Strategic Management And Competitive Advantage: Concepts and Cases PDF by Jay B Barney and William S Hesterly


Strategic Management And Competitive Advantage: Concepts and Cases

By Jay B. Barney and William S. Hesterly

Strategic Management And Competitive Advantage



CHAPTER 1 What Is Strategy and the Strategic Management Process? 2

Go, Pokémon Go 2

Strategy and the Strategic Management Process 4

Defining Strategy 4

The Strategic Management Process 5

What is Competitive Advantage? 8

Research Made Relevant: How Sustainable Are

Competitive Advantages? 10

The Strategic Management Process, Revisited 10

Measuring Competitive Advantage 11

Accounting Measures of Competitive Advantage 11

Strategy in Depth: The Business Model Canvas 12

Economic Measures of Competitive Advantage 16

Ethics and Strategy: Stockholders Versus Stakeholders 18

The Relationship Between Economic and Accounting

Performance Measures 19

Emergent Versus Intended Strategies 19

Why you Need to Know About Strategy 20

Summary 22

Challenge Questions 23

Problem Set 23

End Notes 25

CHAPTER 2 Evaluating a Firm’s External Environment 26

How Attractive is the Music Streaming Industry? 26

Understanding a Firm’s General Environment 28

The Structure-Conduct-Performance Model of Firm

Performance 32

Ethics and Strategy: Is a Firm Gaining a Competitive

Advantage Good for Society? 32

A Model of Environmental Threats 34

Threat from New Competition 34

Strategy in Depth: Environmental Threats and the S-C-P Model 35

Another Environmental Force: Complements 45

Industry Structure and Environmental

Opportunities 46

Research Made Relevant: The Impact of Industry and Firm

Characteristics on Firm Performance 47

Strategy in Depth: Network and Empty Core

Industries 48

Opportunities in Fragmented Industries:

Consolidation 49

Opportunities in Emerging Industries: First-Mover

Advantages 50

Opportunities in Mature Industries: Product

Refinement, Service, and Process Innovation 52

Opportunities in Declining Industries: Leadership,

Niche, Harvest, and Divestment 54

Summary 57

Challenge Questions 58

Problem Set 59

End Notes 60

CHAPTER 3 Evaluating a Firm’s Internal Capabilities 62

When a Noun Becomes a Verb 62

The Resource-Based View of the Firm 64

What Are Resources and Capabilities? 64

Critical Assumptions of the Resource-Based View 65

Strategy in Depth: Ricardian Economics and the

Resource-Based View 66

The VRIO Framework 67

The Question of Value 68

Ethics and Strategy: Externalities and the Broader

Consequences of Profit Maximization 69

The Question of Rarity 71

The Question of Imitability 73

The Question of Organization 77

Research Made Relevant: Strategic Human Resource

Management Research 78

Applying the VRIO Framework 80

Applying the VRIO Framework to Southwest Airlines 81

Southwest’s People-Management and Competitive

Advantage 82

Imitation and Competitive Dynamics in an

Industry 83

Not Responding to Another Firm’s Competitive

Advantage 84

Changing Tactics in Response to Another Firm’s

Competitive Advantage 84

Changing Strategies in Response to Another Firm’s

Competitive Advantage 85

Implications of the Resource-Based View 86

Where Does the Responsibility for Competitive

Advantage in a Firm Reside? 86

Competitive Parity and Competitive Advantage 88

Difficult-to-Implement Strategies 88

Socially Complex Resources 89

The Role of Organization 89

Summary 90

Challenge Questions 91

Problem Set 92

End Notes 93

End-of-Part 1 Cases

Case 1–1: Can SodaStream Disrupt the Carbonated

Soft Drink Market? PC 1–1

Case 1–2: True Religion Jeans: Flash in the

Pants or Enduring Brand? PC 1–11

Case 1–3: Walmart Stores, Inc. PC 1–26

Case 1–4: Harlequin Enterprises: The Mira

Decision PC 1–39


CHAPTER 4 Cost Leadership 96

Fashion Eyeglasses—At a Fraction of the Price 96

What is Business-Level Strategy? 98

What is Cost Leadership? 98

Sources of Cost Advantages 98

Strategy in Depth: Determining the Optimal Level of

Production in an Industry 102

Research Made Relevant: How Valuable Is Market

Share—Really? 106

Ethics and Strategy: The Race to the Bottom 108

The Value of Cost Leadership 109

Cost Leadership and Environmental Threats 109

Strategy in Depth: The Economics of Cost Leadership 110

Cost Leadership and Sustained Competitive

Advantage 111

The Rarity of Sources of Cost Advantage 112

The Imitability of Sources of Cost Advantage 113

Organizing to Implement Cost Leadership 117

Organizational Structure in Implementing Cost

Leadership 117

Summary 120

Challenge Questions 121

Problem Set 122

End Notes 123

CHAPTER 5 Product Differentiation 124

Who Is Victoria, and What Is Her Secret? 124

What is Product Differentiation? 126

Bases of Product Differentiation 127

Research Made Relevant: Discovering the Bases of Product

Differentiation 129

Product Differentiation and Creativity 132

The Value of Product Differentiation 133

Product Differentiation and Environmental

Threats 133

Strategy in Depth: The Economics of Product

Differentiation 134

Product Differentiation and Environmental

Opportunities 135

Ethics and Strategy: Product Claims and the Ethical

Dilemmas in Health Care 136

Product Differentiation and Sustained Competitive

Advantage 137

Rare Bases for Product Differentiation 137

The Imitability of Product Differentiation 137

Organizing to Implement Product

Differentiation 143

Organizational Structure and Implementing Product

Differentiation 143

Management Controls and Implementing Product

Differentiation 144

Strategy in Depth: Going in Search of Blue Oceans 145

Compensation Policies and Implementing Product

Differentiation Strategies 147

Can Firms Implement Product Differentiation and

Cost Leadership Simultaneously? 148

No: These Strategies Cannot Be Implemented

Simultaneously 148

Yes: These Strategies Can Be Implemented

Simultaneously 149

Summary 150

Challenge Questions 151

Problem Set 152

End Notes 153

CHAPTER 6 Flexibility and Real Options 154

Why Is Netflix called Netflix? 154

What is Strategic Flexibility? 156

Types of Flexibility 156

The Value of Strategic Flexibility 158

Incorporating Risk in Strategic Decision Making 159

Limitations of Risk Based Decision Making Under

Uncertainty 159

Valuing Flexibility 160

Strategy in Depth: The Black-Scholes Model for Valuing

Financial Options 161

Research Made Relevant: The Value of Real Options

Thinking 169

Strategic Flexibility and Sustained Competitive

Advantage 172

Rare and Costly-to-Imitate Flexibility 172

Organizing to Implement Strategic Flexibility 173

Ethics and Strategy Feature: Treating Employees as

Flexible Assets 174

Summary 175

Challenge Questions 175

Problem Set 176

End Notes 177

CHAPTER 7 Collusion 178

A Gas Station Conundrum 178

What is Collusion? 180

Ethics and Strategy Feature: The Ethics of Collusion 181

The Value of Collusion 182

Colluding to Reduce the Threat of New Competitors 182

Colluding to Reduce the Threat of Current Competitors 183

Strategy in Depth: How Colluding Firms Generate

Economic Profits 183

Colluding to Reduce Other Competitive Threats 184

Collusion and Sustained Competitive Advantage 184

Ways Firms Can Cheat on Collusive Agreements 185

Explicit and Tacit Collusion 189

Industry Attributes and the Threat of Cheating 189

Research Made Relevant: Sending Signals to Maintain Collusion 190

Rarity and Costly to Imitate Collusion Strategies 196

Organizing to Implement Tacit Collusion 197

Organizational Efficiency 197

Organizational Self-Discipline 198

Summary 198

Challenge Questions 199

Problem Set 199

End Notes 200

End-of-Part 2 Cases

Case 2–1: McDonald’s: Comeback in the U.S. Burger Market? PC 2–1

Case 2–2: The Levi’s Personal Pair Proposal PC 2–7

Case 2–3: Papa John’s International, Inc.: Growth Challenges PC 2–17

Case 2–4: Ryanair—The Low Fares Airline PC 2–24

Case 2–5: Torrey Nano, Inc. PC 2–48

Case 2–6: Collusion in Major League Baseball PC 2–52


CHAPTER 8 Vertical Integration 202

Outsourcing Research 202

What Is Corporate Strategy? 204

What Is Vertical Integration? 204

The Value of Vertical Integration 205

Strategy in Depth: Measuring Vertical Integration 206

Vertical Integration and the Threat of Opportunism 207

Vertical Integration and Firm Capabilities 209

Vertical Integration and Flexibility 210

Applying the Theories to the Management of Call Centers 212

Research Made Relevant: Empirical Tests of Theories of

Vertical Integration 212

Integrating Different Theories of Vertical Integration 214

Vertical Integration and Sustained Competitive Advantage 215

The Rarity of Vertical Integration 215

Ethics and Strategy: The Ethics of Outsourcing 216

The Imitability of Vertical Integration 217

Organizing to Implement Vertical Integration 218

Organizational Structure and Implementing Vertical Integration 218

Management Controls and Implementing Vertical Integration 219

Compensation in Implementing Vertical Integration Strategies 221

Summary 223

Challenge Questions 224

Problem Set 225

End Notes 226

CHAPTER 9 Corporate Diversification 228

The Worldwide Leader 228

What is Corporate Diversification? 230

Types of Corporate Diversification 231

Limited Corporate Diversification 231

Related Corporate Diversification 232

Unrelated Corporate Diversification 233

The Value of Corporate Diversification 233

What Are Valuable Economies of Scope? 233

Research Made Relevant: How Valuable Are Economies of Scope? 234

Can Equity Holders Realize These Economies of Scope on Their Own? 247

Ethics and Strategy: Globalization and the Threat of the

Multinational Firm 248

Corporate Diversification and Sustained

Competitive Advantage 249

The Rarity of Diversification 249

Strategy in Depth: Risk-Reducing Diversification and a

Firm’s Other Stakeholders 249

The Imitability of Diversification 251

Summary 252

Challenge Questions 253

Problem Set 253

End Notes 254

CHAPTER 10 Organizing to Implement Corporate Diversification 256

Is It Soup Yet? 256

Organizational Structure and Implementing

Corporate Diversification 258

The Board of Directors 259

Strategy in Depth: Agency Conflicts Between Managers and Equity Holders 261

Research Made Relevant: The Effectiveness of Boards of Directors 262

Institutional Owners 263

The Senior Executive 264

Corporate Staff 265

Division General Manager 267

Shared Activity Managers 268

Management Controls and Implementing

Corporate Diversification 270

Evaluating Divisional Performance 270

Allocating Corporate Capital 273

Transferring Intermediate Products 274

Compensation Policies and Implementing

Corporate Diversification 277

Ethics and Strategy: Do CEOs Get Paid Too Much? 278

Summary 278

Challenge Questions 279

Problem Set 279

End Notes 281

CHAPTER 11 Strategic Alliances 282

Alliances Between Chinese and U.S. Firms 282

What is a Strategic Alliance? 284

How do Strategic Alliances Create Value? 285

Strategic Alliance Opportunities 285

Strategy in Depth: Winning Learning Races 287

Research Made Relevant: Do Strategic Alliances Facilitate

Tacit Collusion? 290

Alliance Threats: Incentives to Cheat on Strategic Alliances 292

Adverse Selection 293

Moral Hazard 293

Holdup 294

Ethics and Strategy: When It Comes to Alliances, Do

“Cheaters Never Prosper”? 295

Strategic Alliances and Sustained Competitive Advantage 296

The Rarity of Strategic Alliances 296

The Imitability of Strategic Alliances 297

Organizing to Implement Strategic Alliances 300

Explicit Contracts and Legal Sanctions 300

Equity Investments 301

Firm Reputations 302

Joint Ventures 303

Trust 304

Summary 304

Challenge Questions 305

Problem Set 305

End Notes 306

CHAPTER 12 Mergers and Acquisitions 308

The Travails of Technology Acquisitions 308

Ethics and Strategy: Is Greed Good? 310

What Are Mergers and Acquisitions? 311

The Value of Mergers and Acquisitions 312

Mergers and Acquisitions: No Economies of Scope 312

Mergers and Acquisitions: When Economies of Scope Exist 313

Returns to Mergers and Acquisitions: Research Results 317

Strategy in Depth: Evaluating the Performance Effects of Acquisitions 317

Why Are There So Many Mergers and Acquisitions? 318

Mergers and Acquisitions and Sustained

Competitive Advantage 321

Valuable, Rare, and Private Economies of Scope 321

Valuable, Rare, and Costly-to-Imitate Economies of Scope 322

Unexpected Valuable Economies of Scope Between

Bidding and Target Firms 323

Implications for Bidding Firm Managers 324

Implications for Target Firm Managers 328

Research Made Relevant: The Wealth Effects of

Management Responses to Takeover Attempts 329

Organizing to Implement a Merger or Acquisition 332

Post-Merger Integration and Implementing a

Diversification Strategy 332

Special Challenges in Post-Merger Integration 333

Summary 335

Challenge Questions 335

Problem Set 336

End Notes 337

End-of-Part 3 Cases

Case 3–1: National Hockey League Enterprises

Canada: A Retail Proposal PC 3–1

Case 3–2: Starbucks: An Alex Poole Strategy

Case PC 3–6

Case 3–3: Rayovac Corporation: International

Growth and Diversification Through

Acquisitions PC 3–19

Case 3–4: Aegis Analytical Corporation’s Strategic

Alliances PC 3–31

Case 3–5: Activision’s Crush on Mobile

Gaming PC 3–41

Appendix: Analyzing Cases and Preparing for Class Discussions 339

Glossary 344

Company Index 352

Name Index 355

Subject Index 359

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