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 Strategy:
Chapter
1
Concepts, Developments, and Practices
Chapter Outline
1-1 Evolution of Strategy 1-8 What Is Strategy?
1-2 Strategic Analysis 1-9 Corporate Strategy
1-3 External Environmental Analysis Mission Statement
Political Analysis Strategic Vision
Economic Analysis 1-10 Strategic Business Unit Strategy
Social Analysis
1-11 Marketing Strategy
Technological Analysis
Summary
1-4 Industry
Key Terms
1-5 Market Segments
Discussion Questions
1-6 Internal Situation Analysis
Further Reading
Structure
Resource End Notes
Products
1-7 What Can Go Wrong in Strategic Analy-
sis?

The business enterprise has only two basic functions: Marketing and innovation.
Marketing and innovation produce results, all the rest are costs.

-Peter F. Drucker
Chapter 1 -2- Strategy: Concepts, Developments, and Practices

Learning Objectives

 Trace the conceptual developments in strategic thinking.

 Learn how to conduct strategic analysis.
 Understand the importance and use of strategy.
 Differentiate between corporate, strategic business unit, and marketing
strategies.
 Examine how mission and vision statements guide a firm’s strategic decisions.

Think about some of the successful product

launches and then ask yourself: what made these products suc-
cessful. Was it luck? Or, was it strategy? When you examine
the decision process underlying these launches, you will discov-
er the contributions of strategy in making these products suc-
cessful. You will also discover that to develop these strategies
firms needed to understand their resources and capabilities,
their markets, and their customers. This understanding was es-
sential for developing effective strategies, strategies that give
firms a competitive advantage in the marketplace and make
them profitable. Firms need to think and act strategically. They
cannot leave strategic decisions to chance and expect that luck
would turn things in their favor. Successful firms understand what marketing strat-
egy is and how it should be developed and executed to achieve success. Let’s see
how Toyota, a global auto manufacturer, integrated the different elements of the
marketing mix strategy (product, price, place, and promotion) to launch Lexus in
the U.S.
Until the early 1980s, the two dominant European brands in the U.S. luxury
car market were BMW and Mercedes-Benz. Each brand had developed distinctive
images in consumers’ minds. The BMWs were associated with sophisticated engi-
neering and the Mercedes with social status. The two brands also shared a com-
mon perception of being high-quality luxury cars. These images gave the two
brands a commanding position in the marketplace. Thus, the conventional wisdom
at the time was that the U.S. luxury car market was closed to new entrants. The
reasoning behind this belief was that the well-entrenched quality reputation of
BMW and Mercedes, combined with strong loyalty of consumers to these brands
and the high costs of launching a competitive product, would make it difficult for a
new firm to enter and convince customers to try the new product. Overall, the en-
try barriers were viewed as insurmountable.
However, in the late 1980s Toyota challenged the conventional wisdom and
introduced Lexus as a direct competitor to BMW and Mercedes in the U.S. luxury
car market. Toyota’s strategy was to draw customers’ attention to the high quality

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Chapter 1 -3- Strategy: Concepts, Developments, and Practices

and superior performance of Lexus, while charging a lower price than either BMW
or Mercedes. The strategy had two underlying rationales. First, Toyota realized that
potential customers had to be informed about the quality and performance of Lexus
if they were to consider purchasing a new brand of luxury car. Second, Toyota rec-
ognized that pricing Lexus slightly lower than BMW and Mercedes would provide
customers the incentive to test drive Lexus. Toyota’s product and pricing strategies
incorporated these marketing considerations—Lexus was introduced as a high-
quality luxury car at a competitive price.

Toyota captured part

of the luxury car
market by offering
the Lexus as an
alternative to the
higher-priced
Mercedes and BMW.

Toyota also understood that creating a luxury brand image for Lexus would
require a strategy that separated Lexus from other Toyota brands. Toyota accom-
plished this by developing two interrelated strategies. First, it developed a new dis-
tribution system. It sold Lexus in showrooms exclusively devoted to the new brand,
thus delinking the visible association between its famous Toyota nameplate and the
newly introduced Lexus. Second, Toyota executed a comprehensive promotional
strategy, which included ads for Lexus in different media including television, news-
papers, radio, magazines, and billboards. The overall message was unmistakable—
Lexus was a new brand of luxury car.
The integrated marketing strategy with a cohesive and consistent message
paid off. Soon after its launch, Lexus began to gain market share in the luxury car
market. Many people who test drove the car liked its quality and performance and
bought it. Now, twenty-five years later, having been established as a viable competi-
tor in the U.S., Lexus competes well against other famous brands of luxury cars, im-
ported as well as domestic. The success of Lexus in the highly competitive luxury car
market highlights the significance of developing marketing strategies based on the
understanding of both the internal organizational situation and external market con-
ditions. Firms need strategy to succeed. They also need effective execution of strat-
egies to succeed.

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 Chapter 1 -4- Strategy: Concepts, Developments, and Practices

1-1 The Evolution of Strategy

Derived from the word strategia, which literally meant “the office of a gen-
eral” in ancient Greece, the study of strategy continues to draw inspiration from the
science and art of war. The modern interpretations of strategy have their roots in
the ideas and concepts formulated in ancient and modern classics. Among
Strategia: the ancient classics, Sun Tzu’s Art of War, written sometime around 500
a term that literally meant B.C. in China, is one of the earliest known books on strategy. The core
“the office of a general” in idea in this engaging book highlighted the importance of overcoming
ancient Greece.
the enemy by wisdom, not by force alone. Sun Tzu’s doctrine advised
generals to know themselves and their enemies to achieve victory.1 He
was one of the earliest thinkers to warn against taking things for grant-
ed, recommending that strategy needs to be dynamic and should evolve
in response to changing conditions.2 A century later in Greece, Thucydi-
des published The Peloponnesian War, which is regarded as the first
great literary history of war. Thucydides was a realist who saw the world
as it was, a world ruled by strength and self-interest. Writing at a time
when democracy was taking shape, he warned against taking hasty ac-
tions and suggested that two conditions essential for success are good
leaders and courageous leaders.3
In modern times, Karl Von Clausewitz’s book On War, published posthumous-
ly in 1832, is considered one of the classics on military strategy. Clausewitz was a
German soldier-philosopher. He stressed the importance of psychological factors in
war and believed that the best winning strategy is to be very strong, first every-
where, and then at the decisive point.4 His contributions to the study of war and
strategy were twofold. First, he highlighted the centrality of politics in war and, sec-
ond, he emphasized the uncertain nature of war.5 Once a war starts, it is difficult to
predict how and when it will end.
In the twentieth century, business scholars adopted a more formalized ap-
proach to the study of strategy. A key question they attempted to answer was what
made firms successful in a competitive market. Or, to put it another way, what gave
firms a competitive advantage in the marketplace. Scholarly writings to answer this
question found their roots in neoclassical and industrial organization economics.
Edith Penrose, an economist, viewed the firm as a bundle of unique resources which
it uses to expand and diversify by exploiting opportunities created by interactions
between the internal and external environments. The survival, growth, and profita-
bility of the firm depended on acquiring these resources and establishing impregna-
ble bases in the changing competitive markets.6
Joseph Schumpeter, on the other hand, viewed innovation as the source of
competitive advantage and the primary agent of change in the business cycle that
changed the way of doing things.7 He viewed markets as going through two stages
in a cyclical process, a period of relative calm followed by a period of turbulence
caused by the introduction of superior technologies, processes, or products. He
called the replacement of the old with the new creative destruction. Firms that are

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Chapter 1 -5- Strategy: Concepts, Developments, and Practices

able to take advantage of the new opportunities in the turbulent phase of Creative
the market strengthen their competitive positions and perform better than Destruction:
their competitors when the market transitions into the calm phase. Schum- the replacement of the
peter argued that innovations result from a constant search for monopolis- old with the new.

tic profits, which the firm earns by being the first in the marketplace and
Tangible
achieving the first-mover advantage. Innovations also enable firms to avoid
Resources:
competition and control markets.8 And, at the macro level, innovation pro-
includes assets such as
motes economic progress by creatively destroying the old and creating the land, plant, equipment,
new. For Schumpeter, innovation was the key to success. raw materials, capital
goods, customer data
More recently, building on earlier works, strategy scholars have de- base, and talent
veloped the resource-based view of the firm and competitive advantage.9 (employees).
Firms possess two types of resources, tangible and intangible. Tangible re-
sources include things such as land, plant, equipment, raw materials, capi- Intangible
tal goods, customer data base, and employees. Intangible resources in- Resources:
clude brand names, trade contracts, technological know-how, customer include brand names,
trade contracts, techno-
relationship knowledge, and efficient value chain processes. The resource- logical know-how, cus-
based view suggests that firm-specific resources are the fundamental de- tomer relationship
terminants of competitive advantage and, thus, of superior performance. knowledge, and efficient
By linking resources with competitive advantage and competitive ad- value chain processes.

vantage with superior performance, the resource-based view directs atten-

tion to the development and acquisition of result-enhancing resources.
The strategic fit concept adds to the resource-based view of the firm by at-
tempting to answer another key business question: Does a firm that is able to align
its resources with the external environment perform better than those that do not?
The strategic fit concept argues that superior performance is contingent upon the
degree of strategy-environment alignment and upon the efficiency with which strat-
egies are executed. Accordingly, firms that are able to develop an appropriate
match between strategy and environment achieve superior performance.10
The idea of matching resources and strategies with market conditions is pre-
sented more formally in Kenneth Andrews’ strategy framework. The framework,
popularly known as the SWOT analysis, focuses on determining the strengths and
weaknesses of the firm and opportunities and threats in the marketplace. It pre-
sents a more structured view of strategy by focusing on key managerial functions
such as setting objectives; analyzing customers, competitors, and markets; develop-
ing plans; delineating the scope of business; and recognizing the contributions of
firms to different constituencies. The framework also distinguishes between corpo-
rate and business unit strategies, with the former focusing on the selection of the
business the firm wants to compete in and the latter focusing on how the firm
wants to compete in the selected business.11
Besides military theorists and academics, strategy consultants have made
notable contributions to the field of strategy. Bruce Henderson of Boston Consult-
ing Group (BCG) linked strategy with a comprehensive analysis of markets and con-
sumers to find meaningful quantitative relationships. The BCG developed the

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Chapter 1 -6- Strategy: Concepts, Developments, and Practices

“experience curve” concept as a guide to understanding the relationship between

price and competitive behavior, based on the finding that with the doubling of pro-
duction, costs decline by roughly 20 percent to 30 percent due to economies of
scale, organizational learning, and technological innovations.
Thus, firms gain a price advantage when they reduce unit cost
by increasing production. The BCG also developed the two-by-
two growth-share matrix that popularized the use of terms
such as cash cows, stars, question marks, and dogs to repre-
sent the market positions of different business units in a diver-
sified company.12
Another consulting firm, McKinsey & Company, con-
tributed to strategic decision making by developing the GE/
McKinsey industry attractiveness-business strength matrix.
The nine-block matrix focuses on the determination of industry attractiveness and
the competitive positions of different business units. The matrix is useful for analyz-
ing product portfolios, allocating resources to different product portfolios, formulat-
ing business unit strategies, and setting performance targets. Strategic decisions in
the matrix cover three important choices: whether to invest and grow, harvest or
divest, or pursue selective growth in different markets.
The key themes in the discussions above revolve around the importance of
knowledge, analysis and planning, resources, innovation, response flexibility, man-
aging uncertainty, and leadership in achieving success. The insights that can be
gleaned from the evolution of strategy are that firms need to understand their cur-
rent resources and capabilities and the resources and capabilities they need to de-
velop to innovate and achieve long-term success. Furthermore, they need to know
not only themselves and their customers, but also their competitors and markets in
which they compete. Strategies that succeed in aligning internal resources and capa-
bilities with external market conditions erect strong and impregnable barriers
against competitive attacks and help firms achieve superior results.

1-2 Strategic Analysis

Managers make different types of very complex decisions. They decide what
new products to develop, which market segments to target, what prices to charge,
how to develop brand equity, which messages to incorporate in brand positioning,
how to interact with consumers, and which distribution channels to use to reach tar-
get markets. How do managers make these decisions? Some managers may use in-
tuition and gut feelings, and some may rely on strategic thinking and strategic analy-
sis. The difference in the decision-making style has significant performance implica-
tions. There is sufficient evidence to show that strategic decisions that are backed
by systematic analysis of consumers, competitors, markets and the internal organi-
zational situation fare better in the competitive marketplace than those that do not
rely on such analysis. The effectiveness of strategic marketing decisions is contin-
gent upon the quality and comprehensiveness of strategic analysis.

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Chapter 1 -7- Strategy: Concepts, Developments, and Practices

Strategic analysis is the foundation on which business decisions are made.

Firms should know why the analysis is being conducted and what results are ex-
pected from the analysis. Without knowing the reasons for conducting strategic
analysis and the expected outcomes, strategic analysis would not yield the desired
results. The reasons and expected outcomes inform the type of data that
will be collected, the sources from where the data will be collected, the Strategic
type of analysis that will be conducted, and the type of interpretations that Analysis:
will be made. Together, these lead to effective strategic decision making. the process (including
systematic collection,
Strategic analysis answers specific questions about the firm’s inter- analysis, and interpreta-
nal situation and external environment and occupies a key place in the pro- tion of data on the firm’s
cess through which managers arrive at decisions. Managers need to know internal situation and
external environment)
what resources and capabilities are available and how they translate into
that helps managers
strengths and weaknesses for their firm. They also need to know what the make decisions that im-
major environmental developments are and how they would affect con- prove the competitive
sumers’ and competitors’ behaviors and what opportunities and threats position of the firm.
they would create for the firm. The goals of strategic analysis are to deter-
mine strengths and weaknesses, uncover environmental and market trends, and dis-
cover opportunities and threats in the marketplace. From the marketing perspec-
tive, strategic analysis involves the systematic collection, analysis, and interpretation
of data on the firm’s internal situation and external environment to help managers
make decisions that improve the competitive position of the firm.
Strategic analysis takes a systematic approach to the examination of the ex-
ternal environment and internal situation (See Figure 1-1). In the external environ-
ment, three factors whose analysis leads to the determination of opportunities and
threats in the marketplace are environment, industry, and market segments. In the
internal situation, three factors whose analysis leads to the determination of
strengths and weaknesses are structure, resources, and products.

Figure 1-1: Strategic Analysis

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 Chapter 1 -8- Strategy: Concepts, Developments, and Practices

1-3 External Environment Analysis

Environmental Analysis: An essential component of strategic analysis,
firms conduct environmental analysis to get a sense of developments in the market-
place and to determine the opportunities and threats being created. The broad,
macro level analysis of the environment helps managers to:13
· Learn about events and trends in the external environment.
· Establish relationships among them.
· Make sense of data.
· Extract the main implications for decision making and strategy development.
Firms need to conduct environmental analysis for making deci-
Environmental Analysis: sions that improve their survival and growth potential. The analysis
A process that firms conduct
focuses on the following: political, economic, social, and technological
to get a sense of develop- factors.
ments in the marketplace and
to determine the opportuni- Political Analysis: Two of the key questions in political anal-
ties and threats being created. ysis relate to the regulatory environment in which business activities
are conducted. Managers need to understand the marketing implica-
Political Analysis:
tions of the current regulatory environment, especially the type of de-
A process that reviews how
the regulatory regime might
cisions they can make and implement. And, they also need to under-
change and what impact it stand how the regulatory regime might change and what impact it
would have on business and would have on business and marketing activities. Governments see
marketing activities.
their role as creating a regulatory climate that both facilitates the con-
duct of business and protects the interests of consumers. As such,
Economic Analysis:
they regulate industries and set different requirements and standards
A process that reviews how
purchasing powers of consum-
for businesses. Governments also protect some industries from inter-
er segments are changing. national competition by raising tariffs (taxes on the import of prod-
ucts into the country) or by giving them subsidies (financial assistance
to make firms more competitive in the global market). Countries in
the European Union such as France, Germany, Spain, and others heavi-
ly subsidize their agricultural industries. Governments’ role in protect-
ing these industries is coming under greater scrutiny and questions
are being raised about the steps that need to be taken to reduce such
involvement. Managers need to know how regulatory changes might
affect the competitive position of these and other industries.

Economic Analysis: Consumers need money to buy prod-

ucts and services. Therefore, mangers need to know how purchasing
powers of consumer segments are changing. Economic analysis
achieves this by examining changes in the growth rate of the econo-
my, income distribution, and the unemployment, inflation, tax, and
interest rates. Existing studies have shown a close link between
changes in income and the types of goods and services that consum-
ers buy. For example, as income increases, demand for shopping and
luxury goods increases. Therefore, for firms in these industries, the

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Chapter 1 -9- Strategy: Concepts, Developments, and Practices

understanding of changes in income and the distribution of income becomes essen-

tial. In the international market, for example, the rapid increase in the purchasing
power of Chinese consumers resulted in the entry of many firms from the U.S., Eu-
rope, and Japan into the Chinese market.
Social Analysis: The analysis of the social environment focuses Social Analysis:
on developments related to demographics, values, attitudes, and life- An analysis of the social
styles. The variables covered under demographics include population, gen- environment focuses on
der, age, and education. Income is covered in economic analysis. Questions developments related to
demographics, values,
about demographics that firms need to ask are as follows: how is the pop- attitudes, and life-styles.
ulation growth rate changing, what is happening to the distribution of
different age groups, and how is the literacy rate changing? In demograph- Technological
ic analysis, attention is also focused on population shifts, urban/rural, and Analysis:
downtown/suburban distributions. An analysis of how raw
materials are converted
Another aspect of social analysis is the understanding of changes in into finished products and
values, attitudes, and life-styles of consumers. Values are defined as prefer- how finished products are
ence for a state or condition. For example, Japanese consumers value col- distributed to different
markets.
lective decision making, while Americans prefer making decisions on their
own. Attitude is defined as likes or dislikes of objects, people, and ideas.
For example, consumers in developing economies may show favorable at-
titudes toward foreign brands. Lifestyle, as a marketing concept, attempts
to capture the different dimensions of consumers’ lives, reflected by what
they consume, how they spend their time, where they spend time, and
what statements about self they make.

Technological Analysis: Technological developments have a sig-

nificant impact on the value chain process—how raw materials are con-
verted into finished products and how finished products are distributed to
different markets. Both the creation and distribution of value offerings are
affected by technological developments in the transportation and tele-
communications industries. Managers therefore need technological analysis to un-
derstand how these developments are creating opportunities and threats in the
marketplace. For example, as a result of developments in the transportation and
communication industries, firms can now manage their value chain activities quite
differently than they used to not very long ago. They can now source or produce
components around the world and have them shipped to the home country to be
assembled into finished products and then distributed in markets worldwide. Devel-
opments in transportation and communication technologies have also made it feasi-
ble for firms to receive online orders from different parts of the world and ship the
product to these markets at a reasonable cost.

1-4 Industry
A level down from the environment is the industry. Firms need to under-
stand how the industry of which they are a part is changing. Different factors can
change the industry and measurably affect the performance of incumbents. We

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 Chapter 1 -10- Strategy: Concepts, Developments, and Practices

started this chapter with the example of Toyota. When Toyota entered the U.S. mar-
ket in the 1950s, the U.S. auto industry changed with the arrival of a new competitor
in the market. And when Toyota launched Lexus in the U.S., the industry changed
further with the introduction of a new luxury car in the market. In the 1950s, Toyota
was not seen as a threat by U.S. auto firms. But by the 1980’s, Toyota had become a
major force and a threat to U.S. firms, especially in the compact car category.
Changes at the industry level are slow and gradual. However, by the time
they play out, they bring about major changes in the distribution of market power
and performance of the firms. Managers, therefore, need to pay close attention to
developments at the industry level. Some of the key factors to study are the number
of firms in the industry, the size of the firms, the concentration ratio (market share
held by the top three or four firms), and the product portfolios of competitors. The
interrelationships among these variables determine the competitive intensity in the
industry. For example, when the number of firms in the industry is large and the size
of each firm is small and the concentration ratio is low and the product portfolio of
each firm is similar, competitive intensity would be judged as high. Determining the
level of competitive intensity in the industry is a key piece of information for deci-
sion makers because of its close association with the profitability of the industry.
Porter has developed a five forces framework to examine the profitability of an in-
dustry. The fundamental proposition of the five forces model is that supplier power,
buyer power, threat of new entrants, threat of substitutes, and rivalry among exist-
ing firms determine the profitability of an industry. We discuss Porter’s five forces
framework in Chapter 4.

Market Segment:
1-5 Market Segments
a group of customers that A market segment can be defined as a group of customers who
shares similar
share some common needs and wants. This similarity in their charac-
characteristics and
responds to marketing teristics increases the likelihood that they will respond in a similar fash-
offerings is a ion to a marketing offering. For a segment to be meaningful to a firm,
similar fashion. it should meet four basic criteria. The segment should be sizeable,
identifiable, reachable, and profitable. Although the
size of a segment (number of customers in the seg-
ment) is critical, its importance varies depending on
the type of the firm. For many industrial firms, a seg-
ment of one, if it is identifiable, reachable, and profita-
ble, would suffice. However, a segment of one would
not work for consumer products firm. For them the
size of the segment is critical. It needs to be large
enough to be profitable. In conducting segment-level
analysis, managers need to keep certain things in
mind. First, the analysis should focus not only on de-
termining how the currently served segments are
changing but, more importantly, how new segments
are evolving due to environmental developments.

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Chapter 1 -11- Strategy: Concepts, Developments, and Practices

1-6 Internal Situation Analysis

Environmental and industry-related factors change and so do consumers’
and competitors’ behavior. These changes, as discussed above, transform the mar-
ket and create new opportunities and threats. Firms need to be ready to respond to
these developments. How effectively they are able to respond depends on how well
they know themselves. Managers need to know about their organization: who they
are, what they are, what their strengths and weaknesses are, and what their poten-
tials are? This knowledge and insight:

· Improves flexibility and responsiveness

· Creates confidence in strategic decision making
· Develops a better prepared management team Internal Situation
· Enhances ability to achieve competitive advantage Analysis:
An analysis that deter-
Internal situation analysis directs managerial attention to the or-
mines the capabilities of
ganization. Although managers can focus on different dimensions to gain the firm for creating and
knowledge about their organization, we focus on the following three: delivering value
structure, resource, and products. to customers.

Structure: Strategic decisions are made within the context of an Organizational

organizational structure. Mintzberg14 defines organizational structure as Structure:
“the ways in which labor is divided into distinct tasks and coordination is the network of
achieved among these tasks.” An organizational structure would thus re- relationships among the
veal the network of relationships among the employees and the distribu- employees and the
tion of decisions and tasks among them. It would also exhibit the flow of distribution of decisions
and tasks among them.
formal communication among the employees. Firms can be viewed as
having an organic structure or a static structure.15 Organic
structures exhibit a low degree of formality and a high de-
gree of decentralization and information sharing. On the oth-
er hand, static structures are rigid and centralized with tight
control and less prepared to adapt to environmental chang-
es. In analyzing the structure, managers need to know
whether it is compatible with environmental developments.
Managers respond to environmental developments by
formulating appropriate strategies and choosing the design
of the organizational structure.16 When their response results
in a good strategy-structure fit, they improve the perfor-
mance potential of their firms.17 Thus, in evaluating structure, one of the goals is to
see whether the current structure has the wherewithal to respond to environmental
changes. A firm’s ability to adapt is reflected in its product offerings. Thus, one way
to judge adaptability is to look at the number of new products the firm has
launched.18 In addition, managers also need to examine how many of these products
were launched in existing market segments and how many in new market segments.

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Chapter 1 -12- Strategy: Concepts, Developments, and Practices

Resource: An analysis of the resources available to a firm is essential for de-

termining whether the firm is ready to respond to environmental changes, especially
whether it can offer products to customers that they want and need. Promoting an
understanding of the resource endowment of the firm and its capability to cope
with environmental changes is an important contribution of strategic analysis. Wer-
nerfelt19 defines resource as “anything which could be thought of as a strength or
weakness of a given firm.” Hunt20 defines resources as “the tangible and intangible
entities available to the firm that enable it to produce efficiently and/or effectively a
market offering that has value for some market segments.” Here we take the broad-
er view of resources, as defined above, and use the term interchangeably with capa-
bilities and competencies.
Tangible resources consist of machinery, buildings, raw materials, and com-
puters. Intangible resources consist of brand equity, corporate reputation, product
design knowledge, and customer relationships knowledge. Between these two
types of resources, intangible resources are considered more critical in acquiring
and maintaining competitive advantages because they resist duplicative efforts of
competitors.21 Because of the significance of intangible resources in contributing to
competitive advantage, strategic analysis delves deeper into examining their nature
and state.
Srivastava, Fahey, and Christensen22 have identified two types of marketing-
specific intangible resources that can improve a firm’s competitive position: relation-
al and intellectual. Relational resources are developed externally and include rela-
tionships with customers, intermediaries, strategic partners, providers of comple-
mentary goods and services, as well as outsourcing agreements and networks and
eco-system relationships. The authors note that these relationships are based on
trust and reputation and cannot be easily duplicated by rivals. Intellectual resources
are internal to the firm and are imbedded in individuals and processes. These re-
sources include different classes of knowledge that the firm possesses about the
external and internal environment, know-how about how to interact with custom-
ers, know-how about how to leverage intra-organizational relationships such as the
ability to cross-sell products, and know-how about introducing new products or
managing customer relationships. The authors also note that while
competitors can reverse-engineer product features and match other
tangible elements, they find it harder to replicate the intangibles.

Products: Managers make strategic decisions to meet the

needs and wants of customers in a way that improves the firm’s com-
petitive and profitability positions. Therefore, it is important for them
to focus on the positioning of product offerings. They need to know
several things about the product mix (total number of products mar-
keted by the firm). How good is the fit of products with consumer
needs and wants? How are products performing in the marketplace?
Which product needs more resources to build its market positions?
Which products should be phased out? What are the gaps that need to

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Chapter 1 -13- Strategy: Concepts, Developments, and Practices

be filled with new products? A matrix approach is suitable for answering these ques-
tions. The growth share matrix and the market attractiveness and business strength
matrix are discussed in Chapter 6.
Product analysis should be conducted with reference to external develop-
ments. As we have seen, external environmental developments can have a signifi-
cant impact on the performance of a product. For example, technological develop-
ments can reduce the attractiveness of products that are based on old technologies.
Smart phones have lessened the attractiveness of analog phones among young con-
sumers. Likewise, changes in the economic environment, such as an increase in pur-
chasing power, can create opportunities for the launch of new products. Product
mix analysis forms the basis for making decisions about which products to retain,
which to divest, and which to develop.
The fundamental aspect of strategic analysis is the understanding of change.
Managers need to know the changes occurring in the external environment and
their implications for the firm, that is, how the firm needs to respond to these
changes. External environmental and internal situation analyses determine the fit
between evolving opportunities and threats in the marketplace and strengths and
weaknesses of the firm. The analysis shows whether the firm has the resources to
take advantage of the opportunities arising from environmental developments or
changes in the industry structure; whether it has developed a strong position in the
market and whether it can maintain it; or whether it can develop value offerings that
will satisfy customer needs better than the competition. To gain this understanding,
internal and external analyses should be conducted together with information flow-
ing from one to the other.
Conducting a thorough and meaningful strategic analysis is a time-consuming
and expensive enterprise. Therefore, many firms shy away from it. However, strate-
gic analysis is essential because it sets the stage for decision making. Without the
analysis, the validity of decisions becomes questionable. Imagine this scenario. You
are working as the chief marketing officer at a multinational company and one of
your team members suggests that you should develop and launch a new product.
When asked why, she provides a comprehensive justification for her recommenda-
tion based on the external and internal data she analyzed. You will likely have more
faith in her recommendations than if someone had asked you to do the
same and, when asked why, responded either that it was a good idea or
that he had a gut feeling that the product would succeed.
1-7 What Can Go Wrong in Strategic Analysis?
Obviously, many things can go wrong when managers get together
to decide how to conduct strategic analysis and take strategic decisions.
The underlying process for strategic analysis is logical and based on ration-
al decision making. However, in reality different types of biases can inter-
vene to potentially derail the process and undermine decisions. Biases can
play a role at different stages of the analysis: at the stage of defining the

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 Chapter 1 -14- Strategy: Concepts, Developments, and Practices

problem, information gathering, information processing, and decision making. Re-

search shows that managers reduce the complexity of problems they face, use infor-
mation selectively, conduct analysis to support their experiences, and interpret find-
ings in ways that support and preserve their beliefs.23
More specifically, in conducting strategic analysis, managers may fail to real-
ize that that their biases and beliefs may be influencing what they consider to be the
important problems and what they consider to be unimportant. These biases and
beliefs may result in focusing on questions that are not relevant and excluding those
that are relevant. To conduct strategic analysis, different types of tools and tech-
niques for data collection, analysis, and interpretation are required. Here the danger
is that the right tools may not be selected, or, if selected, may not be properly used.
The errors can result from a lack of understanding of the concepts underlying the
tools and techniques or not knowing how to use them. Strategies that are built on
conclusions from these types of analysis are not likely to yield the desired results.
Although the impact of biases and beliefs cannot be totally eliminated, being aware
of them can put managers on the right path to obtaining reliable results from strate-
gic analysis. Being aware of what the biases are and taking actions to avoid them
improve the quality of analysis and decision making.24

1-8 What Is Strategy?

Strategy scholars have defined strategy in a variety of ways. Mintzberg25 de-
fines strategy as “a plan, or something equivalent, a direction, a guide or course of
action into the future, a path to get from here to there, etc.” Strategy is also defined
as “an integrated and coordinated set of commitments and actions designed to ex-
ploit core competencies and gain a competitive advantage.”26 Hofer
and Schendel27 conceptualize strategy as the matching of organiza-
Strategies: tional competencies with the opportunities and risks created by envi-
decisions that specify ronmental change in ways that will be both effective and efficient
a set of activities,
with the activities
over the time such resources will be deployed. The definitions are
specifying what the different, but they converge on some common themes. First, strate-
firm plans to do to add gies are decisions. Second, the decisions specify a set of activities.
unique values to
And, third, the activities specify what the firm plans to do to add
its offerings to
achieve a sustainable
unique values to its offerings to achieve a sustainable competitive ad-
competitive advantage. vantage.
Mintzberg and Lampel28 provide a comprehensive view of how strate-
gies emerge. They note that strategies are the result of collaborative
contacts between organizations (firms learn and borrow from each
other); are pushed along by competition and confrontation
(managers trying to outwit or beat competitors); are the recasting of
the old (old strategies blend with new); and are pushed along by the
sheer creativity of managers (exploration of new ways of doing
things). Michael Porter29 identifies the following five distinguishing
characteristics of strategy:

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Chapter 1 -15- Strategy: Concepts, Developments, and Practices

 Operational effectiveness is not strategy—operational effectiveness means

performing similar activities better than rivals perform them.
 Strategy rests on unique activities—strategy is choosing to perform activi-
ties differently or to perform different activities than rivals.
 A sustainable strategic position requires trade-offs—strategy is making
trade-offs in competing and choosing what not to do.
 Fit drives both competitive advantage and sustainability—strategy is creat-
ing fit among a company’s activities and doing many things well and inte-
grating them.
 Rediscovering strategy—strategy renders choice about what not to do as
important as choices about what to do.
The relevance of strategy and strategic thinking has increased in recent years
due to competitive developments in the global marketplace. Gone are the days
when managers could make decisions without knowing their internal strengths and
weaknesses and external opportunities and threats. As the intensity of global com-
petition has increased, there is a growing realization among managers that they
need to know what their strategic goals are and what they need to do to achieve
them. In today’s highly competitive business environment, wrong decisions can
threaten the survival of firms, just as right decisions can enhance their competitive
position and growth potential.
Consider the case of Wal-Mart and Sears to see how the understanding of
the market and the development of market-relevant strategies are critical for
achieving success. Wal-Mart started its operations in 1962 in Arkansas. Its strategy
was to target price-conscious segments, offering them a wide variety of name-brand
goods at deep discounts, the “everyday low prices.” It built its own warehouses
and bought merchandise in large quantities to gain a cost advantage. It invested in
information technology, reduced inventory levels, and kept store shelves fully
stocked. Focusing on retailing and being single-minded about improving marketing
and financial metrics, it became the largest retailer in the world.
Compared to Wal-Mart, Sears has a long history. Founded in 1886, Sears
opened the first retail store in Chicago in 1925. It became the dominant player in re-
tailing and a household name. In the 1980s it adopted a diversification strategy, ac-
quiring Coldwell Banker and Dean Witter, and introducing the Discover card and the
Sears credit card. It lost its focus on retailing, and, as its market share plummeted,
implemented new merchandising and low-price strategies that failed to bring cus-
tomers back to the store. Locked between everyday low-price discounters and up-
scale retailers, it lost its identity as the store where America shopped. In 2005, Sears
was acquired by K-mart, which itself was coming out of bankruptcy.30 They formed a
merger under the name Sears Holdings Corporation and remain a player in the retail
industry with about 3,900 full-line and specialty retail stores in the United States and
Canada. This case study illustrates the importance of knowing that strategies are not
only about doing the right thing but also not doing the wrong thing.

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Chapter 1 -16- Strategy: Concepts, Developments, and Practices

In a diversified, multiproduct company, strategies are developed at three

different levels, at the corporate level, at the strategic business unit level, and at the
functional level. The hierarchy of strategies is illustrated in Figure 1-2. The three lev-
els of strategies are interrelated and interdependent, suggesting a need for devel-
oping synergies to maximize the creation and delivery of value to customers.
In strategic analysis and strategy development at all three levels, the role of
marketing is prominent. Paul Anderson identifies the role that marketing should play
in the organization.31 Marketing should do the following:
 Identify the optimal long-term position or positions that will assure
customer satisfaction and support.
 Develop strategies to capture preferred positions.
 Advocate the marketing concept.
 Negotiate with other functional areas to implement strategies.
In the following sections, we first discuss the development of strategy at the
three different levels of the firm: corporate, business unit, and marketing (See Fig-
ure 1-2). The strategies at these three levels need to be integrated to enhance their
potential to achieve the organizational goals. In this integrated approach, the goals
set at the corporate level guide the formulation of goals at the business unit level,
and goals set at the business unit level shape the goals of marketing at the function-
al level. Each level of the organization should be clear about its role and contribu-
tions to the overall organizational goals. Thus, for corporate managers, it is im-
portant to understand how the goals they achieve will contribute to the achieve-
ment of the business unit goals. Likewise, managers at the business unit level need
to understand how the goals they achieve will contribute to the achievement of cor-
porate goals. What is important is that managers at each level of the organization
understand the linkages between strategies and goals at the corporate, business
unit, and marketing levels.

Figure 1-2: The Hierarchy of Strategies

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Chapter 1 -17- Strategy: Concepts, Developments, and Practices

1-9 Corporate Strategy

Top-level executives in the corporation formulate corporate-level strategies.
The strategic issues at the corporate level are to define the business and determine
the mission, scope, shape, and structure of the firm.32 Corporate-level strategies also
address issues related to the number and type of strategic business units the corpo-
ration will have in its portfolio and how resources would be allocated to these differ-
ent business units. The strategies may thus specify action plans for adding new busi-
nesses or rejuvenating, downsizing, or eliminating existing businesses. How execu-
tives allocate managerial, technological, and capital resources to different business
units signals the importance they attach to these units. The major goal at the corpo-
rate headquarters is to maximize market value of the firm.33
Corporate-level
Although executives from different units participate in selecting
Strategies:
the corporate agenda, it is the responsibility of the chief executive officer strategic issues that de-
(CEO) to provide strategic directions to the company. Setting corporate fine the business and
strategy is his or her primary responsibility. High-performance executives determine the mission,
scope, shape, and struc-
are visionaries and they translate their vision into strategies and actions.
ture of the firm.
As corporate strategies guide the formulation of strategies at the lower
levels of the organization, the two documents that should succinctly artic- Mission Statement:
ulate the current focus and future direction of the corporation are the mis- a declaration that
sion and vision statements, which we discuss next. specifies the current
business of the company.
Mission Statement: A mission statement specifies the current
business of the company. It is an important document that gives manag-
ers, employees, and customers a sense of what the company is about. It answers
questions about what the company does and what it is. Firms generally take one of
two different approaches to craft their mission statement. They either define their
mission with reference to the products they offer or the consumer needs they satis-
fy. In the first approach, a medical equipment company, for example, might specify
its current business as the manufacturing of X-ray machines and imaging equipment
in its mission statement. In the second approach, the same company might define
its mission as meeting the health care needs of people. Although these two ap-
proaches are popular among firms, they do not cover the essential elements of a
mission statement.
A strategically relevant mission statement should cover three key elements.34
It should specify (1) customer needs, what is being satisfied, (2) customer groups,
whose needs are being satisfied, and (3) the company’s activities, technologies, and
competencies, how the enterprise goes about creating and delivering value to cus-
tomers and satisfying their needs. Avis, for example, states in its mission statement
that it “will ensure a stress-free car rental experience by providing superior services
that cater to our customers’ individual needs … always conveying the ‘We Try Hard-
er’ spirit with knowledge, caring and a passion for excellence.” The role of chief
marketing officers in the crafting of the mission statement is critical. They contrib-
ute by providing answers to the critical questions about customer needs, market

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Chapter 1 -18- Strategy: Concepts, Developments, and Practices

segments, and product/value delivery. In Table 1-1, we provide examples of mission

statements of different companies.

Table 1-1 Mission Statements

Mission Statements:
Kodak: “Build a world-class, results-oriented culture . . . by providing customers and con-
sumers with solutions to capture, store, process, output and communicate images to peo-
ple and machines anywhere, anytime . . . bringing differentiated, cost-effective solutions . . .
to the marketplace quickly and with flawless quality through a diverse team of energetic
employees with the world-class talent and skills necessary to sustain Kodak as the World
Leader in Imaging.”
McDonald’s: “In striving to maintain the Spirit of Team Oerther Foods, our mission is to pro-
actively establish ourselves as the benchmark of customer satisfaction. We will attain mutu-
al prosperity by acting with:
-Integrity—always delivering on our promises to our internal and external customers.
-Honest—open communication on all subjects and at all levels of the organization in
an unthreatening environment.
-Respect—seek first to understand, then create win-win situations.
These values in a team environment will provide the synergy to achieve our vision.”
Avis: “We will ensure a stress-free car rental experience by providing superior services that
cater to our customers’ individual needs…always conveying the ‘We Try Harder®’ spirit
with knowledge, caring and a passion for excellence.”
Ford Motor Company: “We are a global family with a proud heritage passionately commit-
ted to providing personal mobility for people around the world.”
CNS, Inc.: “As CNS employees, our mission is to exceed the expectations of our consumers,
customers and shareholders by achieving excellence in the development and commerciali-
zation of high-quality consumer health care products that enhance everyday life.”
HealthPartners: “Our mission is to improve the health of our members, our patients and
the community.”
Blockbuster: “To help people transform ordinary nights into BLOCKBUSTER nights by being
their complete source for movies and games.”
FedEx: “FedEx Corporation will produce superior financial returns for its shareowners by
providing high value-added logistics, transportation and related information services
through focused operating companies. Customer service requirements will be met in the
highest quality manner appropriate to each market segment served. FedEx Corporation will
strive to develop mutually rewarding relationships with its employees, partners, and suppli-
ers. Safety will be the first consideration in all operations. Corporate activities will be con-
ducted to the highest ethical and professional standards.”
Nike: “To bring inspiration and innovation to every athlete* in the world. *If you have a
body, you are an athlete.”
Southwest Airlines: “The mission of Southwest Airlines is dedication to the highest quality
of Customer Service delivered with a sense of warmth, friendliness, individual pride, and
Company Spirit.”

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Chapter 1 -19- Strategy: Concepts, Developments, and Practices

Strategic Vision: The strategic vision specifies the future business of the
company. It answers questions about the direction the company will take in the fu-
ture—what it will be and where it is going.35 Although there is much uncertainty in
the competitive environment, the firm still needs a strategic vision to visualize the
future competitive space it will occupy and the choices it will make about product
markets, technology, and customer segments. Mische36 lists six essential qualities
of effective vision statements. The strategic vision should communicate a sense of
direction, establish a context for operating the enterprise, describe a fu-
ture condition, motivate people, inspire people, and serve as a centering Strategic Vision:
point for organizational behavior and performance. Examples of strate- a declaration that
specifies the business
gic visions are given in Table 1-2. Avis’s strategic vision, for example,
future of the company.
reads: “We will lead our industry by defining service excellence and build-
ing unmatched customer loyalty.”

Table 1-2 Strategic Vision

Strategic Visions:
Kodak: “Our heritage has been and our future is to be the World Leader in Imaging.”
McDonald’s: “In the Spirit of Team Oerther Foods, together we prosper by dominating our
industry, providing innovative customer experiences that include:
-Extraordinary Value
-Family Entertainment
-Delicious Food
-Unbeatable Service
-Lasting Memories”
Avis: “We will lead our industry by defining service excellence and building unmatched cus-
tomer loyalty.”
Ford Motor Company: “To become the world’s leading consumer company for automotive
products and services.”
CNS, Inc.: “Create an innovative self-care company by delivering solutions that ignite conta-
gious loyalty among individuals with a passion for living healthy lives.”
HealthPartners: “Our vision is to be the best most trusted provider of health care, health
promotion, health care financing and health care administration in the country.”
Levi Strauss & Company: “People love our clothes and trust our company. We will market
the most appealing and widely worn casual clothing in the world. We will clothe the world.”

1-10 Strategic Business Unit Strategy

A strategic business unit (SBU) in a diversified, multi-product company is an
independent business responsible for developing and executing strategies and
meeting its strategic goals. The different units function under the corporate umbrel-
la and are organized around related products and customer needs. P&G, a leading

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 Chapter 1 -20- Strategy: Concepts, Developments, and Practices

consumer product company, has organized its business into three global business
units: beauty and grooming, health and well-being, and household care.37
The key question for a strategic business unit manager is how to compete in
the firm’s chosen business.38 Take the case of General Electric,39 which has formed
six business units based on broad customer and market segments: energy infra-
structure, technology infrastructure, NBC Universal, GE Capital, consumer and indus-
trial, and home and business solutions. GE’s strategy focuses on the renewal model
that should lead to achieving positive results, such as:
· a simplified portfolio based on infrastructure
· investing in profitable growth
· creating market solutions to tough societal problems
· an energized and accountable team
· attractive growth in earnings, cash and returns
As the two examples above suggest, each SBU functions in a specific in-
dustry. Each unit develops its strategies based on the strategic analysis
SBU Strategies:
of its internal situation and external environment. SBU strategies are
strategies based on the
based on the analysis of the attractiveness of the market and the com-
analysis of the attractive-
ness of the market and the petitive strength of the business unit. These two dimensions are com-
competitive strength of bined in a nine-cell matrix that guides the formulation of strategies. The
the business unit. strategies cover three important decisions for the business: should it
invest in growth, should it selectively hold, or should it harvest and di-
vest. We discuss the nine-cell matrix and strategic options in Chapter 6.

1-11 Marketing Strategy

Marketing strategies are decisions and actions about segmenting and target-
ing markets; launching products and positioning brands; pricing and distributing;
and managing supplier, intermediary, and customer relationships. The strategies re-
flect the difficult choices that managers make about which markets to enter, which
products to launch, which customers to serve, which distribution channel to select,
what prices to charge, where to place the advertisements, and how to position the
offerings. The goals of marketing strategy are to satisfy consumer needs and wants
better than the competition and achieve and sustain a competitive advantage. Many
firms achieve a competitive advantage but are not able to sustain it. Sustainable
competitive advantage is achieved by building relationships with customers, part-
ners, and channel members; offering appropriate products; identifying the timing
for changes in relationships and product offerings; and deploying sufficient re-
sources.40 These are the challenges and issues which we examine in the rest of this
book.

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Chapter 1 -21- Strategy: Concepts, Developments, and Practices

Summary
Strategy as we understand it today has a long history. Sun Tzu’s Art of War, Thu-
cidides’ The Peloponessian War and Clausewitz’s On War provide some of the theoretical
underpinnings for the modern conceptualization of strategy. In the twentieth century,
Edith Penrose emphasized the significance of acquiring resources to achieve competitive
advantage and Joseph Schumpeter discussed how creative destruction can be a means to
avoid competition and control markets. The tools developed for making strategic decisions
were SWOT analysis, growth-share matrix, and GE/McKinsey industry-business strength ma-
trix. The two key ideas in later developments were that firms need to understand their cus-
tomers, competitors, and markets and develop resources to gain a competitive advantage.

Strategic analysis takes a systematic approach to the examination of the external

environment and internal situation. In the external environment, three factors whose analy-
sis leads to the determination of opportunities and threats in the marketplace are environ-
ment, industry, and market segments. In the internal situation, three factors whose analysis
leads to the determination of strengths and weaknesses are structure, resources, and prod-
ucts.

In today’s highly competitive global markets, the significance of developing the

right strategy has increased. Strategies are decisions that firms take to achieve a competi-
tive advantage and enhance profitability. Strategies are developed at the corporate level,
strategic business unit level, and functional (marketing) level. Strategies at these three lev-
els are interrelated and interdependent. The overall goal is to create synergies among the
different levels so as to maximize the creation and delivery of value to customers.

A mission statement specifies the current business and the strategic vision specifies
the future business. The vision statement answers questions about the direction the compa-
ny will take in the future—what it will be and where it is going. The mission statement and
strategic vision guide the choices that the corporation makes about business expansion and
retrenchment. In a diversified company, the business units may be organized around prod-
ucts and consumer needs. Each unit develops its mission statement and strategic vision and
is responsible for developing and executing strategies and achieving goals. Within each
business unit is the marketing department. The marketing department also has it vision and
mission statement and develops the strategic marketing plan to make decisions about seg-
ments, targets, positioning, and the marketing mix variables.

Key Terms

Corporate-level Strategies Market Segment Strategia

Creative Destruction
Economic Analysis
Environmental Analysis
Intangible Resources
Internal Situation Analysis
Mission Statement
Organizational Structure
Political Analysis
SBU Strategies
Social Analysis
Strategic Analysis
Strategic Vision
Strategies
Tangible Resources
Technological Analysis

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Chapter 1 -22- Strategy: Concepts, Developments, and Practices

Discussion Questions
1. While strategic analysis can provide benefits such as sustained competitive advantage,
what are the costs of undergoing such analysis? Can you think of an example for which such
in-depth analysis may not be beneficial?
2. Two ways in which business units can be organized are based on products and customer
needs. Can you provide an example of a company for each?
3. Review the external and internal analysis required for developing a mission statement
and strategic vision. What are some potential challenges for analyzing those factors?
Which do you think presents more obstacles to complete? How should a manager over-
come those challenges?

Reading
Bruce D. Henderson. The Logic of Business Strategy, Cambridge, MA: Ballinger Publishing,
1984.
Michael E. Porter. Competitive Strategy: Techniques for Analyzing Industries and Competi-
tors. New York, NY: Free Press, 1998.
Sun Tzu. The Art of War. Philadelphia, PA: Running Press Book Publishers, 2003.

Web Exercise
Go to Proctor and Gamble’s website (www.pg.com) and identify two products, other than
the Crest SpinBrush and Whitestrips, that illustrate P&G’s ability to innovate and command
higher profit margins.

Endnotes
1. General Tao Hanzhang, Translated by Yuan Shibing, 1990, Sun Tzu’s Art of War, The Modern Chi-
nese Interpretation, Sterling Publishing Co., Inc. New York.
2. Foo Check Teck, 1997, Reminisces of an Ancient Strategist: The Mind of Sun Tzu, Grower Publishing
Limited, England.
3. Sir Richard Livingstone, 1943, Thucydides: The History of the Peloponnesian War, Oxford Universi-
ty Press, London.
4. Carl Von Clausewitz, 1993, On War, Alfred A. Knopf, Inc.: New York.
5. Michael I. Handel, 1986, Clausewitz and Modern Strategy, (Ed.), Frank Cass & Co.
6. Edith Penrose, 1959, The Theory of the Growth of the Firm, Oxford, Basil Blackwell.
7. Joseph A. Schumpeter, 1942, Capitalism, Socialism, and Democracy, New York: Harper.
8. Joseph A. Schumpeter, 1934, The Theory of Economic Development, Cambridge, MA: Harvard Uni-
versity Press.
9. See Margaret A. Peteraf, 1993, The cornerstone of competitive advantage: A resource-based
view, Strategic Management Journal, 14, 179-191.
10. N. Venkatraman, and J.E. Prescott, 1990, “Environment-strategy coalignment: An empirical test
of its performance implications,” Strategic Management Journal, 11, 1, pp. 1-23.
11. Kenneth Andrews, 1971, The Concept of Corporate Strategy, Homewood, IL: Richard D. Irwin.
12. Bruce D. Henderson, 1984, The Logic of Business Strategy, Cambridge, MA: Ballinger Publishing.
13. Jorge Costa, 1995, An empirically-based review of the concept of environmental scanning, Inter-
national Journal of Contemporary Hospitality Management, 7, 7, 4-9, p. 5.

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 Chapter 1 -23- Strategy: Concepts, Developments, and Practices

14. Henry Mintzberg, 1993, Structure in Fives: Designing Effective Organizations, Englewood Cliffs:
Prentice Hall, 2.
15. H. Mintzberg, 1979, The structuring of organizations, Prentice Hall, Englewoods Cliffs, NJ.
16. A. Andrews, 1971, The concept of corporate strategy, Dow Jones-Irwin, Homewood, Illinois.
17. B.S. Chakravarthy, 1982, Adaptation: A promising metaphor for strategic management, Academy
of Management Review, 7, 35-44.
18. A. Ginsberg, 1988, Measuring and modeling changes in strategy: Theoretical foundations and
empirical directions, Strategic Management Journal, 9, 559-575.
19. Birger Wernerfelt, 1984, A resource-based view of the firm, Strategic Management Journal, 5, 171-
180.
20. S.D. Hunt, 2000, A general theory of competition, Sage Publications Inc. Thousand Oaks, CA.
21. I. Diericks and K. Cool, 1989, Asset stock accumulation and sustainability of competitive ad-
vantage, Management Science, 35, 12, 1504-1511.
22. R.K. Srivastava, L. Fahey, and H.K. Christensen, 2001, The resource-based view and marketing:
The role of market-based assets in gaining competitive advantage, Journal of Management, 27,
777-802.
23. Russell F. Korte, 2003, Biases in decision making and implications for human resource develop-
ment, Advances in Developing Human Resources, Nov. 5, 4, 440-457.
24. David Hussey, 2001, Creative strategic thinking and the analytical process: critical factors for stra-
tegic success, Strategic Change, Jun/Jul, 10, 4, 201-213.
25. Henry Mintzberg, The Rise and Fall of Strategic Planning, 1994, p. 23.
26. Michael A. Hitt, R. Duane Ireland, and Robert E. Haskisson, 1997, Strategic Management, 2nd Ed.
P. 115.
27. C. W. Hofer and D.E. Schendel, 1978, Strategy Formulation: Analytical Concepts, St. Paul: West
Publishing Company.
28. Henry Mintzberg and Joseph Lampel, 1999, “Reflecting on the strategy process,” Sloan Manage-
ment Review, Spring, pp. 21–30.
29. Michael E. Porter, 1996, “What is Strategy,” Harvard Business Review, November-December, pp.
61–78.
30. www.galenet.galenet.com/servlet/ 2/7/2005.
31. Paul F. Anderson, 1982, Marketing, strategic planning and the theory of the firm, Journal of Mar-
keting, (Spring), pp. 15–26.
32. Frederick E. Webster, Jr., 1992, The Changing Role of Marketing in the Corporation, Journal of
Marketing, 56 (October), pp. 1–17.
33. P. Rajan Varadarajan and Satish Jayachandran, 1999, Marketing Strategy: An assessment of the
state of the field and outlook, Journal of the Academy of Marketing Science, 27, 2, pp. 120–143.
34. Derek F. Abell, 1980, Defining the Business: The Starting Point of Strategic Planning, Englewood
Cliffs, NJ: Prentice Hall, p. 169.
35. See Arthur A. Thompson Jr. and A.J. Strickland (2001), Strategic Management: Concepts and Cases,
McGraw Hill Irwin.
36. Michael A. Mische, 2001, Strategic Renewal: Becoming a High-performance Organization, Prentice
Hall, New Jersey, pp. 205-206.
37. www.pg.com/en_US/company/global_structure_operations/corporate_structure.shtml, Febru-
ary 18, 2011.
38. Webster, 1992.
39. General Electric Annual Report 2009.
40. D. Sudharshan (1995), Marketing Strategy, Englewood Cliffs, NJ: Prentice Hall.

Strategic Marketing Management 3e -23- Chapter 1

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