Strategic Management, Sixth Edition PDF by Frank T. Rothaermel

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Strategic Management, Sixth Edition

Frank T. Rothaermel

Strategic Management

CONTENTS

PART ONE / ANALYSIS 2

CHAPTER 1

WHAT IS STRATEGY? 4

CHAPTER CASE 1 / Part I

Tesla: The Trillion-Dollar Tech Titan 5

1.1 What Strategy Is: Gaining and Sustaining

Competitive Advantage 7

Crafting and Implementing Strategy at Tesla 7

What is Competitive Advantage? 12

1.2 Stakeholder Strategy and Competitive

Advantage 15

Value Creation 15

Stakeholder Impact Analysis 17

1.3 The Analysis, Formulation, Implementation (AFI)

Strategy Framework 22

Key Topics and Questions of the AFI

Strategy Framework 23

1.4 Implications for Strategic Leaders 24

CHAPTER CASE 1 / Part II 25

CHAPTER 2

STRATEGIC LEADERSHIP: MANAGING THE STRATEGY

PROCESS 32

CHAPTER CASE 2 / Part I

Facebook Becomes Meta 33

2.1 Strategic Leadership 34

What Do Strategic Leaders Do? 35

Strategic Leadership at Meta’s Facebook 37

How Do You Become a Strategic Leader? 38

The Strategy Process Across Levels: Corporate, Business,

and Functional Leaders 41

2.2 Vision, Mission, and Values 43

A Purpose-Driven Vision 44

Mission 51

Values 51

2.3 The Strategic Management Process 52

Top-Down Strategic Planning 53

Scenario Planning 54

Strategy as Planned Emergence: Top Down and

Bottom Up 57

2.4 Strategic Decision Making 63

Strategic Inflection Points 63

Two Distinct Modes of Decision Making 65

Cognitive Biases and Decision

Making 66

How to Improve Strategic Decision Making 70

2.5 Implications for Strategic Leaders 71

CHAPTERCASE 2 / Part II 72

CHAPTER 3

EXTERNAL ANALYSIS: INDUSTRY STRUCTURE,

COMPETITIVE FORCES, AND STRATEGIC

GROUPS 80

CHAPTERCASE 3 / Part I

Airbnb’s Pandemic Pivot 81

3.1 The PESTEL Framework 83

Political Factors 83

Economic Factors 84

Sociocultural Factors 86

Technological Factors 87

Ecological Factors 89

Legal Factors 89

3.2 Industry Structure and Firm Strategy: The Five

Forces Model 90

Industry vs. Firm Effects In Determining Firm

Performance 90

Competition in the Five Forces Model 91

The Threat of Entry 92

The Power of Suppliers 97

The Power of Buyers 98

The Threat of Substitutes 99

Rivalry Among Existing Competitors 100

Applying the Five Forces Model to

the U.S. Airline Industry 107

A Sixth Force: The Strategic Role of Complements 109

3.3 Changes over Time: Entry Choices and Industry

Dynamics 110

Entry Choices 110

Industry Dynamics 112

3.4 Performance Differences within the

Same Industry: Strategic Groups 116

The Strategic Group Model 117

Mobility Barriers 118

Strategic Group Dynamics 119

3.5 Implications for Strategic Leaders 120

CHAPTERCASE 3 / Part II 121

CHAPTER 4

INTERNAL ANALYSIS: RESOURCES, CAPABILITIES,

AND CORE COMPETENCIES 128

CHAPTERCASE 4 / Part I

Five Guys’ Core Competency: “Make the Best Burger.

Don’t Worry about Cost.” 129

4.1 From External to Internal Analysis 131

4.2 Core Competencies 132

Leveraging Core Competencies Requires Focus on What to

Do and What Not to Do 132

Resources and Capabilities 137

4.3 The Resource-Based View 138

Resource Heterogeneity and Resource Immobility 140

The VRIO Framework 141

Isolating Mechanisms: How to Sustain a Competitive

Advantage 146

4.4 The Dynamic Capabilities Perspective 151

Core Rigidities 151

Dynamic Capabilities 152

Resource Stocks and Resource Flows 152

4.5 The Firm Value Chain and Strategic

Activity

Systems 154

Firm Value Chain 154

Strategic Activity Systems 157

4.6 Implications for Strategic Leaders 160

Using Swot Analysis to Generate Insights From External

and Internal Analysis 160

CHAPTERCASE 4 / Part II 162

CHAPTER 5

SHARED VALUE AND COMPETITIVE ADVANTAGE 168

CHAPTERCASE 5 / Part I

Patagonia: A Pioneer in Creating Shared Value 169

5.1 From Corporate Social Responsibility to Creating

Shared Value 171

Shareholder Capitalism 172

Shareholder Capitalism in Crisis? 174

Stakeholder Capitalism and Shared Value 175

5.2 Competitive Advantage 181

Accounting Metrics 181

Shareholder Value Creation 183

Economic Value Creation 186

The Balanced Scorecard 192

The Triple Bottom Line 195

5.3 Implications for Strategic Leaders 197

CHAPTERCASE 5 / Part II 199

PART TWO / FORMULATION 206

CHAPTER 6

BUSINESS STRATEGY: DIFFERENTIATION, COST

LEADERSHIP, AND BLUE OCEANS 208

CHAPTERCASE 6 / Part I

JetBlue Airways: En Route to a New Blue Ocean? 209

6.1 Business-Level Strategy: How to Compete for

Advantage 211

Strategic Position 212

Generic Business Strategies 212

6.2 Differentiation Strategy: Understanding Value

Drivers 214

Product Features 217

Customer Service 217

Complements 217

6.3 Cost-Leadership Strategy: Understanding Cost

Drivers 218

Cost of Input Factors 220

Economies of Scale 220

Learning Curve 223

Experience Curve 227

6.4 Business-Level Strategy and the

Five Forces: Benefits and Risks 228

Differentiation Strategy: Benefits and Risks 228

Cost-Leadership Strategy: Benefits and Risks 230

6.5 Blue Ocean Strategy: Combining Differentiation

and Cost Leadership 231

Value Innovation 232

Blue Ocean Strategy Gone Bad: “Stuck in the Middle” 234

6.6 Implications for Strategic Leaders 238

CHAPTERCASE 6 / Part II 239

CHAPTER 7

BUSINESS STRATEGY: INNOVATION,

ENTREPRENEURSHIP, AND PLATFORMS 244

CHAPTERCASE 7 / Part I

Netflix: No Longer a Disruptor? 245

7.1 Competition Driven by Innovation 246

Netflix’s Continued Innovation 247

The Speed of Innovation 247

The Innovation Process 249

The Four Industrial Revolutions 251

7.2 Strategic and Social Entrepreneurship 254

7.3 Innovation and the Industry Life Cycle 257

Introduction Stage 259

Growth Stage 260

Shakeout Stage 264

Maturity Stage 265

Decline Stage 265

Crossing the Chasm 266

7.4 Types of Innovation 274

Incremental vs. Radical Innovation 274

Architectural vs. Disruptive Innovation 276

7.5 Platform Strategy 281

The Platform vs. Pipeline Business Models 281

The Platform Ecosystem 283

7.6 Implications for Strategic Leaders 286

CHAPTERCASE 7 / Part II 287

CHAPTER 8

CORPORATE STRATEGY: VERTICAL INTEGRATION

AND DIVERSIFICATION 294

CHAPTERCASE 8 / Part I

Amazon’s Corporate Strategy 295

8.1 What Is Corporate Strategy? 298

Why Firms Need to Grow 299

Three Dimensions of Corporate Strategy 300

8.2 The Boundaries of the Firm 302

Firms vs. Markets: Make or Buy? 303

The Make-or-Buy Continuum 306

8.3 Vertical Integration along the Industry Value

Chain 310

Types of Vertical Integration 312

Benefits and Risks of Vertical Integration 315

When Does Vertical Integration Make Sense? 317

Alternatives to Vertical Integration 318

8.4 Corporate Diversification:

Expanding Beyond a Single Market 319

Types of Corporate Diversification 321

Core Competencies and Corporate

Diversification 323

Corporate Diversification and Firm Performance 328

8.5 Implications for Strategic Leaders 333

CHAPTERCASE 8 / Part II 333

CHAPTER 9

CORPORATE STRATEGY: STRATEGIC ALLIANCES,

MERGERS, AND ACQUISITIONS 342

CHAPTERCASE 9 / Part I

Little Lyft Gets Big Alliance Partners and Beats Uber in

Going Public 343

9.1 How Firms Achieve Growth 345

The Build-Borrow-Buy Framework 345

9.2 Strategic Alliances 348

Why Do Firms Enter Strategic Alliances? 349

Governing Strategic Alliances 353

Alliance Management Capability 356

9.3 Mergers and Acquisitions 358

Why Do Firms Merge with Competitors? 359

Why Do Firms Acquire Other Firms? 361

M&A and Competitive Advantage 364

9.4 Implications for Strategic Leaders 366

CHAPTERCASE 9 / Part II 367

CHAPTER 10

GLOBAL STRATEGY: COMPETING AROUND

THE WORLD 374

CHAPTERCASE 10 / Part I

IKEA: The World’s Most Profitable Retailer 375

10.1 What Is Globalization? 377

Stages of Globalization 379

State of Globalization 381

10.2 Competing Globally: Why? 384

Advantages of Competing Globally 385

Disadvantages of Competing Globally 387

10.3 Competing Globally: Where and How? 391

Where in the World to Compete? The CAGE Distance

Framework 391

How Do MNEs Enter Foreign Markets? 395

10.4 Cost Reductions vs. Local Responsiveness

396

International Strategy 397

Multidomestic Strategy 398

Global-Standardization Strategy 398

Transnational Strategy 399

10.5 National Competitive Advantage: World

Leadership in Specific Industries 404

Porter’s Diamond Framework 404

10.6 Implications for Strategic Leaders 406

CHAPTERCASE 10 / Part II 407

PART THREE / IMPLEMENTATION 414

CHAPTER 11

ORGANIZATIONAL DESIGN: STRUCTURE, CULTURE,

AND CONTROL 416

CHAPTERCASE 11 / Part I

“A” Is for Alphabet and “G” Is for Google 417

11.1 Organizational Design and Competitive

Advantage 420

Organizational Inertia: The Failure

of Established Firms 421

Organizational Structure 424

Mechanistic vs. Organic Organizations 426

11.2 Strategy and Structure 428

Simple Structure 428

Functional Structure 429

Multidivisional Structure 432

Matrix Structure 436

11.3 Organizing for Innovation 440

11.4 Organizational Culture: Values, Norms, and

Artifacts 444

Where Do Organizational Cultures Come From? 447

How Does Organizational Culture Change? 448

Organizational Culture and Competitive Advantage 449

11.5 Strategic Control-and-Reward Systems 450

Input Controls 451

Output Controls 451

11.6 Implications for Strategic Leaders 452

CHAPTERCASE 11 / Part II 453

CHAPTER 12

CORPORATE GOVERNANCE, BUSINESS ETHICS, AND

BUSINESS MODELS 460

CHAPTERCASE 12 / Part I

Theranos: Bad Blood 461

12.1 Corporate Governance 463

Agency Theory 465

The Board of Directors 466

Other Governance Mechanisms 468

12.2 Strategy and Business Ethics 471

Bad Apples vs. Bad Barrels 474

12.3 Business Models: Strategy in Action 476

The Business Model Framework 476

Popular Business Models 478

Dynamic Nature of Business Models 480

Business Model Innovation 481

12.4 Implications for Strategic Leaders 486

CHAPTERCASE 12 / Part II 487

PART FOUR / MINICASES 493

HOW TO CONDUCT A CASE ANALYSIS 494

PART FIVE / FULL-LENGTH CASES

Twelve cases with auto-graded exercises are included

in Connect. All of Frank T. Rothaermel’s cases

are available through McGraw Hill Create:

www.mcgrawhillcreate.com/rothaermel

Company Index CI-1

Name Index NI-1

Subject Index SI-1

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