Table Of ContentEIGHTH EDITION
Strategic Analysis and Action
MARY M. CROSSAN MICHAEL J. ROUSE JOSEPH N. FRY J. PETER KILLING
Richard Ivey School of Business, Richard Ivey School of Business, Richard Ivey School of Business, Institute for Management Development,
University of Western Ontario University of Western Ontario University of Western Ontario Lausanne, Switzerland
Toronto
Vice-President, Editorial Director: Gary Bennett
Editor-in-Chief: Nicole Lukach
Acquisitions Editor: Nick Durie
Marketing Manager: Jenna Wulff
Supervising Developmental Editor: Madhu Ranadive
Project Manager: Jessica Hellen
Manufacturing Manager: Susan Johnson
Production Editor: Lila Campbell
Proofreader: Susan Bindernagel
Compositor: MPS Limited, a Macmillan Company
Permissions Researcher: Joanne Tang
Art Director: Julia Hall
Cover and Interior Designer: Anthony Leung
Cover Image: Neliyana Kostadinova, Shutterstock images
Credits and acknowledgments for material borrowed from other sources and reproduced, with
permission, in this textbook appear on the appropriate page within text.
If you purchased this book outside the United States or Canada, you should be aware that it has
been imported without the approval of the publisher or the author.
Copyright © 2013, 2009, 2005, 2002, 2000, 1997, 1992, 1989 Pearson Canada Inc. All rights
reserved. Manufactured in the United States of America. This publication is protected by copyright
and permission should be obtained from the publisher prior to any prohibited reproduction, storage
in a retrieval system, or transmission in any form or by any means, electronic, mechanical,
photocopying, recording, or likewise. To obtain permission(s) to use material from this work,
please submit a written request to Pearson Canada Inc., Permissions Department, 26 Prince
Andrew Place, Don Mills, Ontario, M3C 2T8, or fax your request to 416-447-3126, or submit
a request to Permissions Requests at www.pearsoncanada.ca.
10 9 8 7 6 5 4 3 2 1 [EB]
Library and Archives Canada Cataloguing in Publication
Strategic analysis & action / Mary M.
Crossan . . . [et al.]. — 8th ed.
First–4th eds. written by Joseph N. Fry, J. Peter
Killing. 5th–8th eds. written by Mary M. Crossan et al.
Includes bibliographical references and index.
ISBN 978-0-13-215810-7
1. Business planning—Textbooks. 2. Strategic planning—Textbooks. I. Crossan, Mary M.
II. Title: Strategic analysis and action.
HD31.F79 2011 658.4’012 C2011-907005-7
ISBN 978-0-13-215810-7
Contents
Preface ix
Acknowledgements x
Introduction xii
1 A General Management Perspective 1
The Job of the General Manager 1
Assessing Performance 3
Using the Performance Matrix 5
Setting Direction: Vision, Mission, Values 6
Guiding Philosophy 8
Tangible Image 10
Reasonable Expectations of a Vision Process 10
Process Concerns 12
A Final Vision Check 12
From Vision, Mission, and Values to Strategy 13
Strategic Analysis, Planning, and Business Plans 14
Summary 14
Notes 14
Additional Readings 15
2 Strategy 17
The Essentials of the Strategy Model 17
The Role of Strategy 18
Strategy in a Single Business 19
Goals 20
Goal Structures 21
Describing Goal Structures 22
Goals and Competitive Advantage 23
Product Market Focus 23
Describing Product Market Focus 24
Product Market Focus and Competitive Advantage 26
Value Proposition 26
Describing Value Propositions 27
The Value Proposition and Competitive Advantage 29
Core Activities 29
Describing Core Activities 30
Core Activities and Competitive Advantage 32
Putting the Strategy Components Together 32
Contents iii
Other Strategy Perspectives 35
Corporate Strategy 37
Describing Corporate Strategy 39
Corporate Strategy and Competitive Advantage 40
Corporate Strategy and Corporate General Management 41
Summary 42
Notes 43
Additional Readings 44
3 The Diamond-E Framework 46
Introducing the Diamond-E Framework 46
The Criterion of Consistency 46
Consistency, Opportunity, and Risk 48
Strategy, Strategic Proposals, and Strategic Analysis 50
Using the Diamond-E Framework 50
The Strategy-Environment Linkage 51
The Strategy-Resources Linkage 51
The Strategy-Management Preferences Linkage 51
The Strategy-Organization Linkage 52
Strategic Tension 53
The Process of Strategic Analysis 54
Step 1: Base Case Analysis 55
Step 2: Strategy Formulation and Testing 56
Step 3: Decision and Execution 57
Summary 57
Notes 58
4 Tools for Environment Analysis 59
Porter’s Five Forces Model 60
Value Chain 65
Cooperation and Competition: Game Theory 67
Math for Strategists 69
Pest 70
Scenario Planning 71
New Economy Models 71
Blue Ocean Strategy 73
Global Industry Models 75
Stakeholder Analysis 75
Summary 79
Notes 80
5 Environment Analysis: The Strategy-Environment Linkage 83
Conducting Environment Analysis 83
Step 1: Focus the Environment Analysis 83
iv Contents
Performance Assessment as a Focusing Tool 85
The Strategic Proposal as a Focusing Tool 86
Jantzen Technologies: A Case Study 86
The Profit Model as a Focusing Tool 88
Defining the Right Time Horizon 90
Minimizing the Risks of Focus 91
Step 2: Test the Strategy-Environment Linkage 93
Demand 94
Supply 96
Competition 98
Government 100
First Check for Fit or Recycle 103
Step 3: Forecast Performance 103
Step 4: Rank Against Other Proposals 104
Summary 105
Notes 105
Additional Readings 106
6 Resource Analysis: The Strategy-Resource Linkage 107
The Nature of Resources 107
Other Characterizations of Resources 109
Resources and Competitive Advantage 111
The Dual Role of Resources 114
The Constraining Role of Resources 114
The Driving Role of Resources 114
Resource Analysis 115
Step 1: Identify Resource Requirements 116
Step 2: Test the Strategy-Resource Linkage 118
Recycling 120
Step 3: Develop Gap-Closing Analysis 121
Step 4: Move to the Next Step in the Diamond-E Analysis 123
Dynamic Resources 123
Resources and the Scope of the Firm 124
Summary 124
Notes 124
Additional Readings 125
7 Management Preference Analysis: The
Strategy-ManagementPreference Linkage 127
Value Creation, Capture, and Distribution 127
Reconciling Stakeholder Interests 128
Corporate Governance 129
Corporate Social Responsibility 132
Contents v
Management as a Key Stakeholder 133
Inconsistency Between Proposed and Preferred Strategy 134
Inconsistency Between Preferred Strategy and Other Realities 134
The Role of Management Preferences 135
The Roots of Strategic Preference 136
Basic Needs 136
Beliefs 137
Job Context 138
Frozen Preference 140
Implications 140
Matching Preferences and Strategy 141
Step 1: Identify the Required Management Preferences 143
Step 2: Test the Strategy-Preferences Linkage 143
Step 3: Develop Gap-Closing Analysis 144
Framing the Gap-Closing Issues—Individual Managers 144
Gap-Closing Actions and Risks—Individual Managers 146
Framing the Gap-Closing Issues—Groups of Managers 147
Management Preferences and Competitive Analysis 149
Summary 150
Notes 150
8 Strategy and Organization 152
Organizational Capabilities 154
Behaviour 157
Culture 158
Step 1: Identify Required Organizational Capabilities 160
Step 2: Identify Capability Gaps 162
Step 3: Develop New Organizational Capabilities 163
Organization Structure 163
Functional Structure 164
Product Organization 166
Geographic Structure 167
Matrix 168
Cellular 169
Strategic Alliances 170
Choosing a Structure 171
Management Processes 172
Decision-Making Processes 173
Operating Processes 174
Performance Assessment and Reward Processes 175
Leadership Behaviour 176
Do You Have the Right Leaders? 178
Using All Three Leverage Points 178
Step 4: Assess Feasibility 179
vi Contents
Summary 181
Notes 181
9 Strategic Choice 184
Strategy as a Dynamic Process 184
Setting Direction 184
Focusing Effort 185
Defining the Organization 185
Providing Consistency 185
Strategy as Planning 186
Strategy as Learning 190
Cognitive Biases 191
Organizational Learning and Strategic Renewal 194
Reconciling the Tensions in Strategic Renewal 195
Leadership for Strategic Renewal 198
The Practical Matter of Strategic Choice at a Point of Time 199
Summary 201
Notes 201
Additional Readings 203
10 Implementing Strategy: Change Agenda
and Starting Conditions 205
Implementing Strategic Change 205
The Change Plan 207
Change Agenda 207
Analysis of Starting Conditions 208
Urgency for Action: The Crisis Curve 208
Crisis Change 210
Anticipatory Change 212
Reactive Change 214
Organizational Readiness for Change 216
Target Group Identification 216
Target Group Readiness 217
Personal Readiness for Change 219
The View From Below 221
Summary 222
Notes 222
Additional Readings 223
11 Implementing Strategy: Guidelines and Action 224
Establishing Guidelines for Action 224
Priority Objectives 224
Behavioural Versus Non-Behavioural Objectives 224
Action Priorities 226
Contents vii
Priority Targets 226
Picking Starting Points for Action 228
Focus Versus Scope 229
Leadership Style 230
Directive Leadership 231
The Participative Style 232
Pace 233
Implementing Pace Decisions 234
Generic Guidelines 234
Crisis Change 235
Anticipatory Change 236
Reactive Change 239
Creating an Action Plan 241
Monitoring Performance 242
Summary 243
Notes 243
Additional Readings 245
Index 246
viii Contents
Preface
This book was written to complement case analysis in university and company strate-
gic management courses. It takes the point of view of the general manager and pres-
ents a consistent, operational approach to analyzing and acting on strategic problems.
Our intent is to introduce you to the breadth of material in strategic management, yet
enable you to apply it in a decision-making process. In doing so, we venture beyond
current strategic management texts to help reconcile the diversity, breadth and com-
plexity of the field.
As we point out in Chapter 1, general managers run businesses and other types of
organizations, and, while their responsibility may be for a small business, a not-for-profit,
public sector, or large corporation, they face the common challenge of guiding their
organizations to success in competitive environments. The aim of this book is to develop
the basic general management skills required to understand a business organization, sense
the opportunities and problems that it faces, deal effectively with strategic decisions, and
to set in place the people, structures, and operations to implement those decisions.
In preparing the text materials, we have concentrated on analytic concepts that con-
tribute to a practical understanding of specific strategic issues and to the translation of this
understanding into personal action. Further, we have linked these discrete concepts into
a comprehensive framework—the Diamond-E framework—to ensure that the whole of
the situation facing the business is appreciated and that priorities are set for both analysis
and action.
We have made two assumptions about our readers. First, we have assumed that
they are engaged in trying to solve strategic problems—as students of business doing
case analyses or field projects, or as managers on the job. Application and practice are
the prime vehicles for understanding the power and limitations of the concepts in this
text and, more importantly, for developing general management skills. Second, we have
assumed that our readers possess a basic understanding of the background disciplines and
functional areas of business, such as the financial analysis and marketing skills provided
in early courses in university business programs.
NEW TO THIS EDITION
The first edition of this book was published in 1986. In revising it for this eighth edition,
we have updated both the examples and recent theory that support the practical and user-
friendly aspects of the seventh edition. We have made some formatting changes to make
the book more user-friendly for readers.
Many of the changes in theory and practice in recent years have been towards frag-
mentation of concepts and pitting one approach against another. We have found this to
be counter-productive. For example, emphasizing a dynamic approach to strategy does not
Preface ix
