Read the Case “The Walt Disney Company: Its Diversification Strategy in 2012?” and perform the following analysis: You can find the e-book(Chapters 8 ) in the fileWhat is the Walt Disney Company’s corporate strategy? (20 pts)What is your assessment of the long-term attractiveness of the industries represented in Walt Disney Company’s business portfolio?(20 pts)What is your assessment of the competitive strengths of Walt Disney Company’s different business units? (20 pts)What does a Nine-cell Industry Attractiveness/Business Strength Matrix for Walt Disney Company look like? (20 pts)Evaluate the financial and operating performance of the Walt Disney Company. (20 pts)Chapters 8 in your textbook provide detailed discussion of the topic/tool (Portfolio analysis) that you would need to know in order to complete this assignment.
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The Quest for Competitive Advantage
John E. Gamble
Texas A&M University–Corpus Christi
Margaret A. Peteraf
Arthur A. Thompson, Jr.
The University of Alabama
ESSENTIALS OF STRATEGIC MANAGEMENT: THE QUEST FOR COMPETITIVE ADVANTAGE,
Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2017 by
McGraw-Hill Education. All rights reserved. Printed in the United States of America.
Previous editions © 2015, 2013, and 2011. No part of this publication may be reproduced or distributed
in any form or by any means, or stored in a database or retrieval system, without the prior written
consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic
storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers
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This book is printed on acid-free paper.
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All credits appearing on page or at the end of the book are considered to be an extension
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Library of Congress Cataloging-in-Publication Data
Names: Gamble, John (John E.) author. | Thompson, Arthur A., 1940- author. |
Peteraf, Margaret Ann, author.
Title: Essentials of strategic management : the quest for competitive
advantage / John Gamble, Texas A&M University Corpus Christi, Arthur
Thompson, Jr., The University of Alabama TUSCALOOSA, Margaret Peteraf,
Description: Fifth Edition. | Dubuque : McGraw-Hill Education, 2016. |
Revised edition of the authors’ Essentials of strategic management, 2015.
Identifiers: LCCN 2015045630 | ISBN 9781259546983 (alk. paper)
Subjects: LCSH: Strategic planning. | Business planning. | Competition. |
Strategic planning—Case studies.
Classification: LCC HD30.28 .G353 2016 | DDC 658.4/012—dc23 LC record available at http://lccn.loc.
The Internet addresses listed in the text were accurate at the time of publication. The inclusion
of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and
McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.
About the Author
John E. Gamble is a Professor of Management and Dean of the College of
Business at Texas A&M University–Corpus Christi. His teaching and research
for nearly 20 years has focused on strategic management at the undergraduate and graduate levels. He has conducted courses in strategic management in
Germany since 2001, which have been sponsored by the University of Applied
Sciences in Worms.
Dr. Gamble’s research has been published in various scholarly journals
and he is the author or co-author of more than 75 case studies published in
an assortment of strategic management and strategic marketing texts. He has
done consulting on industry and market analysis for clients in a diverse mix of
Professor Gamble received his Ph.D., Master of Arts, and Bachelor of Science degrees from The University of Alabama and was a faculty member in the
Mitchell College of Business at the University of South Alabama before his
appointment to the faculty at Texas A&M University–Corpus Christi.
Margaret A. Peteraf is the Leon E. Williams Professor of Management at
the Tuck School of Business at Dartmouth College. She is an internationally
recognized scholar of strategic management, with a long list of publications
in top management journals. She has earned myriad honors and prizes for her
contributions, including the 1999 Strategic Management Society Best Paper
Award recognizing the deep influence of her work on the field of strategic
management. Professor Peteraf is on the Board of Directors of the Strategic
Management Society and has been elected as a Fellow of the Society. She
served previously as a member of the Academy of Management’s Board of
Governors and as Chair of the Business Policy and Strategy Division of the
Academy. She has also served in various editorial roles and is presently on nine
editorial boards, including the Strategic Management Journal, the Academy
of Management Review, and Organization Science. She has taught in Executive Education programs around the world and has won teaching awards at the
MBA and Executive level.
Professor Peteraf earned her Ph.D., M.A., and M.Phil. at Yale University
and held previous faculty appointments at Northwestern University’s Kellogg
Graduate School of Management and at the University of Minnesota’s Carlson
School of Management.
Arthur A. Thompson, Jr., earned his B.S. and Ph.D. degrees in economics
from The University of Tennessee, spent three years on the economics faculty
at Virginia Tech, and served on the faculty of The University of Alabama’s College of Commerce and Business Administration for 25 years. In 1974 and again
in 1982, Dr. Thompson spent semester-long sabbaticals as a visiting scholar at
the Harvard Business School.
His areas of specialization are business strategy, competition and market
analysis, and the economics of business enterprises. In addition to publishing
over 30 articles in some 25 different professional and trade publications, he
has authored or co-authored five textbooks and six computer-based simulation
exercises that are used in colleges and universities worldwide.
Dr. Thompson spends much of his off-campus time giving presentations,
putting on management development programs, working with companies, and
helping operate a business simulation enterprise in which he is a major partner.
Dr. Thompson and his wife of 54 years have two daughters, two grandchildren, and a Yorkshire terrier.
PART ONE CONCEPTS AND TECHNIQUES
FOR CRAFTING AND EXECUTING
AND EXECUTING STRATEGY
BillCutterz.com: Business Model, Strategy,
and the Challenges of Exponential
Section A: Introduction and Overview
1. Strategy, Business Models, and Competitive
Whole Foods Market in 2014: Vision, Core
Values, and Strategy 237
2. Strategy Formulation, Execution, and
Apple Inc. in 2015 268
Sirius XM Satellite Radio, Inc. in 2014:
Section B: Core Concepts and Analytical Tools
3. Evaluating a Company’s External
On Track to Succeed After a Near-Death
Panera Bread Company in 2015—What to Do
4. Evaluating a Company’s Resources, Capabilities,
and Competitiveness 65
to Rejuvenate the Company’s Growth? 300
Vera Bradley in 2015: Can Its Turnaround
Strategy Reverse Its Continuing
Section C: Crafting a Strategy
5. The Five Generic Competitive Strategies
6. Strengthening a Company’s Competitive
PART TWO CASES IN CRAFTING
osition: Strategic Moves, Timing, and Scope of
7. Strategies for Competing in International
8. Corporate Strategy: Diversification and the
Multibusiness Company 153
9. Ethics, Corporate Social Responsibility,
Environmental Sustainability, and Strategy 181
Section D: Executing the Strategy
10. Superior Strategy Execution—Another Path to
Competitive Advantage 198
Tesla Motors’ Strategy to Revolutionize the
Global Automotive Industry 333
Deere & Company in 2015: Striving for
Growth in a Weakening Global Agricultural
PepsiCo’s Diversification Strategy in
Robin Hood 390
Southwest Airlines in 2014: Culture,
Values, and Operating Practices 392
TOMS Shoes: A Dedication to Social
Key Financial Ratios: How to Calculate
Them and What They Mean 228
he standout features of this fifth edition of Essentials of Strategic Management
are its concisely written and robust coverage of strategic management concepts and its compelling collection of cases. The text presents a conceptually strong
treatment of strategic management principles and analytic approaches that features
straight-to-the-point discussions, timely examples, and a writing style that captures
the interest of students. While this edition retains the 10-chapter structure of the prior
edition, every chapter has been reexamined, refined, and refreshed. New content has
been added to keep the material in line with the latest developments in the theory and
practice of strategic management. Also, scores of new examples have been added,
along with fresh Concepts & Connections illustrations, to make the content come alive
and to provide students with a ringside view of strategy in action. The fundamental
character of the fifth edition of Essentials of Strategic Management is very much in
step with the best academic thinking and contemporary management practice. The
chapter content continues to be solidly mainstream and balanced, mirroring both the
penetrating insight of academic thought and the pragmatism of real-world strategic
Complementing the text presentation is a truly appealing lineup of 12 diverse,
timely, and thoughtfully crafted cases. All of the cases are tightly linked to the content
of the 10 chapters, thus pushing students to apply the concepts and analytical tools
they have read about. Eleven of the 12 cases were written by the coauthors to illustrate
specific tools of analysis or distinct strategic management theories. The Robin Hood
case was not written by the coauthors but was included because of its exceptional
pedagogical value and linkage to strategic management concepts presented in the text.
We are confident you will be impressed with how well each of the 12 cases in the collection will work in the classroom and the amount of student interest they will spark.
For some years now, growing numbers of strategy instructors at business schools
worldwide have been transitioning from a purely text-cases course structure to a
more robust and energizing text-cases-simulation course structure. Incorporating a
competition-based strategy simulation has the strong appeal of providing class members with an immediate and engaging opportunity to apply the concepts and analytical tools covered in the chapters in a head-to-head competition with companies run
by other class members. Two widely used and pedagogically effective online strategy
simulations, The Business Strategy Game and GLO-BUS, are optional companions
for this text. Both simulations, like the cases, are closely linked to the content of each
chapter in the text. The Exercises for Simulation Participants, found at the end of each
chapter, provide clear guidance to class members in applying the concepts and analytical tools covered in the chapters to the issues and decisions that they have to wrestle
with in managing their simulation company.
Through our experiences as business school faculty members, we also fully understand the assessment demands on faculty teaching strategic management and business
policy courses. In many institutions, capstone courses have emerged as the logical
home for assessing student achievement of program learning objectives. The fifth edition includes Assurance of Learning Exercises at the end of each chapter that link
to the specific Learning Objectives appearing at the beginning of each chapter and
highlighted throughout the text. An important instructional feature of this edition is
the linkage of selected chapter-end Assurance of Learning Exercises and cases to the
publisher’s Connect web-based assignment and assessment platform. Your students
will be able to use the online Connect supplement to (1) complete two of the Assurance of Learning Exercises appearing at the end of each of the 10 chapters, (2) complete chapter-end quizzes, and (3) complete case tutorials based upon the suggested
assignment questions for all 12 cases in this edition. With the exception of some of the
chapter-end Assurance of Learning exercises, all of the Connect exercises are automatically graded, thereby enabling you to easily assess the learning that has occurred.
In addition, both of the companion strategy simulations have a built-in Learning
Assurance Report that quantifies how well each member of your class performed on
nine skills/learning measures versus tens of thousands of other students worldwide
who completed the simulation in the past 12 months. We believe the chapter-end
Assurance of Learning Exercises, the all-new online and automatically graded Connect exercises, and the Learning Assurance Report generated at the conclusion of The
Business Strategy Game and GLO-BUS simulations provide you with easy-to-use,
empirical measures of student learning in your course. All can be used in conjunction
with other instructor-developed or school-developed scoring rubrics and assessment
tools to comprehensively evaluate course or program learning outcomes and measure
compliance with AACSB accreditation standards.
Taken together, the various components of the fifth edition package and the supporting set of Instructor Resources provide you with enormous course design flexibility and a powerful kit of teaching/learning tools. We’ve done our very best to ensure
that the elements comprising this edition will work well for you in the classroom, help
you economize on the time needed to be well prepared for each class, and cause students to conclude that your course is one of the very best they have ever taken—from
the standpoint of both enjoyment and learning.
Differentiation from Other Texts
Five noteworthy traits strongly differentiate this text and the accompanying instructional package from others in the field:
1. Our integrated coverage of the two most popular perspectives on strategic management positioning theory and resource-based theory is unsurpassed by any
other leading strategy text. Principles and concepts from both the positioning perspective and the resource-based perspective are prominently and comprehensively
integrated into our coverage of crafting both single-business and multibusiness
strategies. By highlighting the relationship between a firm’s resources and capabilities to the activities it conducts along its value chain, we show explicitly how
these two perspectives relate to one another. Moreover, in Chapters 3 through 8, it
is emphasized repeatedly that a company’s strategy must be matched not only to
its external market circumstances but also to its internal resources and competitive capabilities.
2. Our coverage of business ethics, core values, social responsibility, and environmental sustainability is unsurpassed by any other leading strategy text. Chapter 9,
“Ethics, Corporate Social Responsibility, Environmental Sustainability, and Strategy,” is embellished with fresh content so that it can better fulfill the important
functions of (1) alerting students to the role and importance of ethical and socially
responsible decision making and (2) addressing the accreditation requirements
that business ethics be visibly and thoroughly embedded in the core curriculum.
Moreover, discussions of the roles of values and ethics are integrated into portions of other chapters to further reinforce why and how considerations relating to
ethics, values, social responsibility, and sustainability should figure prominently
into the managerial task of crafting and executing company strategies.
3. The caliber of the case collection in the fifth edition is truly unrivaled from the
standpoints of student appeal, teachability, and suitability for drilling students in
the use of the concepts and analytical treatments in Chapters 1 through 10. The
12 cases included in this edition are the very latest, the best, and the most on-
target that we could find. The ample information about the cases in the Instructor’s Manual makes it effortless to select a set of cases each term that will capture
the interest of students from start to finish.
4. The publisher’s Connect assignment and assessment platform is tightly linked
to the text chapters and case lineup. The Connect package for the fifth edition
allows professors to assign autograded quizzes and select chapter-end Assurance
of Learning Exercises to assess class members’ understanding of chapter concepts. In addition, our texts have pioneered the extension of the Connect platform
to case analysis. The autograded case exercises for each of the 12 cases in this
edition are robust and extensive and will better enable students to make meaningful contributions to class discussions. The autograded Connect case exercises
may also be used as graded assignments in the course.
5. The two cutting-edge and widely used strategy simulations—The Business
Strategy Game and GLO-BUS—that are optional companions to the fifth edition
give you unmatched capability to employ a text-case-simulation model of course
Organization, Content, and Features of the Fifth
Edition Text Chapters
The following rundown summarizes the noteworthy features and topical emphasis in
this new edition:
Chapter 1 serves as a introduction to the topic of strategy, focusing on the managerial actions that will determine why a company matters in the marketplace.
We introduce students to the primary approaches to building competitive advantage and the key elements of business-level strategy. Following Henry Mintzberg’s pioneering research, we also stress why a company’s strategy is partly
planned and partly reactive and why this strategy tends to evolve. The chapter
also discusses why it is important for a company to have a viable business model
that outlines the company’s customer value proposition and its profit formula.
This brief chapter is the perfect accompaniment to your opening-day lecture on
what the course is all about and why it matters.
Chapter 2 delves more deeply into the managerial process of actually crafting and
executing a strategy. It makes a great assignment for the second day of class and
provides a smooth transition into the heart of the course. The focal point of the
chapter is the five-stage managerial process of crafting and executing strategy:
(1) forming a strategic vision of where the company is headed and why,
(2) developing strategic as well as financial objectives with which to measure the
company’s progress, (3) crafting a strategy to achieve these targets and move the
company toward its market destination, (4) implementing and executing the strategy, and (5) evaluating a company’s situation and performance to identify corrective adjustments that are needed. Students are introduced to such core concepts as
strategic visions, mission statements and core values, the balanced scorecard, and
business-level versus corporate-level strategies. There’s a robust discussion of
why all managers are on a company’s strategy-making, strategy-executing team
and why a company’s strategic plan is a collection of strategies devised by different managers at different levels in the organizational hierarchy. The chapter winds
up with a section on how to exercise good corporate governance and examines
the con …
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