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(South-Western Cengage Learning, 2012), 3rd edition. His work has been published
in a range of journals, including Academy of Management Review, Academy of
Management Journal, Administrative Science Quarterly, Strategic Management
Journal, Academy of Management Executive, Journal of Management, Journal
of Management Studies, Decision Sciences, Human Relations, Strategic Entrepreneur-
ship Journal, British Journal of Management, Journal of Business Venturing, and
Entrepreneurship: Theory & Practice. Working with colleagues, he has served as
a guest editor for special issues of Academy of Management Review, Academy of
Management Executive, Strategic Management Journal, Journal of Business Ventur-
ing, Organizational Research Methods, and Journal of Engineering and Technology
Management. He has also served in various editorial capacities including terms as a
member of the editorial review boards for Academy of Management Review, Academy
of Management Journal, Academy of Management Executive, Journal of Manage-
ment, Journal of Business Venturing, and Entrepreneurship: Theory & Practice.
He recently completed a term as editor of the Academy of Management Journal.
Currently, he is the vice president of the Academy of Management.
He received the 1999 award for Outstanding Intellectual Contribution to
Competitiveness Research from the American Society for Competitiveness. He is a
Fellow of the Academy of Management and a Fellow of the Strategic Management
Society. Two of his papers received Best Paper awards from Academy of Management
Journal (2000) and Academy of Management Executive (1999).

JEFFREY S. HARRISON
Jeffrey S. Harrison is the W. David Robbins Chair of Strategic Management in the
Robins School of Business at the University of Richmond. Prior to his current
appointment, he served as the Fred G. Peelen Professor of Global Hospitality Strategy
at Cornell University. He now serves or has served on the editorial review boards
of Strategic Management Journal, Academy of Management Journal, and Academy
of Management Executive.
Dr. Harrison’s research interests include strategic management and business
ethics, with particular expertise in the areas of mergers and acquisitions, diversifica-
tion, strategic alliances, and stakeholder management. Much of his work has been
published in prestigious academic journals such as Academy of Management
Journal, Strategic Management Journal, and Journal of Business Ethics. He has
authored or co-authored numerous books, including Foundations of Strategic
Management, (South-Western Cengage Learning, 2014) 6th edition, Strategic
Management of Organizations and Stakeholders, (Wiley, 2003), Stakeholder Theory:
The State of the Art, (Cambridge University Press, 2010), and Mergers and Acquisi-
tions: A Guide to Creating Value for Stakeholders, (Oxford University Press, 2001).
Dr. Harrison helped organize the Stakeholder Strategy Interest Group at the
Strategic Management Society and has served in a variety of leadership roles in that
group. He has also provided consulting and executive training services to many
companies on a wide range of strategic, entrepreneurial, and other business issues.

vi ABOUT THE AUTHORS

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 BRIEF CONTENTS

PART 1 STRATEGIC THINKING 1

1 Introduction to Strategic Management 2
2 Strategic Leadership 34

PART 2 STRATEGIC ANALYSIS 71

3 The External Environment: Opportunities, Threats, Industry
Competition, and Competitor Analysis 72
4 The Internal Organization: Resources, Capabilities, and
Core Competencies 106

PART 3 CREATING COMPETITIVE ADVANTAGE 141

5 Business-Level Strategy 142
6 Competitive Rivalry and Competitive Dynamics 172
7 Cooperative Strategy 200
8 Corporate-Level Strategy 225
9 Acquisition and Restructuring Strategies 257
10 International Strategy 284

PART 4 MONITORING AND CREATING

ENTREPRENEURIAL OPPORTUNITIES 319
11 Corporate Governance 320
12 Strategic Entrepreneurship 351
13 Strategic Flexibility and Real Options Analysis 372

Glossary 405
Name Index 413
Company Index 440
Subject Index 443

vii
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 CONTENTS

Preface xvii

Part 1: Strategic Thinking 1

CHAPTER 1: INTRODUCTION TO STRATEGIC MANAGEMENT 2
The Competitive Landscape 3
Globalization of Markets and Industries 4
Economic Volatility 5
Technological Advances 6
Coping with Hypercompetitive Influences 7
The Emergence of Strategic Management as a Business Discipline 8
Early Influences on the Strategy Concept 9
Modern Strategic Management 10
Three Perspectives on Value Creation 11
The I/O Model of Above-Average Returns 11
The Resource-Based Model of Above-Average Returns 14
The Stakeholder Model of Responsible Firm Behavior and Firm Performance 17
Strategic Thinking and the Strategic Management Process 20
Strategic Thinking 21
The Strategic Management Process 22
Summary 24
Ethics Questions 25

CHAPTER 2: STRATEGIC LEADERSHIP 34

Strategic Leaders as a Key Resource through Their Influences on
Strategic Decisions 35
Strategic Leadership Style 36
Managerial Discretion and Decision Biases 37
Top Management Teams 40
Top Management Team Heterogeneity 40
The CEO and Top Management Team Power 42
Executive Succession Processes 44
Key Strategic Leadership Responsibilities and Actions 46
Ensure that the Firm Is Well Positioned Economically 48
Acquire, Develop, and Manage Key Resources 50
Develop and Manage Relationships with External Stakeholders 53

ix
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 Determine and Communicate Strategic Direction 54
Oversee Formulation and Implementation of Specific Strategies 57
Establish Balanced Controls 58
Summary 60
Ethics Questions 62

Part 2: Strategic Analysis 71

CHAPTER 3: THE EXTERNAL ENVIRONMENT: OPPORTUNITIES, THREATS,
INDUSTRY COMPETITION, AND COMPETITOR ANALYSIS 72
The General, Industry, and Competitor Environments 73
External Environmental Analysis 74
Scanning 76
Monitoring 77
Forecasting 77
Assessing 77
Segments of the General Environment 78
The Demographic Segment 78
The Economic Segment 80
The Political/Legal Segment 81
The Sociocultural Segment 82
The Technological Segment 83
The Global Segment 84
The Physical Environment Segment 86
Industry Environment Analysis 86
Threat of New Entrants 88
Bargaining Power of Suppliers 91
Bargaining Power of Buyers 92
Threat of Substitute Products 92
Intensity of Rivalry among Competitors 93
Complementors 95
Interpreting Industry Analyses 95
Analysis of Direct Competitors 96
Strategic Groups 96
Understanding Competitors and Their Intentions 97
Summary 99
Ethics Questions 100

CHAPTER 4: THE INTERNAL ORGANIZATION: RESOURCES,

CAPABILITIES, AND CORE COMPETENCIES 106
Internal Analysis and Value Creation 108
Conditions Influencing Internal Analysis 108
Creating Value 110

x CONTENTS
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 Resources, Capabilities, and Core Competencies 112
Resources 112
Capabilities 115
Core Competencies 116
Building Core Competencies 118
Four Criteria of Sustainable Competitive Advantage 118
Value Chain Analysis 121
Outsourcing 125
When Core Competencies Lose Their Value 126
Firm Performance 126
Stakeholder Objectives and Power 127
Measures of Firm Performance 128
Balancing Stakeholder Performance 131
Sustainable Development 131
Summary 133
Ethics Questions 134

Part 3: Creating Competitive Advantage 141

CHAPTER 5: BUSINESS-LEVEL STRATEGY 142
Economic Logic and Business-Level Strategy 143
Types of Business-Level Strategy 144
Serving Customers 145
Strategy and Structure 148
Cost Leadership Strategy 149
Successful Execution of the Cost Leadership Strategy 149
Using the Functional Structure to Implement the Cost Leadership Strategy 152
Competitive Risks of the Cost Leadership Strategy 154
Differentiation Strategy 154
Successful Execution of the Differentiation Strategy 155
Using the Functional Structure to Implement the Differentiation Strategy 157
Competitive Risks of the Differentiation Strategy 159
Focus Strategies 159
Focused Cost Leadership Strategy 160
Focused Differentiation Strategy 160
Using the Simple or Functional Structures to Implement Focus Strategies 161
Competitive Risks of Focus Strategies 161
Integrated Cost Leadership/Differentiation Strategy 162
Successful Execution of the Integrated Cost Leadership/Differentiation Strategy 162
Using a Flexible Structure to Implement the Integrated Cost Leadership/Differentiation
Strategy 163
Competitive Risks of the Integrated Cost Leadership/Differentiation Strategy 165

CONTENTS xi
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Summary 166
Ethics Questions 168

CHAPTER 6: COMPETITIVE RIVALRY AND COMPETITIVE DYNAMICS 172

A Model of Competitive Rivalry 175
Competitor Analysis 176
Market Commonality 176
Resource Similarity 177
Drivers of Competitive Actions and Responses 179
Competitive Rivalry 180
Strategic and Tactical Actions 181
Likelihood of Attack 181
First-Mover Incentives 182
Organizational Size 183
Quality 184
Likelihood of Response 185
Type of Competitive Action 186
Actor’s Reputation 186
Dependence on the Market 187
Competitive Dynamics 188
Slow-Cycle Markets 188
Fast-Cycle Markets 190
Standard-Cycle Markets 192
Summary 193
Ethics Questions 195

CHAPTER 7: COOPERATIVE STRATEGY 200

The Importance of Cooperative Strategy 201
Strategic Alliances in Slow-Cycle Markets 203
Strategic Alliances in Fast-Cycle Markets 203
Strategic Alliances in Standard-Cycle Markets 204
Types of Alliances and Other Cooperative Strategies 204
Cooperative Strategies that Enhance Differentiation or Reduce Costs 205
Complementary Strategic Alliances 206
Network Cooperative Strategies 207
Cooperative Strategies that Address Forces in the External Environment 209
Competitive Response Alliances 209
Uncertainty-Reducing Alliances 209
Competition-Reducing Cooperative Strategies 209
Associations and Consortia 210
Cooperative Strategies that Promote Growth and/or Diversification 211
Diversifying Strategic Alliances 212
Franchising 212
International Cooperative Strategies 212

xii CONTENTS
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 Competitive Risks of Cooperative Strategies 214
Implementing and Managing Cooperative Strategies 216
Summary 218
Ethics Questions 219

CHAPTER 8: CORPORATE-LEVEL STRATEGY 225

Levels of Diversification 226
Low Levels of Diversification 226
Moderate and High Levels of Diversification 227
Reasons for Diversification 229
Diversification and the Multidivisional Structure 231
Related Diversification 232
Operational Relatedness: Sharing Activities 233
Using the Cooperative Form of the Multidivisional Structure to Implement the Related
Constrained Strategy 233
Corporate Relatedness: Transferring of Core Competencies 235
Using the Strategic Business-Unit Form of the Multidivisional Structure to Implement the
Related Linked Strategy 235
Market Power through Multipoint Competition and Vertical Integration 237
Simultaneous Operational Relatedness and Corporate Relatedness 238
Unrelated Diversification 239
Efficient Internal Capital Market Allocation 240
Restructuring 241
Using the Competitive Form of the Multidivisional Structure to Implement the Unrelated
Diversification Strategy 242
Value-Neutral Diversification: Incentives and Resources 243
Incentives to Diversify 243
Resources and Diversification 246
Value-Reducing Diversification: Managerial Motives to Diversify 246
Summary 248
Ethics Questions 250

CHAPTER 9: ACQUISITION AND RESTRUCTURING STRATEGIES 257

The Popularity of Merger and Acquisition Strategies 258
Mergers, Acquisitions, and Takeovers: What Are the Differences? 259
Reasons for Acquisitions 260
Increase Market Power 260
Overcome Entry Barriers 262
Reduce Costs and Risks Associated with New Product Development 262
Increase Speed to Market 263
Increase Diversification and Reshape the Firm’s Competitive Scope 263
Learn and Develop New Capabilities 264

CONTENTS xiii
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Problems in Achieving Acquisition Success 265
Integration Difficulties and an Inability to Achieve Synergy 266
Inadequate Evaluation of Target 267
Large or Extraordinary Debt 267
Too Much Diversification 268
Managers Too Focused on Acquisitions 269
Firm Becomes Too Large 269
Effective Acquisitions 270
Restructuring 272
Downsizing 272
Downscoping 273
Leveraged Buyouts 274
Outcomes from Restructuring 275
Summary 276
Ethics Questions 277

CHAPTER 10: INTERNATIONAL STRATEGY 284

Incentives for Using an International Strategy 286
Increased Market Size 286
Return on Investment 287
Economies of Scale, Scope, and Learning 287
Obtain Resources and Achieve Other Location Advantages 288
International Corporate-Level Strategy 289
International Scope: Worldwide Presence or Regionalization 289
Multidomestic Strategy 292
Global Strategy 293
Transnational Strategy 295
International Business-Level Strategy 296
Choice of International Entry Mode 299
Exporting 299
Licensing 301
Strategic Alliances 302
Acquisitions 303
New Wholly-Owned Subsidiary 303
Dynamics of Mode of Entry 304
Strategic Competitiveness Outcomes 305
International Diversification and Returns 305
International Diversification and Innovation 306
Risks in an International Environment 307
Complexity of Managing Multinational Firms 309
Summary 310
Ethics Questions 312

xiv CONTENTS
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 Part 4: Monitoring and Creating Entrepreneurial
Opportunities 319
CHAPTER 11: CORPORATE GOVERNANCE 320
Separation of Ownership and Managerial Control 323
Agency Relationships 324
Product Diversification as an Example of an Agency Problem 325
Agency Costs and Governance Mechanisms 326
Ownership Concentration 328
Influence of Institutional Owners 329
Board of Directors 330
Board Effectiveness 332
Executive Compensation 333
The Effectiveness of Executive Compensation 334
Market for Corporate Control 335
Managerial Defense Tactics 337
International Corporate Governance 338
Corporate Governance in Germany 339
Corporate Governance in Japan 340
Global Corporate Governance 341
Governance Mechanisms, Stakeholder Management, and Ethical Behavior 341
Summary 342
Ethics Questions 344

CHAPTER 12: STRATEGIC ENTREPRENEURSHIP 351

Strategic Entrepreneurship and Innovation 352
Innovation 353
Entrepreneurs 354
International Entrepreneurship 355
Internal Innovation 357
Incremental Innovations 357
Radical Innovations 357
Implementing Internal Innovation 359
Cross-Functional Product Development Teams 360
Facilitating Integration and Implementation 361
Creating Value from Internal Innovation 361
Innovation through Cooperative Strategies 362
Innovation through Acquisitions 363
Creating Value through Strategic Entrepreneurship 364
Summary 365
Ethics Questions 366

CONTENTS xv
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CHAPTER 13: STRATEGIC FLEXIBILITY AND REAL OPTIONS ANALYSIS 372
Real Options Analysis 374
Types of Real Options 375
Purpose and Importance of Real Options Analysis 377
Value Drivers for Real Options 383
Valuation of Real Options 386
Implementation Requirements of Real Options 386
Summary 387
Ethics Questions 389
Appendix: Detailed Valuation Guidelines 389

Glossary 405
Name Index 413
Company Index 440
Subject Index 443

xvi CONTENTS
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 PREFACE

UPDATES AND HIGHLIGHTS FOUND IN THE THIRD EDITION

Our goal in developing the Third Edition of Competing for Advantage was to
present an up-to-date explanation of the strategic management process. In doing
so, we maintained the highest standards of intellectual integrity while simulta-
neously providing thoughtful practical examples of the conceptual points we
sought to illustrate. We also sought to present our material in a readable style. To
accomplish these objectives, we read the most recent academic research to insure
that our content is highly current and relevant to the organizations that are rele-
vant to our MBA and EMBA student audiences. Furthermore, we continuously
read articles in the best practitioner publications (e.g., Wall Street Journal, Bloomberg
BusinessWeek, Fortune, Financial Times, Forbes, and many others). After identifying
interesting examples that effectively illustrated the conceptual ideas on which we
focused, we related them to particular concepts so that students can see how they are
applied in practice. Although the examples are usually brief, students have found them
useful, not only to illustrate the conceptual application but also to facilitate efforts to
identify and solve organizational problems.
So, both the concepts and the examples included in this third edition are
current. We updated all the examples from the second edition and inserted many
new examples, including a focus on services, healthcare, technology and innovation,
crisis management, corporate social responsibility, and green strategies. For instance,
in Chapter 1, there are several examples of crisis management: one concerning the
Japanese earthquake and its supply change implications and one dealing with the
recession and the firm crises associated with it. We use, for instance, Caterpillar’s
successful anticipation and planning for the volatility associated with the recession.
Chapter 2 focuses on strategic leadership; herein, we provide new examples of stra-
tegic change by Steve Ballmer as Microsoft’s CEO and the recent selection of a
female CEO at IBM, Virginia Rometty. We also discuss the Internet hacking scandal
associated with the tabloid newspaper in Rupert Murdoch’s media empire, News
Corp. In Chapter 3, focused on external environmental analysis, we added a new
section on the physical environment, discussing the importance of climate change
issues and the use of green strategies to deal with these issues. In Chapter 4, on inter-
nal analysis, we introduce situations surrounding Kodak’s bankruptcy, Nike’s core
competencies, and how Twitter, as a new competitor, offers another way to cre-
ate value in media firms. We also explain that many firms are using sustainability
as part of their strategies and are establishing sustainability as an organizational
competency. Example firms include McDonald’s, Burger King, Chipotle Mexican
Grill, and Walmart.
In Chapter 5, on business-level strategy, we added content on the use of out-
sourcing for the reduction of costs in the discussion of the cost leadership strategy.

xvii
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We also added a number of current examples in this chapter such as Amazon.com’s
introduction of the Kindle Fire to lead the market in e-book readers and to com-
pete with Apple’s iPad. We discuss the success of Ryanair’s cost leadership strategy
exemplified by its 10 percent increase in passengers to 72 million during the
economic recession in 2010. And we also used examples of major Asian companies
such as the Li Ning Company, the largest sporting goods manufacturer in China.
Chapter 6, focused on competitive dynamics, was updated with a number of
examples. For instance, the chapter discusses how FedEx and UPS compete across
several product markets, including package delivery by both land and air and the
increasing e-commerce segment. Johnson & Johnson’s recent competitive problems
associated with product quality are discussed. Innovation is an important tool
for remaining competitive; Cooper Tire is highly dependent on the replacement tire
market, and the chapter discusses how it relies on continuous innovation to remain
competitive.
A number of global examples are included in this edition as well. For instance,
Chapter 7, on cooperative strategy, contains an interesting new example of Ericson,
a global network management company with more than two hundred and fifty
million customers worldwide. This chapter also describes instances of firms joining
associations and consortia to deal with the green movement and sustainability
issues. Chapter 8 deals with corporate strategy. In this chapter, we add a number
of service industry examples along with the traditional manufacturing industry
cases. There are examples from Medifast and Catholic Health Initiatives as well as
the hospitality and real estate brokerages as diversified service firms. This chapter
also presents an example in the solar industry, which represents a continuing focus
on green strategies and sustainability. In Chapter 9, on acquisition strategy, we
added examples such as one dealing with Google’s acquisition of Motorola Mobility.
In addition, we include instances of large emerging economy firms pursuing devel-
oped economy acquisitions such as JBS, a Brazilian meat producer, making a
number of acquisitions in the United States. We also discuss Bristol-Myers
Squibb’s acquisition of hepatitis C drug producer Inhibitex.
Chapter 10, focused on international strategy, contains many new examples
and a significant updating of the literature. There are important discussions of
firms in many different countries including China, Mexico, India, and Russia. One
section includes an interesting discussion on an annual corruption index suggesting
the institutional risks companies face when entering foreign countries.
Chapter 11’s consideration of corporate governance introduces a number of
updates including information on recent regulations regarding proxy voting “say
on pay,” where large institutional investors have a vote on executive compensation
packages and can nominate board members for a proxy vote who support their
positions. We also provide updates on the Dodd-Frank regulation of the financial
industry which pertains to corporate governance. Ethical issues in corporate gover-
nance are examined, including the scandal associated with News Corp. mentioned
earlier, and how the executive leaders can improve organizational culture by the
way they govern the firm.
In Chapter 12 on strategic entrepreneurship, we include a discussion on Tim
Cook, Apple’s new CEO, and how he intends to maintain the strong culture com-
mitted to innovation that Steve Jobs created. Finally, in Chapter 13, we have

xviii PREFACE
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eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional
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 updated the real options literature and provided associated examples that apply
this important decision-making tool.
We think that students will find the updates very useful conceptually. In addition,
the many application-oriented examples appearing throughout this third edition of
Competing for Advantage should prove instructive.

PURPOSE AND ORGANIZATION OF THE BOOK

The purpose of this book is to provide a comprehensive yet concise description of
the core concepts of strategic management that firms need to use to meet the chal-
lenge of competing in the current fast-paced and globally competitive environment.
Written to meet the educational needs of full-time and part-time MBA students as
well as those pursuing an Executive MBA degree, this book will also serve the prac-
ticing manager, consultant, or corporate trainer whose firms or clients are faced
with global economic challenges in achieving competitive advantage over their
rivals. CEOs, line managers, and especially executives charged with developing
and implementing strategic initiatives will find much to challenge their thinking
and put to prescriptive use while reading and studying this book.
Our examination of strategic management is distinctive in several important
ways. The book contains a detailed treatment of multiple perspectives, including
traditional industrial organization economics, the resource-based view, and the
stakeholder perspective. These three perspectives form the foundation upon which
other important ideas and tools for developing and effectively implementing strate-
gies are built. The net effect is an integrated approach that demonstrates how firms
can be ethical and efficient simultaneously, socially responsible and profitable,
responsive to multiple stakeholders, and capable of sustaining high financial perfor-
mance over the long term.
Another distinguishing feature of this book is that strategies and methods for
implementing them are treated within the same chapters. For example, the organi-
zational structures required for implementing each of the business-level strategies
are discussed in Chapter 5 on business strategies. This is also done for chapters
on cooperative strategies (Chapter 7), corporate-level strategies (Chapter 9), and
international strategies (Chapter 10). This approach provides students with a more
complete understanding of the organizational implications of selecting a particular
strategy. We also describe patterns of competitive rivalry and competitive dynamics,
because these phenomena occur as firms implement business strategies to compete in
their chosen markets. The chapter in which these important topics are considered dis-
cusses concisely yet thoroughly the competitive dynamics in slow-cycle, fast-cycle,
and standard-cycle markets.
To ensure that our descriptions of the core concepts of strategic management
are accurate and up-to-date, we draw extensively from both current and classic
academic research, using as guides the literature in economics, finance, marketing,
business ethics, entrepreneurship, and social psychology in addition to strategic
management. Also, to fulfill our purpose of providing contemporary insights and
analysis, we use numerous current examples from the business press to illustrate
how companies use the concepts presented here to achieve multiple goals and

PREFACE xix
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especially to improve firm performance. We tackle the critical issues of the day:
strategic leadership, corporate governance, business ethics, competitive rivalry and
competitive dynamics, strategic entrepreneurship, and real options. In fact, this is
the only leading MBA-level strategic management text with separate chapters on
corporate governance, strategic entrepreneurship, and real options analysis.
This book also fully incorporates concepts of globalization and technological
change. Increasing globalization and rapid technological change make the strategic
management process highly challenging for managers. These trends create a high
level of complexity and turbulence during the strategy development process and
also increase the need for speed in making strategic decisions. We integrate issues
associated with globalization and technological change in the chapters throughout
the book. To emphasize their importance, we also discuss globalization and techno-
logical change in a separate chapter on international strategy.
Additionally, because the strategic management process is most effective when
grounded in ethical practices, ethics questions are presented at the end of each
chapter. These questions challenge readers to place chapter-specific strategic man-
agement practices within an ethical context.

PARTS OF THE STRATEGIC MANAGEMENT PROCESS

Strategic Thinking is the foundation for the effective use of strategic management;
as such, it is the first of this book’s themes. Then in Part 2, we focus on the princi-
ples and techniques of Strategic Analysis. In Part 3, we examine the topic of Creat-
ing Competitive Advantage. This discussion shows how firms create competitive
advantage by developing and implementing effective business-level, cooperative,
corporate-level, and international strategies. In Part 4, Monitoring and Creating
Entrepreneurial Opportunities, we emphasize the important trend toward increased
corporate governance that emerged in the post-Enron era. Because more intensive
corporate governance tends to make firms more conservative, we integrate a discus-
sion of strategic entrepreneurship into this section. We end with a chapter on real
options—a technique that flows naturally from strategic entrepreneurship. Integrating
these topics allows us to show how increased governance can in turn create a need
for firms to actively identify and exploit entrepreneurial opportunities.

Part 1—Strategic Thinking

Strategic thinking and the strategic leadership resulting from it are critical inputs
to an effective strategic management process. In Chapter 1, we discuss strategic
thinking and its link with effective strategic management. This relationship is more
critical in the current competitive environment, which is characterized by globaliza-
tion and increased technological change. Chapter 1 also examines the emergence of
strategic management as a discipline. Some of the important early work in the field is
reviewed, as are prominent contemporary ideas in the field.
Three major perspectives that influence strategic thinking are introduced
in Chapter 1. The industrial organization (I/O) model of value creation, which is
based in industrial organization economics, focuses on how competitive forces in

xx PREFACE
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 the firm’s external environment shape the firm’s strategy. The resource-based
model of value creation focuses on how strategy is shaped by the firm’s idiosyn-
cratic and valuable resources, capabilities, and core competencies. The stakeholder
model of responsible firm behavior and firm performance envisions the firm at the
center of a network of stakeholders. According to this model, firms that recognize
the needs of stakeholders and that effectively manage relationships with a broad
group of stakeholders are more likely to achieve high performance over the long
term. The first chapter closes with a discussion of the key elements of strategic
thinking and how it can be effectively integrated into the strategic management
process. This process is described in detail, and the strategic management model
described in Chapter 1 serves as an outline for the rest of the book.
Because of the important role of managers in the strategic management pro-
cess, Chapter 2 uses a comprehensive model to describe how managers, as strategic
leaders, foster better strategic thinking throughout the organization. This chapter
opens with a discussion of individual strategic leaders, their decision-making styles,
and factors that influence their strategic decisions. The chapter then broadens to a
discussion of top management teams, including the influence of team heterogeneity,
team power, and executive succession processes. The rest of the chapter explains
key strategic leadership responsibilities and actions, which include ensuring that
the firm is well positioned economically, managing strategic resources, managing
relationships with external stakeholders, determining strategic direction, overseeing
formulation and implementation of specific strategies, and establishing balanced
controls.

Part 2—Strategic Analysis

In Part 2 of the book, we focus on how firms analyze their external environment
and internal organization. After managers are oriented toward strategic thinking
and understand principles of effective strategic leadership, the results of these anal-
yses provide the information and knowledge needed to achieve competitive advan-
tages by selecting and using particular strategies.
Chapter 3 examines the different tools the firm uses to analyze the three parts
of its external environment (the general environment, the industry environment,
and competitors). By studying its general environment, the firm identifies opportu-
nities and threats. The I/O model provides the foundation that firms use to study
industries. The primary purpose of examining this part of the external environment
is to determine the profitability potential of an industry or an industry segment.
Competitor analysis, the third part of the firm’s external environment, yields infor-
mation that allows the firm to know more about its competitors and about the
actions and responses each competitor might take while competing in different
markets.
The emphasis in Chapter 4 is on internal analysis, and the purpose is to iden-
tify the resources, capabilities, and core competencies that can help a firm to
achieve competitive advantages. Whereas Chapter 3 focused on what a firm might
do as suggested by the external environment, this chapter focuses on what a firm
can do as suggested by its resources, capabilities, and core competencies.

PREFACE xxi
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the
eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional
content at any time if subsequent rights restrictions require it.
 The resource-based view of the firm is the underlying theoretical framework for
Chapter 4’s discussions. Four criteria that firms use to identify core competencies—
value, rarity, imperfect imitability, and nonsubstitutability—are described. In addition,
we examine the value chain in terms of value chain activities and support functions
to show how firms determine those activities with which they can or cannot create
value. This analysis also provides information suggesting when a firm should
outsource an activity in the value chain to a supplier. Finally, firms are cautioned
to remain flexible so that core competencies do not become core rigidities. An under-
standing derived from strategic analysis is the foundation needed to focus on
the strategies firms can use to create competitive advantages.
Chapter 4 concludes with a detailed examination of firm performance from
multiple perspectives. The demands and needs of multiple stakeholders, as well as
their power to influence the firm, are described. Multiple measures of firm perfor-
mance are introduced, including both financial and nonfinancial measures. The
chapter closes with a discussion of sustainable performance.

Part 3—Creating Competitive Advantage

In chapters of Part 3, we simultaneously discuss formulation and implementation,
components of the strategic management process that are examined separately in
other books. Our joint treatment of formulation and implementation actions is
comprehensive and integrated. For example, our study of business-level strategies
in Chapter 5 includes analyses of cost leadership, differentiation, focused cost lead-
ership, focused differentiation, and integrated cost leadership/differentiation strate-
gies. After explaining the characteristics of each strategy, we describe the unique
organizational structure that firms match to each type of business-level strategy.
In this manner, we link formulation (i.e., the selection of a business-level strategy)
with implementation (i.e., the appropriate organizational structure matched with
individual business-level strategies). This important and unique pattern of linking
strategy with structure is followed in the remaining chapters of Part 3.
Chapter 6 also focuses on business-level strategy in describing patterns of com-
petitive rivalry between individual firms as well as patterns of competitive dynamics
among all firms that compete within an industry. An important reason for the firm
to understand competitive rivalry and competitive dynamics is to learn how to pre-
dict the actions that competitors might take against it as well as how the competi-
tor might respond in retaliation against the focal firm’s competitive action. The
chapter examines factors that are important to competitive rivalry (e.g., awareness,
motivation, and ability as drivers of a firm’s competitive behavior). The chapter
also analyzes dimensions of competitive dynamics (e.g., the effects of varying rates
of competitive speed in different markets). Thus, in total, the chapter’s analysis of
rivalry and dynamics highlights their influences on firms’ competitive actions and
competitive responses.
We focus on cooperative strategies in Chapter 7. Cooperative strategies such as
strategic alliances, joint ventures, and network strategies have become increasingly
important to firms. A key reason for this importance is that few, if any, firms have
the resources necessary to either internally develop or acquire from external sources
all of the resources needed to create value. Cooperative strategy is another path

xxii PREFACE
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the
eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional
content at any time if subsequent rights restrictions require it.
 that firms follow when gaining access to and developing new resources and capa-
bilities as well as exploiting current ones. This chapter examines strategies that
have evolved in response to the challenges and opportunities created by increasing
globalization and technological change. The chapter also explains the risks associ-
ated with cooperative strategies, including inadequate contracts, opportunism, and
misrepresentation of competencies by partners. Dominant approaches for managing
strategic alliances are also explored to explain how risk is managed when the firm
cooperates with others to create value.
Chapter 8 begins our discussion of corporate-level strategy. Concerned with
the businesses in which the diversified firm intends to compete—and with how it
will manage its portfolio of businesses—the chapter discusses four major corpo-
rate-level strategies. These strategies range from one with relatively little diversification
(single business) to one with substantial diversification (unrelated diversification). In
addition, the unique organizational structures required to successfully implement
each corporate-level strategy are described.
The analysis of corporate-level strategy and diversification is extended in
Chapter 9, where we discuss mergers and acquisitions. Mergers and acquisitions
have been popular for many decades, and recent trends suggest that their popular-
ity is unlikely to decline much in the next few years. Although many mergers
and acquisitions fail, some succeed. Chapter 9 presents reasons that account for
failure as well as those that contribute to merger and acquisition success. The domi-
nant approaches to restructuring (downsizing, downscoping, and leveraged buyouts)
are also discussed in this chapter. Successful firms restructure their portfolio of
businesses as necessary. Restructuring can be initiated to deal with merger and
acquisition failures or to adjust the firm’s portfolio of businesses in response to
emerging opportunities in its external environment.
Chapter 10 explores both corporate-level and business-level international strat-
egies. As in the previous chapters in Part 3, we describe the organizational structures
necessary to implement each of the corporate-level strategies. We also discuss some
of the implications of implementing international business-level strategies in a partic-
ular country. After selecting an international strategy, a firm must decide which
mode of entry to pursue when implementing the chosen strategy. Exporting,
licensing, strategic alliances, acquisitions, and establishing a new wholly-owned
subsidiary are entry modes that firms consider when entering markets. We also
discuss outcomes of international diversification and the attendant political and
economic risks.

Part 4—Monitoring and Creating Entrepreneurial

Opportunities
Corporate governance, strategic entrepreneurship, and real options analysis are
examined in Part 4, the book’s final section. Corporate governance, given the
implementation of Sarbanes-Oxley and Dodd-Frank as well as global reach, creates
a challenging context for governing firms appropriately and thus represents a criti-
cally important topic warranting a separate chapter. Therefore, Chapter 11
describes major corporate governance mechanisms and how they can be effectively
used to ensure that the actions of the firm’s agents (key decision makers) are

PREFACE xxiii
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the
eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional
content at any time if subsequent rights restrictions require it.
Another random document with
no related content on Scribd:
Tūmbaku (tumbākū).—Tobacco used for the kalian or water-
pipe.
Tūmbūn (tumban).—Petticoats (made as very loose drawers).
Umbar (ambār).—A cellar or store-room, a go-down.
Ūtū or Ootoo (atw).—An iron (flat or otherwise).
Utu-kesh (atw kash).—An ironer.
Vakeel-u-dowleh (wakīl ud Dawlah).—An agent of
Government; the empty title given to native newswriters,
who are supposed to act as English Consuls, and whose
offices are sinecures.
Yabū (yābū).—A pony, a common horse, a horse.
Yahū (?).—A kind of common house pigeon.
Yakhjal (Yakh-chāl).—An ice-store; a pond (and wall) for
making ice.
Yaourt (Turkish).—Curdled milk, (Persian) “mast.”
Yashmak (Turkish).—A kind of veil, or face covering.
Yawash (Turkish).—Gently, slowly.
Yessaoul (yasāwal).—A mounted mace-bearer.
Zalābi or Zalābieh (zalībiyā).—A sweet cake or fritter eaten
in Ramazan at night.
Zambūrek (zambūrak).—A tiny cannon carried on and fired
from a camel’s back (from Zambūr, a wasp).
Zangal (zangāl).—A legging.
Zenda-Rūd, Zendarūd (Zanda-Rud).—The river at Ispahan.
Zil-es-Sultan (Zill us Sultan) (title).—Shadow of the King.
Zoban-i-Gunghishk (zabāni gunjishk).—Lit. sparrow’s
tongue, a kind of willow.
Zūlf (zulf).—A long love-lock, a curl.
 FOOTNOTES
[1] See Appendix D, page 417.
[2] Turcomanchai was the place where the treaty between
Persia and Russia was signed, February 22, 1828. Erivan and
Nakchewan were ceded to Russia, and two millions agreed to be
paid to her.
[3] The form of these was very various, though the principle of
action was always the same: the smoke was conducted to the
bottom of a pint or more of water and then sucked up in bubbles
through it, a gurgling noise being produced. Some used the long
“snake” or nehpeech, a spiral of copper wire covered with
coloured leather, and forming a flexible air-tight tube some four
yards long; this was the more old-fashioned way, and required
good lungs. A servant held the pipe itself at the side of the
master’s chair. Others affected the wooden stem with the pipe;
this as a rule is held by the smoker himself, and no great effort is
required in smoking, as the tube is only eighteen inches long and
air-tight, which the “nehpeech” or “snake” seldom is, save when
quite new.
The portion between the pipe-head and the water-holder is as a
rule always the same: a wooden tube some fourteen inches or
more long, with numerous indentations, turned in a lathe, and
coming to a point, so that any pipe-head will fit it; from the end of
this an inner tube goes to within an inch of the bottom of the
water. Sometimes this tube is made of ebony, at other times
covered with silver, and rarely with gold. In its side at the bottom
is the hole for the snake-like tube, or the stick.
The water-reservoir is usually of glass, either plain crystal, or
cut Bohemian; the shape of these glasses is that of a wide-
mouthed, long-necked decanter, and the neck serves as the place
by which the whole contrivance is held. In summer a porous clay
bottle is generally used as cooler by all classes, rich or poor.
Another kind of reservoir called a narghil (narghil, a cocoa-nut)
is made, having its shape like a cocoa-nut, with a spike or small
knob at the sharp end; this rests on the ground, and is meant for
travelling. It is made of brass, silver, or gold, and often in the two
latter cases enamelled; the “meāna,” or middle tube, to this kind
of pipe is often two and a half feet long, and the stem two.
Yet another form of kalian exists for travelling, and that is a
copy of the glass reservoir, of a rather squat shape, in buffalo or
rhinoceros hide; this is often, indeed usually, covered with
enamelled plates of gold and silver, often encrusted with gems,
and is only in use among the very rich.
As the great personages of Persia are constantly travelling,
these more elaborate forms of pipe are frequent; and, as a man’s
pipe often gives an idea of his social position, money is very
freely lavished on them. The mouth-piece is simply either
wooden, or else the end is shod with silver. The head consists of,
among the poor, a clay reservoir for the tobacco. These cost a
farthing. But most Persians, though only of the lower middle
class, manage to have a silver pipe-head; this consists of three
pieces, the handle or chōb (wood), a carved and turned piece of
wood pierced with a conical hole which fits the meāna (or stem)—
this may be represented by the lower two-thirds of an old-
fashioned wine-glass, with a small foot; the fire-holder, which is of
gold, silver, or stone, is fitted to this, and represents the upper
third of the wine-glass; and on this all the ingenuity of the
Persians is lavished in the matter of ornament. From its under
edge hang four or six little silver or gold chains four inches long,
terminated by flattened balls.
Lastly, the wind-guard, which prevents the fire from falling or
being blown up into an excessive state of incandescence, is
usually made of silver, and is an inverted cone of the same size
as the fire-holder, fitted to it with accuracy, and provided with two
holes to give the requisite amount of draught; at the side two pairs
of chains depend from the upper edge of this, and are made to
reach as far as do the lower set.
The fire-holder is lined with a mixture of clay and plaster of
Paris, on which is placed the tobacco, freshly moistened and
rubbed into coarse fragments (though connoisseurs prefer a more
elaborate preparation)—about three-quarters of an ounce is
required; it is flattened and smoothed, the surplus water being
squeezed away. Upon it are placed morsels of live charcoal,
which are blown into a fierce flame, and the excess of water in the
reservoir or bottle being driven out by blowing from the bottle,
which is always nearly filled. A few draws are taken by the pipe-
boy to see that all goes well, and to get rid of the taste of fresh
charcoal, and get the tobacco well alight, and it is then handed to
the smoker as under weigh.
On the fire-holder, however—perhaps because it is opposite
the eye and so most conspicuous—are seen the highest efforts of
Persian art. It is, whenever it can be afforded, of purest gold,
though often thin; some rare exceptions are unornamented; more
ordinarily it is chased or covered with high repoussé work, or
elaborately engraved. Or it may be so encrusted with turquoises
till little, if any, of the original metal shows; or it may be
ornamented with elaborate enamels of birds and flowers, or of
fruit; and a favourite pattern is vine-leaves of transparent enamel
let into the deeply-cut metal, and the bunches of grapes of varied
colours.
More often three or four ovals, some two inches long, are filled
by portraits of a girl or boy—of course fancy ones—and the
spaces between them filled with flowers and birds. These
enamels are very beautiful, very costly, and very brittle; ten
pounds being a common price paid to an enameller to decorate a
gold head, while as much as one hundred tomans, or forty
pounds, are given by great and rich amateurs.
Of the kalians, the heads and reservoirs of which are thickly
encrusted with gems, I do not speak at present; I had few
opportunities at that time of seeing such, and, as a rule, they are
only possessed by the Shah, his sons and uncles. I trust the
reader will bear with this long but needful detail as to pipes.
[4] As a rule, in Persia every one is up by six a.m.
[5] Those who feel curious on the subject of modern Persian
medicine, I must refer to my article on the subject in the British
Medical Journal.
[6] The English Legation or Embassy is always called “The
Mission” in Persia, by the members of it, and the English in the
country.
[7] Futteh-Ali Shah had over seventy sons and daughters, and
a prince’s son in Persia is a prince.
[8] As some confusion may be experienced in the matter of
money terms, I may append the following table of coins:—

s. d.
(Copper) 2 pūls = 1 shahi (or shaie) or 0 0½
English
banabat or half-keran
” 10 shahis = 1 ” 0 5
(silver)
20 shahis = 1 keran (silver) ” 0 10
10 kerans = 1 toman (tomaun), gold ” 7 6

Were the keran really tenpence, of course the tomaun would be

8s. 4d., but its value is really only ninepence at present exchange
(1883). Of these coins the pūls and shahis are copper, the kerans
and half-kerans or banabats silver, and the tomauns gold; though
for the past fifteen years, until just recently, the tomauns (in gold)
had nearly disappeared, and were merely nominal, or old coins
hoarded for the sake of the purity of their gold. Prices are given
indiscriminately in tomauns or kerans; the price in kerans as five
hundred kerans being mostly spoken of and always written as
kerans and not fifty tomauns. Till lately the tomaun has been only
a name. The merchant-class, too, use the dinar, an imaginary
coin (not now minted at least), as a convenient fraction for
calculation.
I on arrival took my servants’ accounts in tomauns and kerans,
afterwards in kerans and shaies, and at last in kerans and pūls;
while an English merchant friend actually wrote his house
accounts in dinars, and said it awed his servants! one thousand
dinars make a keran, so one dinar is the 1/1000 of 9d.
There are no bank-notes: and in The Times telegraphic news,
under the head of Persia, Friday, February 24th, 1883, is a
summary of a truly Persian edict. By it the Shah informs his
subjects that, “they are foolish to take dirty pieces of paper for
gold and silver, and that in future all Russian Rouble notes will be
confiscated!” Then follows a really useful prohibition forbidding
aniline dyes, and ordering such, when imported and discovered,
to be destroyed; these dyes, which are not fast, have been lately
much used by ignorant carpet-weavers in Persia.
[9] Hakim, a doctor or physician.
[10] This system accounts partly for the apparently very low
wages paid to the Persian servant, which are (I give those paid
latterly—1881—by myself; in the case of head-servants it is
sometimes, but very seldom, more, as the pay is of course
nothing to the modakel):—
 A month. £ s. d.
A nazir or steward 50 kerans, or 2 0 0
A good cook 50 ” 2 0 0
A good peishkhidmut
(personal servant, waits at
40 to 50 kerans, or 30s. to 2 0 0
table, and valets one, and is
expected to dress well)
A farrash, i. e. sweeper or
25 kerans, or 1 0 0
message runner
A sherbet-dar, plate-
cleaner, maker of coffee, 25 ” 1 0 0
ices, etc.
A second farrash 20 ” 0 16 0
A third farrash 15 ” 0 12 0
A cook’s disciple, or
10 ” 0 7 6
scullery man
A washerman, or woman
who can wash and iron 35 ” 1 6 0
thoroughly
A woman-servant or nurse 25 ” 1 0 0
A head-groom 30 ” 1 5 0
An under-groom 20 ” 0 16 0

[11]? Mustela Sarmatica.

[12] More correctly munshi.
[13] Or nummud.
[14] Here are four tombs, cut in the face of the solid rock, those
of Darius, Xerxes I., Artaxerxes I., and Darius II. A detailed
description is to be found in Usher’s book. (See illustration.)
[15] Russian subjects are well protected in Persia, and no injury
or insult to them is allowed to pass by their embassy.
[16] The present comparative dearness of provisions, such as
bread, milk, eggs, etc., is compensated for by a corresponding
cheapness in the price of sugar, candles, etc., which formerly
were more expensive. I append a list of prices in Ispahan in 1882:
—

Kerans. s. d.
Rice (per maund, 14 lbs.) 2 1 6
Mutton ” ” 2 1 6
Beef ” ” 1½ 1 1½
Fowls (each) ¾ to 1 7d., 8d. and 0 9
Small chickens (each) ⅓ 0 3
Pigeons ” 0 2
Partridges ” ½ 0 4½
Eggs (40 to 60) 1 0 9
Butter (14 lbs.) 5 3 9
Clarified butter or ghee for
5 to 7 4s. to 5 0
cooking (14 lbs.)
Coffee, Mocha (per lb.) 1 9d. to 0 10
Tobacco (14 lbs.) 4 to 12 3s. to 10 0
Potatoes ” ½ to 2 4½d. to 1 6
Wood for firing (280 lbs.) 2½ 1 9
” broken, in small
5 3 9
quantities (280 lbs.)
Loaf-sugar, English (per lb.) ¾ to 1 6d. to 0 9
Charcoal, sifted (14 lbs.) ½ to 1 4½d. to 0 9
” unsifted ” ¼ to ½ 2d. to 0 4½
Grapes ” 7/20 to 15/20 3d. to 0 7
Dip candles ” 4 3 0
Commonest oil for servants
1½ 1 1½
(14 lbs.)
Bread (14 lbs.) 1 to 1½ 9d. to 1 1

The cost of horse-keep, including grooms’ wages, shoeing,

etc., is from 9d. to 1s. a day; this is supposing several are kept.
[17] I use this word for want of a better.
[18] On March 30th I left Erzeroum at nine a.m., reached
Hassan Kaleh, twenty-four miles, at three p.m.; started again at
four p.m. (all snow), reached Balakoohi, where a storm compelled
us to halt at seven p.m. Slept there.
March 31st.—Started at five a.m. for Kharassan, twenty-five
miles; arrived at half-past nine; made a detour of ten miles on
account of water. Started at half-past eleven on same horses;
stopped at a village twenty-four miles off, name unknown; horses
dead beat; road—water, mud, and thawing snow—twenty-four
miles.
 April 1st.—Started at five a.m.; arrived at Moollah Suleiman,
eighteen miles (same sort of road), at ten a.m.; left at half-past
eleven for Kadikeesa, twenty miles; arrived at five p.m.; went on
through snow till nine p.m. to a village, twelve miles only; halted.
Slept in a sheep-shed full of tics.
April 2nd.—Started at six a.m.; arrived at three p.m. at
Desardūn, thirty-six miles. Here I saw Mount Ararat. Road very
bad, from melting snow. Arrived at Kizzil Deeza, twenty-four miles
(a wretched hole), at eight p.m.
April 3rd.—Five a.m. Road pretty fair over a long snow-pass,
twenty miles to Abajik, in Persia. Arrived at ten a.m. Quite a
pleasure to get among the Persians again, and to be able to
make myself understood. Then an easy twenty miles to Keranee
—half-past four p.m. Started at once; reached Zarabad, twenty-
two miles over a good road with capital horses, at half-past eight
p.m.
April 4th.—Left at half-past six a.m. for Khoi, a long twenty-four
miles; got in at eleven a.m. Khoi is a very large place, apparently
prosperous. Good dinner of bazaar kabobs. Arrived at Turseh,
twenty-four miles, ten p.m.; road good, but shocking horses, down
a tremendous pass, then along the shores of Lake Ooroomeyeh
—a kind of Dead Sea—it is very salt. Many bituminous fires
lighted it up at night, huge sheets of flame suddenly appearing.
April 5th.— Half-past two a.m., left Turseh for a place the name
of which has escaped me, arriving at half-past ten a.m. Arrived at
Sufian at half-past twelve noon. Left at once, reaching Tabriz,
twenty-four miles off, in four hours. Erzeroum to Tabriz, six days
and seven hours, three hundred and thirty-five miles.
I stopped with Colonel J⸺, V.C., our Consul-General, April
6th, 7th, and 8th. At three p.m. of April 9th I started for Teheran.
Stages between Tabriz and Teheran.

Miles.
Saoudabad 20
Hadji Aga 20
Darathiar 16
56

Slept.
April 10th.— Turcomanchai 24
 Meana 16
Jemalabad 12
Tercham 16
Aga Mezar 12
Nikibeg 20
100

Slept four hours.

Zinjan (met one of our staff;
April 11th.— 26
breakfasted, and lost three hours)
Sultaneah 24
Khya 30
80

Slept four hours.

April 12th.— Khirve 18
Zeedaen 24
Kasvin 16
Abdulabad 18
76

Slept four hours.

April 13th.— Sufferkhoja 24
Shunkerabad 22
Meanjūb 20
Teheran 20
86

[19] This is the one standard weight of Persia, the other being
the miscal or sixth part of our ounce. This, for convenience, is
supposed to consist of twenty nokods—the nokod being a grain
similar to our pea in appearance. The nokod is subdivided into
three gundums or grains (of wheat); these again into four kērāts
(or carats)—these latter, however, are only used in weighing
gems. The Tabriz maund (or batman) and the miscal and its
subdivisions are in use throughout Persia in mercantile affairs.
Further north than Ispahan the sere and the gerewankeh—the
latter about a pound, and borrowed from the Russians—are in
use. Other local weights exist, only known in special places. As a
rule, each village has its special weight (literally stone, “sang”),
and their maunds get lighter and lighter as one gets away from
the large cities.
[20] The cost had been—

Kerans.
Thirty jars, at five kerans 150
Twenty loads of grapes 750
Carriage of same 60
Cost of labour, etc. 100
1060

Per contra.
Kerans.
Paid to me by Jews for refuse, for arrack-making 50
Resale of jars 140
190

Total cost, 870 kerans, or about 5½d. per bottle.

[21] Must is a Persian word signifying “drunk;” it also means the
state of excitement of male camels at certain times.
[22] Strangled, after he had refused a cup of poisoned coffee, in
1882, by order of the Zil-es-Sultan, while an honoured guest in his
(the Zil-es-Sultan’s) house.
[23] Topi, a sun-helmet.
[24] The full title is Kawam-ul-Molk.
[25] The full title is Muschir-ul-Molk.
[26] Would it have been necessary to have explained to Bishop
Bonner the use of the thumbscrews after his cruelty to the
Reformers?
[27] Aug. 2nd, 1887. Dr. Odling writes me that this well is 849
feet deep. I fancy that there is some error in this, as I put down
the six hundred yards. Possibly there may be a second shaft.
[28] The murdered sons of Ali, considered by the Persians, and
all Shiah Mahommedans, as the rightful successors of the
prophet, consequently sainted martyrs.
[29] Bhang, an intoxicating drug used by dervishes.
[30] Azraël, the angel of death.
 [31] Not of coral, as in the Levant.
[32] Origin of our word “hummums.”
[33] Now Sir Oliver St. John.
[34] See Ussher’s ‘London to Persepolis,’ p. 564.
[35] Muleteer.
[36] See Appendix D, page 417.
[37] Shah Abbas the Great built caravanserais of great size and
solidity all over Persia, hence a good and large caravanserai,
even though not built by him, is called a “Shah Abbas
caravanserai.”
[38] Mushir al Mulk, counsellor of the province.
 INDEX.

Abadeh, 261, 356

carvings, 332
Abbah, the, 319
Abbas Kūli Khan, 215
the Great, 161
Abdul, 285
Abdul Hamid, 276, 353
Abdullah’s types, 9
Abdul Mahomed, 64
Ab-i-Rūkhni, 218
Ab-i-Zungi, 218
Ableh, 62
Abū Seif Mirza, 59, 84
Senna, 82
Accident to Mr. H⸺, 128
Accidents in driving, 374
Actors, Persian, 282
Aden, 343
Administration of justice, 146
Adulteration of opium, 180
Afghan poosseens, 319
(?) tiles, 198
Aflatoon, 82
Agha Hassan, 109
Ahs an Ahs, 96
Ahū, 167
Aid-i-No Ruz, 48, 51
Akbar Khan, 402
Alangū, 323
Alarm of robbers, 130
Alexander the Great, 378
coins of, 76
Algiers, 342
Ali Akbar, 282
death of, 283
Ali Oh! 43
Alison, His Excellency Mr., 48, 201
Alla Sung, 392
Alligators, 344
American missionaries, 144
Aminabad, 262
Ancient Armenian language, 140
buildings, disappearance of, 364
engraved ruby, 37
Julfa, 161
mud-houses, 137
Anderūn, 92
Anecdote of a dervish, 47
re smoking, 32
Aniline dyes, 149
dyes, prohibition of, 63
Animals, treatment of, 316
Antelope hunt, 86
Antelopes, 56
Apostate monk, 139
Appetites, large, 336
Apricots, 168
April, the 1st of, 330
Arab dress, 110
horse, my, 61
horses, 106
pipe, 33
Arachnoort, the, 138, 141, 159
Ararat, hailstones at, 391
Araxes river, 19, 313
‘Arcot,’ voyage in the, 341
“Armchair,” 136
Armenian Alsatia, 142
artificers, 162
baptism, 141
church, 160
converts, 164
cook, 363
fasts, 144
grateful, 93
graves, 162
jewellers, 162
Kaweh Khana, 163
loafers, 143
marriage of, 141
priest, 132
Protestant teacher, 140
 schools, 144
scriptures, 140
theatre, 9
tribute, 376
village, 131
wine-sellers, 142
women, dress of, 132
women, industry of the, 360
Armenians, 72, 110
anecdote of, 73
apostatising, 111
bread, 336
carpenters, good, 123
character of, 316
disguised as Europeans, 72
education of, 144
former oppression of, 144
idleness of the, 359
improved position of, 144
of Hamadan, 72, 74
position of in Persia, 74
sanctity of, 73
successful, 143
taken to Julfa, 161
uncleanliness of, 316
Arms, 322
Arnold, Mr. Arthur, 273
Arrack, 141, 159, 360
Art of avoiding falls, 54
Arts, lost, 162
Asparagus, wild, 168
Ass, wild, the, 308
Assadabad Pass, 101
Astrachan, 405
As we turn in another turns out, 110
Attempts to proselytise among the Persians, 144
Audience at Tazzia, 281
Austrian officers, 371
Avadavats, 347
Avicenna, 82
Ayrton, Mr., 5

B⸺, Mr., 27, 213

B⸺, Rev. R., 340
Baab, cursing, 155
Baabi artificers, 164
conspiracy, 154
death of a, 154
revolt, 272
Baabiism, tenets of, 154, 339
Baabis, 144, 339
charges against, 154
visit to, 201
Baab, 153
Bad drainage, 153
Badraghah, 56
Bad water, 153, 241
Baghalli, 236
Bagh-i-No, 218
Bagh-i-Takht, 220, 292
Baker, an ungrateful, 183
Bakhtiaris, 262
Bakū, 403
Bamiah, 170
Bankers, 192
Bank-notes, edict as to, 63
Baptism, Armenian, 141
Barber’s Bridge, the, 389
Bargain for mules, a, 381
Bargains, 187
Barley, 102
Bastinado, the, 146
at Kūmishah, 254
degrees of, 148
Bath carpets, 152
at Constantinople, 212
the, 334
Bazaar, at Teheran, 372
breakfasts, 200
practice, 182
Bazaarcha Baland, 200
Bazū-band, 290, 323
Bear and dog fight, 227
Beards, 321
Beaters, 177
Bēbē Sakineh Sultan Khanūm, 215
Bedding for travelling, 55
Bedding horses, 101
Beef, 142, 299
Beetles, road, 215
Bell tower, Julfa, 139
Bells, substitute for, 139
Belly-dance, the, 115
Belt, the, 320
Belūchistan, 345
Berlin, 407
Besitūn, 109
Bewitched, 65
Bishop Moses, 138
of Julfa, the, 159
Thaddeus’s tomb, 158
Bishop’s, the, pictures, 159
Bits, native, 329
Black-wood furniture, 345
Black flags, 283
Sea, 9
Blandford, Mr. W., 321
Blowing from a mortar, 203
from guns, 202
Boat-building, 247
Boat journey, 210
Boiled to death, 272
Bombassi, 326
Bonaat, 77
Bookbinding, 288
Boorio, 197
Boots, 321
Borasjūn, 348
Boulevard at Teheran, 371
Bowin, 392
Boy dancers, 246
singers, 281
Boys, a mob of, 393
Bread, varieties of, 335
Breasts as ornaments, 132
Bribery, 189
Bribing postmaster, 13
Bricking up alive, 269
Brickwork, fine, 222
Bridge of tombstones, 163
Brigands, 263
Broom plant, 309
Bruce, Mrs., 164
Rev. Dr., 164
Bulbul, 114
Bull-terriers of Zil-es-Sultan, 366
Bunder Abbas, 345
Burial of a Christian child, 140
Burke, Captain, 344
Burmese Embassy, 376
Burning alive, 204
Bushire, 345