overshadowed by the growing
importance of Russian intrigue in Central Asia.
While our activities in Persia and Afghanistan demonstrated
merely political expansion, a change of quite another order was
beginning to define the position of Russia in Central Asia. From this
it became evident that a severe test would be imposed upon our
trans-border policy. By successive stages, Russian aggrandisement
had subjugated the several States which were lying between her
territories and the frontiers of Afghanistan when the principles of our
policy in regard to that country were announced in 1838. One by one
the Turcoman tribes were conquered until, by the capture of
Samarkand in 1868 and the submission of the Amir of Bokhara,
Russia gained direct approach to the waters of the Oxus, with the
right to furnish its bank with armed posts. The moment was rapidly
arriving against which all the energies of Indo-Afghan policy in the
past should have been directed. In the interval, before the Russian
domination of Central Asia was complete, the aim of British policy to
bring about a strong Afghanistan had seemed upon the point of
realisation when, in 1863, Dost Mahommed died.
None could foresee the developments of the future. The activity of
the Russians in Central Asia boded no good; and with the death of
Dost Mahommed it was recognised that the resulting situation
contained a challenge to the principles of the policy by which, in
years gone by, we had proposed to guarantee the inviolability of
Afghan territory. Indeed, an attitude of non-intervention was no
longer politic; but, instead of seizing the opportunity presented by the
death of Dost Mahommed and occupying the territories of
Afghanistan for ourselves, we hesitated. Yet, if the passing visit of a
Russian mission to Kabul in 1838 had been accounted sufficient
warranty for the invasion of Afghanistan, how much more the
massing of Russian forces upon its northern and north-western
frontiers should have propelled us to a renewed display of energy in
1863. Unfortunately for ourselves, the logic of our position was
destroyed irretrievably by the train of hostile circumstance which our
supineness had set in motion. Whilst our politicians debated Russia
had acted; and Shir Ali, Khan of Herat and son of Dost Mahommed,
spurred by Russian promises and intrigues, began a movement
against Azim, Khan of Kabul. Varying fortunes distinguished the
efforts of the rival factions between 1863-1868; but at length, in
1868, Shir Ali prevailed and he became recognised as de facto ruler
of Afghanistan. For the moment the situation showed improvement,
as Shir Ali veered from Russia to India. Practical assistance, in the
shape of money and materials of war, was at once accorded him by
the Government of India, between whose supreme chief, Lord Mayo,
and himself as the ruler of Afghanistan a conference was arranged
at Umballa in March of 1869. The outcome of this meeting, not by
any means so definite as the interests of a trans-border policy
demanded, was held to be sufficient to dispel the feelings of alarm
which the prolonged military activities of Russia in the Trans-Caspian
region had aroused. None the less, while the Russians were
occupied with the conquest of Khiva and Shir Ali had been
disappointed at the aloofness of the Indian Government, four
momentous years 1869-1873 were passing. Their close revealed
only the further and more complete estrangement of the Amir of
Kabul through the amazing ineptitude with which the advisers of the
Indian Government dealt with his difficulties. Bitter, indifferent, and
relying upon the Russian promises of assistance of 1872, Shir Ali
became openly defiant, repudiating all suggestions for any formal
treaty of alliance, 1876-1877. At the same time, 1877, he flatly
declined to admit to Kabul any British officers as the accredited
representatives of the Government of India, although in 1878 he
himself received a Russian mission there. With the failure of our own
attempt (1878) to force a mission upon him, the Second Afghan War,
1878-1880, began.
gandamak bridge, where the famous treaty was signed

Kandahar was occupied by Sir Donald Stewart, January 8, 1879;
and, while a second force moved into position against the capital, a
third under Sir Frederick Roberts marched against Paiwar Kotal. Shir
Ali, flying before these operations, died at Mazar-i-Sharif in February
1879, the first chapter of the second war closing with the installation
of his son Yakub Khan on the Kabul throne and the despatch of the
Cavagnari mission to Kabul. The treaty of Gandamak, May 26, 1879,
had barely put the seal upon certain rights, which might have led
ultimately to the definite establishment of British authority in
Afghanistan, when, in the following September, the sudden
massacre of the entire mission occurred. The second phase of the
Afghan War of 1878-1880 opened with the operations of Sir
Frederick Roberts. Defeating the Afghans at Charasia, he entered
Kabul in October causing the overthrow of Yakub Khan and paving
the way for the eventual recognition of the late Amir Abdur Rahman
as Amir of Kabul. Throughout this occupation of Kabul the temper of
the surrounding tribes became slowly inflamed until, in December
1879, a rebellion against the British was proclaimed. The tribes
rising, the forces in Kabul were placed in jeopardy by the interruption
of communications with India. Action by Sir Donald Stewart, who had
come up with forces from Kandahar, stemmed the torrent, the
situation growing more complex when Abdur Rahman, who had
retired across the Oxus on his defeat by Shir Ali in the war for
succession, 1863-1868, reappeared in March of 1880 to establish
himself in north-western Afghanistan. Both the Government of India
and the bulk of the population welcomed his return, and withdrawing
the territories of the Kandahar province from his rule he was
recognised as Amir of Afghanistan with certain reservations in
respect of foreign policy and dealings with Russia. Unfortunately the
disasters which hitherto had followed British intervention in
Afghanistan were to continue; in July 1880, but a few months after
the proclamation of Abdur Rahman as the new Amir, the news of the
defeat at Maiwand of General Burrows was received. Ayub Khan,
Khan of Herat and youngest son of Shir Ali, marching upon
Kandahar and defeating the British force sent to check his advance,
had succeeded in investing the city. Sir Frederick Roberts was now
once more to come upon the scene. Taking 10,000 men from Sir
Donald Stewart’s garrison at Kabul he set out to the relief of
Kandahar, accomplishing by a series of forced efforts an
extraordinarily rapid march of 313 miles and, on September 1, 1880,
routing Ayub Khan’s army. A little later, in 1881, British troops once
again retired to India from Afghanistan; but a sudden attack by Ayub
Khan’s adherents in July, 1881, secured the re-capture of Kandahar,
Ayub Khan remaining there until, on September 22, he was totally
vanquished by Abdur Rahman, losing all his possessions and
retreating to Persia, from where subsequently he surrendered to the
Government of India.
plan of herat
a street shrine.
During this long pre-occupation with Afghan affairs Russia had

made considerable improvement in her own position in Central Asia,
where but little more than the final touches remained to be given.
These appeared with the seizure of Merv in 1884 and the completion
of the Central Asian railway between Krasnovodsk and Samarkand
1800-1888. The slow, yet faltering, steps with which Russia had
maintained her advance towards Afghanistan, in contradiction of all
treaties, in abuse of all frontiers and in contempt of our own inaction,
at last forced home upon the British Government the fruits of its own
miscalculations. In 1884 along the Afghan north-western frontier as
also in 1896 on the Pamirs, Boundary Commissions were assembled
to meet the exigencies of the situation. The former of these took the
field under the leadership of Sir Peter Lumsden, with whom were
associated Colonel Sir West Ridgeway and numerous officers
attached for political, survey, military, geological and medical duties,
including Major E. L. Durand, Major C. E. Yate, Major T. H. Holdich,
Captain St. George Gore, Captain Peacocke, Captain the
Honourable M. C. Talbot, Captain Maitland, and Lieutenant A. C.
Yate. The Pamirs Mission was under the presidency of Major-
General M. G. Gerard, with whom were Colonel T. H. Holdich, Lieut.-
Colonel R. A. Wahab, Captain E. F. H. McSwiney, and Surgeon-
Captain A. W. Alcock. Russia was represented by Major-General
Povalo Shveikovski, Colonel Galkin, Captain Krutorogin, Lieutenant
Orakolow, Monsieur Panafidine, and Doctor Welman.[12]
The province of Herat extends from near the sources of the Hari
Rud on the east to the Persian frontier on the west, and from the
Russian southern boundary to the northern limits of Seistan. The
area is 300 miles from east to west and 200 miles from north to
south. North, south and west there are tracts of unproductive
country, presenting facilities for development only over restricted
surfaces. In the east the upper reaches of the Hari Rud valley stretch
away to the mountain regions of the Koh-i-Baba. It has been
estimated that the valley of the Hari Rud is capable of furnishing
supplies for an army of occupation which should not exceed 150,000
men. It is this fact, coupled with the value of its position as the
converging point of roads from the Caspian, Merv, Meshed, Bokhara,
and from India through Kandahar, which has invested Herat with the
title of The Key of India. The Hari Rud oasis presents a wonderful
appearance of fertility; near the city groves of pistachia and mulberry
trees, blackberry bushes, wild roses and innumerable settlements
abound. The Hari Rud, flowing in a single channel 100 to 140 feet in
width which diminishes as the summer wanes, has been the means
of converting into a smiling paradise the surrounding wilderness.
Flood-water in this river lasts from the close of January until the end
of March, when fords are dangerous to cross. The subsidence of
flood-water in April makes it more readily passable, the average
depth of the fords then measuring 4 feet. Later, when the warmer
weather appears, the permanent channel breaks up into long lakes,
fed by springs and underground continuations of supplementary
streams. The northern extremity of the river, which waters the Tejend
oasis and the Sarakhs region, preserves in the main the
characteristics of the upper stream. The undulating country between
the Hari Rud and the Murghab, extending from the northern slopes
of the Paropamisus to the edge of the Kara Kum, is called Badghis.
At one time this district included the oasis of Yulatan and, even now,
it embraces Pendjeh. Across it, along the banks of the Murghab and
through the valley of the Kushk, runs the direct road from Merv to
Herat. From the levels of valleys within Russian jurisdiction, which
are about 2000 feet above sea-level, the road rises throughout a
distance of 35 miles until it pierces the Paropamisus range by the
Ardewan pass, 4700 feet above sea-level. From these mountains, it
descends across the broken slopes of the Koh-i-Mulla Khwaja until it
meets at last the alluvial flats of the Hari Rud plain, wherein the city
of Herat stands, 2600 feet above sea-level.
The city of Herat, built entirely of mud with certain outworks lying
beyond its walls, stands in a hollow. It forms a quadrangle 1600
yards by 1500 yards. On the western, southern and eastern faces
the wall is a straight line, the only projecting points being the
gateways and the bastions. On the northern face, the line is broken
by the old Ark or citadel, which stands back about 200 yards from
the main wall and is situated upon a high, artificial mound, which is
250 feet in width and between 50 and 60 feet in height. Above this
the walls of the city rise an additional 30 feet. There are five gates—
the Kutabchak near the north-east angle of the wall and the Malik
gate at the re-entering angle formed by the wall of the Ark and the
continuation of the north wall. The other gates are on the western,
southern and eastern faces, the names respectively being the Irak,
Kandahar and Kushk. Four streets, running from the centre of each
face, meet at the Charsu, a domed square covered with beams and
matting in the heart of the city. A wide, road encircles the walls on
the inside, although its upkeep has been sadly neglected. The
defences of the city are contained by the wall which stands above
the mound. On its outer slope there were at one time two parallel
trenches, covered by low parapets; but the trenches, like the moat at
the foot of the mound, are now choked up. There are 25 bastions on
each wall. The gates, defended by works differing from one another
in shape, are of irregular design. They resemble redans, with sides
of unequal length and project about 200 feet beyond the main wall.
The defences of the gateways are of a lower profile than those of the
main works. At the apex of the projection a small rectangular
traverse screens the postern.
The northern wall is irregular. Near its centre, thrown back about
200 yards from the main wall and standing on a mound of its own, is
the position of the old citadel. A “return” in the wall, leading down on
this work from the eastern portion of the north face, terminates on
the counterscarp of its ditch. The western face, retired about 100
yards behind the eastern face, connects with the north-west angle of
the citadel by a slight bend. There are two gateways on this front, the
one about 200 yards to the westward of the north-east angle and the
other in the main wall. This latter is unprovided with the irregular
projecting work attached to the others.
The wall of the fort is about 14 feet thick at the base, 9 feet thick
at the top and 18 feet high, exclusive of the parapet. The parapet is
2½ feet thick at the base, 9 inches at the crest and 7½ feet in height.
It is loop-holed and crowned with the ruins of small battlements
which, like so much attaching to Herat, have been permitted to
crumble away. In several places the walls have broken down, the
repairs subsequently effected adding to the general insecurity of
what has remained rather than improving the original breaches. The
width of the pathway behind the parapet is 6 feet; but there are many
gaps, and continuity of communication is preserved only by the
severe physical exertion of flying leaps. Their condition renders them
ill-adapted to the employment of artillery, while the ramps leading up
to this pathway are barely broad enough to admit the passage of a
single man.
At one time this wall was flanked by small exterior towers, placed
at intervals of 100 feet. They varied in size and are now so generally
in ruin that it is difficult to estimate their dimensions. In their original
state they were probably from 40 to 60 feet in diameter, the larger
towers being 30 feet in width and projecting 25 feet. In contrast with
the containing wall of the city the wall of the fort possesses an
outward inclination, equal perhaps to one-seventh of its height. The
slope of the towers is generally greater; many of them are splayed at
the base to accommodate their foundations to the sloping surface
upon which they rest. The whole work appears originally to have
been constructed of sun-dried brick, backed with layers of moist
earth. Some of the towers have foundations and facings of rough
stone or burnt brick, laid in mud. The wall itself is a very old one;
stone, brick and earth have been used indiscriminately, so that it now
presents a patchwork appearance.
the irak gate
The interior slope of the mound, upon which the walls stand, is
steep and from the base of the wall drops perpendicularly into the
town. No attention whatever appears to have been paid to this part
of the fortifications. The inhabitants of the city have been for several
generations in the habit of removing earth from it for the construction
or repair of their dwellings. At one time, too, houses were erected
close to the foot of the rampart and also upon it, the slope being
excavated to admit of the walls being erected against it. A partial
collapse of the mound has followed, the fallen masses of earth
serving as a convenient resting-place for the dead.
The old citadel is a brick structure 150 yards long from east to
west and 50 yards wide. It occupies an elevation of its own, and,
when erected, stood nearly in the centre of the north face of the city.
It was flanked by several towers, differing greatly in size; those at the
angles were the largest, while those on the north-east angle were
the most imposing. The interior, in part occupied by Feramorz Khan,
the Commander-in-Chief, is divided into three courts. The inhabited
portion is a lofty building, supported by four bastions along its face,
with the entrance gate facing the main street to the Charsu. It fills a
space 110 yards in length by 60 yards in breadth. The Ark, from its
massive appearance, is very dignified, but it is not calculated to
withstand protracted defence if the town itself were captured. Its
walls, thickly built but of inferior masonry, are exposed from base to
parapet, and a few shells dropped behind them would create great
havoc.
The Ark-i-nao, or new citadel, serves as a parade-ground for the
garrison. Weak both in plan and profile, it is constructed in advance
of the mound, but 80 feet below it and upon a level with the country.
It consists of 4 straight walls 300 yards in length. The face is flanked
by 5 semi-circular towers, each possessing a diameter of 30 feet.
The walls are 13 feet thick at the base and 8 feet at the top, crowned
on their outer edge by a parapet 6 feet high and 1½ feet thick. There
was once a ditch 30 feet in width and 15 feet in depth at a distance
of 60 feet from its base, but it is now a general receptacle for the
refuse of the city.
herat citadel
Within recent years the fortifications of Herat have undergone

radical alteration. At one time, prior to the Pendjeh crisis, the city
could not be said to possess an esplanade nor any free field of fire.
Detached buildings, even small villages, surrounded it, while
cultivation extended close to the walls; and where agriculture ended
the cemeteries of the city began. Mosques, tombs and reservoirs
stood opposite the gateways, some of them lying within 100 yards of
the walls. Vast mounds of earth were also close at hand. Many of
these defects were removed[13] under the guidance of the British
officers who were assisting in the demarcation of the Russo-Afghan
boundary in 1884-87; in 1903-04, under the supervision of Feramorz
Khan, additional improvements were made and a number of
mountain and field batteries installed.
In general the Herati is not a fighting man and cares little for
military appearances. Indeed, if choice were left to the Heratis they
would sooner surrender at once to the Russians than run the risk of
future disturbances. The garrison is not generally drawn from the
locality and seldom includes many Herati, Hazara or Taimani
recruits. Commanded by Feramorz Khan, it is composed mainly of
regiments from Kandahar and Kabul, whose men lounge through the
streets in unkempt undress or clad in dirty linen and to whom
belongs such little martial spirit as may be detected in the city. In this
direction nothing can be more marked than the difference between
the Herati and the Afghan soldier. The former, a peasant pure and
simple, is unversed in military science, while it is a rare sight to see
the soldiers without an extraordinary number and variety of weapons
attached to their persons. Each carries, as a rule, two pistols, a
sword, rifle and many knives, their swagger and overbearing
disposition causing them to be hated by the wretched population.
The position of the city to-day as between Russia and India is rather
that of a woman whose wares are put up to the highest bidder. It is
not particularly partial to the rule of the Amir, to the overtures of
Russia or to the influence of India. One might say that it were
indifferent alike to each of these three interested parties and that it is
merely a question of price which will determine its surrender. It must
be confessed that the fortress occupies an unfortunate position.
Whatever the garrison might attempt in support of the huge
earthworks which the place boasts, there is no doubt that the
sympathies of the population—if the history of the past goes for
anything—would be given to any who contrived to evict the Afghans;
and, as all reports concur in alluding to the lavish manner in which
Russian roubles have circulated in the province, the statement may
be hazarded that, under certain contingencies, the tribes on the
north-western border of Afghanistan would declare for the Russians.
Upon this aspect of the situation various changes introduced by the
Amir into the administration of Herat province, and concerning
equally all posts along the banks of the Oxus and the western
border, have direct bearing. Although there is practically no
intercourse between the Afghan and Russian posts on either bank of
the Amu Daria, indeed the ferry station at Chushka Guzar is
constantly sniped from the Afghan bank by Pathan pickets, there has
been an insidious growth of association between the Herat officials
and the Russians. Quite lately the Kazi Saad-ud-Din, Governor of
Herat, was recalled, the Shahgassi Mahomed Sarwar Khan taking
his place, while a warning was administered to the commander-in-
chief. There is no doubt that these officials accepted complimentary
gifts from the Russian officials at Merv, and the transference of the
one and the rebuke of the other may check the propensity of the
native to find in the efficacious application of the Russian rouble a
panacea for all evils. In respect of the soldiers themselves, orders
have been issued from Kabul that all detachments on frontier duty
are to be relieved monthly. Obviously Herat is too close to the
Russian border not to have been intimidated by the spectacle of
Russia’s strength in Central Asia. A similar state of things might not
be expected to prevail in Kabul and Kandahar. Kabul is too much
under the personal sway of the Amir to express any active interest in
Russia or India, while Kandahar has been associated too closely
with the reverses which British arms have experienced in
Afghanistan to have over much respect for the greatness of
Hindustan. Russia is really the supreme and dominating factor in
Afghanistan, not only along the northern, eastern and western
frontiers, but throughout the kingdom.

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Independent of the regular garrison at Herat, there is a levy roll for

HERAT AND THE WESTERN BORDER

gandamak bridge, where the famous treaty was signed

During this long pre-occupation with Afghan affairs Russia had

the irak gate

Within recent years the fortifications of Herat have undergone

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