1 What Is Business Strategy? What Is Business Strategy? Competitive Advantage The Strategic Management Process What Information and Analysis Guides Strategy Formulation? Mission External Analysis Internal Analysis How Are Strategies Formulated? Strategy Vehicles for Achieving Strategic Objectives Strategy Implementation Strategy in Practice - The IKEA Effect Who Is Responsible for Business Strategy? Who Benefits from a Good Business Strategy? Summary Key Terms Review Questions Application Exercises Mini Case - Taisho''s Strategic Challenges and Choices References 2 Analysis of the External Environment: Opportunities and Threats Determining the Right Landscape: Defining a Firm''s Industry Five Forces That Shape Average Profitability Within Industries Rivalry: Competition Among Established Companies Buyer Power: Bargaining Power and Price Sensitivity Supplier Bargaining Power Threat of New Entrants Threat of Substitute Products Overall Industry Attractiveness Where Should We Compete? New Thinking About the Five Forces and Industry Attractiveness How the General Environment Shapes Firm and Industry Profitability Complementary Products or Services Technological Change General Economic Conditions Demographic Forces Ecological/Natural Environment Global Forces Political, Legal, and Regulatory Forces Strategy in Practice - Starbucks: Each Interaction is Unique Social/Cultural Forces Summary Key Terms Review Questions Application Exercises Strategy Tool Mini Case - Hailo Faced Heat from Rival Competitors in the Market References 3 Internal Analysis: Strengths, Weaknesses, and Competitive Advantage The Value Chain Strategy in Practice - Nestlé: External Environment Challenges The Resource-Based View Resources Capabilities Priorities Creating a Sustainable Competitive Advantage: The VRIO Model of Sustainability Value Rarity Inimitability Organized to Exploit Assessing Competitive Advantage with VRIO The Competitive Advantage Pyramid: A Tool for Assessing Competitive Advantage Gathering Data for the Competitive Advantage Pyramid Analysis Using the Competitive Advantage Pyramid Summary Key Terms Review Questions Application Exercises Mini Case - Intel''s Competitive Advantage References 4 Cost Advantage Economies of Scale and Scope Ability to Spread Fixed Costs of Production Ability to Spread Nonproduction Costs Specialization of Machines and Equipment Specialization of Tasks and People Evaluating Economies of Scale: The Scale Curve Economies of Scope Learning and Experience The Learning Curve The Experience Curve Experience Curves and Market Share How Strategists Use the Scale and Experience Curves to Make Decisions Strategy in Practice - Ryanair: Dominating in the Cost Game Proprietary Knowledge Lower Input Costs Bargaining Power over Suppliers Cooperation with Suppliers Location Advantages Preferred Access to Inputs Different Business Model or Value Chain Eliminating Steps in the Value Chain Performing Completely New Activities Tata Nano: A Cautionary Tale Summary Key Terms Review Questions Application Exercises Strategy Tool Mini Case - Reliance''s Cost Advantage References 5 Differentiation Advantage What Is Product Differentiation? Sources of Product Differentiation Different Product/Service Features Quality or Reliability Convenience Brand Image How to Find Sources of Product Differentiation Customer Segmentation Mapping the Consumption Chain Building the Resources and Capabilities to Differentiate New Thinking: Achieving Low Cost and Differentiation Strategy in Practice - 3M is Staying Ahead of the Pack Assessing Differentiation Performance Strategy in Your Career: What Is Your Unique Value? Summary Key Terms Review Questions Application Exercises Strategy Tool Mini Case - Toyota: Creating Value Through Product Differentiation References 6 Corporate Strategy Corporate Versus Business Unit Strategy Creating Value Through Diversification Strategy in Practice - Disney: Not just Disneyland! Levels of Diversification Value Creation: Exploit and Expand Resources and Capabilities The Eight Ss Destroying Value Through Diversification Methods of Diversification The Acquisition and Integration Process Making the Acquisition Integrating the Target Summary Key Terms Review Questions Application Exercises Mini Case - Google''s Successful Acquisitions References 7 Vertical Integration and Outsourcing What Is Vertical Integration? The Value Chain Forward Integration and Backward Integration Strategy in Practice - Luxottica: When You Own Everything Three Key Reasons to Vertically Integrate Capabilities Coordination Control Dangers of Vertical Integration Loss of Flexibility Loss of Focus Advantages of Outsourcing Dangers of Outsourcing Summary Key Terms Review Questions Application Exercises Strategy Tool Mini Case - Shell Plc and Vertical Integration References 8 Strategic Alliances What Is a Strategic Alliance? Choosing an Alliance Types of Alliances Nonequity or Contractual Alliance Equity Alliance Joint Venture Vertical and Horizontal Alliances Ways to Create Value in Alliances Combine Unique Resources Pool Similar Resources Strategy in Practice - Red Bull and GoPro: An Adventurous Alliance Create New Alliance-Specific Resources Lower Transaction Costs The Risks of Alliances Hold-Up Misrepresentation Building Trust to Lower the Risks of Alliances Building an Alliance Management Capability Improving Knowledge Management Increasing External Visibility Providing Internal Coordination Facilitating Intervention and Accountability Summary Key Terms Review Questions Application Exercises Strategy Tool Mini Case - Disney''s Alliances Based on Resource Capabilities References 9 International Strategy The Globalization of Business Why Firms Expand Internationally Growth Efficiency Managing Risk Knowledge Responding to Customers or Competitors Where Firms Should Expand Cultural Distance Administrative Distance Geographic Distance Economic Distance How Firms Compete Internationally Multidomestic Strategy--Adapt to Fit the Local Market Strategy in Practice - McDonald''s: A Tale of Cultural Innovation Global Strategy--Aggregate and Standardize to Gain Economies of Scale Arbitrage Strategy Combining International Strategies How a Firm Gets into a Country: Modes of Entry Exporting Licensing and Franchising Alliances and Joint Ventures Wholly Owned Subsidiaries Choosing a Mode of Entry Summary Key Terms Review Questions Application Exercises Strategy Tool Mini Case - LG''s Internationalization References 10 Innovative Strategies That Change the Nature of Competition What Is an Innovative Strategy? Incremental Versus Radical Innovation Strategy in Practice - Philip Morris International: Becoming a Synonym for Smoke-Free Alternatives Categories of Innovative Strategies Reconfiguring the Value Chain to Eliminate Activities (Disintermediation) Low-End Disruptive Innovations High-End/Top-Down Disruptive Innovations Reconfiguring the Value Chain to Allow for Mass Customization Blue Ocean Strategy--Creating New Markets by Targeting Nonconsumers Create a Platform to Facilitate Transactions Free Business/Revenue Models Hypercompetition: The Accelerating Pace of Innovation Innovation and the Product/Business/Industry Life Cycle (S-Curve) Introduction Stage Growth Stage Maturity Stage Decline Stage Summary Key Terms Review Questions Application Exercises Mini Case - Tesla''s Innovation References 11 Competitive Strategy and Sustainability Understanding the Competitive Landscape Strategic Groups and Mobility Barriers Strategy Canvas Evaluating the Competition What Drives the Competitor?