SOLUTIONS MANUAL Strategic Management Text and Cases 10/E Dess
part 1 Strategic Analysis
Chapter 1
Strategic Management: Creating Competitive Advantages ... 1-2
What Is Strategic Management? .............................................................. 1-4
Defining Strategic Management ..................................................................................... 1-4
The Four Key Attributes of Strategic Management ........................................................ 1-5
The Strategic Management Process.......................................................... 1-6
Intended versus Realized Strategies ................................................................................ 1-6
Strategy Analysis ............................................................................................................. 1-7
Strategy Formulation ...................................................................................................... 1-7
Strategy Implementation ................................................................................................. 1-8
The Role of Corporate Governance
and Stakeholder Management .................................................................. 1-8
Alternative Perspectives of Stakeholder Management .................................................... 1-11
Social Responsibility and Environmental Sustainability:
Moving Beyond the Immediate Stakeholders ...................................................... 1-11
The Strategic Management Perspective:
An Imperative throughout the Organization .......................................... 1-14
Ensuring Coherence in Strategic Direction ............................................. 1-15
Organizational Vision ..................................................................................................... 1-16
Mission Statements .......................................................................................................... 1-17
Strategic Objectives ........................................................................................................ 1-18
Issue for Debate 1-19
Reflecting on Career Implications ............................................................ 1-21
Summary ..................................................................................................... 1-23
End-of-Chapter Teaching Notes 1-25
Connect Resources 1-31
,Chapter 1
Strategic Management:
Creating Competitive Advantages
Summary/Objectives
PowerPoint Slide 2: Learning Objectives
At the heart of strategic management is the question: “How and why do some firms outperform
others?” The challenge to managers is to develop and implement strategies that will provide
competitive advantages that will be sustainable over time. This chapter is divided into five
sections.
1. The first section addresses the broad question: “What is strategic management?”
Here, we define strategic management as “consisting of the analysis, decisions, and
actions an organization undertakes to create and sustain competitive advantages.” We
also address the four key attributes of strategic management: concern with overall
objectives; involvement of multiple stakeholders; incorporation of short- and long-
term perspectives; and recognition of tradeoffs between effectiveness and efficiency.
We also introduce the concept of “ambidextrous behaviors”—the need to combine
alignment and adaptability.
2. The second section discusses the strategic management process. Here, we present the
three processes—analysis, formulation, and implementation—that provide the
framework for the overall organization of the thirteen chapters of the book.
3. The third section focuses on the vital role of corporate governance, which is essential
to ensuring that the actions of a firm’s management are consistent with the goals of its
owners—the shareholders. We also address stakeholder management. It must be
taken into account throughout the strategic management process. Although the
interests of stakeholders may, at times, conflict, we discuss how firms are able to
achieve “symbiosis” among stakeholders wherein various interests are considered
interdependent and can be attained simultaneously. We address the importance of
social responsibility, including environmental sustainability, as well as challenges
associated with making the case for sustainability initiatives.
4. The fourth section addresses today’s greater need for a strategic management
perspective throughout the organization. With the emergence of the knowledge of
economy and globalization, leaders must mobilize people throughout the
organization.
5. The fifth section discusses the need for organizations to attain consistency in their
vision, mission, and strategic objectives. Collectively, they form a hierarchy of goals.
, Lecture/Discussion Outline
We begin the chapter in LEARNING FROM MISTAKES with a clever quote from Arthur
Martinez, Sears’s former chairman: “Today’s peacock is tomorrow’s feather duster” to help
illustrate the rapid turnover among the Fortune 500 firms over a period of time. With rapid
changing technologies and intensified global competition success can be temporary, and new
entrants can shake up long-standing industries.
The SUPPLEMENT below, from a website provides an interesting perspective on the
digital economy.
Extra Example: The Digital Disruption Has Already Happened
• World’s largest taxi company owns no taxis. (Uber)
• Largest accommodation provider owns no real estate. (Airbnb)
• Largest phone companies own no telco infrastructure. (Skype, WeChat)
• World’s most valuable retailer has no inventory. (Alibab)
• Most popular media owner owns no content. (Facebook)
• Fastest growing banks have no actual money. (SocietyOne)
• World’s largest movie house owns no cinemas. (Netflix)
• Largest software vendors don’t write the apps. (Apple and Google)
Source: www.ibmforentreprenuers.com.
Discussion Question 1: What are the implications for your careers? (This is a rather
general question, but it might help remind students that they must be sensitive to changes
in industry dynamics that could provide new opportunities—as well as, perhaps, erode
opportunities that they may have thought they had in a particular industry.)
Teaching Tip: By raising the “career implications” question, you will have the
opportunity to briefly introduce the concept of the sustainability of competitive
advantage(s), i.e., the criteria of rare, valuable, difficult to copy (imitate and substitute)
that we will address at length in Chapters 3 and 5. The point that can be made is that
students should strive to develop skills and capabilities that satisfy these four criteria to
enjoy greater career success. This helps to illustrate some very practical implications of
strategy concepts and heighten student interest.
The opening case is about a company, Mattress Firm, which failed because of (1) some of
the strategic actions that it undertook, and (2) strong competition that emerged—principally from
online rivals who had some rather significant competitive advantages. Thus, it helps to illustrate
both the romantic view as well as the external control view of leadership, respectively.
Discussion Question 2: What actions should Mattress Firm have taken when it became
apparent that there were some nimble, online rivals entering the industry?
Response Guidelines: This question should result in some interesting perspectives. Some
students may feel that the situation was rather “hopeless” and that nothing could be done—in
view of the rather significant advantages that rivals such as Casper enjoyed. But, others may
, come up with some constructive ideas such as creating some online options themselves to help
blunt these new rivals. To do that, of course, would require investment—which would mean that
Mattress Firm should have reduced the investment that was the result of their ambitious growth
plans. Further, management could have been more introspective in what some of their customers
(and potential customers!) believed were negative aspects of the brick-and-mortar companies in
this industry, e.g., salespersons “rushing” to have them make a decision on a major purchase that
needs to last many years, complicated and expensive delivery options, etc. Thus, Mattress Firm
could have endeavored to explore ways in which they could have enhanced the customer buying
experience.
Discussion Question 3: Casper Sleep Inc. has certainly become a strong competitor in
this industry. In your view, what could they do to further strengthen their position?
Response Guidelines: Part of the answer, of course, is revealed in the last sentence in the
case, i.e., expand into other products such as bed frames, sheets, pillow, and dog mattresses.
Such related products would provide additional revenues and margins—and, ideally, there would
be rather minimal transportation costs because some of these products could be shipped along
with the mattress purchase. Casper could also conduct marketing surveys to determine how they
could further improve the customer experience as well as generate ideas on what additional
products they could add to their portfolio. Additionally, Casper could explore partnerships with
other producers of similar products as well as joint marketing initiatives.
I. What Is Strategic Management?
PowerPoint Slide 3: The Importance of Leadership
PowerPoint Slide 4: Two Perspectives of Leadership
PowerPoint Slide 5: Leaders Can Make a Difference
PowerPoint Slide 6: Defining Strategic Management
PowerPoint Slide 7: Two Fundamental Questions
PowerPoint Slide 8: Strategic Management
PowerPoint Slide 9 Strategic Management Trade-offs
We point out that it is very important for managers to see their jobs as more than just custodians
of the “status quo.” Rather, they must proactively anticipate change and continually refine, as
well as, when necessary, make significant changes to their strategies. This has become
particularly important as competitive environments become characterized by increasing rates of
unpredictable change.
A. Defining Strategic Management
We define strategic management as “consisting of the analysis, decisions, and actions an
organization undertakes in order to create and sustain competitive advantages.” We believe this
definition captures two main elements of the field of strategic management.
part 1 Strategic Analysis
Chapter 1
Strategic Management: Creating Competitive Advantages ... 1-2
What Is Strategic Management? .............................................................. 1-4
Defining Strategic Management ..................................................................................... 1-4
The Four Key Attributes of Strategic Management ........................................................ 1-5
The Strategic Management Process.......................................................... 1-6
Intended versus Realized Strategies ................................................................................ 1-6
Strategy Analysis ............................................................................................................. 1-7
Strategy Formulation ...................................................................................................... 1-7
Strategy Implementation ................................................................................................. 1-8
The Role of Corporate Governance
and Stakeholder Management .................................................................. 1-8
Alternative Perspectives of Stakeholder Management .................................................... 1-11
Social Responsibility and Environmental Sustainability:
Moving Beyond the Immediate Stakeholders ...................................................... 1-11
The Strategic Management Perspective:
An Imperative throughout the Organization .......................................... 1-14
Ensuring Coherence in Strategic Direction ............................................. 1-15
Organizational Vision ..................................................................................................... 1-16
Mission Statements .......................................................................................................... 1-17
Strategic Objectives ........................................................................................................ 1-18
Issue for Debate 1-19
Reflecting on Career Implications ............................................................ 1-21
Summary ..................................................................................................... 1-23
End-of-Chapter Teaching Notes 1-25
Connect Resources 1-31
,Chapter 1
Strategic Management:
Creating Competitive Advantages
Summary/Objectives
PowerPoint Slide 2: Learning Objectives
At the heart of strategic management is the question: “How and why do some firms outperform
others?” The challenge to managers is to develop and implement strategies that will provide
competitive advantages that will be sustainable over time. This chapter is divided into five
sections.
1. The first section addresses the broad question: “What is strategic management?”
Here, we define strategic management as “consisting of the analysis, decisions, and
actions an organization undertakes to create and sustain competitive advantages.” We
also address the four key attributes of strategic management: concern with overall
objectives; involvement of multiple stakeholders; incorporation of short- and long-
term perspectives; and recognition of tradeoffs between effectiveness and efficiency.
We also introduce the concept of “ambidextrous behaviors”—the need to combine
alignment and adaptability.
2. The second section discusses the strategic management process. Here, we present the
three processes—analysis, formulation, and implementation—that provide the
framework for the overall organization of the thirteen chapters of the book.
3. The third section focuses on the vital role of corporate governance, which is essential
to ensuring that the actions of a firm’s management are consistent with the goals of its
owners—the shareholders. We also address stakeholder management. It must be
taken into account throughout the strategic management process. Although the
interests of stakeholders may, at times, conflict, we discuss how firms are able to
achieve “symbiosis” among stakeholders wherein various interests are considered
interdependent and can be attained simultaneously. We address the importance of
social responsibility, including environmental sustainability, as well as challenges
associated with making the case for sustainability initiatives.
4. The fourth section addresses today’s greater need for a strategic management
perspective throughout the organization. With the emergence of the knowledge of
economy and globalization, leaders must mobilize people throughout the
organization.
5. The fifth section discusses the need for organizations to attain consistency in their
vision, mission, and strategic objectives. Collectively, they form a hierarchy of goals.
, Lecture/Discussion Outline
We begin the chapter in LEARNING FROM MISTAKES with a clever quote from Arthur
Martinez, Sears’s former chairman: “Today’s peacock is tomorrow’s feather duster” to help
illustrate the rapid turnover among the Fortune 500 firms over a period of time. With rapid
changing technologies and intensified global competition success can be temporary, and new
entrants can shake up long-standing industries.
The SUPPLEMENT below, from a website provides an interesting perspective on the
digital economy.
Extra Example: The Digital Disruption Has Already Happened
• World’s largest taxi company owns no taxis. (Uber)
• Largest accommodation provider owns no real estate. (Airbnb)
• Largest phone companies own no telco infrastructure. (Skype, WeChat)
• World’s most valuable retailer has no inventory. (Alibab)
• Most popular media owner owns no content. (Facebook)
• Fastest growing banks have no actual money. (SocietyOne)
• World’s largest movie house owns no cinemas. (Netflix)
• Largest software vendors don’t write the apps. (Apple and Google)
Source: www.ibmforentreprenuers.com.
Discussion Question 1: What are the implications for your careers? (This is a rather
general question, but it might help remind students that they must be sensitive to changes
in industry dynamics that could provide new opportunities—as well as, perhaps, erode
opportunities that they may have thought they had in a particular industry.)
Teaching Tip: By raising the “career implications” question, you will have the
opportunity to briefly introduce the concept of the sustainability of competitive
advantage(s), i.e., the criteria of rare, valuable, difficult to copy (imitate and substitute)
that we will address at length in Chapters 3 and 5. The point that can be made is that
students should strive to develop skills and capabilities that satisfy these four criteria to
enjoy greater career success. This helps to illustrate some very practical implications of
strategy concepts and heighten student interest.
The opening case is about a company, Mattress Firm, which failed because of (1) some of
the strategic actions that it undertook, and (2) strong competition that emerged—principally from
online rivals who had some rather significant competitive advantages. Thus, it helps to illustrate
both the romantic view as well as the external control view of leadership, respectively.
Discussion Question 2: What actions should Mattress Firm have taken when it became
apparent that there were some nimble, online rivals entering the industry?
Response Guidelines: This question should result in some interesting perspectives. Some
students may feel that the situation was rather “hopeless” and that nothing could be done—in
view of the rather significant advantages that rivals such as Casper enjoyed. But, others may
, come up with some constructive ideas such as creating some online options themselves to help
blunt these new rivals. To do that, of course, would require investment—which would mean that
Mattress Firm should have reduced the investment that was the result of their ambitious growth
plans. Further, management could have been more introspective in what some of their customers
(and potential customers!) believed were negative aspects of the brick-and-mortar companies in
this industry, e.g., salespersons “rushing” to have them make a decision on a major purchase that
needs to last many years, complicated and expensive delivery options, etc. Thus, Mattress Firm
could have endeavored to explore ways in which they could have enhanced the customer buying
experience.
Discussion Question 3: Casper Sleep Inc. has certainly become a strong competitor in
this industry. In your view, what could they do to further strengthen their position?
Response Guidelines: Part of the answer, of course, is revealed in the last sentence in the
case, i.e., expand into other products such as bed frames, sheets, pillow, and dog mattresses.
Such related products would provide additional revenues and margins—and, ideally, there would
be rather minimal transportation costs because some of these products could be shipped along
with the mattress purchase. Casper could also conduct marketing surveys to determine how they
could further improve the customer experience as well as generate ideas on what additional
products they could add to their portfolio. Additionally, Casper could explore partnerships with
other producers of similar products as well as joint marketing initiatives.
I. What Is Strategic Management?
PowerPoint Slide 3: The Importance of Leadership
PowerPoint Slide 4: Two Perspectives of Leadership
PowerPoint Slide 5: Leaders Can Make a Difference
PowerPoint Slide 6: Defining Strategic Management
PowerPoint Slide 7: Two Fundamental Questions
PowerPoint Slide 8: Strategic Management
PowerPoint Slide 9 Strategic Management Trade-offs
We point out that it is very important for managers to see their jobs as more than just custodians
of the “status quo.” Rather, they must proactively anticipate change and continually refine, as
well as, when necessary, make significant changes to their strategies. This has become
particularly important as competitive environments become characterized by increasing rates of
unpredictable change.
A. Defining Strategic Management
We define strategic management as “consisting of the analysis, decisions, and actions an
organization undertakes in order to create and sustain competitive advantages.” We believe this
definition captures two main elements of the field of strategic management.
