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Index

Above-industry-average profi tability, 3Absorptive capacity, 226Accenture

ethics at, 280knowledge management at,

334–335 top ten fi rms for work, 405

Accountability, responsibility and, 265

Accumulation. See Resource accumulation

Acquisitions, 204in China and India, 253

Adelphia Communications, 268Adidas, mass customization at, 59Advantages of scale, 171Advertising, global, 246–247Advertising business model, 168–170

vs. subscription model, 168–169Affi liate business model, 170Affl uence, demographic trends and,

79Agency theory, 270Aggressiveness, of entrepreneurs,

98–99Airlines, cost sharing with customers,

65Aldi, Trader Joe’s and, 298Alignment, emerging strategy and,

303–305 leadership and, 377 of people and strategy, 305–309

Alliances, 209barriers to learning in, 224–225career networking as, 404–405learning as outcome of, 222–227strategic, 204, 348–350

Allianz, 310AlliedSignal, Inc., 370, 372 See also

Honeywell

Allstate Business Insurance Group, 352

Amazon.com, 42, 43, 92–93, 113–114

competition and, 126Toys “R” Us alliance with,

222–223, 349–350Ambidextrous organization, 116 See

also Dual Strategy, 114–116America Online (AOL)

alliance by, 222TCA at, 212–213

America’s Second Harvest, Wal-Mart and, 287

American Express, 78, 279Andersen. See Arthur AndersenAngel investors, 108Apple Inc., 279

Disney and, 28, 92, 274–275IBM and, 226 –227iPhone, 173–174iPod, xv, 59, 174iTunes, xv, 28Safari Browser, 173Steve Jobs and options at, 275

Arthur Andersen, Enron and, 266–267, 280 Asia, competition from, 243

Assets, knowledge as, 329–330AstraZeneca, 190Asymmetries, 140–143Authentic leadership style, 380Automobile industry

customer perceptions of, 77–78GM-Toyota joint venture and,

223Autonomous initiatives, 312Autonomy, entrepreneurship and,

97–98

Bold page numbers indicate locations of defi ned terms.

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414 Index

Baby boomers, retirement benefi ts for, 400 Bain & Company, 339

Balanced scorecard, 313–314at Oak Knoll Academy, 314, 315

Bankruptcy, of Enron, 266–267Banks and banking, 32

comparative study of bank performance, 32–33

Barriers to entry, 133–134Barriers to exit, 131Barriers to learning

in alliances, 224–225overcoming of, 225–227

Bayer, 268Bell System, as monopoly, 128Benchmarking, 188, 346–347, 398Benefi ts

availability of, 397, 398–400in code of ethics, 282at Trader Joe’s, 298

Berkshire Hathaway, Warren Buffet’s strategy for, 205 small headquarters staff, 211

Best practice, 188, 332 See also Promising practice

Bilateral collaboration, 152Birth rate, demographic trends and, 79Birth stage, of new offering, 181–182Blue ocean, market space as, 101BMG, 4, 18 BMW, 312Boards of directors, 269

diversity of, 271–273at Microsoft, 277responsibilities of, 271–272selection of, 273

Body Shop, 109, 110Boeing Corporation, 268, 366

continuous planning at, 311 Jim McNerney, CEO, 366 job relocation at, 395

Bootlegging, 312Bootstrapping, 107Boston Consulting Group (BCG), 171

on emerging multinational fi rms, 243

Bottom-up planning process, 310Boundary decisions, 201Boundaryless organization, 308–309

BP, See British Petroleum

Brands and branding, 34–35 global, 246IKEA, 249individual strategy and, 402–403Martha Stewart, 402synergy and brand names, 75

Brazil, economic powerhouse, 357British Petroleum (BP), 340Broker business model, 168–170Brooks Sports Inc., 281–282, 338Browsers, war among, 172–173Build-a-Bear Workshop, 179Bundling, 184Bureaucracy, removing unnecessary,

306 Burger King, 251Burma (Myanmar), Pepsi operations

in, 285Business

defi ned in customer terms, 71opportunities in, 79–80in multidivisional organizations,

205, 219–220Business ethics, 279–280Business judgment rule, boards of

directors and, 271Business model, 165

activities in, 174–175advertising, 168–170basics of, 165broker, 168business plans compared with,

191community, 168–170customer-based, 71–75 innovation of a new, 301on Internet, 169–170life cycle as source of, 180–186long-tail, 246of Netfl ix, 166–167people in, 305razor-and-bade, 167–168specifying, 163subscription, 166, 168–170types of, 165–174for value chain activities, 176

Business plans, 166, 191Business strategy, 15

strategic groups and, 135–136


Index 415

Business unit, use of term, 205Buyers

attributes of, 74in oligopolies, 131–132

California Public Employees Retirement System (CalPERS), 274, 275

Cannibalization strategies, 148–149Canon, 246 Sony and, 203

Xerox business model and, 176–177, 179

Cap Gemini, 395 Capabilities, 8–9, 30Capital. See also specifi c types

start-up, 107venture, 107–108 Cap

Careersplanning for, 400–406strategy for, 401–402success in, 407trends in, 393–396work/life balance and, 406–408

Carpet manufacturers, customer tastes and, 142–143

Causal ambiguity, 44Cemex, 243Center for Leadership Effectiveness

(GE Capital), 207–208Centralized research and

development, 190 Cerebus Capital Management, 255

CEO. See Chief executive offi cer (CEO)

CEO duality, 272Champion International, 219Champions, 113Change

careers and, 401–402competence-destroying, 47competence-enhancing, 47contingent employees, and,

347–348in employment relationships,

396–400at IBM, 370–371knowledge management and, 329leadership and, 364organizational boundaries and, 308

Chevron, process master at, 345–346Chicago and Northwestern Railway

(C&NW), 45Chief executive offi cer (CEO), 272,

345compensation of, 270–271 election of, 272shared leadership and, 365

Chief information offi cer (CIO), 345

Child labor, 281China, 243

economic powerhouse, 257job shift towards, 395knowledge spillover in relations

with, 224market potential in, 238mergers and acquisitions in, 253–4alliances to understand, 348

China Bicycle Company, 308Chrysler. See also DaimlerChrysler

Neon division at, 308–309CIA, as employer, 405Cirque du Soleil, 101Cisco Systems

coproducing networks at, 65customer service at, 65–66diversifi cation strategy and, 216,

223employee and customer

satisfaction at, 69–70Citigroup, 268Coca-Cola, 239

global brand, 246Codes of ethics, corporate, 281–283Codifi cation, as knowledge storage

strategy, 339Cognitive infl uence, of strategic

groups, 136Collaboration, 150

across industries, 152bilateral, 152among competitors, 149–152formal, 151multilateral, 152spontaneous, 150–151

Collaborative strategies, 125Collective bargaining, in code of

ethics, 282


416 Index

Collusion, tacit, 133, 148Combination of knowledge

components, 336–337Command, 299–300

and control, 364Communication

of strategy, 8technology-based, 342

Community business model, 168–170Community contributions, 152Compaq Computer, 176Comparative advantage, of nations,

240–242Compensation

of CEOs, 270–271employment changes and,

398–400of Microsoft directors, 278for overtime, 282at Trader Joe’s, 298

Competence-destroying change, 47Competence-destroying innovations,

104Competence-enhancing change, 47Competencies

core, 213–220distinctive, 30diversifi cation beyond, 221–222maximizing, 126modifi cation of, 113–114

Competitionbarriers to entry and, 133–134context of, 142–143customer expectations and, 63–64interaction and changing industry

structure, 141learning from, 186–191levels of, 128among members of network, 308multidomestic strategy and, 245among partners, 223with rivals, 125

Competitive advantage, 19asymmetries and, 140–143corporate governance as, 268–269generic strategies for achieving,

143–147international expansion and,

238–243

investment and, 37–38knowledge and, 331at Marks & Spencer, 36–37for resource accumulation, 46resources for, 29–31

Competitive aggressiveness, of entrepreneurs, 98–99

Competitive conditions, macro forces and, 136–143

Competitive environments, 127–129

Competitive resourcescharacteristics of, 33–34creating and sustaining, 32–43supporting activities for, 35–37

Competitors, 149–152 raising customer expectations, 63

Complementary products or services, 134–135

Computer-aided design (CAD) system, 137

Computers, operating systems for, 173–174

Conglomerates, 214–215aggregate value as independent

businesses, 205Consoles, game, 164–165Consulting fi rms, knowledge storage

by, 339Consumer demand, globalization

of, 246Consumer rights, Amazon.com and,

92–93Consumers, tracking tastes of, 238Context, 9

of business strategy, 8–12competitive, 142–143

Contingent employees, 347–348outside contractors and suppliers,

306Contingent workforce, 398Continuous planning, 311Contracts

changes in, 398long-term, 208–209for New York City taxi drivers, 397

Control, 299over quality, 306–309

Control systems, 312


Index 417

Cooper Industries, corporate skills at, 219

Coopetition, 125Coordination, 13, 299Coors Brewing Company, 251Coproduction

with customers, 64–65networks for, 65–66

Core competence, 216–218, 217diversifi cation and, 213–220

Core ideology, 367Core rigidities, 111–112Core value, 367Corporate culture at Boeing, 366

incompatibility of, 254knowledge management and,

343–344 at Southwest Airlines, 373

Corporate entrepreneurship, 106, 110–114

Corporate governance, 268–269changing standards of, 268–278at Microsoft, 277–278Sarbanes-Oxley Act and, 275–278

Corporate leadership systems, 378–379

Corporate parenting, 218–220Corporate social responsibility,

278–283Corporate strategy, 15, 201, 203–207

at UTC, 206Corporations

codes of ethics of, 281–283locations of, 280–281philanthropy by, 279

Cosmetics.com, 110Cost leadership strategies, 144–145Costs

of customer service, 82economies of scale and, 182strategy execution and, 305–306switching, 132at Trader Joe’s, 298

Cost sharing, 65Country clusters, 257Creativity, 305Credit card companies, customer

analysis by, 78Crocs, 99–100

Cross-cultural differences, 255–258Cross-pollination, 227Culture. See Corporate culture,

Organizational culture, Regional culture

Cumulative adopters, S-curve of, 105Customer(s) boundaries between

fi rms and, 308changing tastes of, 142–143coproduction with, 64–65 cost-sharing with, 65critical nature of relationships

with, 59–66data gathering about, 75–80defi ning needs of, 72, 73–74demands of, 60–62, 241–242ethnographic techniques for

understanding of, 80involvement in product decisions, 80knowledge of and second-mover

advantage, 172learning from, 186–191needs, 71–75perceptions of quality, 61–62market perceptions, 77–78measures of, 313positive perspective on, 68–69problematic, 82service levels for, 81–82success as barrier and, 83traditional contacts with, 59

Customer-based business model, guidelines for, 71–75

Customer-based strategy, 59Customer contact, 59

technology enhances, 62Customer experience map, 76Customer-focused fi rms, 376Customer information

resources and, 81tracking of, 78–79

Customer satisfactionat Cisco Systems, 69–70surveys of, 78

Customer service, 57–58at Cisco Systems, 65–66costs of, 82service mentality and, 66–70value added through, 82


418 Index

Customization, mass, 59Customized offerings, 184Customized toys, 179

Daimler AG, 75DaimlerChrysler, 254–255, 397Data, 330, 331

about customers, 75–80hierarchy of, 331

Decentralizationas leader approach, 376strategic control and, 315–316

Decision makingat IBM, 303strategy execution and, 315–317at Trader Joe’s, 299

Defi ned contribution (401 [K]) programs, 399

Delegation, as leader approach, 376Dell Inc., 304–305

coproduction and, 65value chain activities at, 176, 177,

179 Deloitte & Touche, 405Delta, 372Demand conditions, national

advantage and, 241–242Democratizing innovation, 190Demographic environment, 138Demographic trends, anticipating

consequences of, 79–80Deployment, of resources, 113“Designers Accord,” 288Developing nations, global output

and, 243Diageo, 110–111Differentiation, 145–146

by Trader Joe’s, 298–299Digital photography, as radical

innovation, 98Diplomacy, knowledge spillover and,

224Direction setting, by leaders, 364Disasters, spontaneous collaboration

during, 150–151Discovery, of opportunities,

100–101Discrimination, in code of ethics,

282

Disney, 28, 112brand, 75competitive advantage, 33customer needs and, 74–75diversifi cation and expansion of

business scope at, 221Michael Eisner, CEO, and, 28,

271, 274–275shareholder meeting (2004) at,

274–275Distinctive competencies, 30, 46Distributed expertise, 350–351Diversifi cation, 204, 205

competencies and, 216–218, 221–222

dominant businesses, 214opportunities for linked, 220through exporting, 250international, 237–238related-constrained, 214–215related-linked, 214–215by Sony, 202 unrelated conglomerate, 214–215,

221Diversifi cation strategy, 213–220Diversity, of boards of directors, 271,

273Divestment, 217Divisional structures, 305Dominant businesses, 214“Dragon” economies, 243Dreamliner, 366Dual strategy, for optimizing

performance and preparing for change, 114–116. See also Ambidexterity

Early adopters, 105Early majority users, 105Earnings gap, education and, 325eBay, 126, 168Economic environment, 138–139Economic profi t, 19Economic transactions

among fi rms, 207–213structuring relationships for,

207Economies of scale, 126, 182, 239Economies of scope, 239


Index 419

Economy“dragon,” 243emerging, 243franchising in, 108technological changes and, 63

Education. See also Learningcorporate concerns about, 279earnings and, 325

80/20 rule, 82Electronic databases, for information

storage, 339Emerging economies, 243Employees

contingent, 347–348 contributions to service climate, 70contribution to Southwest

Airlines, 373–374as contractors, 306recruitment of, 346service mentality in, 69–70socialization of, 42–43at Trader Joe’s, 298–299

Employee satisfaction, at Cisco Systems, 69–70

Employers, evaluating, 405–406Employment

changing relationship in, 396–400future opportunities for, 391

Employment contracts, changes in, 398

Encarta, 71–72Encyclopedia Britannica, business

loss by, 71–72Enron, 266–267, 280

bankruptcy by, 265Code of Ethics at, 282, 283

Entertainmentfree agents in, 394as growth industry, 391

Entrants to competitive environment, 133–134

Entrepreneurial fi rms, 393Entrepreneurial orientation, 97–98Entrepreneurial teams, 94, 97Entrepreneurs, 94

capabilities of, 97–98growth of, 393–394persistence of, 96serial, 96

women as, 95–96Entrepreneurship

corporate, 106, 110–114initiatives for, 112–113resources for, 102–103small fi rm, 106, 107–110strategic, 93–94

Entry modes of international, 249–255characteristics of, 250

Environmentchemical waste disposal costs and,

64in code of ethics, 282competitive, 127–129customer perceptions and, 61–62demographic, 138economic, 138–139green design for, 288macro, 136–143political/legal, 139–140position in, 38–41sociocultural, 138technological, 138

Environmental opportunities, 10. See also Context

Environmental reports, 268Equity joint ventures, 209–210

as learning vehicles, 223Ernst & Young, 395, 405Ethics, 265

at Accenture, 280–281at Boeing, 366business, 279–280corporate codes of, 281–283 at Merck, 366multinational operations and,

284–285multistakeholder judgments and,

285–288of personal information gathering, 79variance in, 283–288

Ethnographic techniques, for customer information, 80

Evaluation, at Microsoft, 277–278Exchanges, spot market, 208Execution of strategy. See also

Strategy executionExit barriers, 131


420 Index

Expansion, 204international, 238–243, 244–249

Expectations, communicating, 374–377

Experience curve, 171, 172Experience Life Cycle, 76Experience-oriented strategies, 62–63Experiential learning, Kolb’s model

of, 328Explicit knowledge, 224, 333Exploitation, 12Exploration, 12Export, 250External environment, board of

directors and, 272Externalization, 336

Factor conditions, of nations, 241Factor endowments, 240Families, demographic trends and, 79Fannie Mae, 268Fast-food franchising model, of

McDonald’s, 186–187Feasibility analysis, 101–102Federal Sentencing Guidelines for

Organizations, 27915 percent rule, at 3M, 112Financial capital, for entrepreneurial

fi rms, 102Financial control systems, 312–313Financial measures, balanced

scorecard approach to, 313Financial risk

combining diverse businesses and, 205

reducing through boundary expansion, 204

Financial security, as growth industry, 392

Financing, for entrepreneurs, 107–108

Firefox browser, 173Firms

economic transactions at, 207–213entrepreneurial, 393–394infrastructure of, 175, 178Resource-Based Theory of, 29–31strategy, structure, and rivalry of, 241 technology clusters of, 307–308

top 25 worldwide, by market value, 237

top ten employers, 405–406First-mover, 98, 170–172. See also

Second moverFive forces (Porter), 180Flexibility, strategic, 301–303Focus, 146–147Forced labor, 281Ford Motor Company, 288,

367–368Formal collaboration, 151Formal internal knowledge, database

storage of, 339Formality, of strategic planning,

310–311Formula businesses, restrictions on,

187–188Forte hotel chain, 251Fortune magazine, top 25 fi rms by

market value, 237401 [K] programs, 399

Frame theories, 180Franchisee, 108Franchising, 108, 251–252

agreements as long-term contract, 208–209

business model, 186–187disadvantages of, 251–252 opportunity and, 107–108

Franchisor, 108–109Free agents

income for, 397–398independent workers as, 394

Freedom of association, in code of ethics, 282

Fuji Xerox, 347Functional strategy, 16Functional structures, 305

Gartner Group, 339GE. See General Electric (GE)GE Capital, 207–208GEMAYA fi rms, 126–127, 135General Electric (GE)

benchmarking program at, 347bundling by, 184 “destroy your business” initiative,

302


Index 421

diversifi cation relatedness and, 213–214

information technology at, 327leaders of, 379new ventures of, 112people in business model at, 305product development alliance

with UTC and, 217purpose of, 367

General Motors (GM)retirement benefi ts at, 400Toyota joint venture with, 223,

225, 226Generic life cycle. See Life cycle

modelGeneric strategies framework,

143–147Germany, 241Giant Manufacturing (Taiwan), 308Gillette Company, 167Global advertising, 246–247Global Crossing, 268Globalization, 235, 238

economies of scale through, 239economies of scope through, 239as shaping strategy, 5workers and, 394–395work/life balance and, 406–407

Global labor market, 394–396Global strategies, 244, 246–247Glocal strategies, 248Goods, customer perceptions of,

61–62Google, 7–8, 405

as brokerage and advertising model, 168

knowledge and market value at, 326

Governance, at Tyco, 269–270Grameen Bank, 362–363

cultural values at, 367Green consumerism, Body Shop and,

109, 110Green design, 288Greenfi eld ventures, 253Growth

diversifi cation and, 204–205, 221of Honeywell, 300of Sony, 202–203

Growth industries, 390–393Growth strategy, 203–207Guidance, of organizational

activities, 13

Habitat Jam, 371Harassment, in code of ethics, 282Health and safety, in code of ethics,

282Health benefi ts, 399, 400Health care

desirable attributes of services, 60–61

as growth industry, 391 rising costs of, 400

Heart Zones, 96Hewlett-Packard, 279

“HP Way” at, 367Mike Hurd, CEO at, 366

Hierarchiesagreement on use of, 256costs and benefi ts of, 210–212fl attening of, 306TCA and, 211–212

High Cost of Low Price, 286High-performing organizations, 374Hilton, 251Hiring, of knowledge workers, 346Home Depot, strategy execution at,

302Honeywell, 300, 301

Larry Bossidy, CEO at, 300, 305, 372

people and business model at, 305

Horizontal structures, 376Human behavior, positive model of,

68–69Human capital, 372–374

for entrepreneurial fi rms, 102–103Human capital theory, 329Human resource management, 175

technology development and, 177–178

Human resources, at IBM, 397Hurricane Katrina

spontaneous collaboration and, 150–151

Wal-Mart and, 287


422 Index

Hypercompetition, 125, 128characteristics of, 147–149oligopoly compared with, 148–149

Hypercompetitive environment, 127Hyundai, 243

IBMApple and, 226–227continuous planning at, 311Lou Gerstner, CEO, reinvention

of, 370, 397knowledge management and, 327,

344lifetime employment at, 396–397strategy execution, 303 top ten fi rm to work for, 405

IDEO, Valarie Casey and green design at, 288

Ideology, core, 367IKEA

cost leadership by, 144–145fi rst-mover advantage of, 171glocal strategy at, 248–249

ImClone, 268Implementation of strategy. See

Strategy implementationImprovisation, 379Inbound logistics, 174Incentive systems, 344Income, for free agent, 397–398Incremental innovations, 98, 103Independent workers, 394India

economic powerhouse, 256emerging economy in, 243entertainment industry, 394job shift towards, 395mergers and acquisitions in, 253outsourcing to, 306

Indirect costs, 211Individual, as strategist, 389Individual strategy, 16Indonesia, 257Induced initiatives, 310–311Industrial organization (IO)

economics, 130Industry, 127

collaboration across, 152competitive, 127

national advantage and, 241–242rivalry within, 131

Industry analysis, 134Industry level, of life cycle, 181Industry life cycle, 181–186Inertia, 111Infomediary, 169Informal internal knowledge,

database storage of, 339Information, 330, 331

asymmetries, 141boards of directors and, 271ethics of gathering, 79hierarchy of, 331sharing of, 376–377storage of, 335

Information systems, 185Information technology, 393–394Infrastructure, 175, 178Initial public offering (IPO), 108InnoCentive, 350–351Innovation, 12, 94–95, 300, 305

competence-destroying, 104democratizing, 190management of, 103–106open, 189–191value chain activities and, 179

Innovativeness, of entrepreneurs, 98Innovators, 105Institutional investors, 273–278Instrumental resources, 103Intangible resources, 29

differentiation and, 145replacement period of, 41

Intel, 134, 183Intellectual capital, 60, 326, 341Intellectual property rights, 332Intellectual stimulation, as growth

industry, 392Intended strategy, 13Interest group participation, 152Internal business processes, measures

of, 313Internal corporate venturing, 110Internalization, of knowledge, 337International activities, globalization

and, 235International diversifi cation, advantages

and disadvantages of, 237–238


Index 423

International expansionalternative strategies for, 244–249competitive advantage through,

238–243exploiting national differences

through, 239–243franchising as, 251

International Franchise Association (IFA), 186–187

International strategies, 244Internet

Amazon.com and, 92–93business models on, 169buyer information from, 185customer value through, 62–63

Internet Explorer, 172Intrapreneurship, 106, 110Inventors, 95Investment, competitive advantage

and, 37–38Investors, institutional, 273–278Involvement, across organization

levels, 309

Jam technology, IBM, 371Japan, 243

benchmarking in, 347global strategy in, 246just-in-time inventory practices

in, 332knowledge management in,

337–338Japan Railways East, 9–10JIT. See Just-in-time inventory

management and manufacturingJob enlargement, as leader approach,

376Joint ventures, 252, 348

equity, 209–210, 223Just-in-time inventory management,

332Just-in-time manufacturing, formal

collaboration in, 151

Kao, 245Kentucky Fried Chicken, 251Knowledge, 327

characteristics of, 330–334codifi ed, 339

as competitive advantage, 328creation of, 336–338explicit, 224, 333external sources of, 346–350hierarchy of, 331incentive systems and sharing of,

344–345Kolb’s model of experiential

learning and, 328personalized, 333spirals of, 337–338storage of, 338–339sustainable advantage from,

327–330tacit, 224, 333transfer of, 339–341, 348use of, 341–343

Knowledge management, 325, 334–343learning process and, 328–329organizational systems and,

343–346processes and components of, 335

Knowledge spillover, 224Kodak, core competencies at, 217–218Kolb’s model of experiential learning,

328Korn/Ferry, 273“Kyoto Treaty” of design, 288

Labor. See also Workersforced and child, 281outsourced, 398

Labor market, global, 394–396Laggards, 105Latchkey children, library services

for, 67Late majority users, 105Leaders, 363. See also Leadership

approaches of, 375–376articulating vision, 366–369best and worst, 366career anchors for, 369–370expectations of, 374–377Jack Welch’s description of, 368organizational culture and, 371–372strategic, 364, 365–379

Leadership, 14–18, 361. See also Leaders activities, 366–374

defi nitions of, 363–364


424 Index

Leadership (continued)entrepreneurial, 95evolving models of, 364high-performing organizations

and, 374–379teams of, 364types of, 363

Leadership pipeline, 377–378Leadership systems, 378–379Lead users, 105–106Lean manufacturing techniques, 332Learning. See also Education,

Experiential learningbalanced scorecard and, 315knowledge spillover and, 224organizational culture and, 226, 345as outcome of alliance, 222–227as outcome of licensing, 351process of, 328

Learning and growth category, on balanced scorecard, 314

Learning organization, 342Legal environment, 139–140Lenovo, 303Leveraging, of resources, 47Levi Strauss

global brand, 246in Burma (Myanmar), 285

Liability of newness, 107Library services, for latchkey

children, 67Licensing

franchising as, 251as global entry mode, 250–251

Life cycle model, 180–186Lifestyle, work balance and,

406–408Lifetime employment, at IBM,

396–397Linux, 190Long-tail markets, 167Long-term capital, from institutional

investors, 274Long-term contracts, 208–209Lorain Autoparts, 115L’Oréal, 245

Body Shop and, 109Lockheed Martin, 405

Lukoil, 243

Macro environmental forces, competitive conditions and, 136–143

Managementcorporate infl uence on, 219guidelines at Microsoft, 277innovation and, 190institutional investors and, 274separation from ownership,

270–271top team, 365

Managers, 95, 113, 363roles of, 306

Manufacturer business model, 170Mapping

of customer experience, 76of customer perceptions, 77–78

Marakon Associates, value of conglomerates and, 205

Market(s)costs and benefi ts of, 210–212customer perceptions of, 77–78entry modes for, 249–255niche, 246TCA and, 211

Market advantage, restrictions on, 173–174

Market information, tracking of, 78–79

Marketing, 174of oneself, 402–403

Marketing strategy, targeting of market segments in, 73

Market life cycle, 180Marketplace, positioning oneself in,

402Market transactions, indirect costs

in, 211Marks & Spencer

activity system at, 36competitive advantage at, 36–37distinctive competencies of, 46fall of, 39–40resource fl ows at, 38turnaround, 40–41Marriott Hotels, 251

Mass customization, 59Matrix structures, 305, 306Matsushita, 246


Index 425

Mattel, Barbie doll of, 179McDonald’s

diversifi cation relatedness and, 213fasts-food franchising model of,

186–187franchise agreements as long-term

contract and, 208–209global brand, 246globalization by, 242QSCV at, 371in Russia, 252

McKinsey Corporation, 339, 409Media Player (Microsoft), 78Medicaid, 268Medtronic, 380Memory, organizational, 339Mercedes-Benz, 75, 145–146Merchant business model, 169Merck & Company Ray Gilmartin,

CEO, 366Mergers, in China and India, 253Merrill Lynch, 268Mexico, emerging economy in, 243Microsoft

anticompetitive processes at, 139consoles, 164continuous planning at, 311corporate governance guidelines

from, 277–278Internet Explorer and, 172knowledge and market value at, 326Media Player from, 78as operating system, 174top ten fi rms to work for, 405

Miller Brewing Company, 251Mimetic behavior, 31Minorities, as entrepreneurs, 95–96Mission, 7, 315

at Southwest Airlines, 373MIT Smart Customization Group, 80MNCs. See Multinational fi rmsModel T Ford, 115Modular integrated robotized system

(MIRS), at Pirelli, 136–137Mohawk Industries, 142Molson, 250–251Monopoly, 127

in Bell System, 128Mosaic, 173

Motorola, alliance with Cisco, 223Motorcycle sales, focus in, 146–147Motorola, alliance with Cisco, 223Movie business, Walt Disney Studios

and, 28Mozilla, 173Multidomestic strategies, 244–245Multilateral collaboration, 152Multinational fi rms

in Burma, 285emerging, 243ethical dilemmas and, 284–285study of corporate leadership in,

378Multistakeholder judgments, ethics

and, 285–288Myanmar. See Burma (Myanmar)MySpace, 392

Napster, 4–5, 8, 18, 98National Auto Parts Association

(NAPA), 115National Semiconductor, 343–344Nations

comparative advantage of, 240ethical differences in, 280

Needs, choices for satisfying, 74–75Neon automobile, 308–309Nestlé, 148, 245Netfl ix, business model of, 166–167Netscape, 172–173Network(s), 209

social, 333Networking, in career management,

404–405Network organizations, 306–309

in Silicon Valley, 307–308Network strategy, 15

government policy and, 307–308New product development, 314News delivery, print and electronic,

111–112New United Motor Manufacturing

Inc. (NUMMI), 223, 225, 226New York City, taxi drivers in, 397New York City Police Department,

decentralization and strategic control at, 315, 316

Niche markets, 246


426 Index

Nikecustomer service at, 58–59networked strategy at, 307

Nintendo, 164–165Nokia, 115Nondiscrimination, in code of ethics,

282Nordstrom, customer service at, 81–82Novell, 139Nucor information technology at, 327

organization structure at, 306values at, 372

NUMMI. See New United Motor Manufacturing Inc. (NUMMI)

Oak Knoll Academy, balanced scorecard strategy at, 314, 315

Oligopoly, 127, 128buyers in, 131–132collusion in, 133competitive advantage

achievement by, 143–147hypercompetition compared with,

148–149profi t potential in, 129–136substitute products and, 132–133suppliers as, 132

Open innovation, 189–191Open-source idea, 174Operating systems, 173–174Operational strategy, 16Operations, 174, 178Opportunities capacity to develop, 93

development of, 99–106exploration of, 12, 91organizational capabilities and,

97–99Opportunity recognition, 100–102Orange County Choppers (OCC),

146–147Organization(s), entrepreneurial,

97–99high-performing, 374service climate of, 70

Organizational activity, understanding of strategy and, 303–304

Organizational capital, for entrepreneurial fi rms, 103

Organizational components of knowledge management, 335

knowledge use and, 342–343Organizational culture, 369

at Cisco Systems, 69–70learning and, 226supportive, 369–372

Organizational memory, 339Organizational strategy, 15, 180Organizational structure, 305

alignment with intent, 301alignment with people, 305–309horizontal, 376knowledge management and,

345–346Organization of Petroleum Exporting

Countries (OPEC), as oligopoly, 131

Otis Elevator, 72–73Outbound logistics, 174Outside contractors and suppliers,

306Outsourcing, 308

by IBM, 397loss of control in, 306of service operations, 211by Silicon Valley businesses,

307–308 Overcommitment of resources, 44Overtime compensation, in code of

ethics, 282Ownership, separation from

management, 270–271

Parenting, corporate, 218–220Participation management, as leader

approach, 376Partners, in joint ventures, 252PayPal, 168PC industry, 303Peer assist, British Petroleum,

340–341Pension funds, institutional investors

and, 274Pensions, availability of, 399PeopleFinder, 150–151People-oriented fi rms, 376Pepsi, operations in Burma

(Myanmar) 285


Index 427

Performancecorporate leadership supporting,

379individual and unit, 312–317measures of, 134resource-based model of, 29of rivals, 20self-feedback for evaluation of, 402transformational leaders and,

376–377wage increases based on, 399

Performance evaluation, of Microsoft CEO, 277–278

Performance management, in New York City Police Department, 316

Personal care, as growth industry, 391Personalization, as knowledge storage

strategy, 339Personal marketing, 402–403Petro-Canada, 285Pharmaceutical companies, 392Philanthropy, corporate, 279Physical capital, for entrepreneurial

fi rms, 102Pirelli, 136–137Pixar Animation Studios, 28, 97

Disney and, 275Planning. See also Strategic planning

at Allianz, 310Political/legal environment, 139–140Political risks, 257–258Position, in retailing environment,

38–41Positive models of human behavior

and service quality, 68–69Post-it Notes, 112Pricewaterhouse Coopers, 405Pricing, by Amazon.com, 92–93Primary activities, in business

models, 175Privacy rights, data about customers

and, 78Private knowledge, 332Proactiveness, of entrepreneurs, 98Process innovations, 103Procter & Gamble, 239, 245Procurement, 175Product(s)

attributes of, 74cannibalization of, 148–149complementary, 134–135customer involvement in decisions

about, 80differentiation of, 145

Product innovation, 103, 190Product/market life cycle, 180. See

also Industry life cycleProduct standards, 172Profi t

economic, 19potential for, 129–136sources of, 129

Profi tabilityabove-industry-average, 3forces affecting, 130

Profi t potential, in oligopolies, 129–136

Promising practices, 188, 332.See also Best practices

Promoters, 95Pronto Markets, 298Property rights, intellectual, 332Public Company Accounting

Oversight Board, 275Public knowledge, 332Public pension funds, directors of,

273Pure competition, 127Purpose, 367Pygmalion effect, 375

QSCV (quality, service, cleanliness, value), at McDonald’s, 371

Qualitycontrol over, 306customer perceptions of, 61

Radical innovations, 98, 103–104, 113Radio Shack, 10–11Railroads, trucking industry and, 45Ranbaxy Laboratories 243R&D. See Research and developmentRazor-and-blade business model,

167–168Reality TV, 392Realized strategy, 13. See also

Intended strategy


428 Index

Recording companies, Napster and, 4–5

Recording Industry Association of America (RIAA), 4, 18

Recruitment, of knowledge workers, 346

Reformsof boards of directors, 272of corporate governance, 275–278

Regional culture(s), 307–308Related-constrained diversifi ers, 214,

215, 216Related industries, national

advantage and, 242Related-linked diversifi ers, 214, 215Relationship stage, of product life

cycle, 184–186Relationship technology, 185Renewal of resources, 47Replacement period, for intangible

resources, 41Research and design, by customers, 80Research and development

centralized, 190formal collaboration in, 151R&D partnerships, 348

Research facilities, networked, 245Resource accumulation, 41–42.

See also Resource deploymentcausal ambiguity for, 44external attribution and, 44–45overcommitment and, 44strategic management of, 45–47uncertain capacity for, 43–44

Resource allocation process, planning and, 310–311

Resource-based approach, and knowledge management, 328–330

Resource-based logic, 31, 216–217Resource-Based Theory of the Firm,

29–31Resource deployment, 39, 45–47, 113Resource development, 27. See also

Resource accumulationResource fl ows, 38. See also Resource

stocksResources, 29. See also Competitive

resources; Resource

accumulation; Resource deployment

brands as, 34–35 competitive, 33–34for competitive advantage, 29–31customer information and, 81for entrepreneurial fi rms, 102–103

intangible, 29leveraging of, 47performance and, 29renewal of, 47strategic management of

accumulation and deployment, 45–47

strategy for generating, 12, 102–103

tangible, 29Resource accumulation, 39, 41–42,

43–45, 102–103strategic management of, 45–47

unclear capacity for, 43–44Resource stocks, 38. See also Resource

fl owsResource theory, knowledge and, 329Responsibility

accountability and, 265of board of directors, 271–272

Responsiveness, speed of, 305Retaliation, 133Retirement benefi ts, 397, 399–400Return on assets (ROA), 19Rewards

based on quantitative measures, 317knowledge management and, 344

Risk(s)cultural differences as, 257failure and, 344for franchises, 187–188 knowledge management and, 344political, 257–258in resource accumulation, 43–45strategic, 43

Risk taking, by entrepreneurs, 99Rivals, 18–20

within industry, 131national advantage and, 241performance of, 20

ROA. See Return on assets (ROA)Rock Island Railroad, 45


Index 429

Routines, 30Royal Bank of Scotland, 32Royal Philips Electronics global

advertising by, 246–247Russia,

Boeing jobs in, 395economic powerhouse, 257emerging economy in, 243McDonald’s in, 252

Safari browser, 173Sales, 174Sarbanes-Oxley Act (2002), 275–278,

279Scale of activity, 205Scandals, corporate governance and,

268Schwinn bicycles, 308Scope of activity, 205S-curves

innovation, 105technology, 104

Search engines, 7, 339Second movers, 98Segmentation

and customer demands, 73–74synergy and, 75

Self-feedback, for performance evaluation, 402

Self-managed teams, 376Semiconductor manufacturers,

strategic alliances by, 348Serial entrepreneurs, 96Servant leadership style, 380Service(s), 174

complementary, 134–135customer perceptions of, 61–62for customers, 81–82differentiation of, 145employee mentality toward,

69–70organization climate of, 70 value chain framework and, 174

Service centers, 211Service climate, 70

tools and activities to produce, 70Service mentality, 66–70

at Cisco Systems, 69employee attitudes and, 69

organizational activities to support, 66

positive view of customers and, 68Shareholders, management behavior

and, 270ShareNet, 339Sharp Corporation, 211Shaw Industries, 142Siemens Information and

Communications Networks group, 339

Signature processes, 340Silicon Valley, technology business

organization in, 307–308Skills, career, 401Skunkworks, 112Small and medium-sized enterprises

(SMEs), 107–110Small fi rm entrepreneurship, 106,

107–110SMEs. See Small and medium-sized

enterprises (SMEs)Social capital, 103, 341

for entrepreneurial fi rms, 103Social capital theory, 333Social contact, growth industries for,

392Socialization, 336

of employees, 42–43Socially complex activities, 31Social reports, 268Social responsibility, internal forces

for, 278–283Sociocultural environment, 138Solutions stage, of life cycle model, 184Sony, 243

Apple and, 202–203 CEO Akio Morita’s vision for, 367consoles by, 164 global competitor, 243growth of, 202–203PlayStation, 181, 227

South Korea, 243economies of scale in, 239

Southwest Airlines, 144, 188, 346, 373employees at, 372–373

Spirals of knowledge, 337–338Spontaneous collaboration, 150–151Spot market exchanges, 208


430 Index

Stakeholders, 16–18external, 364sustainable strategy and, 267–268

Standardization, 182Start-up capital, 107Start-ups, franchises as, 187State Department, as employer, 405STEP analysis, SWOT analysis and,

139–140Stock, ownership of, 274Storylistening, 80Strategic alliances, 204, 348–350

between Amazon and Toys “R” Us, 349

Strategic control, decentralization and, 315–316

Strategic entrepreneurship, 93–94Strategic fl exibility, 301–303Strategic groups, 135–136Strategic initiatives, 301

board of directors monitoring of, 272Strategic leaders, 364, 365–379Strategic location, comparative

advantage of nations and, 240Strategic options, 302Strategic outcomes, of balanced

scorecard review, 314Strategic planning

at Allianz, 310changing of, 310–312formality and timing of, 310–311process of, 309–310

Strategic questions, internal vs. external, 66

Strategic risk, 43 Strategic simplicity, at Royal

Phillips Electronics, 247–248Strategic vision, 367Strategizing, 13, 14–16Strategy, 6

building blocks of, 21cannibalization, 148characteristics of effective, 5–14combination, 147–149context of, 9corporate, 201cost leadership, 144–145differentiation, 145–146dual, 114–116

fi ve levels of, 14–16focus, 146–147global, 244intended, 13international, 244multidomestic, 244national advantage, contribution

to, 241realized, 13six functions of, 14transnational, 244

Strategy execution, 301at Dell, 304–305to support fl exibility, 299–303

Strategy implementation, 299–301.See also Strategy execution

Structural isolation, 112Structure. See also Organizational

structureas strategic issue, 308

Stuck-in-the-middle strategies, 147Subscription model, 166, 168–169, 170

of Netfl ix, 166–167Subsidiaries, wholly-owned, 253–255Substitutes, products as, 132–133Success, study of, 407Sullivan Principles, for MNCs, 284Sun Microsystems, 139, 350Supervisors, 363Suppliers entrepreneurship and, 106

oligopoly and, 132reducing boundaries between

fi rms and, 308Support activities, in business

models, 175Supporting industries, national

advantage and, 242Supportive culture, 369–372Survivor (television program), 28Sustainability reports, 268Sustainable advantage, from

knowledge, 327–330Sustainable strategy, 267–268Switching costs, 132SWOT analysis, 10, 11, 401

as individual strategy, 16STEP analysis and, 139–140

Synchronicity, 101Synergy, 18, 75


Index 431

Systems, 182as life cycle stage, 182–183

Tacit collusion, 133, 148Tacit knowledge, 224–225, 333.

See also Explicit knowledgeTaiwan, 243Tangible resources, 29.

See also Intangible resourcesdifferentiation and, 145

Target, 223, 248Targeting, of market segments, 73–74Tata Motors, 368Taxi drivers, in New York City, 397TCA. See Transaction cost analysis

(TCA)Teach for America, as employer, 405Teams entrepreneurial, 97

self-managed, 376top management, 365

Teamwork, in career management, 403–404

Technological environment, 138Technological resources, for

entrepreneurial fi rms, 103Technology

centers of, 307–308customer contact through, 62–63destructions of business models

and, 178–179development of new, 305economic change through, 63industry evolution and, 136–137for information storage, 339knowledge use and, 341–342knowledge management and, 335at Pirelli, 136–137protection of, 308relationship, 185S-curves for, 104Silicon Valley business

organizations and, 307–308tracking customers with, 78transfer, 348

Technology development, 175human resource management

and, 177–178Television

Internet competition with, 63

subscription and advertising models of, 168–169

Textile industry, strategic location of fi rms in, 240

Third-world multinationals, 2433M

corporate culture, knowledge management, and, 343

Jim McNerney, CEO, 302–366new ventures at, 112

Three Cs of implementation, 299–300

TIAA-CREF public pension fund, 273

Time Warner, AOL and, 213Timing

of strategic planning, 310–311as synchronicity, 101

Tomb Raider, products generated by, 227

Top-down planning process, 310Top management teams, 365Total direct compensation, for CEOs,

270–271Total quality management (TQM),

332Toyota, 243, 246

General Motors and, 223, 225, 226

health care costs at, 400Toys “R” Us, Amazon alliance with,

222, 349–350TQM. See Total quality management

(TQM)Trader Joe’s, 298–299Traditional product/market life cycle,

180Training, at Trader Joe’s, 298–299Transaction cost analysis (TCA),

210–212, 218at AOL, 212–213

Transfer of knowledge, in strategic alliances, 339–341, 348

Transformational leaders, 95, 376–377, 380

Transnational strategy, 244, 245–246Trilogy Software, 177–178Triple Bottom Line, 268, 407Trucking industry, railroads and, 45


432 Index

Tyco International, 268, 269–270

Unilever, 239UN Global Compact, 284United Technologies Corporation

(UTC), 206, 217United Airlines, 372

United Way 279, 281Unrelated diversifi ers

(conglomerates), 214–215UTC. See United Technologies

Corporation (UTC)Utilitarian resources, 103Utility business model, 170

Value (worth)adding through customer service,

82enhancing, 67

Value chain, 174–180, 245analysis of, 175deconstruction of, 178–180linking activities of, 177–178

Values (principles)core, 367ethics and, 280at IBM, 371knowledge management and,

343–344leader articulation of, 371organizational, 370, 371–372at Trader Joe’s, 299

Venture capitalists, 107–108Vertical integration, 216Vioxx, 366Virgin (business group)

industries involved in, 112Rail Group, 189Richard Branson, CEO, 112, 189,

374Vision, 7

Balanced Scorecard and, 313–314for Google, 7for Grameen Bank, 362–363of leader, 366–369strategic planning and, 309

Wagesannual increases in, 399

in code of ethics, 282Wall Street Journal, 111–112Wal-Mart, 144

customer service at, 81–82ethics and, 285–288information technology at, 327performance differences and, 20

Walt Disney Studios. See Disney Studios

Web browsers, 172–173Whirlpool, 112

global integration by, 236Wholly owned subsidiary, 253–255Who Wants to Be a Millionaire? (television

program), 28Wii, 164–165Wikipedia, Encyclopedia Britannica

and, 72Women

on boards of directors, 273as entrepreneurs, 95–96

Work, best places to, 405–406comparative hours of, 406life balance with, 406–408trends shaping, 390

Workers. See also Recruitmentbenefi ts for, 400contingent, 347–348entrepreneurial, 393–394in global labor market, 394–396independent, 394new, 395at Wal-Mart, 286

Workforce, “contingent” nature of, 398

Work hours, in code of ethics, 282Workplace

growth industries and, 390–393trends in, 390–396

WorldCom, 268bankruptcy of, 265

Xerox, 347Canon and business model of,

176–177strategic benchmarking and, 347

Yellowtail wine, 83


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