The authors do not have rights to distribute the full-text online so only the table of contents and front matter are provided here. If you are an instructor seeking a review copy or teaching supplements, please use this link to locate your Cengage representative: http://www.cengage.com/repfinder/ Brief Contents PART ONE INTRODUCTION TO STRATEGIC MANAGEMENT 1 Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage 1 2 External Analysis: The Identification of Opportunities and Threats 43 PART TWO THE NATURE OF COMPETITIVE ADVANTAGE 3 Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability 80 4 Building Competitive Advantage through Functional-Level Strategies 116 PART THREE STRATEGIES 5 Business-Level Strategy 153 6 Business-Level Strategy and the Industry Environment 178 7 Strategy and Technology 210 8 Strategy in the Global Environment 246 9 Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing 286 10 Corporate-Level Strategy: Related and Unrelated Diversification 318 PART FOUR IMPLEMENTING STRATEGY 11 Corporate Performance, Governance, and Business Ethics 359 12 Implementing Strategy through Organization 395 CASES

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STRATEGIC MANAGEMENT: AN

INTEGRATED APPROACH, 12TH EDITION

CHARLES W. L. HILL

University of Washington – Foster School of Business

MELISSA A. SCHILLING

New York University – Stern School of Business

GARETH R. JONES

Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United

States

Contents

Preface xix

Acknowledgements xxiii

Dedication xxvii

PART ONE INTRODUCTION TO STRATEGIC MANAGEMENT

Chapter 1 Strategic Leadership: Managing the Strategy-Making Process for Competitive

Advantage 1

Opening Case 1

Overview 3

Strategic Leadership, Competitive Advantage, and Superior Performance 4

Superior Performance 5

Competitive Advantage and a Company's Business Model 6

Industry Differences in Performance 7

Performance in Nonprofit Enterprises 8

Strategic Managers 9

Corporate-Level Managers 10

Business-Level Managers 10

Functional-Level Managers 11

The Strategy-Making Process 11

A Model of the Strategic Planning Process 11

Mission Statement 12

Major Goals 16

External Analysis 17

Internal Analysis 17

SWOT Analysis and the Business Model 17

Hill, Schilling & JonesFM-1

Strategy in Action 1.1: Strategic Analysis at Time Inc. 18

Strategy Implementation 19

The Feedback Loop 20

Strategy as an Emergent Process 20

Strategy Making in an Unpredictable World 20

Autonomous Action: Strategy Making by Lower-Level Managers 21

Strategy in Action 1.2: Starbucks' Music Business21

Serendipity and Strategy 22

Intended and Emergent Strategies 22

Strategy in Action 1.3: A Strategic Shift at Charles Schwab 23

Strategic Planning in Practice 25

Scenario Planning 25

Decentralized Planning 26

Strategic Decision Making 27

Cognitive Biases and Strategic Decision Making 27

Techniques for Improving Decision Making 29

Strategic Leadership 29

Vision, Eloquence, and Consistency 30

Articulation of the Business Model 30

Commitment 30

Being Well Informed 31

Willingness to Delegate and Empower 31

The Astute Use of Power 32

Emotional Intelligence 32

Chapter 2 External Analysis: The Identification of Opportunities and Threats 43

Opening Case 43

Overview 44

Defining an Industry 45

Industry and Sector 46

Industry and Market Segments 47

Changing Industry Boundaries 47

Competitive Forces Model 47

Risk of Entry by Potential Competitors 48

Rivalry Among Established Companies 50

Strategy in Action 2.1: Circumventing Entry Barriers into the Soft Drink

Industry 51

Strategy in Action 2.2: Price Wars in the Breakfast Cereal Industry 53

The Bargaining Power of Buyers 55

The Bargaining Power of Suppliers 56

Substitute Products 58

Complementors 58

Summary: Why Industry Analysis Matters 59

Strategic Groups Within Industries 60

Implications of Strategic Groups 61

The Role of Mobility Barriers 62

Hill, Schilling & Jones FM-2

Industry Life-Cycle Analysis 63

Embryonic Industries 63

Growth Industries 64

Industry Shakeout 64

Mature Industries 65

Declining Industries 66

Summary 66

Limitations of Models for Industry Analysis 67

Life-Cycle Issues 67

Innovation and Change 67

Company Differences 69

The Macroenvironment 69

Macroeconomic Forces 69

Global Forces 71

Technological Forces 71

Demographic Forces 72

Social Forces 72

Political and Legal Forces 72

PART TWO THE NATURE OF COMPETITIVE ADVANTAGE

Chapter 3 Internal Analysis: Distinctive Competencies, Competitive Advantage, and

Profitability 80

Opening Case 80

Overview 82

Competitive Advantage 82

Distinctive Competencies 83

Resources 85

Resource Quality: The VRIO Model

Resources and Sustainable Competitive Advantage

VALUE CREATION AND PROFITABILITY

THE VALUE CHAIN 89

Primary Activities 89

Strategy in Action 3.1: Value Creation at Burberry 91

Support Activities 91

Value Chain Analysis: Implications

Strategy in Action 3.2: Competitive Advantage at Zara 92

The Building Blocks of Competitive Advantage 93

Efficiency 93

Quality as Excellence and Reliability 94

Innovation 96

Customer Responsiveness 96

Chapter 4 Building Competitive Advantage Through Functional-Level Strategies 116

Opening Case 116

Overview 117

Hill, Schilling & JonesFM-3

Achieving Superior Efficiency 119

Efficiency and Economies of Scale 119

Efficiency and Learning Effects 120

Strategy in Action 4.1: Learning Effects in Cardiac Surgery 122

Efficiency and the Experience Curve 122

Efficiency, Flexible Production Systems, and Mass Customization 124

Marketing and Efficiency 125

Strategy in Action 4.2: Pandora: Mass Customizing Internet Radio 126

Materials Management, Just-in-Time Systems, and Efficiency 128

R&D Strategy and Efficiency 129

Human Resource Strategy and Efficiency 129

Information Systems and Efficiency 132

Infrastructure and Efficiency 132

Summary 133

Achieving Superior Quality 134

Attaining Superior Reliability 134

Strategy in Action 4.3: General Electric's Six Sigma Quality Improvement

Process 135

Implementing Reliability Improvement Methodologies 136

Improving Quality as Excellence 138

Achieving Superior Innovation 139

The High Failure Rate of Innovation 140

Reducing Innovation Failures 141

Strategy in Action 4.4: Corning—learning from Innovation Failures 142

Achieving Superior Responsiveness to Customers 144

Focusing on the Customer 144

Satisfying Customer Needs 145

PART THREE STRATEGIES

Chapter 5 Business-Level Strategy 153

Opening Case 153

Overview 154

Low Cost and Differentiation 155

Lowering Costs 155

Strategy in Action 5.1: Low Costs at Southwest Airlines 156

Who are Our Customers? Market Segmentation 161

Business-Level Strategy Choices 164

Business-Level Strategy, Industry and Competitive Advantage 166

Strategy in Action 5.2: Microsoft Office versus Google Apps 167

Implementing Business-Level Strategy 168

Competing Differently: Searching for a Blue Ocean 171

Chapter 6 Business-Level Strategy and the Industry Environment 178

Opening Case 178

Overview 179

Hill, Schilling & Jones FM-4

Strategy in a Fragmented Industry 180

Reasons for Fragmentation 180

Consolidating a Fragmented Industry Through Value Innovation 181

Chaining and Franchising 182

Horizontal Mergers 183

Strategies in Embryonic and Growth Industries 184

The Changing Nature of Market Demand 185

Strategic Implications: Crossing the Chasm 188

Strategy in Action 6.1: Crossing the Chasm in the Smartphone Market 189

Strategic Implications of Differences in Market Growth Rates 190

Strategy in Mature Industries 191

Strategies to Deter Entry 192

Strategies to Manage Rivalry 194

Strategy in Action 6.2: Toyota Uses Market Development to Become the Global

Leader 198

Strategies in Declining Industries 201

The Severity of Decline 201

Choosing a Strategy 202

Chapter 7 Strategy and Technology 210

Opening Case 210

Overview 211

Technical Standards and Format Wars 213

Strategy in Action 7.1: "Segment Zero"—A Serious Threat to Microsoft? 213

Examples of Standards 216

Benefits of Standards 217

Establishment of Standards 218

Network Effects, Positive Feedback, and Lockout 219

Strategies for Winning a Format War 222

Ensure a Supply of Complements 222

Leverage Killer Applications 222

Aggressive Pricing and Marketing 223

Cooperate with Competitors 223

License the Format 224

Costs in High-Technology Industries 224

Comparative Cost Economics 225

Strategic Significance 226

Strategy in Action 7.2: Lowering the Cost of Ultrasound Equipment Through

Digitalization 227

Capturing First-Mover Advantages 227

First-Mover Advantages 229

First-Mover Disadvantages 229

Strategies for Exploiting First-Mover Advantages 230

Technological Paradigm Shifts 233

Paradigm Shifts and the Decline of Established Companies 234

Strategic Implications for Established Companies 238

Hill, Schilling & JonesFM-5

Strategic Implications for New Entrants 240

Chapter 8 Strategy in the Global Environment 246

Opening Case 246

Overview 247

The Global and National Environments 248

The Globalization of Production and Markets 248

National Competitive Advantage 250

Increasing Profitability and Profit Growth Through Global Expansion 253

Expanding the Market: Leveraging Products 253

Realizing Cost Economies from Global Volume 255

Realizing Location Economies 256

Leveraging the Skills of Global Subsidiaries 257

Cost Pressures and Pressures for Local Responsiveness 258

Pressures for Cost Reductions 259

Pressures for Local Responsiveness 259

Strategy in Action 8.1: Local Responsiveness at MTV Networks 260

Choosing a Global Strategy 261

Global Standardization Strategy 262

Localization Strategy 263

Transnational Strategy 264

International Strategy 265

Changes in Strategy over Time 265

Strategy in Action 8.2: The Evolving Strategy of Coca-Cola 267

The Choice of Entry Mode 268

Exporting 268

Licensing 269

Franchising 270

Joint Ventures 271

Wholly Owned Subsidiaries 272

Choosing an Entry Strategy 273

Global Strategic Alliances 275

Advantages of Strategic Alliances 275

Disadvantages of Strategic Alliances 276

Making Strategic Alliances Work 276

Chapter 9 Corporate-Level Strategy: Horizontal Integration, Vertical Integration and Strategic

Outsourcing 286

Opening Case 286

Overview 287

Corporate-Level Strategy and the Multibusiness Model 288

Horizontal Integration: Single-Industry Corporate Strategy 289

Benefits of Horizontal Integration 290

Problems with Horizontal Integration 294

Vertical Integration: Entering New Industries to Strengthen the "Core" Business

Model 295

Hill, Schilling & Jones FM-6

Increasing Profitability Through Vertical Integration 297

Problems with Vertical Integration 301

Alternatives to Vertical Integration: Cooperative Relationships 302

Short-Term Contracts and Competitive Bidding 303

Strategic Alliances and Long-Term Contracting 303

Building Long-Term Cooperative Relationships 305

Strategy in Action 9.2: ebay's Changing Commitment to Its Sellers 306

Strategic Outsourcing 307

Benefits of Outsourcing 310

Risks of Outsourcing 311

Chapter 10 Corporate-Level Strategy: Related and Unrelated Diversification 318

Opening Case 318

Overview 322

Increasing Profitability Through Diversification 322

Transferring Competencies Across Businesses 323

Leveraging Competencies to Create a New Business 324

Sharing Resources and Capabilities 325

Using Product Bundling 326

Utilizing General Organizational Competencies 327

Strategy in Action 10.1: United Technologies Has an "ACE" in Its Pocket 329

Two Types of Diversification 331

Related Diversification 331

Unrelated Diversification 331

The Limits and Disadvantages of Diversification 333

Changes in the Industry or Company 333

Diversification for the Wrong Reasons 334

The Bureaucratic Costs of Diversification 335

Strategy in Action 10.2: How Bureaucratic Costs Rose Then Fell at Pfizer 337

Choosing a Strategy 338

Related Versus Unrelated Diversification 338

The Web of Corporate-Level Strategy 338

Entering New Industries: Internal New Ventures 341

The Attractions of Internal New Venturing 341

Pitfalls of New Ventures 342

Guidelines for Successful Internal New Venturing 344

Entering New Industries: Acquisitions 345

The Attraction of Acquisitions 345

Acquisition Pitfalls 346

Guidelines for Successful Acquisition 348

Entering New Industries: Joint Ventures 349

Restructuring350

Why Restructure? 350

PART FOUR IMPLEMENTING STRATEGY

Hill, Schilling & JonesFM-7

Chapter 11 Corporate Performance, Governance, and Business Ethics 359

Opening Case 359

Overview 361

Stakeholders and Corporate Performance 362

Stakeholder Impact Analysis 363

The Unique Role of Stockholders 363

Profitability, Profit Growth, and Stakeholder Claims 364

Strategy in Action 11.1: Price Fixing at Sotheby's and Christie's 366

Agency Theory 367

Principal–Agent Relationships 367

The Agency Problem 367

Strategy in Action 11.2: Self-Dealing at Hollinger International Inc. 371

Governance Mechanisms 372

The Board of Directors 372

Stock-Based Compensation 373

Financial Statements and Auditors 374

The Takeover Constraint 375

Governance Mechanisms Inside a Company 376

Ethics and Strategy 378

Strategy in Action 11.3: Nike–the Sweatshop Debate 379

Ethical Issues in Strategy 380

The Roots of Unethical Behavior 383

Behaving Ethically 384

Chapter 12 Implementing Strategy through Organization 395

Opening Case 395

Overview 396

Organization Architecture

Organization Structure

Centralization and Decentralization

Tall versus Flat Hierarchies

Structural Forms

Formal Integrating Mechanism

Informal Integrating Mechanisms

Organization Controls and Incentives

Control Systems

Methods of Control

Organizational Culture 410

Culture as a Control Mechanism

Implementing Strategy Through Culture

Organization Processes

Implementing Strategy through organization Architecture

Strategy and Organization in the Single Business Enterprise

Strategy and Organization in the Multibusiness Enterprise

Takeaways for Strategic Managers

Hill, Schilling & Jones FM-8

PART FIVE CASES IN STRATEGIC MANAGEMENT

I

ntroduction: Analyzing a Case Study and Writing a Case Study Analysis C-2

What is Case Study Analysis C-2

Analyzing a Case Study C-3

Writing A Case Study Analysis C-8

The Role of Financial Analysis in Case Study Analysis C-9

Profit Ratios C-10

Liquidity Ratios C-11

Activity Ratios C-11

Leverage Ratios C-12

Shareholder-Return Ratios C-12

Cash Flow C-13

Conclusion C-14

Cases

Case 1: The Cherry Lady C-15

Case 2: Century 21 Sussex and Reilly Residential C-32

Case 3: Estonian Air's Big Buy C-45

Case 4: Homegrocer.com: Anatomy of a Failure C-59

Case 5: Tenfold™ Organic Textiles C-77

Case 6: The Air Express Industry: 40 Years of Expansion C-92

Case 7: Airborne Express: The Underdog C-105

Case 8: Harley-Davidson's Focus Strategy C-115

Case 9: Auto-Graphics Corp and the Library Automation Industry C-131

Case 10: Nucor in 2013 C-154

Case 11: Intel Corporation: 1968–2013 C-173

Case 12: Getting an Inside Look: Given Imaging's Camera Pill C-186

Case 13: Skullcandy C-194

Case 14: Tesla Motors C-201

Case 15: Charles Schwab C-210

Case 16: Toyota in 2013: Lean Production and the Rise of the World's Largest Au-

tomobile Manufacturer C-226

Case 17: Costco Wholesale Corporation C-239

Case 18: Ikea in 2013: Furniture Retailer to the World C-251

Case 19: Starbucks, 2013 C-259

Case 20: Apple Inc., 1976–2013 C-269

Case 21: High Noon at Universal Pipe: Sell Out or Risk Everything? C-285

Case 22: Principled Entrepreneurship and Shared Leadership: The Case of TEOCO

(The Employee Owned Company) C-297

Case 23: 3M—The First 110 Years C-319

Case 24: The Tata Group, 2013 C-334

Case 25: Genzyme's Focus on Orphan Drugs C-342

Case 26: Usha Martin: Competitive Advantage Through Vertical Integration C-

347

Case 27: Disaster in Bangladesh: The Collapse of the Rana Plaza Building C-360

Case 28: Frog's Leap Winery in 2011—The Sustainability Agenda [Case and

Hill, Schilling & JonesFM-9

Video] C-364

Glossary G-1

Index I-1

Preface

Consistent with our mission to provide students with the most current and up-to-date account of

the changes taking place in the world of strategy and management, there have been some

significant changes in the 12th edition of Strategic Management: An Integrated Approach.

First, our new co-author, Melissa Schilling has taken on a major role in this edition. Melissa is

a Professor of Management and Organization at the Leonard Stern School of Business at New

York University, where she teaches courses on strategic management, corporate strategy, and

technology and innovation management. She has published extensively in top-tier academic

journals and is recognized as one of the leading experts on innovation and strategy in high-

technology industries. We are very pleased to again have Melissa on the book team. Melissa

made substantial contributions to the prior edition and that continues with this edition. She has

revised several chapters and writing seven high-caliber case studies. We believe her input has

significantly strengthened the book.

Second, a number of chapters have been extensively revised. In the 11 th edition, chapter 5:

Business-Level Strategy was rewritten from scratch. In addition to the standard material on

Porter's generic strategies, this chapter now includes discussion of value innovation and blue

ocean strategy following the work of W. C. Kim and R. Mauborgne. Chapter 6: Business-Level

Strategy and the Industry Environment was also extensively rewritten and updated to clarify

concepts and bring it into the 21st century. For the 12 th edition we significantly revised and

updated Chapter 3, building discussion of resources and competitive advantage around Jay

Barney's popular VRIO model. We also combined Chapters 12 and 13 into a single chapter on

implementing strategy through organization. We think this more streamlined approach greatly

strengthens the book and enhances readability, particularly for students.

Third, the examples and cases contained in each chapter have been revised. Every chapter has

a new Opening Case and a new Closing Case. There are also many new Strategy in Action

features. In addition, there has been significant change in the examples used in the text to

illustrate content. In making these changes, our goal has been to make the book relevant for

students reading it in the second decade of the 21st century.

Fourth, we have a substantially revised selection of cases for this edition. All of the cases are

either new to this edition or are updates of cases that adopters have indicated they like to see in

the book. For this edition we made the decision to only use our own cases. Over the years it has

been increasingly difficult to find high quality third party cases, while we have received

consistently positive feedback about the quality of cases that we have written, so we decided that

from this point forward, we would only use our own cases. We have also received feedback that

many professors like to use shorter cases, instead of or in addition too the longer cases normally

included in our book. Consequently, in this edition of the book we have included 29 cases, 18 of

which are the traditional long form cases, and 11 of which are shorter cases. Many of the cases

are current as of 2015. We have made an effort to include cases that have high name recognition

with students, and that they will enjoy reading and working on. These include cases on Boeing,

Staples, Trader Joe's, Tesla Motors, Uber, Google, Microsoft, and 3M.

Practicing Strategic Management: An Interactive Approach

We have received a lot of positive feedback about the usefulness of the end-of-chapter exercises

Hill, Schilling & Jones FM-10

and assignments in the Practicing Strategic Management sections of our book. They offer a wide

range of hands-on and digital learning experiences for students. Following the Chapter Summary

and Discussion Questions, each chapter contains the following exercises and assignments:

•Ethical Dilemma. This feature has been developed to highlight the importance of ethical

decision making in today's business environment. With today's current examples of

questionable decision making, we hope to equip students with the tools they need to be

strong ethical leaders.

•Small-Group Exercise. This short (20-minute) experiential exercise asks students to divide

into groups and discuss a scenario concerning some aspect of strategic management. For

example, the scenario in Chapter 11 asks students to identify the stakeholders of their

educational institution and evaluate how stakeholders' claims are being and should be met.

•The Strategy Sign-On section presents an opportunity for students to explore the latest data

through digital research activities.

•First, the Article File requires students to search business articles to identify a

company that is facing a particular strategic management problem. For instance,

students are asked to locate and research a company pursuing a low-cost or a

differentiation strategy, and to describe this company's strategy, its advantages and

disadvantages, and the core competencies required to pursue it. Students'

presentations of their findings lead to lively class discussions.

•Then, the Strategic Management Project: Developing Your Portfolio asks students

to choose a company to study through the duration of the semester. At the end of

every chapter, students analyze the company using the series of questions provided at

the end of each chapter. For example, students might select Ford Motor Co. and, using

the series of chapter questions, collect information on Ford's top managers, mission,

ethical position, domestic and global strategy and structure, and so on. Students write

a case study of their company and present it to the class at the end of the semester. In

the past, we also had students present one or more of the cases in the book early in the

semester, but now in our classes, we treat the students' own projects as the major class

assignment and their case presentations as the climax of the semester's learning

experience.

•Closing Case. A short closing case provides an opportunity for a short class discussion of a

chapter-related theme.

In creating these exercises, it is not our intention to suggest that they should all be used for every

chapter. For example, over a semester, an instructor might combine a group of Strategic

Management Projects with 5 to 6 Article File assignments while incorporating 8 to 10 Small-

Group Exercises in class.

We have found that our interactive approach to teaching strategic management appeals to

students. It also greatly improves the quality of their learning experience. Our approach is more

fully discussed in the Instructor's Resource Manual.

Strategic Management Cases

The 29 cases that we have selected for this edition will appeal, we are certain, to students and

professors alike, both because these cases are intrinsically interesting and because of the number

of strategic management issues they illuminate. The organizations discussed in the cases range

from large, well-known companies, for which students can do research to update the information,

to small, entrepreneurial businesses that illustrate the uncertainty and challenge of the strategic

Hill, Schilling & JonesFM-11

management process. In addition, the selections include many international cases, and most of

the other cases contain some element of global strategy. Refer to the Contents for a complete

listing of the cases with brief descriptions.

To help students learn how to effectively analyze and write a case study, we continue to

include a special section on this subject. It has a checklist and an explanation of areas to

consider, suggested research tools, and tips on financial analysis.

We feel that our entire selection of cases is unrivaled in breadth and depth.

Teaching and Learning Aids

Taken together, the teaching and learning features of Strategic Management provide a package

that is unsurpassed in its coverage and that supports the integrated approach that we have taken

throughout the book.

For the Instructor

•The Instructor's Resource Manual: Theory. For each chapter, we provide a clearly focused

synopsis, a list of teaching objectives, a comprehensive lecture outline, teaching notes for the

Ethical Dilemma feature, suggested answers to discussion questions, and comments on the

end-of-chapter activities. Each Opening Case, Strategy in Action boxed feature, and Closing

Case has a synopsis and a corresponding teaching note to help guide class discussion.

•Case Teaching Notes include a complete list of case discussion questions as well as a

comprehensive teaching notes for each case, which gives a complete analysis of case issues.

•Cognero Test Bank: A completely online test bank allows the instructor the ability to create

comprehensive, true/false, multiple-choice and essay questions for each chapter in the book.

The mix of questions has been adjusted to provide fewer fact-based or simple memorization

items and to provide more items that rely on synthesis or application.

•PowerPoint Presentation Slides: Each chapter comes complete with a robust PowerPoint

presentation to aid with class lectures. These slides can be downloaded from the text website.

•CengageNow. This robust online course management system gives you more control in less

time and delivers better student outcomes—NOW. CengageNow™ includes teaching and

learning resources organized around lecturing, creating assignments, casework, quizzing, and

gradework to track student progress and performance. Multiple types of quizzes, including

video quizzes are assignable and gradable. Flexible assignments, automatic grading, and a

gradebook option provide more control while saving you valuable time. CengageNow

empowers students to master concepts, prepare for exams, and become more involved in

class.

•Cengage Learning Write Experience 2.0. This new technology is the first in higher

education to offer students the opportunity to improve their writing and analytical skills

without adding to your workload. Offered through an exclusive agreement with Vantage

Learning, creator of the software used for GMAT essay grading, Write Experience evaluates

students' answers to a select set of writing assignments for voice, style, format, and

originality.

For the Student

•CengageNow includes learning resources organized around assignments, casework, and

quizzing, and allows you to track your progress and performance. A Personalized Study

diagnostic tool empowers students to master concepts, prepare for exams, and become more

involved in class.

Acknowledgments

Hill, Schilling & Jones FM-12

This book is the product of far more than three authors. We are grateful to our Senior Product

Managers, Michele Rhoades and Scott Person; our Senior Content Developer, Tara Singer; our

Content Project Manager, Cliff Kallemeyn; and our Marketing Manager, Emily Horowitz, for

their help in developing and promoting the book and for providing us with timely feedback and

information from professors and reviewers, which allowed us to shape the book to meet the

needs of its intended market. We also want to thank the departments of management at the

University of Washington and New York University for providing the setting and atmosphere in

which the book could be written, and the students of these universities who react to and provide

input for many of our ideas. In addition, the following reviewers of this and earlier editions gave

us valuable suggestions for improving the manuscript from its original version to its current

form:

Andac Arikan, Florida Atlantic University

Ken Armstrong, Anderson University

Richard Babcock, University of San Francisco

Kunal Banerji, West Virginia University

Kevin Banning, Auburn University- Montgomery

Glenn Bassett, University of Bridgeport

Thomas H. Berliner, The University of Texas at Dallas

Bonnie Bollinger, Ivy Technical Community College

Richard G. Brandenburg, University of Vermont

Steven Braund, University of Hull

Philip Bromiley, University of Minnesota

Geoffrey Brooks, Western Oregon State College

Jill Brown, Lehigh University

Amanda Budde, University of Hawaii

Lowell Busenitz, University of Houston

Sam Cappel, Southeastern Louisiana University

Charles J. Capps III, Sam Houston State University

Don Caruth, Texas A&M Commerce

Gene R. Conaster, Golden State University

Steven W. Congden, University of Hartford

Catherine M. Daily, Ohio State University

Robert DeFillippi, Suffolk University Sawyer School of Management

Helen Deresky, SUNY—Plattsburgh

Fred J. Dorn, University of Mississippi

Gerald E. Evans, The University of Montana

John Fahy, Trinity College, Dublin

Patricia Feltes, Southwest Missouri State University

Bruce Fern, New York University

Mark Fiegener, Oregon State University

Chuck Foley, Columbus State Community College

Isaac Fox, Washington State University

Craig Galbraith, University of North Carolina at Wilmington

Scott R. Gallagher, Rutgers University

Eliezer Geisler, Northeastern Illinois University

Gretchen Gemeinhardt, University of Houston

Hill, Schilling & JonesFM-13

Lynn Godkin, Lamar University

Sanjay Goel, University of Minnesota—Duluth

Robert L. Goldberg, Northeastern University

James Grinnell, Merrimack College

Russ Hagberg, Northern Illinois University

Allen Harmon, University of Minnesota—Duluth

Ramon Henson, Rutgers University

David Hoopes, California State University—Dominguez Hills

Todd Hostager, University of Wisconsin—Eau Claire

David Hover, San Jose State University

Graham L. Hubbard, University of Minnesota

Tammy G. Hunt, University of North Carolina at Wilmington

James Gaius Ibe, Morris College

W. Grahm Irwin, Miami University

Homer Johnson, Loyola University—Chicago

Jonathan L. Johnson, University of Arkansas Walton College of Business Administration

Marios Katsioloudes, St. Joseph's University

Robert Keating, University of North Carolina at Wilmington

Geoffrey King, California State University—Fullerton

Rico Lam, University of Oregon

Robert J. Litschert, Virginia Polytechnic Institute and State University

Franz T. Lohrke, Louisiana State University

Paul Mallette, Colorado State University

Daniel Marrone, SUNY Farmingdale

Lance A. Masters, California State University—San Bernardino

Robert N. McGrath, Embry-Riddle Aeronautical University

Charles Mercer, Drury College

Van Miller, University of Dayton

Tom Morris, University of San Diego

Joanna Mulholland, West Chester University of Pennsylvania

James Muraski, Marquette University

John Nebeck, Viterbo University

Jeryl L. Nelson, Wayne State College

Louise Nemanich, Arizona State University

Francine Newth, Providence College

Don Okhomina, Fayetteville State University

Phaedon P. Papadopoulos, Houston Baptist University

John Pappalardo, Keen State College

Paul R. Reed, Sam Houston State University

Rhonda K. Reger, Arizona State University

Malika Richards, Indiana University

Simon Rodan, San Jose State

Stuart Rosenberg, Dowling College

Douglas Ross, Towson University

Ronald Sanchez, University of Illinois

Joseph A. Schenk, University of Dayton

Hill, Schilling & Jones FM-14

Brian Shaffer, University of Kentucky

Leonard Sholtis, Eastern Michigan University

Pradip K. Shukla, Chapman University

Mel Sillmon, University of Michigan—Dearborn

Dennis L. Smart, University of Nebraska at Omaha

Barbara Spencer, Clemson University

Lawrence Steenberg, University of Evansville

Kim A. Stewart, University of Denver

Ted Takamura, Warner Pacific College

Scott Taylor, Florida Metropolitan University

Thuhang Tran, Middle Tennessee University

Bobby Vaught, Southwest Missouri State

Robert P. Vichas, Florida Atlantic University

John Vitton, University of North Dakota

Edward Ward, St. Cloud State University

Kenneth Wendeln, Indiana University

Daniel L. White, Drexel University

Edgar L. Williams, Jr., Norfolk State University

Jun Zhao, Governors State University

Charles W. L. Hill

Melissa A. Schilling

Gareth R, Jones

Dedication

To my daughters Elizabeth, Charlotte, and Michelle

– Charles W. L. Hill

For my children, Julia and Conor

– Melissa A. Schilling

For Nicholas and Julia and Morgan and Nia

– Gareth R. Jones

Hill, Schilling & JonesFM-15

... In this era of global competition, strategic decision-making takes place in an alert environment where vigilant competitors are existent, and one firm's choice of a strategy is always made concerning those of its competitors making decision creation a variable for firm managers (Hill, Schilling & Jones, 2016). Intense competition has resulted from global market development and stable growth of international trade, with each firm aiming at maintaining its position on the market with internationalization of businesses becoming an innovative development strategy for large retail companies (Jelena and Sonja, 2016). ...

... Adaption of strategy to the competitive environment has been called the adaptive cycle, which consists of three stages: the environmental problem, technological problem, and the administrative period. Hill et al., (2016) equate the managerial process to organizational design which includes organizational structure and control and culture. Similarly, the Organizational Cultural Model is based on four cultural traits of Involvement, Consistency, Adaptability, and Mission Involvement builds human capability, ownership, and responsibility. ...

... On organizational culture, the study is in tandem with findings of Nazarian et al. (2017), who, while searching the role of national culture and balanced organizational culture in organizational performance established that national culture of personnel in hotels inspire equitable corporate culture which, in turn, stimulates firm performance. Hill et al., (2016), on the other hand, sees organizational culture as an essential element of internal corporate design. The study is also consistent with that done by Polychroniou et al. (2018) and found a strong positive association between the strength of a culture and performance in terms of competence of innovation and human associations as well as firm outcomes namely profitability, growth and reputational assets. ...

... Resources can be divided into two types: tangible and intangible. Tangible resources are physical entities, such as land, buildings, manufacturing plants, equipment, inventory and capital (David and Han, 2004;Hill et al., 2014). Intangible resources are nonphysical entities, such as brand names, reputation, knowledge and experience, as well as the intellectual property of the company including patents, copyrights, and trademarks (David and Han, 2004;Jones and Hill, 2013). ...

... The basis of competitive advantage (adapted fromBernroider, 2002;Hill et al., 2014). ...

This paper explores the opportunity for New Zealand to establish and sustain an internationally competitive sheep dairy industry. As part of this it evaluates the role of responsible innovation (RI) within the New Zealand sheep dairy (NZSD) industry and whether this can assist in achieving a sustainable competitive advantage. In the context of agrifood supply chains RI has received little attention despite the fact that these industries have significant environmental, ethical and social impacts. The research also addresses the lack of evidence as how to put RI into practice and the claim that the practical applicability of RI is not possible. The French sheep dairy industry was used as a comparative case study for the New Zealand industry. Information was gathered through a literature search, the comparative case study and interviews with New Zealand and French industry experts. Comparisons were made between the strategic capabilities and structural forces of the sheep dairy industries in both France and New Zealand. The study found that for the New Zealand sheep dairy (NZSD) industry to achieve a competitive advantage it would need to pursue a differentiation strategy that focused on customer responsiveness, innovation, sustainability and quality. Furthermore, the study identified that RI had the potential to assist the NZSD industry by providing distinctive competencies to develop a competitive advantage. This is because there were existing resources and capabilities that provided a platform for differentiation. There were also strategic and economic drivers in the NZSD industry that encouraged RI as a competitive strategy. This indicated that for RI to occur there needed to be economic incentives that encouraged companies to pursue this strategy.

... 2.2 Attempts to automate the strategic planning process SP is the organizational process of developing and maintaining a strategic management, given by the Mission, the Vision and an internal/external analysis, so that the objectives and resources of the organization can be aligned with the changing business opportunities [13]. Hill and Jones [14] contributed with a list of concept definitions and techniques related to this process. Beyond the SP definition, there are some works that propose novel systems for carrying it out and for planning and managing general strategic information. ...

... There are several SP processes described in the literature that would lead to slightly different systems, but they all share the same basic structure. In this work, the SP process follows the five main steps proposed by Hill and Jones [14] and the SP model stated by Llorens-Largo [24], illustrated in Fig. 2. The general structure of the MAS defined in the following sections can be easily adapted to other SP process models or, even, to other process models. ...

Nowadays, Big Data techniques have made possible to obtain interesting low-level information from large amounts of data. However, the information is often difficult to be enriched enough to aid in high-level orga nizational processes. The objective of this work is to define a model to allow the use of available information for the design and implementation of high level-of-abstraction processes that take place in the organizations. Particularly, this paper is focused on the strategic planning (SP) process, one of the most complex and abstract processes in any company. So far, there are very few successful attempts to automate this process, which is usually based on manual tasks. At the most, the results from the automatic data analysis are generated and used as reports and are not integrated in the process. A further step is proposed, posing a SP model based on a multi-agent system with a blackboard, which is used as a means of communication and storage of the generated information. The information is described using ontology to formalize both the SP process and the information used in each step. The combination of these elements enables the participation, interaction and sharing of information and knowledge of the participants in the process. The accumulated knowledge allows the use of previous experience to automate the process and improve the decision making. In short, the proposed model is a formal, comprehensive, agile and flexible solution to perform the process of SP in organizations today leverag ing of the enormous amount of available data and the gathered experience.

... Competencies are the firm's specific strengths that allow a company to gain competitive advantage. Threshold competencies are needed to meet the necessary requirements to compete in a given market and achieve parity competitive advantage, whereas distinctive competencies allow the firm to achieve sustainable competitive advantage [44]. Service System as a configuration of resources (at least one operant resource) that is capable of providing benefit to other service systems and itself [30]. ...

... It is a firm's profitability that is greater than the average profitability for all firms in its industry. Furthermore, sustained competitive advantage is a firm maintaining above average and superior profitability for a number of years [44]. The primary objective of strategic sourcing is to achieve a sustained competitive advantage (in a commercial domain) or survivability (in a noncommercial domain) ...

Strategic sourcing recognizes that procurement is not just a cost function, but supports the firm's effort to achieve its long-term objectives. Strategic sourcing has become a critical area of strategic management that is centered on decision-making regarding an organization's procurement activities such as spend analysis, capability sourcing, supplier selection and evaluation, contract management and relationship management. Many companies face challenges in obtaining the benefits associated with effective strategic sourcing. From an organizational perspective, procurement data management is a core organizational challenge for chief procurement officers (CPOs) for fact-based strategic sourcing decision-making. To address this challenge, we define research objectives to design a holistic view on strategic sourcing orientations and to develop a conceptual basis for enabling centralization of procurement data and enabling the systemic exploration of sourcing alternatives. From a service ecosystem perspective as a holistic view on strategic sourcing, we define a model driven approach to explore sourcing alternatives based on a common language (C.A.R.S) that enables companies to achieve procurement data management and analytics competencies for fact-based decision-making. Keywords: Model based strategic sourcing Á Strategic sourcing and procurement Á Service-dominant conceptual modeling Á Procurement data management Á Procurement analytics Á Strategic sourcing decision-making Á Fact-based decision-making

... This is in line with Hill, Schilling, and Jones (2016) who suggest that strategic executives must choose strategies that work together to assist their firms in utilizing resources most effectively to achieve high performance. A review of the literature shows Product-Market strategy is explained by Market Penetration, product diversification, and collaborative networks (Ansoff, 1957;Wanjiru & Gongera, 2015). ...

... Igualmente, el uso de drones, análisis de macrodatos (big data) y la Industria 4.0, que hace referencia a una fábrica inteligente, informatizada e interconectada a través de Internet -tecnologías aplicadas por la marca Keen (Climent, 2017)-, también son oportunidades del entorno que pueden aprovechar las empresas para alcanzar o mantener ventajas competitivas a través de la calidad, la eficiencia, la innovación y la satisfacción del cliente (Hill, Schilling y Jones, 2016). En la actualidad, las empresas dedicadas al calzado deportivo son las que están desarrollando e implementando las nuevas tecnologías (cesce, 2018). ...

La complejidad que supone la toma de decisiones estratégicas que permitan maximizar los beneficios y cumplir con los objetivos de la empresa en el contexto global actual, caracterizado por rápidos y complejos cambios, requiere una metodología apropiada y exhaustiva de investigación para conocer el entorno en el que compiten las empresas. En este trabajo se realiza un análisis externo del entorno específico de la industria del calzado en España mediante la aplicación del modelo de las cinco fuerzas competitivas de Porter. Los resultados muestran las amenazas y oportunidades que pueden ayudar a las empresas de la industria a alcanzar ventajas competitivas y obtener rentas superiores.

... Hill, Jones, & Schilling, 2015) usually use verbs like " define " , " describe " , " understand " , " explain " , " discuss " , " compare and contrast " to describe the books' and chapters' learning goals. These verbs actually represent only the two lowest-level learning goals in Bloom's learning taxonomy – knowledge and comprehension (Bloom, Engelhart, Furst, Hill, & Krathwohl, 1956). ...

  • Wei He

Few management courses highlight the development of students problem-solving skills as a learning goal despite the popularity of solving management problems as a routine job for managers. Drawing on the pedagogies of problem-based learning and case teaching, this paper presents a problem-solving approach of case study and applies it to a set of 14 Harvard Business Review cases to develop problem-solving skills in a typical conceptual management course Organizational Behavior. It explains the detailed requirements of the problem-solving approach of case study step by step, specifies the case references and their suitable topics respectively, describes the organization and process of a problem-solving case study session, illustrates an exemplary case study out of the 14 cases, and discusses the effectiveness and implications of the problem-solving pedagogy. The paper has three folds of contribution to management education: It proves both the necessity and feasibility of developing students problem-solving skills in a conceptual management course; it provides other instructors of Organizational Behavior or Management with a valid, ready-to-use pedagogy and quality teaching materials to improve the relevance and effectiveness of their teaching; and it may inspire more instructors of management courses to explore their own comfortable pedagogies in developing business students skills.

  • Recai Coskun Recai Coskun

POSITIONING SCHOOL OR RESOURCE-BASED APPROACH? A QUALITATIVE RESEARCH ON THE MANAGERS' VIEWS OF STRATEGIC ISSUES EXTENDED ABSTRACT There has been an ongoing debate in the literature of strategic management about how to classify schools of thoughts in the first place and whether it is necessary to fragmentise, integrate or synthesise those schools in the second (Mintzberg, 1988; 1990; Volberda ve Elfring, 2001). Since the beginning of 2000's an ostensibly consensus amongst scholars has been realized over this issue that the number of schools needed to be reduced and in many studies combining those schools into two main categories, i.e. the Positioning School (TPS) and the Resource-Based Approach (RBA) became mainstream attitude (Geyik, 2005; Herrmann, (2005). Depending on this background, this study aims to determine whether the managers, in their evaluation of strategic issues were akin to the arguments of the TPS or the RBA. For this end, after carrying out a literature review several research questions were developed: a) What content do managers ascribe to the term of strategy? b) Are the discourses of the managers close to the terminologies of TPS or the RBA? c) Do managers use a coherent strategic language when evaluating the strategic management process? d) Is it possible to make inferences from the statements of the managers in support of the attempts to integrate or synthesise TPS and the RBA? In this study a qualitative research approach which makes available to examine the phenomena in focus with a detailed inquiry is preferred (Berg, 2001; Flick, 2009). By using a purposive sampling technique six large-scale companies representing different industries were included into the research. Semi-structured face to face interviews were carried out with seven senior managers who had knowledge regarding the evolution of the companies from their establishment to the present day and are familiar with the strategic decisions were made during this period of time. The data were analysed in accordance with the views of TPO and the RBA by using a qualitative content analysis technique. Several findings were emerged depending on the analysis of the interviews: Firstly, it was evident that the managers attribute different contents and meanings to the strategic and managerial concepts. Secondly, while talking about strategic issues the managers tend to use a dual language the one which they gained from their formal education and the other one which they prefer in their daily professional routines. It is also understood that they tend to use some sophistic strategic terminology to impress the researchers by demonstrating that they are as much capable of using academic terminology as the researchers do. However, when they speak about their firms and real life strategic issues their language transforms to a jargon-like firm/industry specific professional discourse. Thirdly, managers' formal statements are predominantly affected by the discourse of TPS as this schools' views dominate the formal higher education business administration curriculums and the strategic management practices in the public and private sectors in Turkey. Finally, it was observed that for managers, desire of consistency in their managerial discourse was not an issue at all as they could easily switch their terminology and language between the views of TPS and the RBA. All in all, it was determined that the opinions of the managers are close to the arguments of TPS. Moreover, the language which the managers preferred was significantly affected by the opinions of TPS. However, it was also evident that in certain situations the managers tend to use a dual language and adopted the discourses of the both approaches. Hence, we suggest that this duality in managerial language should be scrutinized in the future studies. In addition, it was determined that the managers had developed a pragmatist perspective by prioritizing practical results rather than seeking consistency in their discourses. The findings of this study did not provide any concrete proofs to support or reject the arguments of integrating or synthesizing the views of TPS and the RBA. A partial inference can be made from the managers' attitude of using both approaches' arguments whenever they found it appropriate. Hence, if the practice comes before the theory then this finding might imply that by following the managerial practices the academics in the strategic management discipline will be able to synthesize the views of the different schools of thoughts and build a grand theory in the foreseen future. In the future studies, we suggest that the data obtained through semi-structured face to face interviews were insufficient to reveal the implicit meanings behind the formal expressions of the managers. For this reason, we strongly emphasise the need of using panel and follow up interviews in order to provide a longitudinal perspective and enrich the data sets that allow the researchers to figure out the implicit messages embedded into the formal statements.

  • Yarub Alsiede Yarub Alsiede

Abstract Purpose: studying and analyzing the nature of uncertainty as part of strategy formulation, through analyzing the uncertainty faced by managers in the modern business environment characterized by high complexity and dynamism, though developing of an idea about the uncertainty cases and how enable the mind to understand these cases. Methodology: It was the use of inductive and analytical approach, in order to study the accumulation of knowledge towards development areas that could contribute to strengthening the strategy formulation. Findings: Mentoring the future will not make the success for business organization but thought business organization ability to developing share mental model for the future will make the future successful. through multiple mental models we can enhance the learning process from the future and that contribute to developing memory of the future that help managers to manage the uncertainty. Originality and value: development approach to strategy formulation as organic process through which to understand the uncertainty, by focusing on the expansion the ideas of cognitive and learning school through orientation towards learning from the future and future memory. Mintzberg consider both cognitive and learning school as Natural by contras with planning school tend to be rational, and as oriented to External word considered both cognitive and learning school tend to be able to deal with Unpredictable and confusing by compare with planning school tend to by controllable and comprehensible, that result lead to expanding in the ideas of both cognitive and learning school Keywords: uncertainty, strategic conversation, mental model, learning and learning from the future, future memory.

The concept of strategic sourcing recognizes that procurement is not just a cost function, but supports the firm's effort to achieve its long-term objectives. Organizations more and more expect from their chief procurement officer (CPO) to develop long-term and short-term plans in procurement. Typically, however, procurement is driven by a tactical spend management sourcing process aimed at cost saving targets, which is not able to support organizations in achieving strategic objectives like innovation, value creation, sustainable competitive advantage and long-term partnerships. A paradigm shift from a tactical way of thinking about sourcing to a more strategic way of thinking is needed by focusing on value-driven targets. To help realize the new paradigm of value-driven management in sourcing, we designed a systemic view on strategic sourcing based on Service-Dominant Logic and (service) systems thinking. We used this systemic view to develop the conceptual basis of a new modeling and analysis language that helps organizations in exploring sourcing alternatives according to value-driven management.

  • Shah Rahman Shah Rahman

This presentation, given at the 2nd Brazilian PVC Congress in Sao Paulo in June 2007, provides a broad overview of the PVC pipe market globally and in the United States. It provides a historical perspective on the development of PVC as a piping material, and discusses specifics of American PVC pressure and gravity pipe standards, joint types, and gaskets and sealing systems.