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Strategic Management

Purpose of Course  showclose

What is strategy?  When your friend tells you that his “strategy” in basketball is to win, he is not telling you a strategy at all.  A strategy is a plan of action designed to achieve a goal—in the case of your friend, a more appropriately defined strategy for his basketball game would be: “I am going to apply defensive pressure and force the opposing team to make mistakes with the end goal of winning the game.”  In this course, you will learn that you must first clearly define your goals before you develop strategies in order to achieve them.  You will also learn that strategy in business is similar to strategy in sports, war, or politics; the parallels are so close that early business strategists studied military strategies in depth.  The science of strategy development has developed beyond this by now, but the parallels still exist. Strategic Management involves two processes: first, the process of identifying specific goals for a firm and designing strategies to achieve those goals, and second, the process of implementing those strategies.  It is easy to say that your goal is to increase sales by 50% in three years, but how do you go about achieving that goal?  Are you going to lower prices, acquire a competitor, move into other businesses, or something else?  Assuming you are going to lower prices, how are you going to do so and keep profits up?  These are the sorts of questions that strategists must answer. This course is the capstone of the business major, because it incorporates elements from all of the core courses you should have already completed.  Almost every topic should be familiar to you to some degree; however, Strategic Management ties them all together.  This course begins with an introduction to the field and the definition of some important terms and concepts.  You will then move  on to identifying goals and formulating strategies before addressing implementation topics.  This course will conclude with strategies for the 21st century.  This course should be taken after all core courses have been completed and, ideally, near the end of your completion of the elective courses.

Course Information  showclose

Welcome to BUS501, Strategic Management.  Below, please find some general information about the course and its requirements.
 
Primary Resources: This course is comprised of a range of different free, online materials.  However, the course makes primary use of the following materials:
Requirements for Completion: In order to complete this course, you will need to work through each unit and all of its assigned materials.  Pay special attention to Unit 1 as it lays the groundwork for understanding the more advanced, exploratory material
presented in later units.  You will also need to complete:
  • Unit 1 Quiz and Thought Question
  • Unit 2 Quiz and Thought Question
  • Unit 3 Quiz and Thought Question
  • Unit 4 Quiz and Thought Question
  • Unit 5 Quiz and Thought Question
  • Final Exam
Note that you will only receive an official grade on your Final Exam.  However, in order to adequately prepare for this exam, you will need to work through the quizzes and
thought questions for each unit.
 
In order to “pass” this course, you will need to earn a 70% or higher on the Final Exam.  Your score on the exam will be tabulated as soon as you complete it.  If you do not pass the exam, you may take it again.
 
Time Commitment: This course should take you a total of 62.25 hours to complete.  Each unit includes a “time advisory” that lists the amount of time you are expected to spend on each subunit.  These should help you plan your time accordingly.  It may be useful to take a look at these time advisories and to determine how much time you have over the next few weeks to complete each unit, and then to set goals for yourself.  For example, Unit 1 should take you approximately 7.5 hours to complete.  Perhaps you can sit down with your calendar and decide to complete the introduction and subunit 1.1 (a total of 3 hours) on Monday night; subunits 1.2, 1.3, and the Unit 1 Assessment (a total of 4.5 hours) on Tuesday night; etc.
 
Tips/Suggestions: Please take comprehensive notes on each resource.  Keep the learning outcomes at the beginning of each unit in mind as you take notes.  These notes will help serve as a study guide as you prepare for your Final Exam.  Try to keep your answers to the quizzes and thought questions organized; reviewing these will also help you practice for the Final Exam.  

Learning Outcomes  showclose

Upon successful completion of this course, students will be able to:
  • Define strategy, discuss the participants in the strategic management process, and analyze various types of industry structures.
  • Select and apply appropriate strategic management tools to diagnose internal and external factors facing organizations.
  • Define and classify types of competitive advantage and explain associated best practices for creating and maintaining advantages.
  • Explain the most commonly used corporate strategies and analyze alternatives for creating long term value.
  • Apply modern strategic management techniques and choose the best alternatives in the face of rapidly changing technology.
  • Synthesize strategic management theory and concepts to explain competitive advantage in the era of globalization.

Course Requirements  showclose

In order to take this course, you must:

√    Have access to a computer.

√    Have continuous broadband internet access.

√    Have the ability/permission to install plug-ins or software (e.g. Adobe Reader of Flash).

√    Have the ability to download and save files and documents to a computer.

√    Have the ability to open Microsoft files and documents (e.g. .doc, .ppt, .xls, etc.).

√    Be competent in the English language.

√    Have completed the following courses from the “Core Program” of the Business Administration discipline: BUS200/ECON101: Principles of Microeconomics, BUS202: Principles of Finance, BUS203: Marketing Management, BUS300: Operations Management, BUS208: Principles of Management, BUS201/ECON102: Principles of Macroeconomics

Preliminary Information

  • Principles of Management

    You will be prompted to read sections of this book throughout the course. You may choose to download the text in full now and skip to the appropriate section as prompted by the resource boxes below.

    Link: Principles of Management (PDF)

    Terms of Use: This text was adapted by The Saylor Foundation under a Creative Commons Attribution-NonCommercial-Share-Alike 3.0 License without attribution as requested by the work’s original creator or licensee.

Unit Outline show close


Expand All Resources Collapse All Resources
  • Unit 1: Introduction to Strategy  

    In order to understand how to design a strategy, you must first review some definitions.  Accordingly, this unit will open by defining the terms strategy, markets, firms, and management.  This unit will also underscore that firms must identify the market that they compete in.  It is not enough to identify competitors, which will be discussed in a later unit; Microsoft and Google are competitors, but they do not compete in all of the same markets.  Google mostly competes in the search engine market, to which Microsoft has recently started to devote an increasing number of resources in the hopes of competing with the new “decision engine” called Bing.  Likewise, Microsoft competes in the operating system market, and Google has recently diverted resources to compete in this market with Google Chrome OS.   However, competitors do not always compete in the same markets.  For example, Apple competes in many markets with Google and Microsoft, but makes these companies’ products available on its own platform.  Apple does not have a search engine, so it allows Google and Microsoft to compete on the iPhone. 

    Identifying markets and industries gives a firm the foundation it needs to develop goals and strategies.  Microsoft may aim to take 5% of the search engine market from Google and then develop a strategy in which to accomplish this.  This unit focuses on topics such as these as well as issues like designing strategies at different levels within a firm.  There are corporate strategies, but there are also strategies designed by a line of business or department. 

    Time Advisory   show close
    Learning Outcomes   show close
  • 1.1 Definitions  
  • 1.1.1 Strategy  
    • Reading: Tutor2u.net’s “Strategy: What Is Strategy?”

      Link: Tutor2u.net’s “Strategy: What Is Strategy?” (HTML)

      Instructions: Read this article for an overview of strategy, paying close attention to the section on “How Strategy is Managed: Strategic Management,” including the figure that shows the three components of strategic management.  In business, the term “strategy” refers to the calculated decision-making process or plan designed to reach an ultimate business goal.  This reading covers sub-subunits 1.1.1 and 1.1.4.  This reading should take approximately 15 minutes to complete.
        
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

      See a broken link? Please let us know!

  • 1.1.2 Markets  
  • 1.1.3 Firms  
    • Reading: AmosWeb Encyclonomic Web*pedia’s “Firm Objectives”

      Link: AmosWeb Encyclonomic Web*pedia’s “Firm Objectives” (HTML)
       
      Instructions:  Read this article about the role of the firm.  It may help to click on any embedded hyperlinks to read about associated content.  Consider that various stakeholders may look to a firm to maximize different objectives.  Think about how firms are in a competitive marketplace and how they can survive and thrive long term.  This reading should take approximately 30 minutes to complete.
       
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  • 1.1.4 Management  

    Note: Strategic management involves analyzing a strategy (a plan of action designed to obtain a specific result), making a final decision, and implementing that decision.  The reading listed under sub-unit 1.1.1 covers strategic management.  

  • 1.2 Strategic Hierarchy  
    • Reading: QuickMBA’s “Hierarchical Levels of Strategy”

      Link:   QuickMBA’s “Hierarchical Levels of Strategy” (HTML)
       
      Instructions:  Read the entire article.  Think about how each level of strategy is interrelated to the other.  A more complex organizational structure must be strategically managed to be effective and efficient.  Remember that any structure must leverage each part’s strengths.  This reading covers subunits 1.2.1 through 1.2.3.
       
      This article is based on Mintzberg, Lampel, and Ahlstrand’s Strategy Safari, which classifies strategy into ten schools based on various categories.  

      This reading should take approximately 15 minutes to complete.
       
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  • 1.2.1 Corporate  

    Note: This topic is covered by the reading assigned below subunit 1.2.  Please focus on the text below the heading “Corporate Level Strategy.”

  • 1.2.2 Business  

     
    Note: This topic is covered by the reading assigned below subunit 1.2.  Please focus on the text below the heading “Business Level Strategy.”

  • 1.2.3 Functional  

    Note: This topic is covered by the reading assigned below subunit 1.2.  Please focus on the text below the heading “Functional Level Strategy.”

  • 1.3 Industry Analysis  
  • 1.3.1 Industry Classification System  
  • 1.3.2 Porter’s Five Forces  
  • 1.3.2.1 Rivalry  

    Note: This topic is covered by the reading assigned below sub-subunit 1.3.2.  In particular, focus on the text below the subheading “Rivalry.”

  • 1.3.2.2 Barriers to Entry  

    Note: This topic is covered by the reading assigned below sub-subunit 1.3.2.  In particular, focus on the text below the subheading “New Entrants.”

  • 1.3.2.3 Suppliers  

    Note: This topic is covered by the reading assigned below sub-subunit 1.3.2.  In particular, focus on the text below the subheading “Supplier Power.”

  • 1.3.2.4 Substitutes  

    Note: This topic is covered by the reading assigned below sub-subunit 1.3.2.  In particular, focus on the text below the subheading “Substitutes.”

  • 1.3.2.5 Buyers  

    Note: This topic is covered by the reading assigned below sub-subunit 1.3.2.  In particular, focus on the text below the subheading “Buyer Power.”

  • Unit 2: Strategic Planning  

    Strategic planning is the phase of strategic management that comes after goals are defined but before the strategy is put into place.  In this phase, the financial situation of your firm must be taken into account.  For example, if your firm wants to grow, this usually involves additional investment of capital.  If your firm does not have the cash or the means to raise money to spend, then the goal may be dead in its tracks. 

    Likewise, there are external issues that must be taken into consideration.  Google cannot grow much in the advertising space market without facing reviews from the Department of Justice for anti-trust issues.  These are political issues, but there are also economic, social, and technological concerns at play.  By considering these factors, strategic planners can design a strategy that can be implemented without being stalled or shut down by some unforeseen issue. 

    There are many ways to analyze a system and develop a strategic plan.  Hopefully, you will study the methods in this course, and then further research systems that may be best catered to your desired industry of employment. 

    Time Advisory   show close
    Learning Outcomes   show close
    • Lecture: iTunesU: Westmont College: Dr. Dave Newton’s “Intro to Strategic Management – Part 2 4-2” Lecture

      Link: iTunesU: Westmont College: Dr. Dave Newton’s Intro to Strategic Management – Part 2 4-2” Lecture (iTunes U)
       
      Instructions: Listen to this entire lecture prior to diving into the subunits below. The link above will direct you to Westmont College's iTunes U page.  Please click on “View in iTunes” for Dr. Dave Newton’s “Intro to Strategic Management – Part 2 4-2” (4/5/10).  Once iTunes is launched, click the play button next to the lecture.  This is the conclusion to the lecture in the first unit.  You should spend approximately 45 minutes listening to and taking notes on this lecture.
       
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    • Reading: Project Gutenburg’s version of Lao-Tze’s Tao Teh King.

      Link:  Project Gutenburg’s version of Lao-Tze’s Tao Teh King (HTML)
       
      Also available in:
      Google Books

      Instructions:  This is a classic work about balance.  The ideas are abstract, but work to separate out the practical applications, noting how the internal and external environments are perceived.  For example, the phrase “When gold and jade fill the hall, their possessor cannot keep them safe” addresses the question of how much wealth a company ought to accumulate.  In other words, it may be better to distribute profits as they are made rather than build up a large store of cash which can be raided by competitors.  This is a challenging text to read and understand, but is useful and insightful.  You should spend approximately 10 hours reading and studying this text. 
       
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  • 2.1 Organizational Goals  
  • 2.1.1 Mission Statements  

    Note: This topic is covered by the readings assigned below subunit 2.1.  In particular, focus on the “How to Write a Mission Statement” reading, as well as Sections 2, 3, 6, and 7 in Chapter 4 of Principles of Management.

  • 2.1.2 Vision Statements  
    • Reading: Global Text Project: Donald J. McCubbrey’s “Business Fundamentals”

      Link: Global Text Project: Donald J. McCubbrey’s “Business Fundamentals” (PDF)
       
      Instructions: Find Donald McCubbrey’s “Business Fundamentals”.article (note the articles are listed alphabetically by title), and select the “PDF” hyperlink to download the article.  Read pages 244 to 249 to learn how information is gathered and applied within a strategic context.
       
      This reading covers sub-subunits 2.1.3 to 2.1.6.  Reading and taking notes should take you approximately 30 minutes to complete.
       
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  • 2.1.3 Competitive Intelligence  

    Note: This topic is covered by the reading assigned below sub-subunit 2.1.2.  In particular, focus on the “Introduction” and “Definition” sections on pages 244 and 245.

  • 2.1.4 What Is Competitive Intelligence?  

    Note: This topic is covered by the reading assigned below sub-subunit 2.1.2.  In particular, focus on the definition on page 245 and read through the text on page 246 up until “Importance and Goals of Competitive Intelligence.”

  • 2.1.5 Goals and Objectives of Competitive Intelligence  

    Note: This topic is covered by the reading assigned below sub-subunit 2.1.2.  In particular, focus on the text that appears below the heading “Importance and Goals of Competitive Intelligence,” starting on page 246.

  • 2.1.6 Information Collection Techniques  

    Note: This topic is covered by the reading assigned below sub-subunit 2.1.2.  In particular, focus on the text below the heading “Information Collection Techniques,” starting on page 248.

  • 2.2 SWOT Analysis  
  • 2.2.1 Strengths  
  • 2.2.2 Weaknesses  
  • 2.2.3 Opportunities  
  • 2.2.4 Threats  
  • 2.3 PEST Analysis  
    • Reading: MindTools’ “PEST Analysis: Understanding the “Big Picture” Forces of Change”

      Link:  MindTools’ “PEST Analysis: Understanding the “Big Picture” Forces of Change” (HTML)
       
      Instructions:  Read this article along with the examples it includes.  PEST stands for the Political, Economic, Social, and Technological factors that are evaluated in this type of analysis.  This discussion will provide you with a good overview of a PEST and how it can be used to understand the external environment.  The PEST further refines external factors identified through the SWOT.
       
      This reading is an introduction to sub-subunits 2.3.1 through 2.3.4.  This reading should take approximately 30 minutes to complete. 
       
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    • Reading: NetMBA’s “PEST Analysis”

      Link:  NetMBA’s “PEST Analysis” (HTML)
       
      Instructions:  Read this article.  Note how each element of the PEST is further developed through the use of generic questions.  Not all of these questions apply to every organization, but they are a good starting point for determining relevant factors.
        
      This reading covers sub-subunits 2.3.1 to 2.3.4.  This reading should take approximately 15 minutes to complete. 
       
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  • 2.3.1 Political  

    Note: This topic is covered by the readings assigned below subunit 2.3.  Focus on the text below the “Political” headings in each reading.

  • 2.3.2 Economic  

    Note: This topic is covered by the readings assigned below subunit 2.3.  Focus on the text below the “Economic” headings in each reading.

  • 2.3.3 Social  

    Note: This topic is covered by the readings assigned below subunit 2.3.  Focus on the text below the “Social” headings in each reading

  • 2.3.4 Technological  

    Note: This topic is covered by the readings assigned below subunit 2.3.  Focus on the text below the “Technological” headings in each reading.
     

  • 2.4 Factors of Success  
  • 2.4.1 Suitability  

    Note: This topic is covered by the reading assigned below subunit 2.4.  Focus on the text below the subheading “Suitability” on page 2.
     

  • 2.4.2 Feasibility  

    Note: This topic is covered by the reading assigned below subunit 2.4.  Focus on the text below the subheading “Feasibility,” starting on page 3.

  • 2.4.3 Acceptability  

    Note: This topic is covered by the reading assigned below subunit 2.4.  Focus on the text below the subheading “Acceptability” on page 5.

  • Unit 3: Creating Competitive Advantage  

    The success of a strategy depends on the firm’s competitive advantage, or whether its position in a competitive market allows it to achieve its goals—which might include higher returns on investments, greater efficiency or superior effectiveness in comparison to competitors.  What sets your product or service apart from the competition?  Two generic strategies for developing a competitive advantage are cost leadership and differentiation.  Cost leadership is a strategy that Walmart follows.  This company aims to offer the lowest prices in order to draw in customers.  Differentiation is a strategy designed to make your product or service so unique that it stands out from the competition in a desirable way to a target market.  Nintendo launched the Wii video game consul by differentiating their product with motion sensitive controllers.  (This company pursued a cost leadership strategy in conjunction with this differentiation strategy.)

    There are a number of ways to achieve competitive advantage, and they all require a focus on the competitors.  It is important to keep this in mind when studying this unit.  This unit’s primary takeaway should be the concept of sustainable competitive advantage.  As soon as your competitors see a strategy of yours working, they will either copy or leapfrog it.  Sony immediately attempted to copy Nintendo by developing its own motion-sensitive controllers, and Microsoft has moved to motion recognition via cameras.  Sustainable competitive advantage involves not only jumping ahead, but staying there. 

    Time Advisory   show close
    Learning Outcomes   show close
    • Lecture: Academic Earth: Greg Ballard’s “Great Products Aren’t Enough” Lecture

      Link: Academic Earth: Greg Ballard’s “Great Products Aren’t Enough” Lecture (Adobe Flash)
       
      Instructions: Please view this lecture before working through the subunits below.  
       
      Entrepreneur Greg Ballard is the former CEO of Glu Mobile and the current CEO of Transpera.  In this video lecture, hosted by Academic Earth, Ballard uses his own corporate experiences to discuss how a solid product is a good start, but not the only relevant aspect of a successful business.

      Viewing the lecture and taking notes should take approximately 15 minutes.
       
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    • Reading: Project Gutenberg: Niccolò Machiavelli’s The Prince

      Link:  Project Gutenberg: Niccolò Machiavelli’s The Prince (HTML)
       
      Also available in:
      Google Books
      PDF (Click prince.pdf)
       
      Instructions:  This is a classic work about strategy and its usefulness.  As you read this text, think about how the author discusses one’s ability to control his or her own destiny.  Compare this to the idea of fate and consider how other cultures may approach this topic in the strategic management process.  Lastly, analyze the concept of “the ends justifying the means.”  How does this relate to your own idea of ethics?

      You should spend approximately 15 hours reading and studying this resource. 
       
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  • 3.1 Competitive Advantage  
    • Reading: QuickMBA’s “Competitive Advantage”

      Link: Quick MBA’s “Competitive Advantage” (HTML)
       
      Instructions:  Read this article, which provides an excellent overview of competitive advantage.  The information is based on Michael Porter’s Competitive Advantage: Creating and Sustaining Superior Performance.
       
      This reading covers sub-subunits 3.1.1 to 3.1.4.  This reading should take approximately 15 minutes to complete.  
       
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  • 3.1.1 What Is Competitive Advantage?  

    Note: This topic is covered by the reading assigned below subunit 3.1.  In particular, focus on the definition of competitive advantage in the first part of the reading, as well as the Model of Competitive Advantage.

  • 3.1.2 Resources and Capabilities  

    Note: This topic is covered by the reading assigned below subunit 3.1.  Focus on the text below the heading “Resources and Capabilities.”

  • 3.1.3 Value Chain  
    • Reading: Quick MBA’s “The Value Chain”

      Link: Quick MBA’s “The Value Chain”
       
      Instructions: Please read the entire article.  Also, please note that this topic is briefly covered in the reading assigned below subunit 3.1 under the “Value Creation” heading.  This reading should take you approximately 15 minutes to complete.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.
       

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  • 3.1.4 Sustainable Competitive Advantage  

    Note: This topic is covered by the reading assigned below subunit 3.1.  Focus on the text below the heading Cost Advantage and Differentiation Advantage.”

  • 3.2 Types of Competitive Advantage  
    • Reading: British Columbia Institute of Technology: Kevin Wainwright’s “Lecture Notes on Porter's Generic Strategies.”

      Link: British Columbia Institute of Technology: Kevin Wainwright’s “Lecture Notes on Porter's Generic Strategies” (PDF)
       
      Instructions:  Go to this webpage, scroll down toward the bottom of the page under “Readings and Articles,” and click on the hyperlink titled “Lecture Notes on Porter's Generic Strategies” to download the lecture.  This is an Adobe Acrobat file that requires Adobe Acrobat Reader, which can be downloaded free at Adobe’s Site.
       
      Read this article (4 pages) for a discussion of various kinds of competitive advantage. 
       
      This reading covers sub-subunits 3.2.1 through 3.2.3, as well as any inclusive sub-subunits.  This reading should take approximately 30 minutes to complete.
       
      Terms of Use: Please respect the copyright and terms of use displayed on the webpage above.

      The Saylor Foundation does not yet have materials for this portion of the course. If you are interested in contributing your content to fill this gap or aware of a resource that could be used here, please submit it here.

      Submit Materials

  • 3.2.1 Generic Strategies  

    Note: This topic is covered by the reading assigned below subunit 3.2.  In particular, focus on the introduction on page 1.

  • 3.2.1.1 Cost Leadership  

    Note: This topic is covered by the reading assigned below subunit 3.2.  In particular, focus on the text below “Cost Leadership” on pages 1 and 2.

  • 3.2.1.2 Differentiation  

    Note: This topic is covered by the reading assigned below subunit 3.2.  In particular, focus on the text below “Differentiation” on page 2.

  • 3.2.1.3 Focus or Niche Strategy  

    Note: This topic is covered by the reading assigned below subunit 3.2.  In particular, focus on the text below “Focus or Niche Strategy” on page 3.

  • 3.2.2 Issue: Being Stuck  

    Note: This topic is covered by the reading assigned below subunit 3.2.  In particular, focus on the text below the heading “Stuck in the Middle” on page 3.

  • 3.2.3 Strategy Risks  

    Note: This topic is covered by the reading assigned below subunit 3.2.  In particular, focus on the text below the heading “Risks of Each Strategy” on pages 3 and 4.
     

  • 3.3 Total Quality Management  
    • Reading: Global Text Project: Donald J. McCubbrey’s “Business Fundamentals”

      Link: Global Text Project: Donald J. McCubbrey’s “Business Fundamentals” (PDF)
       
      Instructions: Find Donald McCubbrey’s “Business Fundamentals” article, and select the “PDF” hyperlink to download the text.  Read pages 167 to 171, which discusses how strategic managers can apply a process to sustain competitive advantage by creating high quality products and reducing costs.
       
      This reading covers sub-subunits 3.3.1 to 3.3.3.  This reading should take approximately 1 hour to complete.
       
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  • 3.3.1 Quality Costs  

    Note: This topic is covered by the reading assigned below subunit 3.3.  In particular, focus on the text below the heading “Quality Costs.”
     

  • 3.3.2 Seven Basic Elements  

    Note: This topic is covered by the reading assigned below subunit 3.3.  In particular, focus on the text below the heading “TQM’s Seven Basic Elements,” starting on page 169.

  • 3.3.3 Quality Awards and Standards  

    Note: This topic is covered by the reading assigned below subunit 3.3.  In particular, focus on the text below the heading “Quality Awards and Standards,” starting on page 171.

  • Unit 4: Corporate Strategy  

    Corporate strategy is perhaps the most important strategy, because it sets the metric by which all other strategies are formed within the company.  For example, BMW has a focus on quality vehicles that they can sell for a premium.  If a business unit of BMW decides to pursue a cost leadership strategy that will not work well with the overall firm strategy, it would be very difficult and could tarnish BMW’s brand image, although that is not to say that it is impossible. 

    The subject of corporate strategy is vast; however, corporate strategies are usually based around one central goal: growth.  It is up to the management to determine the best way to achieve growth.  Some prefer to integrate into the value chain, which was discussed in sub-sub-unit 3.1.3 of this course.  For BMW, this would mean pursuing opportunities to produce parts for its cars instead of paying contractors.  Other firms may want to grow by diversifying.  While a firm like GE, which has produced engines, financial products and entertainment programming, can diversify across industries, most diversify with closely-related industries.  BMW also makes motorcycles and owns the Mini and Rolls-Royce brands, which cater to different markets than do BMW vehicles.  Companies may create subsidiaries, different branches of a major company, in order to cater to these different markets.  For example, in educational textbook publishing, a company like Pearson Education also has subsidiaries (although this company has since moved to combine these subsidiaries into the whole of Pearson Education, Inc.).  The subsidiaries Prentice Hall and Addison-Wesley focus on specific fields, such as mathematics and economics, in which to market textbooks.  At one point, these subsidiaries competed against each other, while at the same time both brought in market share for the Pearson Education company as a whole.  Pearson Education has since merged these subsidiaries, although it has kept the names for branding, and now focuses on selling its products without this internal competition. 

    This unit focuses on the various methods a firm can use to pursue growth.  Growing is not just about buying the competition, because that is not always possible or expeditious.  This unit will explore why that is and how to determine the best strategy for growth. 

    Time Advisory   show close
    Learning Outcomes   show close
    • Reading: Project Gutenberg’s version of Sun Tzu’s The Art of War

      Link:  Project Gutenberg’s version of Sun Tzu’s The Art of War (HTML)
       
      Also available in:
      Google Books
       
      Instructions:  Read the entire book about ancient Japanese philosophy and strategy.  Pay particular attention to passages about being victorious over rivals.  Consider these general ideas in light of corporate actions like takeovers, price wars, and buyouts. You should spend approximately 6 hours reading and studying this resource.
       
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  • 4.1 Growth Strategies  
    • Reading: Growth Strategies

      Reading:  California State University – Northridge: Rex C.  Mitchell’s “Formulating Strategy”
       
      Link: California State University – Northridge: Rex C.  Mitchell’s “Formulating Strategy” (Microsoft Word Document)
       
      Instructions:  Scroll down the page until you come to the section “Strategic Management.”  Open the link to the “Formulating Strategy” document.  Read the section on Growth Strategies and Mergers and Acquisitions on pages 3-5.  Remember that these are all strategies designed to help an organization grow.  Consider the pros and cons of each.
       
      This reading covers sub-subunits 4.1.1 to 4.1.5.  You should spend approximately 15 minutes reading this resource.


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  • 4.1.1 Vertical Integration  

     Note: This topic is covered by the reading assigned below subunit 4.1.  Focus on the text after the subheading “Vertical Integration” on pages 3 to 4 of the text.

  • 4.1.2 Horizontal Integration  

    Note: This topic is covered by the reading assigned below subunit 4.1.  Focus on the text after the subheading “Horizontal Integration” on page 4 of the text.

  • 4.1.3 Related Diversification  

    Note: This topic is covered by the reading assigned below subunit 4.1.  Focus on the text after the subheading “Related Diversification” on page 4 of the text.

  • 4.1.4 Unrelated Diversification  

    Note: This topic is covered by the reading assigned below subunit 4.1.  Focus on the text after the subheading “Unrelated Diversification” on page 4 of the text.

  • 4.1.5 Mergers and Acquisitions (M&A)  

    Note: This topic is covered by the reading assigned below subunit 4.1.  Focus on the text after the subheading “Mergers, Acquisitons, and Strategic Alliances” on pages 4 and 5 of the text.

  • 4.2 Retrenchment  
    • Reading: Reference for Business’s “Strategy Levels”

      Link:  Reference for Business’s “Strategy Levels” (HTML)
       
      Instructions:  Read the section on Retrenchment Strategies.  Not all firms are able to make a profit, and sometimes they must cut back.  Consider the pros and cons of each strategy.  

      This reading covers sub-subunits 4.2.1 to 4.2.4.  You should spend approximately 30 minutes reading and studying this resource.
        
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  • 4.2.1 Turnaround  

    Note: This topic is covered by the reading assigned below subunit 4.2.  In particular, focus on the text below “Retrenchment Strategies.”

  • 4.2.2 Divestment  

    Note: This topic is covered by the reading assigned below subunit 4.2.  In particular, focus on the text below “Retrenchment Strategies.”

  • 4.2.3 Bankruptcy  

    Note: This topic is covered by the reading assigned below subunit 4.2.  In particular, focus on the text below “Retrenchment Strategies.”

  • 4.2.4 Liquidation  

    Note: This topic is covered by the reading assigned below subunit 4.2.  In particular, focus on the text below “Retrenchment Strategies.”

  • 4.3 Corporate Strategy Selection  
  • 4.3.1 Joint Ventures  
  • 4.3.2 Licensing  
  • 4.3.3 Franchising  
  • 4.3.4 Better Off Test  
  • 4.3.5 Best Alternative Test  
  • Unit 5: 21st Century Strategy  

    Research in strategy really picked up steam in the 20th century.  However, new research shows that there are other factors that can seriously impact strategies.  For example, the use of psychology in business has moved up in the strategic planning world.  Managers used to assume that all employees were the same and that all employees would do what they are told.  We now know that employees are unique and motivated by different goals themselves.  Understanding the culture of a firm and what motivates employees will allow strategy managers to extract more out of each individual. 

    Additionally, the idea of innovation as a strategy leader has complemented the competitive advantage strategy.  There are issues with getting to the top of an industry by innovating and then falling behind to rising competitors.  Collectively, these issues are known as the innovator’s dilemma, and technology companies have been fighting tooth and nail to avoid falling victim to this problem (as have many other industries).  One way to avoid this dilemma is by maintaining a high level of cash and simply acquiring the innovating companies.  From 2007 through 2009, Google acquired 24 companies (that were disclosed) and Microsoft acquired 34. 

    Finally, as globalization makes the world a real global economy, the focus of strategy must go beyond the borders of your own country.  Technology has enabled even small companies of just a few people to outsource work to the other side of the world.  A global view will be essential to any 21st century strategy. 

    Time Advisory   show close
    Learning Outcomes   show close
    • Lecture: Carnegie Council: Dr. Joseph Stiglitz’s “Making Globalization Work” Lecture

      Link: iTunesU: Carnegie Council: Dr. Joseph Stiglitz’s “Making Globalization Work” Lecture (iTunes U)
        
      Instructions: Listen to this entire lecture before diving into the subunits below.  When you click on the link above, you will be directed to a Carnegie Council lecture series hosted on iTunes.  Please click on the “View in iTunes” link to  Dr. Joseph Stiglitz’s “Making Globalization Work.”  This lecture discusses the challenges and opportunities of a globalized economy.  Listening to this lecture and taking notes should take approximately 1 hour and 15 minutes to complete.
       
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  • 5.1 Enterprise Culture  
  • 5.1.1 Socialization  
  • 5.1.2 Managerial Theories  
  • 5.1.2.1 Theory X  

    Note: This topic is covered by the reading assigned below subunit 5.1.2.  In particular, pay attention to the first paragraph of the article.

  • 5.1.2.2 Theory Y  

    Note: This topic is covered by the reading assigned below subunit 5.1.2.  In particular, pay attention to the first paragraph of the article.

  • 5.1.2.3 Theory Z  

    Note: This topic is covered by the reading assigned below subunit 5.1.2.  In particular, pay attention to the second paragraph of the article.

  • 5.1.2.4 Theory C  

     
    Note: This topic is covered by the reading assigned below subunit 5.1.2.  In particular, pay attention to the last paragraph of the article.

  • 5.2 Innovation  
    • Lecture: Academic Earth: Geoffrey Moore’s “Innovation and Inertia” Lecture

      Link: Academic Earth: Geoffrey Moore’s “Innovation and Inertia” Lecture (Adobe Flash)
       
      Instructions: Please view this entire short video lecture (1:44 minutes).
       
      Lecturer Geoffrey Moore is a best-selling author and Partner at Mohr Davidow Ventures.  In this video lecture, he explains how inertia is created from innovation, as well as what companies need to do in order to use both to stand out.  Viewing and taking notes on this lecture should take less than 15 minutes to complete.  Viewing and taking notes on this lecture should take less than 15 minutes to complete.
       
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  • 5.2.1 Sustained Innovation  
  • 5.2.2 Disruptive Innovation  
  • 5.2.3 Innovator’s Dilemma  
  • 5.2.4 Research and Development  
  • 5.3 Global Strategy  
  • 5.3.1 Mercantilism  
  • 5.3.2 Globalization  
    • Reading: Emory University’s “Globalization Issues”

      Link:  Emory University’s “Globalization Issues” (HTML)
       
      Instructions:  Read this article about the basics of globalization.  Explore the links at the end of the article for a more in-depth analysis of how globalization affects organizations, people, and society.  You should spend approximately 1 hour with this reading and exploring the additional links.
       
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  • 5.3.3 Free Markets and The World Trade Organization  
    • Reading: The World Trade Organization’s “The WTO in Brief”

      Link:  The World Trade Organization’s “The WTO in Brief” (HTML or PDF)
       
      Instructions:  Read this article about the purpose of the WTO.  Think about how organizations and countries both benefit from free trade and who might be harmed.  Also, consider how globalization relates to the WTO’s mission.  Make sure to click on “next” at the bottom of the page or the links to each of the additional four sections for a more in-depth analysis of how the WTO operates.  To view in PDF format, click on the PDF link in the yellow box to the right.  This reading should take approximately 30 minutes to complete. 
       
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  • 5.3.4 Absolute and Comparative Advantage  
  • 5.3.5 Porter’s National Diamond  
  • Final Exam  

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