Chapter 1 - The Nature of Strategic Management
Overview
Chapter 1 introduces the basic terms in strategic management. This chapter presents the
comprehensive model for strategic planning that appears in each subsequent chapter and provides
a unifying, logical flow for the entire textbook. This chapter describes the benefits of doing
strategic planning, the drawbacks of not doing strategic planning, and the pitfalls of doing
strategic planning incorrectly.
Learning Objectives
The Chapter 1 Learning Objectives presented in the textbook are reiterated below:
1. Describe the strategic-management process.
2. Discuss the nature of strategy formulation, implementation, and evaluation activities.
3. Define and give examples of key terms in strategic management.
4. Explain the need for integrating analysis and intuition in strategic management.
5. Discuss the nature and role of a chief strategy officer (CSO).
6. Describe the benefits of good strategic management.
7. Explain why some firms do no strategic planning.
8. Discuss the relevance of Sun Tzu’s The Art of War to strategic management.
9. Discuss how a firm may achieve sustained competitive advantage.
Teaching Tips
1. Spend about 20 minutes going over the comprehensive strategic-management
model in Figure 1-1, highlighting each component part with examples. This model
,integrates all the chapters in the book in a clear process approach to this course.
Going over this model is an excellent way to cover the terms introduced in the
chapter.
2. Pull up the new and improved author website for this textbook, because it has
great resources for students. The URL is www.strategyclub.com. In class, listen to
the 4-minute author video at this website for “Why is Chapter 1 so Important?”
Spend perhaps a whole class on the author website using the many resources there
to give an overview of the whole strategic-management process.
3. The Edward Deming quote mentioned in Chapter 1 (In God We Trust, All Others
Bring the Data) is vitally important in this course, because students tend to use
vague terms throughout their case analysis. Vagueness is detrimental to
development of any strategic plan. Therefore, highlight and emphasize the
relevance and importance of the Deming quote and tell students that vagueness is
disastrous in this course. Strategies must be formulated to the extent possible on
factual, specific, underlying key internal and external factors, rather than trying to
formulate strategies based on general statements, opinion, or intuition.
4. A new feature of this edition is the Academic Research Capsules that reveal
current research findings on various strategy topics. The first capsule appears early
in Chapter 1 titled “When are Chief Strategy Officers (CSOs) Hired/Appointed?”
Mention this new feature and this first capsule.
5. Go over the new Table 1-1 that reveals ten famous, strategic planning relevant
quotes from NFL coaches. These quotes are all applicable to effectively formulating
and implementing strategies.
6. Make sure students can define and give an example of all the strategic-
management terms introduced in this chapter – because these terms are used
throughout the textbook and in most businesses.
7. Highlight Figure 1-2 on “the benefits of doing strategic planning.” Use that
exhibit to emphasize the many benefits of doing strategic planning, as well as the
drawbacks of not doing strategic planning.
8. Ask students to raise their hand if they played football, basketball, or soccer for
the college/university. Ask several of those athletes to “tell the class how important
having a good game plan is to the success of an athletic team.” Associate their
answers to the importance of a business having a good game plan, i.e., strategic
plan.
,9. Regarding the “Comparing Business and Military Strategy” section, emphasize to
students that there are countless examples in military history where a superior army
was defeated by a smaller army that had a better strategic plan. The famous
general, Alexander the Great, who never lost a battle, said (paraphrased): “I’d
rather face an army of lions led by a sheep, than an army of sheep led by a lion.”
That quote emphasizes the importance of strategic planning, and having an
excellent strategist. All the Notable Quotes given at the www.strategyclub.com
website under Student Resources are outstanding.
10. Go over the “Implications for Strategists” (new to the 16 th edition) and the
“Implications for Students” sections at the end of this chapter.
11. For the first time ever, each chapter concludes with a mini-case designed to
apply chapter concepts and techniques. The Chapter 1 mini-case is on Kroger
Company – an American firm that may do the best job of strategic planning among
all firms. Go over the mini-case in this and all chapters.
12. All end-of-chapter review questions are excellent to go over as many as possible
in class. Sometimes in class, the authors will assign every student a question and
give the class 10 minutes to develop answers and then let each student give the
class the answer, and then comment on the answer (answers to all questions are
given later in this manual). This is a great way to promote teacher/student
interaction.
13. Ask students to read the Hershey Company Cohesion Case presented after
Chapter 1 because a third of all the end-of-chapter exercises at the end of every
chapter apply chapter concepts to the Hershey case – thus preparing students for
developing a case analysis on their assigned company. Divide students into 3- or 4-
person teams within the first two weeks of class and assign to them one of the 30
cases in the book, and schedule a day for the teams to each give a 15 to 20 minute
oral presentation revealing their recommended three-year strategic plan for the
firm. The authors and most professors using this book use this approach.
14. It is important to spend some class time also on Exercise 1B that applies the
strategic-management process to the Hershey Company Cohesion Case. Visit the
websites mentioned in this exercise. Show students important strategic information
at those websites. Make sure students understand the basic strategic-planning
process as applied to Hershey and revealed in that exercise. Associated exercises at
the end of other chapters utilize the information obtained from Exercise 1B and
collectively help prepare students for performing case analysis on their assigned
company.
, 15. A popular exercise at the end of Chapter 1 is 1D titled “Strategic Planning for My
University.” You could spend a whole class day on this exercise alone. Definitely
spend some time on this exercise because associated exercises at the end of each
chapter apply strategy concepts to your college/university. Students are very
knowledgeable about their university and their opinions differ widely as to
strengths/weaknesses and opportunities/threats/strategies. Thus, spending class
time working through this exercise will reveal to students how opinions vary
regarding the importance of various factors/issues; opinions also vary in companies
doing strategic planning. We use this exercise also to facilitate teacher/student
interaction as well as student/student interaction, which is especially beneficial to
do early in the semester.
16. You could spend a whole class period on Exercise 1F. The author website is
extremely useful for students. The Excel template is vital, the videos are well worth
showing, the case and chapter updates are excellent, and the Student Resources are
very helpful. The two sample case analysis projects showcase how to prepare a
strategic plan.
17. The new Exercise 1G could be assigned for extra credit because students enjoy
comparing and contrasting game plans with strategic plans.
18. Skip over to the last two pages in the book (pp. 364-365), i.e., in the How To
Analysis A Case section that appears after Chapter 11. Go through that basic
timeline/outline for a strategic management case analysis – so students will know
what is expected of them in terms of preparing their case analysis/project for the
course. Refer back to these three pages often in the course, because students will
often ask what they are supposed to do or prepare to present.
19. Encourage your students to use the free Excel Student Template at the author
website at www.strategyclub.com. Your students will find this template to be
immensely helpful in this course. Plus, two example strategic-management case
projects are provided at this website as a guide for students to follow.
Answers to End-of-Chapter 1 Review Questions
1-1. Diagram the comprehensive strategic-management model.
Overview
Chapter 1 introduces the basic terms in strategic management. This chapter presents the
comprehensive model for strategic planning that appears in each subsequent chapter and provides
a unifying, logical flow for the entire textbook. This chapter describes the benefits of doing
strategic planning, the drawbacks of not doing strategic planning, and the pitfalls of doing
strategic planning incorrectly.
Learning Objectives
The Chapter 1 Learning Objectives presented in the textbook are reiterated below:
1. Describe the strategic-management process.
2. Discuss the nature of strategy formulation, implementation, and evaluation activities.
3. Define and give examples of key terms in strategic management.
4. Explain the need for integrating analysis and intuition in strategic management.
5. Discuss the nature and role of a chief strategy officer (CSO).
6. Describe the benefits of good strategic management.
7. Explain why some firms do no strategic planning.
8. Discuss the relevance of Sun Tzu’s The Art of War to strategic management.
9. Discuss how a firm may achieve sustained competitive advantage.
Teaching Tips
1. Spend about 20 minutes going over the comprehensive strategic-management
model in Figure 1-1, highlighting each component part with examples. This model
,integrates all the chapters in the book in a clear process approach to this course.
Going over this model is an excellent way to cover the terms introduced in the
chapter.
2. Pull up the new and improved author website for this textbook, because it has
great resources for students. The URL is www.strategyclub.com. In class, listen to
the 4-minute author video at this website for “Why is Chapter 1 so Important?”
Spend perhaps a whole class on the author website using the many resources there
to give an overview of the whole strategic-management process.
3. The Edward Deming quote mentioned in Chapter 1 (In God We Trust, All Others
Bring the Data) is vitally important in this course, because students tend to use
vague terms throughout their case analysis. Vagueness is detrimental to
development of any strategic plan. Therefore, highlight and emphasize the
relevance and importance of the Deming quote and tell students that vagueness is
disastrous in this course. Strategies must be formulated to the extent possible on
factual, specific, underlying key internal and external factors, rather than trying to
formulate strategies based on general statements, opinion, or intuition.
4. A new feature of this edition is the Academic Research Capsules that reveal
current research findings on various strategy topics. The first capsule appears early
in Chapter 1 titled “When are Chief Strategy Officers (CSOs) Hired/Appointed?”
Mention this new feature and this first capsule.
5. Go over the new Table 1-1 that reveals ten famous, strategic planning relevant
quotes from NFL coaches. These quotes are all applicable to effectively formulating
and implementing strategies.
6. Make sure students can define and give an example of all the strategic-
management terms introduced in this chapter – because these terms are used
throughout the textbook and in most businesses.
7. Highlight Figure 1-2 on “the benefits of doing strategic planning.” Use that
exhibit to emphasize the many benefits of doing strategic planning, as well as the
drawbacks of not doing strategic planning.
8. Ask students to raise their hand if they played football, basketball, or soccer for
the college/university. Ask several of those athletes to “tell the class how important
having a good game plan is to the success of an athletic team.” Associate their
answers to the importance of a business having a good game plan, i.e., strategic
plan.
,9. Regarding the “Comparing Business and Military Strategy” section, emphasize to
students that there are countless examples in military history where a superior army
was defeated by a smaller army that had a better strategic plan. The famous
general, Alexander the Great, who never lost a battle, said (paraphrased): “I’d
rather face an army of lions led by a sheep, than an army of sheep led by a lion.”
That quote emphasizes the importance of strategic planning, and having an
excellent strategist. All the Notable Quotes given at the www.strategyclub.com
website under Student Resources are outstanding.
10. Go over the “Implications for Strategists” (new to the 16 th edition) and the
“Implications for Students” sections at the end of this chapter.
11. For the first time ever, each chapter concludes with a mini-case designed to
apply chapter concepts and techniques. The Chapter 1 mini-case is on Kroger
Company – an American firm that may do the best job of strategic planning among
all firms. Go over the mini-case in this and all chapters.
12. All end-of-chapter review questions are excellent to go over as many as possible
in class. Sometimes in class, the authors will assign every student a question and
give the class 10 minutes to develop answers and then let each student give the
class the answer, and then comment on the answer (answers to all questions are
given later in this manual). This is a great way to promote teacher/student
interaction.
13. Ask students to read the Hershey Company Cohesion Case presented after
Chapter 1 because a third of all the end-of-chapter exercises at the end of every
chapter apply chapter concepts to the Hershey case – thus preparing students for
developing a case analysis on their assigned company. Divide students into 3- or 4-
person teams within the first two weeks of class and assign to them one of the 30
cases in the book, and schedule a day for the teams to each give a 15 to 20 minute
oral presentation revealing their recommended three-year strategic plan for the
firm. The authors and most professors using this book use this approach.
14. It is important to spend some class time also on Exercise 1B that applies the
strategic-management process to the Hershey Company Cohesion Case. Visit the
websites mentioned in this exercise. Show students important strategic information
at those websites. Make sure students understand the basic strategic-planning
process as applied to Hershey and revealed in that exercise. Associated exercises at
the end of other chapters utilize the information obtained from Exercise 1B and
collectively help prepare students for performing case analysis on their assigned
company.
, 15. A popular exercise at the end of Chapter 1 is 1D titled “Strategic Planning for My
University.” You could spend a whole class day on this exercise alone. Definitely
spend some time on this exercise because associated exercises at the end of each
chapter apply strategy concepts to your college/university. Students are very
knowledgeable about their university and their opinions differ widely as to
strengths/weaknesses and opportunities/threats/strategies. Thus, spending class
time working through this exercise will reveal to students how opinions vary
regarding the importance of various factors/issues; opinions also vary in companies
doing strategic planning. We use this exercise also to facilitate teacher/student
interaction as well as student/student interaction, which is especially beneficial to
do early in the semester.
16. You could spend a whole class period on Exercise 1F. The author website is
extremely useful for students. The Excel template is vital, the videos are well worth
showing, the case and chapter updates are excellent, and the Student Resources are
very helpful. The two sample case analysis projects showcase how to prepare a
strategic plan.
17. The new Exercise 1G could be assigned for extra credit because students enjoy
comparing and contrasting game plans with strategic plans.
18. Skip over to the last two pages in the book (pp. 364-365), i.e., in the How To
Analysis A Case section that appears after Chapter 11. Go through that basic
timeline/outline for a strategic management case analysis – so students will know
what is expected of them in terms of preparing their case analysis/project for the
course. Refer back to these three pages often in the course, because students will
often ask what they are supposed to do or prepare to present.
19. Encourage your students to use the free Excel Student Template at the author
website at www.strategyclub.com. Your students will find this template to be
immensely helpful in this course. Plus, two example strategic-management case
projects are provided at this website as a guide for students to follow.
Answers to End-of-Chapter 1 Review Questions
1-1. Diagram the comprehensive strategic-management model.
