Strategic Management:

Competitiveness and Globalisation, 7th

Asia-Pacific Edition Dallas Hanson
Visit to download the full and correct content document:
https://ebookmass.com/product/strategic-management-competitiveness-and-globalisa
tion-7th-asia-pacific-edition-dallas-hanson/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...

(eBook PDF) Management, 7th Asia-Pacific Edition by

John R. Schermerhorn

https://ebookmass.com/product/ebook-pdf-management-7th-asia-
pacific-edition-by-john-r-schermerhorn/

Strategic Management: Concepts: Competitiveness and

Globalization 12th Edition, (Ebook PDF)

https://ebookmass.com/product/strategic-management-concepts-
competitiveness-and-globalization-12th-edition-ebook-pdf/

eTextbook 978-1305502147 Strategic Management: Concepts

and Cases: Competitiveness and Globalization

https://ebookmass.com/product/etextbook-978-1305502147-strategic-
management-concepts-and-cases-competitiveness-and-globalization/

Fundamentals of Management 6th Asia-Pacific Edition

Edition Danny Samson

https://ebookmass.com/product/fundamentals-of-management-6th-
asia-pacific-edition-edition-danny-samson/
Strategic Management: Concepts and Cases:
Competitiveness and Globalization, 13e 13th Edition
Michael A. Hitt

https://ebookmass.com/product/strategic-management-concepts-and-
cases-competitiveness-and-globalization-13e-13th-edition-michael-
a-hitt/

Strategic Management: Competitiveness and Globalization

- Concepts and Cases, 14e 14th Edition Michael A. Hitt

https://ebookmass.com/product/strategic-management-
competitiveness-and-globalization-concepts-and-cases-14e-14th-
edition-michael-a-hitt/

Strategic Management and Organisational Dynamics 7th

Edition Ralph.D. Stacey

https://ebookmass.com/product/strategic-management-and-
organisational-dynamics-7th-edition-ralph-d-stacey/

Corporate Finance: Asia-Pacific Edition John Graham

https://ebookmass.com/product/corporate-finance-asia-pacific-
edition-john-graham/

Marketing research 4th Asia- Pacific edition. Edition

William Zikmund

https://ebookmass.com/product/marketing-research-4th-asia-
pacific-edition-edition-william-zikmund/
Strategic Management: Competitiveness and Globalisation © 2022 Cengage Learning Australia Pty Limited
7th Edition
Dallas Hanson Copyright Notice
Kim Backhouse This Work is copyright. No part of this Work may be reproduced, stored in a
David Leaney retrieval system, or transmitted in any form or by any means without prior
Michael A. Hitt written permission of the Publisher. Except as permitted under the
R. Duane Ireland Copyright Act 1968, for example any fair dealing for the purposes of private study,
Robert E. Hoskisson research, criticism or review, subject to certain limitations. These limitations
include: Restricting the copying to a maximum of one chapter or 10% of this
book, whichever is greater; providing an appropriate notice and warning with the
Head of content management: Dorothy Chiu copies of the Work disseminated; taking all reasonable steps to limit access to
Content manager: Rachael Pictor these copies to people authorised to receive these copies; ensuring you hold the
Content developer: Talia Lewis appropriate Licences issued by the Copyright Agency Limited (“CAL”), supply a
Senior project editor: Nathan Katz remuneration notice to CAL and pay any required fees. For details of CAL licences
Cover designer: Cengage Creative Studio and remuneration notices please contact CAL at Level 11, 66 Goulburn Street,
Text designer: Alba Design: Rina Gargano Sydney NSW 2000, Tel: (02) 9394 7600, Fax: (02) 9394 7601
Permissions/Photo researcher: Wendy Duncan Email: info@copyright.com.au
Editor: Anne Mulvaney Website: www.copyright.com.au
Proofreader: James Anderson
Indexer: Max McMaster For product information and technology assistance,
Art direction: Linda Davidson in Australia call 1300 790 853;
Cover: Sun in Space (by cookelma) via Canva.com in New Zealand call 0800 449 725
Typeset by KnowledgeWorks Global Ltd.
For permission to use material from this text or product, please email
Any URLs contained in this publication were checked for currency during the aust.permissions@cengage.com
production process. Note, however, that the publisher cannot vouch for the
ongoing currency of URLs. National Library of Australia Cataloguing-in-Publication Data
ISBN: 9780170451116
Adaptation of Strategic Management: Competitiveness and Globalization, A catalogue record for this book is available from the National Library of
13th edition by Michael A. Hitt, R. Duane Irelane and Robert F. Hoskisson Australia.
[9780357033838], Cengage Learning, 2015.
Cengage Learning Australia
This seventh edition published in 2022. Level 7, 80 Dorcas Street
South Melbourne, Victoria Australia 3205

Cengage Learning New Zealand

Unit 4B Rosedale Office Park
331 Rosedale Road, Albany, North Shore 0632, NZ

For learning solutions, visit cengage.com.au

Printed in China by 1010 Printing International Limited.

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
Another random document with
no related content on Scribd:
 The change was duly effected, without detection, and next morning
there was no doubt that Gwen's neuralgia was cured.

It was Sunday morning—a warm, sunny, October day, and the golden
light streamed into the Vicarage breakfast-room. The girls were all
assembled, waiting for breakfast, with newly brushed hair and clean frocks.
All looked healthy, cheerful and glad. But the vicar's face, as he walked in,
was in sharp contrast to the gay morning. More than the customary hush
descended on his entrance.

"Melicent," he said, greeting nobody, "oblige me by taking your

breakfast into the study. Eat it there, and wait till I come."

Melicent stood up, staring in surprise. "Why do you say this? What have
I done?"

"What you have done cannot be so much as alluded to before your

young cousins. Leave the room at once."

Melicent drew herself up. She looked round at all the furtively dropped
eyes—at Gwen's cheeks, oddly suffused with sudden scarlet—then at her
uncle.

"I have done nothing to deserve to be so spoken to," said she. "When
you find out the truth, I hope you will apologise to me."

"We wish to hear nothing from you, Melicent. Go in silence."

Tommy behind the tea-tray, and her pupils seated round, were well-nigh
paralysed with terror. What had been found out? Were they implicated?
Would Melicent obey?

She took up her cup and plate, tossed back her hair, and walked out,
white and speechless. The vicar shut the door, sat down in the dire silence,
and began his breakfast. They all chewed their way through chunks of pork-
pie in unbroken gloom.
 When his daughters had filed away to learn their collects, their father
betook himself to his study and the culprit.

Melicent had finished her breakfast, and stood by the window. He sat
down at his table, and fixed his eyes upon her.

"Well," said he, "I suppose, before condemning you, it is only right to
ask you what you have to say."

"I don't know what you mean," said Melicent. "I have nothing to say. I
am waiting for you to explain why you treat me in this manner."

"Unfortunately," he said, "all is known. You will hardly deny that you
got out of the window of your bedroom, when I happened to see you do it."

"I do not deny that I did," she returned quietly.

"Perhaps you will tell me why you did so?"

"It was partly that I wanted to see whether I could, and partly that I was
restless. I am used to be out of doors a great deal more than Aunt Minna
likes me to be."

"When I tell you, Melicent, that I know what happened last night, you
should see how much worse you are making things by quibbling like this."

"Last night! But—"

"We are speaking of last night."

"I am not. The only time I got out of the window was on Thursday
night."

"Do you seriously mean to tell me that you did not get out of the
window last night?"

"Certainly! I did not."

 He sat staring; and in the pause that followed, enlightenment came to
Melicent, and she wondered at her own blindness. Gwen had asked to sleep
in her room, in order to get out of the window!

That being so, she could not clear herself without incriminating her
cousin; and in a flash she saw that if she said Gwen and she had changed
beds the previous night, the others would all deny it. Her mind, travelling
with the speed that comes in moments of crisis, discerned the strength of
the case against her. Even Tommy did not know of last night's escapade.
Both she and Mrs. Cooper could say with confidence that all the girls were
in their own beds at half-past ten on Saturday night. She wondered at
herself for being deceived by the flimsy pretext of the toothache, when she
thought how unlikely the story would sound.

The girls must deny everything. They had no other course. They had to
go on living at home, and such a thing, if known, would make life
impossible, and turn their prison into a veritable dungeon keep.

She, on the contrary, had no intention of remaining where she was. Her
uncle had already a bad opinion of her. To allow it to grow worse seemed
the only course in the dilemma so suddenly developed.

After long thought, her uncle spoke, in a gentler tone than he had ever
used to her.

"Confession, Melicent," he said, "is the only possible way to lessen my

extreme displeasure. Last night, or to be more correct, at two o'clock this
morning, I heard a casement flapping in the wind. I got up, believing it to
be the landing window, and left my room without a light, to shut it. I found
it closed, and was on the point of pushing it open, to look out, and see
whence the noise came, when a movement in the yard below caught my
eye. Two people were seated, side by side, upon the stone steps near your
window, the window of which was no doubt causing the disturbance. One
was a man, the other was my niece. I saw that the man had his arm round
your waist. His face I could not distinguish, but in the light of recent events,
I consider myself justified in supposing it to have been Alfred Dow."
 The girl's short, indignant laugh, naturally increased her uncle's idea of
her shamelessness.

"I saw you"—he went on—"I saw you escort him to the gate, shut and
lock it after him, return and scramble in, by means of a piece of rope, into
your bedroom. I stood there, broad awake, and saw all this. After hearing
my story, will you persist in your denial?"

"No," she said, after a minute's thought; "I do not persist in it."

"You admit," he said, with righteous indignation blazing under the even
surface of his voice, "that you did all this?"

"No," said the girl; "I do not admit it. If you saw it, there is no question
of my denying it or admitting it Either the thing is certain, or you have
made a great mistake."

"Why not confess openly, Melicent?"

"I have nothing to confess."

"This is mere quibbling," he said, still temperately. "But what you have
said I consider tantamount to a confession. One thing, and one alone, you
can do to lessen your guilt. Give me the name of the man who has violated
my home, insulted my office and degraded my niece."

She was silent

"You will not?"

"I cannot."

"You mean you will not."

"I mean that I cannot."

He almost wished that she were a boy, and could be caned.

 "I believe you to be wilful and undisciplined," he said, almost
appealingly, "but I am most anxious not to judge you too harshly, Melicent,
for I know what your bringing up has been. I will not make too much of
what I hope and pray may have been merely a wild, rebellious prank. If you
will tell me frankly what you did, and the man's name—"

"I can't do either."

"Then, Melicent, most unwillingly, I must require of you that you

remain in the schoolroom while we are at church. Think things over, and by
the time we return, God grant you may be of a better mind. Come with me,
please."

Melicent followed him without a word.

CHAPTER XVII

A CRISIS AT THE VICARAGE

"She said sometimes: 'Aurora, have you done
Your task this morning? Have you read that book?
And are you ready for the crochet here?'
As if she said: 'I know there's something wrong;
I know I have not ground you down enough
To flatten and bake you to a wholesome crust
For household uses and proprieties.'"
—ELIZABETH BARRETT BROWNING.

The schoolroom was empty. Tommy and her brood were preparing to go
to church. The vicar laid a little book upon the table and addressed a few
sincere words to the girl. Narrow he was, prejudiced be might be; but a man
who, however mistaken, is quite sincere, has always some power. Melicent
felt that, had she been to blame, she might have repented at his bidding.

It was not expected that the party from the Grange would be at
Fransdale Church that day. Mrs. Cooper was inly disconcerted when she
saw that they were there. She found their inquiries after Melicent, when
service was over, difficult to parry.

"A little disagreement?" she murmured, smiling, meaningly, and

speaking as though taking Mrs. Helston into special confidence—always
her manner when she was not telling the truth—"just a little question of
discipline between dear Melicent and her uncle. We must hope for the best;
but it needs much patience and kindness to eradicate the results of such
training."

Mrs. Helston, though furious, realised that no indignation on her part

would help Melicent's cause. She longed to ask questions, but knew she had
no right to interfere in the matter at all. Mrs. Cooper, smiling and chattering,
got away with adroitness on which she prided herself, with no questions
asked as to whether Melicent would be allowed to go to the picnic next day.

Meanwhile Tommy and her pupils were in a terrible panic. They dared
not guess what had been found out. Gwen, on considering the matter, could
not believe it possible that it could be her last night's escapade, because, if
her father had by some mysterious means seen anything, she felt sure that
he would have taken the culprit in the act. By no means a student of
character, she forgot that he never took action in the heat of the moment.
They all crept home from church with shaken nerves, fully expecting that
the storm would burst on their return. But nothing happened. Whatever
Melicent's offence, she had certainly not incriminated them.

They were all so burdened by guilty consciences that, had it been their
custom to be natural before their parents, anybody could have seen that
something was wrong. However there was nothing unusual, at the Vicarage,
in embarrassed, sulky silence, or monosyllabic answers: so all passed off
without disturbance, and they were free to stare at one another in the
seclusion of the schoolroom, from which the captive was now removed, and
ask what could possibly be "up."
 Mr. and Mrs. Cooper were meanwhile at a loss. It was certain that they
could not keep their niece among their own children, but what other course
was feasible? They could not afford to support her at school. She was too
young to be turned out to get her own living, not to mention the probability
of her disgracing herself and them, wherever they placed her.

Her aunt went in during the afternoon, and tried her blandishments, but
was confronted with a steady, cold assertion that the girl had nothing to say.

That night, Melicent slept in another room, with a screwed-down

window and a locked door; and in the solitude she broke down utterly, and
wept pitifully for her dead father. She yearned for the presence of somebody
she knew—somebody that believed in her; she even thought, with a gust of
something like tenderness, of Bert Mestaer himself.

But in the morning, when her aunt brought her breakfast, she was self-
contained and proud as ever. She heard the waggonette from the Grange
drive up to the door, in dazzling sunshine. From her window she saw it pass
out of the gate, after a twenty minute's delay caused by Mrs. Cooper's not
being ready—saw Maddie, Gwen and Theo, in the new blouses she had
made and hats which she had trimmed.

They had not been long gone before the key turned in the lock and
Tommy crept in. She looked flurried and eager.

"Oh, my dear," she gasped, "at last I have a moment! Do tell me what
has occurred!"

Melicent laid down her book and looked up, "Has Uncle Edmund not
told you anything?"

"Not anything!"

"Then of course I can't."

"Really, Melicent, you are an impracticable girl! How can we help you
if we don't know the scrape you're in?"
 "You can't help me."

"Oh, very well!" huffily. "I came to let you out, and say that of course
Babs and Bee and I should not tell, and you might just as well come and sit
in the schoolroom with us."

"You are very kind, Miss Lathom, but I shall stay here. I don't cheat."

"I can guess what it is," observed Tommy, with an air of penetration.
"Your uncle has found out that you got out of window!"

There was no reply.

"I thought so!" said Tommy triumphantly. "I was sure of it! That would
be just the thing to make him angry. But I must say, I think they're
punishing you too severely, considering you were shut up all yesterday.
However, cheer up, my dear! These things blow over, you know."

"You're very kind," said Melicent wearily, "but I think you'd better go
away. I feel sure they told you not to come and talk to me, didn't they?"

Tommy grew red.

"You're an ungrateful little cat," she said. "I come here trying to be kind
to you, and I daresay you'll go and tell tales of me!"

"You ought to know by now that I don't tell tales," said Melicent; "but
as I can hardly ever speak the truth here without telling tales, the only thing
I can do is to hold my tongue."

Miss Lathom flounced out of the room in a rage.

Meanwhile, the Vicarage party met with a very cool reception when
they arrived at Clairvaulx.

Lady Burmester clearly showed her displeasure.

"Surely you are too hard upon a girlish fault," she said stiffly. "If
Melicent was in punishment all yesterday, you might have relented to-day,
when you knew how anxious we all are to have her."

"If you knew the gravity of my niece's fault," said the vicar, in his most
distant manner, "you would, I believe, think differently. She has proved
herself altogether an unfit companion for innocent girls, and must, I fear, be
sent to some institution where the moral sense may be developed by
constant supervision."

"Good Lord!" said Sir Joseph.

The six elders were standing together, the girls having strayed off in
company with Lancelot and Mr. Freshfield.

Mrs. Helston's cheeks were crimson.

"Will you think we ask too much if we beg to be told what she has
done?" she inquired, in a voice that shook.

"Our claim to know is a strong one," put in her husband, "as, if Mr.
Mayne consents, we should like to undertake the child's education, and give
her a home. We hoped that, as you have plenty of daughters, and we have
none, you would perhaps spare her to us, who have grown attached to her.
But we ought to be in a position to know what tendencies in her to guard
against."

"I presume," said the vicar, "that you would rather that we did not speak
before Sir Joseph and Lady Burmester."

Her ladyship laid her hand on her husband's arm, and led him away
across the grass.

"If I were a girl," she said, "the very sight of Mrs. Cooper would make
me wicked. She makes my flesh creep. I wish somebody would take out her
ear-rings."

"You are an ungenerous, ill-regulated woman," said Sir Joseph placidly.

"I daresay they've had a sweet time of it, trying to break in Harry's precious
African filly. He hints at her having had a past already. I expect she's a bit
of a fire-brand in a peaceful parsonage."

The four others strolled in an opposite direction. The vicar, with real
reluctance, and with brevity, described what he had seen Melicent do.

"I do not believe it!" cried Brenda Helston hotly.

"Brenda!" cried her husband, while Mrs. Cooper grew pink, and
trembled visibly.

"It was one of the maids masquerading," went on Brenda, unheeding.

"The very idea of Melicent doing such a thing is outrageous! One of the
maids used her window to get out by! I daresay she sleeps soundly."

The vicar had had his moment in which to collect himself.

"Unfortunately," he said, "my niece does not deny it."

CHAPTER XVIII

A NEW HOME
"——Many, I believe there are,
Who live a life of virtuous decency,
Men who can hear the Decalogue, and feel
No self-reproach; who of the moral law
Established in the land where they abide
Are strict observers; and not negligent
In acts of love to those with whom they dwell,
Their kindred and the children of their blood.
Praise be to such, and to their slumbers, peace!
—But of the poor man ask, the abject poor;
Go and demand of him, if there be here,
 In this cold abstinence from evil deeds;
And these inevitable charities,
Wherewith to satisfy the human soul."
—WORDSWORTH.

It was getting dusk—too dusk to see to read the "History of Europe";

and Melicent, who had scarcely slept all night, stretched herself upon her
bed and fell asleep. The flash of a light in her eyes awoke her, and starting
up, she saw her uncle come in with a lamp, followed by Mr. and Mrs.
Helston.

She gave a low, thrilling cry, like that of a babe who sees its mother. She
had not expected this. The vicar had never seen her look as she did when
running to her friends' arms. He set down the lamp and left them together.

It was long, however, before they could persuade her to tell them
anything. They were obliged to make her clearly understand the serious
nature of the charge against her. They showed how essential it was to
remove such a stigma. They guessed at once that she was shielding
someone; and after much urgent entreaty, she was induced to tell them all,
and leave the upshot to their discretion.

"I am sure," she said, when she had related the whole story, "that it
would not be the least use to tell them the truth; for two reasons. First, they
would think the bare idea of Gwen's behaving like that simply ridiculous.
Aunt Minna thinks they are all babies, and talks to them as if they could
hardly understand what she says; and they mimic her afterwards. Second,
because all the girls would deny it. It would be my word against Maddie
and Gwen. Which do you think they would take?"

"There would be somebody else," observed Harry Helston firmly.

"Young Freshfield. I know Sir Joseph has been dissatisfied lately, and he
will have about settled his hash if any of this gets about. The thing is—how
to trap him? There will be no more chance for Gwen to use that window, I
take it?"
 "He would still go on writing to her at Bensdale under cover to Tommy,
I expect—but oh, you must not say anything about it! You don't know how
awful it would be! Tommy would be sent away; they would lead the most
weary life—wear chains on their ankles, I should think."

"But, dear," said Brenda gently, "what is to happen if this is allowed to

go on? Gwen does not know what she is doing. Suppose she came to harm,
what should we feel, who had never warned them of her danger? Now I
think of it, I noticed little things between her and that man once or twice to-
day. But she is so unformed, and—to me—so unattractive, that I never
thought of such a thing."

"She's rather a handsome girl," said her husband.

And now Melicent exhausted her eloquence to implore them not to say
anything.

"You see, it will only make them worse," she said. "If they were trusted,
they would be all right; if they were given credit for good sense and good
feeling, they would be quite different. But they are treated like fools, who
would be knaves if they were allowed their own way, and it just makes
them treacherous—they must have an outlet! It's only for adventure and
frolic that Gwen did it—it's the only thing they have to think about—they're
not allowed to read or think, or do anything but just vegetate; how can such
a life content them? And now, if this is known, they will be all the more
shut in and tied up, and crushed down, and I shouldn't wonder if it drove
them to do something really wrong."

This view of the subject constituted a real difficulty. Revelation would

merely tighten the prison-bars, and would so increase the very evil it was
intended to remove. A more perplexing problem had never been offered to
the Helstons.

They put it resolutely away from them for a time, in order to tell
Melicent about their own plans for her future. They told her that they hoped
to receive, in about a fortnight's time, Carol Mayne's formal permission to
take charge of her for the present.
 They had some private means, but did not consider themselves rich
enough to justify them in adopting her entirely. In all respects, they thought
it would be doing her a truer kindness to educate her with a view to making
her independent. Harry Helston, artist and dreamer by temperament, was
architect by profession. He had spent so much time in travelling the world,
and absorbing the idea of all the masterpieces of his great profession, that
his fortune was by no means made. It was perhaps a drawback to him
professionally, that of him it might be said as of a certain statesman who
"thought in continents," that he, Harry Helston, "thought in cathedrals." The
ornamental suburban residence, with its nurseries chopped away in chunks
to make the external elevation picturesque, was his pet abomination. He
would do no work, where cheapness was to be the marring key-note.
Simplicity and the best craftsmanship were his mottoes. His work lay in
London, where he and his wife, after their travels, were about to take a flat.
But he was also now determined to fulfil his youthful ambitions, and build
for himself the house of his dreams in Fransdale itself.

Sir Joseph, who was a byword in the district for his stern refusal to sell
or lease land for building purposes, had relented in his case; and the home
of his imagination was to arise in a level meadow half-way down the Dale
—a pleasure house for holiday hours—a final refuge for old age.

For the austere mystery of the North had made him as completely a
captive as was Melicent herself.

The girl could hardly believe that she was to visit every year, in the
company of those she loved best, the Dale which had gripped her fancy so
powerfully. The Helstons were to rent, until their own house should be
built, the tiny cottage upon which Melicent had looked down, when she sat
upon Tod's Trush. The darkness of her misery was all changed into pure joy
by the time her friends took leave.

Before Mr. Helston lay the formidable necessity of seeing Mr. Cooper.
He was fairly perplexed. Should he speak, or not? He found himself
wondering what advice Mr. Hall, of Ilberston, would be likely to give. But
there was no time for reflection. He left his wife still with Melicent, and
found himself in the study without having made up his mind as to his duty.
His intention flickered to and fro like a candle in the wind. Was he shirking
truth because it was disagreeable? Or was he contemplating an
unwarrantable interference into another man's affairs? Was he justified in
giving information which would result in deeper mismanagement of those
unaccountable beings, young girls? Or if he stood aloof, was he guilty of
Cain-like indifference to his brother's peril?

He sat down in more discomfort than he ever remembered to have

suffered before. His indignation that Melicent should suffer under any kind
of stigma made another powerful factor in his desires; and he did not know
for how much he ought to let it weigh. As he looked at Mr. Cooper's cold,
dark face, he was conscious of a desire to demand that, as it had been
publicly announced that Melicent was in disgrace, so it should be publicly
known that she was cleared. But he felt pretty sure of the difficulty there
would be in establishing the truth. He saw a distinct likeness between the
vicar and his niece; he had seen the same hard glint in Melicent's eye when
she was on the defensive. The Coopers gave him the idea of being always
on the defensive—on the watch to parry and frustrate any attempts upon
their confidence or their intimacy.

"I shall be glad to hear that you have elicited any information that may
tend to Melicent's rehabilitation," said the vicar, in tones wholly devoid of
expectancy.

Helston found himself speaking without having in the least determined

what he meant to say.

"Melicent has told us what she knows," he said. "We think it clears her.
But we respect her motive for silence, and are inclined to think that no good
end could be served by telling you what she told us."

The vicar looked stony. "But I think I must ask to hear it," he said.

"It was told us in confidence. Melicent is—is content to feel that we

know it. I—I am not sure that I am entitled to let it go further."

The cold, blue eye still fixed him.

 "You convey to me the idea that Melicent is shielding someone else. Is
this so?"

Helston twirled his soft hat idly in his hands, and looked at the ground.

"I do not feel at liberty to say," he said at length.

"If that be so, the person shielded must be a member of my household,"

said the vicar, in a voice which sounded to Helston like the crackling of ice
in a hard frost. "I suppose you can scarcely be venturing to insinuate that it
was one of my daughters?"

"I insinuate nothing; I do not know who it was. It was not Melicent."

"Far be it from me," said Mr. Cooper, after reflection, "to traduce or
speak ill of my sister's child; but if she has resorted to the desperate
expedient of trying to fasten blame upon one of my poor girls, I must
reluctantly lower still further my opinion of her. I fear you and Mrs. Helston
are altogether deceived in her."

"We are willing to take the risk," said Helston immediately, "and to
relieve you of the charge of her to-morrow, if you are willing." His eyes
twinkled as he added: "We have no daughters to be contaminated."

"Had it not been so, I could not in honour have allowed you to
undertake the charge of her. I am quite frank with you. I tell you plainly that
I will in no case keep her among my own girls; and I do not know how to
meet the cost of maintaining her elsewhere. If you, knowing what you
know, are willing to take her, my feelings can but be those of gratitude and
relief."

"Then we may consider it settled!" cried Helston, rising.

Perhaps his haste betrayed how he was yearning to get away, for a look
of suspicion crossed the vicar's face.

"Do you not think I have a right to ask you to be more explicit?" he
said.
 His visitor looked down, and it was after an interval that he slowly said:

"You have a right. I ask you to waive it. What I have heard rests wholly
upon Melicent's word, which, I understand, you do not trust."

The vicar could not say that he did.

"You would not take her word against that of your own children?"

"Certainly not!"

"That is natural enough; but it convinces me that there is no more to be

said."

The vicar looked down, thinking deeply. Then abruptly, and perhaps
with the deliberate idea of taking the other by surprise, he demanded:

"She would not tell you the name of the man?"

"There is no man in the world to whom she would accord a clandestine

meeting."

"Perhaps you forget that I was an eye-witness, Mr. Helston."

"Would you swear in a court of law that the girl whom you saw was
Melicent?"

The vicar hesitated.

"Why," asked Helston, "did you not at once enter her room, and
convince yourself?"

"I never act in haste; besides, there is no doubt. She wore Melicent's hat
—a kind of broad, flat cap which she wears in the garden; and she entered
her room! Mr. Helston, I fear I must ask you to be explicit. You have said
too much, or not enough. What is it you suggest?"

"I suggest nothing, for I know nothing, except the fact, of which I am
sure, that the girl you saw was not Melicent. Had you gone to her room, and
confronted her then and there, you would have known more than I do at this
moment."

"I think you are bound to tell me what my niece has told you," said the
vicar; and a new uneasiness was in his voice.

"No; I am not bound to, and I have no wish to. But there is a further
question, as to whether I ought to. I—I can't speak without inflicting great
pain, which I am very loath to do. But I can't get away from the feeling that
perhaps I ought not to allow you to go on in ignorance of the true state of
affairs. Perhaps I have said enough to put you on your guard. Let us leave it
so."

"No;" the answer came at once and firmly. "We cannot leave it so. You
must tell me the tale which my niece has poured into your ears, in simple
justice to me and mine. If Melicent has slandered her cousins, she should be
punished."

"Equally, if they have allowed her to suffer for them, they should be
punished," said Helston, stung at last. "May I ask if you have made any sort
of inquiry among them?"

"Decidedly not. I have not allowed them even to know the way this
misguided girl has behaved."

Helston hardly knew whether most to pity or be enraged at such

blindness. He turned away and walked to the window. The girls were just
passing through the garden on their way from feeding their rabbits. They all
glanced in a furtive way at the study windows, and Gwendolen met his eyes
fully. She averted her face in confusion, and hurried on. The visitor turned
abruptly to the vicar and took leave. He could not trust himself to say
another word. Mr. Cooper accompanied him to the hall door, and they found
themselves suddenly face to face with Gwen, coming in.

Her father, in a marked way, encircled her with his arm, as if to show
his confidence. The girl was trembling, scarlet, deeply moved. She turned
upon Helston.
 "Then she held her tongue?" she gulped out. "She has not split, even
now?"

Helston's face lit up.

"Does that touch you, Miss Cooper?" he asked kindly.

"It does. I'm most things that are bad, but I simply can't be such a sneak
as this. Father! It was I, not Melicent, whom you saw in the yard! And you
may thrash me, or starve me, or do what you like with me, but I will never
tell you the name of the man who was with me! Oh, Melicent isn't the only
person in this house with any sense of honour! She's—she's—taught me a
lesson! You tell her from me, Mr. Helston, that if I'm ever any good in this
world, it'll be all owing to her."

The vicar had not said one word. He stood where he was, the arm which
his daughter had shaken off rigid against his side. His face grew bloodless,
his expression a marvellous exhibition of self-control.

It seemed to Helston kindest to say good-bye and leave the house

hurriedly. His admiration for Gwendolen was great; after what Melicent had
told him, he could partly guess the effort it needed to make her confession
—a confession which must expose not only her own wrong-doing, but the
whole working of a long system of deceit; for the matter could now hardly
be allowed to rest where it stood.

Contact with Melicent's honesty and courage had stimulated this girl to
show herself honest and courageous. He felt very hopeful of her future,
though he himself winced at the ordeal now before her.

CHAPTER XIX

AN UNMARKED FESTIVAL
 "Day of days! Unmarked it rose,
In whose hours we were to meet;
And forgotten passed. Who knows,
Was earth cold, or sunny, sweet,
At the coming of your feet?"
—MRS. MEYNELL.

As her visitor departed, Brenda Helston turned from the door and let
herself sink into an easy-chair by the fire with a gratified laugh.

Five years had not changed her, except that her soft, abundant hair was
whiter. No wrinkles marred her smooth pink cheeks, her eyes were still
bright, though her forty-fifth birthday stared her in the face.

The room in which she sat—the drawing-room of her flat in Collis

Square—was an unusual room. Harry Helston strongly held the theory that
Londoners must live inside their walls. The pictures which hung on these
were all originals and all good. A line of bookshelves encircled the room
like a dado, the top forming a shelf for the reception of rare bits of pottery,
brass, cloisonné and curios. In one corner the line of books was broken for
the admission of a large secretaire. With this exception, and that of a roomy
writing-table near the fire, the room contained no furniture but chairs of
every variety of comfort, and small solid tables, holding no ornaments, but
convenient for the reception of cups, books or papers. There were flowers
in every place where they could be put without risk of being knocked over.

The visitor who had just left the room had gone unwillingly, but
gladdened by a cordial invitation to return later. His hostess thought of him
with pleasure and satisfaction. He was immensely improved by his term of
foreign service, and it was gratifying that his first visit on reaching London
should have been to her. She had always liked Lance Burmester; and the
fact of his having proved himself so emphatically all that a Special
Correspondent ought to be—of his having chosen to have a profession, and
to work hard at it, being, as he was, the eldest son of a wealthy man—had
by no means lessened her good opinion.
 She rang the bell, gave some orders to the maid who answered it, and
was still in reverie—perhaps building castles in the air—when her husband
came in, chuckling.

He held an evening paper in his hand.

"Brenda, here's something that will amuse you," he said, stooping to

kiss her affectionately.

She looked up eagerly.

"I have news for you, Harry! Guess who has been here to-day!"

"I'll guess afterwards, but first I must read you this. It's about Melicent.
Won't she be furious? She did think she had dodged the halfpenny
interviewer." He unfolded his copy of the Hauberk and read aloud:

"'THE LADY ARCHITECT

"'The decision of Miss Lutwyche, three years ago, to complete her

course of architectural training by acquiring a practical knowledge of
building, caused a considerable flutter of the dove-cotes at the Polytechnic
when she applied personally to be enrolled. There was no rule, however, by
which she could be excluded, and she has been ever since, the only lady
among six hundred male students.

"'Having completed her course, she is now taking steps to set up for
herself, and is to begin by superintending the erection of two labourers
cottages from her own designs, upon the Cleveshire estates of Sir Joseph
Burmester. Miss Lutwyche has an intimate knowledge of the tastes and
requirements of the natives of the district in question, and it is understood
that she is strongly of opinion that the question of the housing of the poor
will ultimately be successfully tackled by women and not by men.

"'Simplicity, durability and convenience are the keynotes of her work. It

is known that she had much to do with the erection of the wonderful house