Formulation,

Implementation,
and Control of
Competitive
Strategy
Preface
Top Strategist
Gary Forsee, Chairman and CEO of Sprint Corporation
Gary Forsee, Chairman
and CEO of Sprint Corpo-
ration. Courtesy of Sprint
Corp.
Forsee agreed to a $35 billion merger with Nextel Com-
munications Inc. in December. Hell serve as CEO of the
combined Sprint Nextel.
This tenth edition of Formulation, Implementation, and Control of Competitive Strategy is a compre-
hensive revision designed to accommodate the needs of strategy students worldwide in our fast chang-
ing twenty-first century. These are exciting times, and they are reflected on the many new developments
in this book and the accompanying Mc-Graw-Hill supplements. This preface describes what we have
done to make the tenth edition uniquely effective in preparing students for strategic decisions in to-
morrows fast-paced global business arena. They include:
A NEW chapter dedicated to corporate social responsibility and business ethics
A NEW chapter dedicated to structuring effective 21st century organizations
NEW, extensive coverage of globalization as a central theme integrated and illustrated throughout
this book and in a separate, updated chapter of the global business environment
A major NEW section on leadership including numerous examples and illustrations that help pro-
vide practical guidelines young, emerging leaders can use
Major NEW coverage of innovation, and entrepreneurship
NEW Top Strategist Boxes highlighting the
Exhibit worlds best new leaders as strategists
2.9
Over 60 NEW BusinessWeek Strategy In Action
Give Gary D. Forsee Forsees telecom giant will have the heft to battle
credit for his vision. After Cingular Wireless LLC and Verizon Wireless and the boxes taking students from the bleachers of the
taking the reins at Sprint means to forge the broadband future. Sprint was al-
Corp. in March 2003, he ready partly there, thanks to Forsee. He struck deals Boston Red Sox to the Silicon Valley of Banga-
recognized that for his to let Virgin Mobile Telecoms Ltd., AT&T, and others
company to excel in the lease Sprints wireless network so they could market lore, India
sluggish telecom sector, services that would compete with Sprints own offer-
it would have to jettison ings. Radical? Maybe, but it got Sprint 3 million new
its image as a long- users. And he teamed with cable operators to deliver
distance provider. So residential phone service, giving Sprint access to 95%
Forsee combined Sprints Strategy in Action
of U.S. households that have phones. Thats Forsee Exhibit 2.4
wireless and wireline always willing to break with convention to win.
businesses to create a Growth Philosophy at AIM Private Asset Management Inc.
company that could pro-
KEY ACCOMPLISHMENTS
vide everything from cel-
Combined Sprints wireless tracking stockphilosophy
AIMs growth with focuses on earningsa tangi- Strive to find the best earnings growth.
lular to local phone
that of the parent company, paying the of
ble measure way for
a companys growth. Because stock prices Maintain a strong sell discipline.
service. Then, buoyed by
Sprints merger with Nextel. can gyrate widely on rumors, we use earnings to weed
a stock that had soared out high-flying speculative stocks.
Unconventional partnerships with cable operators Why growth philosophy?
50% from a year earlier,
and rival telcos added millions
In of consumers
selecting to
investments, we look for: Investment decisions are based on facts, not guesses
Sprints network. Quality earnings growthbecause we believe earn- or big-picture economic forecasts.
ings
Source: BusinessWeek January 10, 2005, p. 60.drive stock prices. Earningsnot emotionsdictate when we should
Positive earnings momentumstocks with greater buy and sell.
positive momentum will rise above the crowd. AIMs investment managers have followed the same
earnings-driven philosophy for decades.
Our growth philosophy adheres to four basic rules: This approach has proven itself in domestic and for-
eign markets.
Remain fully invested.
Focus on individual companies rather than industries, Source: AIM Private Asset Management Inc., http://sma.
sectors or countries. aiminvestments.com/
NEW coverage of the pros and cons of outsourcing and the reality of what is now a truly global
economy
15 NEW BusinessWeek end of chapter cases providing practical, interesting, contemporary appli-
cations of chapter topics
NEW coverage and illustration of franchising as a major global economic trend
NEW cases and illustration modules about companies founded and run by women and minorities
NEW chapter material, cases and illustrations examining the accelerating pace of global and tech-
nological change and its impact on companies, markets and whole industries
NEW coverage of specific companies that have responded to the need for improved business ethics
in a manner that provides solid illustration and practical guidance to future business leaders using
this book today.
NEW illustrations of renewal, growth and enhanced profitability among companies in established, ma-
ture industries including airlines, pet care, automotive, food, retail and consumer products.
Comprehensive supplemental material and industry leading e-book support.
Comprehensive website for both the student and the instructor.
vii
viii Preface

A proven model-based treatment of strategic management that allows for self-directed study, easy-
to-understand presentationin a package that represents the most cost effective book on the mar-
ket today. Professors and students receive all the advantages of the most expensive books for the
lowest price of any major text.
A proven author team that have been recognized with more than 20 research awards from various
professional organizations including five Best Paper awards from the prestigious Academy of
Management.
The tenth edition of Formulation, Implementation, and Control of Competitive Strategy is divided
into 13 chapters. They provide a thorough, state-of-the-art treatment of the critical business skills
needed to plan and manage strategic activities. While the text continues a solid academic connection,
students will find the text material to be practical, skills oriented, and relevant to their jobs and en-
trepreneurial aspirations.
We were thrilled to have access to the worlds best business publication, BusinessWeek, to create
examples, illustration modules, and a wide variety of chapter-ending cases. The result is an exten-
sively enhanced text and chapter discussion cases benefiting from hundreds of contemporary exam-
ples and illustrations provided by BusinessWeek writers worldwide. You will see BusinessWeeks
impact on our discussion case feature, our Strategy in Action modules, and our website. Of course,
we are also pleased with several hundred examples blended into the text material, which came from
recent issues of BusinessWeek or www.businessweek.com.

AN OVERVIEW OF OUR TEXT MATERIAL

The tenth edition uses a model of the strategic management process as the basis for the organization of
the text material. Previous adopters have identified this model as a key distinctive competence for our
text because it offers a logical flow, distinct elements, and an easy-to-understand guide to strategic man-
agement. The model has been modestly refined to reflect strategic analysis at different organizational
levels as well as the importance of innovation in the strategic management process. The model and par-
allel chapter organization provides a student-friendly approach to the study of strategic management.
The first chapter provides an overview of the strategic management process and explains what stu-
dents will find as they use this book. The remaining 12 chapters cover each part of the strategic man-
agement process and techniques that aid strategic analysis, decision making, implementation, control
and renewal. The literature and research in the strategic management area have developed at a rapid
pace in recent years in both the academic and business press. The tenth edition includes several up-
grades designed to incorporate major developments from both these sources. While we include cut-
ting-edge concepts, we emphasize straightforward, logical, and simple presentation so that students
can grasp these new ideas without additional reading. The following are a few of the revisions that de-
serve particular note:

A New Chapter on Corporate Social Responsibility and Business Ethics

Because of the publics heightened sensitivity to the behavior of strategic managers, we developed a
new chapter for the tenth edition that focuses on Corporate Social Responsibility and Business Ethics.
Always important in our text, we are pleased to bring these important issues into the foreground of in-
formed classroom instruction. A key feature of the new Chapter 3 is its emphasis on naming names.
We identify dozens of corporations who are taking steps to assure that their stakeholders are properly
represented in their communities and the world. Our goal is to help students to understand how Cor-
porate Social Responsibility and Business Ethics can be managed properly.

A New Chapter on Structuring Effective Organizations

The accelerating rate of change often driven by the sudden emergence of opportunities in global mar-
ket niches demanding quick decisions and immediate action places unprecedented demands on an or-
ganizations use of people and resources. Forward thinking entrepreneurs and business leaders have
responded to this new reality by crafting organizational structures that are fluid, open, virtual networks
of people, expertise and knowledge. Doing so is absolutely essential in implementing twenty-first
 Preface ix

century strategies. Chapter 11, Organizational Structure, has been created to help students understand
how to structure effective organizations in these types of market settings. We identify numerous or-
ganizations that illustrate effective structures, and explore ways to incorporate key advantages asso-
ciated with traditional organizing principles into organizational structures that are at the same time
ambidextrous, fluid, boundaryless and comprehensively responsive.

Sarbanes-Oxley in 2006 and Beyond

Responding to highly publicized corporate and executive misconduct in recent years, the Sarbanes-
Oxley Act was passed by the U.S. Congress requiring certifications for financial statements, new cor-
porate regulations, disclosure requirements, and penalties for failure to comply. Chapter 3 provides
in-depth coverage of the act, including discussions of the provisions restricting the corporate control
of executives, accounting firms, auditing committees, and attorneys. Particular attention is given to
its impact on the governance structure of American corporations, including the heightened role of cor-
porate internal auditors who now routinely deal directly with top corporate officials, after its initial
years in existence.

The Value Disciplines

A new approach to generic strategy centers on delivering superior customer value through one of three
value disciplines: operational excellence, customer intimacy, or product leadership. Companies that
specialize in one of these disciplines, while simultaneously meeting industry standards in the other
two, gain a sustainable lead in their markets. Chapter 7, Long-Term Objectives and Strategies, pro-
vides details on these approaches with several examples of successful company experiences.

Agency Theory
Of the recent approaches to corporate governance and strategic management, probably none has
had a greater impact on managerial thinking than agency theory. While the breadth and measure-
ment of its usefulness continue to be hotly debated, students of strategic management need to un-
derstand the role of agency in our free enterprise, capitalistic system. This edition presents agency
theory in a coherent and practical manner. We believe that it arms students with a cutting-edge ap-
proach to increasing their understanding of the priorities of executive decision making and strate-
gic control.

Resource-Based View of the Firm

One of the most significant conceptual frameworks to systematize and measure a firms strategic
capabilities is the resource-based view (RBV) of the firm. The RBV has received major academic and
business press attention during the last decade, helping to shape its value as a conceptual tool by
adding rigor during the internal analysis and strategic analysis phases of the strategic management
process. This edition provides a revised treatment of this concept in Chapter 6, Internal Analysis. We
present the RBV in a logical and practical manner as a central underpinning of sound strategic analy-
sis. Students will find several useful examples and a straightforward treatment of different types of
assets and organizational capabilities culminating in the ability to determine when these resources
create competitive advantage. They will see different ways to answer the question what makes a re-
source valuable? and be able to determine when that resource creates a competitive advantage in a
systematic, disciplined, creative manner.

The Outsourcing Debate

Outsourcing of jobs and functions has become a global business necessity in the majority of com-
panies in the U.S., Europe and indeed throughout the world today. It has moved from simply seeking
low cost manufacturing options to having product development, product design, and indeed core in-
novation sought by some of the worlds best known companies actually done outside that company by
x Preface

an outsourced provider. Chapter 11, Organizational Structure, along with an excellent special
BusinessWeek case, provide extensive examination of the pros and cons of outsourcing along with a
practical look at whether or not the furor over outsourcing is consistent with the reality of an inter-
connected global economy.

Leadership
Developments of the last few years that highlight corporate and executive misconduct along with the
unprecedented challenge faced by companies seeking to survive and prosper in a dynamic, constantly
changing global business environment highlight the critical need for solid leadership more than ever
before. Chapter 12, Leadership and Culture, provides a completely new examination of leadership,
the critical things that good leaders do, and a look at ways young operating managers can develop spe-
cific skills that will help them become outstanding future leaders in what will be an incredibly dy-
namic global economy.

Innovation and Entrepreneurship

In a global economy that allows everyone everywhere instant information and instant connectivity,
change often occurs at lightening speed. So leaders are increasingly looking for their firms to embrace
innovation and entrepreneurship as essential foundations from which to respond and find opportunity
in overwhelming uncertainty. Indeed this rapid change and steady uncertainty is the ideal setting
within which start-up entrepreneurs and disruptive technologies typically thrive. Chapter 13, Con-
trol, Innovation, and Entrepreneurship, examines innovation, different types of innovation, and the
best ways to bring more innovative activity into a firm. It examines the entrepreneurship process as
another way to build innovative responsiveness and opportunity recognition into a firm, both in new
venture settings and in large business organizations.

Executive Compensation
While our text has led the field in providing a practice-oriented approach to strategic management,
we have redoubled our efforts to treat topics with an emphasis on application. Our revised section on
executive compensation in Chapter 10, Implementation, is a clear example. You will find an extended
discussion of executive bonus options that provides a comparison of the relative merits of the five
most popular approaches, to include the current debate on the use, or overuse, of stock options and
the need to accurately account for their true cost.

Bankruptcy
Many revisions in this book are driven by changes in business trends. Nowhere is that more evident
than in our discussion of company bankruptcy. In the 1980s bankruptcy was treated as a last option that
precluded any future for the firm. In the first decade of the 2000s the view has dramatically changed.
Bankruptcy has been elevated to the status of a strategic option, and executives need to be well versed
in its potentials and limitations, as you will see in Chapter 7, Long-Term Objectives and Strategies.

Strategic Control
Rapid change necessitates control that is at once loose and flexible yet also tight and focused. Chap-
ter 13 examines four ways strategists create steering controls over a firms overall direction to keep
its long term objectives in focus. Conversely, operating activities and periodic review seek to dissect
performance so as to ensure efficient and effective use of company resources. Chapter 13 provides
new treatment of approaches to do this including the latest on the Balanced Scorecard approach, Six
Sigma, CCC21, continuous improvement and the evaluation of deviations in short term performance.

OUR STRATEGIC ALLIANCE WITH BUSINESSWEEK

We have long felt BusinessWeek to be the unquestionable leader among business periodicals for its
coverage of strategic issues in businesses, industries, and economies worldwide, and we are proud to
include articles which illustrate relevant and compelling examples that resonate with students and in-
structors alike.
 Preface xi

Personal surveys of collegiate faculty teaching strategic management confirmed our intuition:
While there are many outstanding business magazines and new publications, none match the consis-
tent quality found in BusinessWeek for the coverage of corporate strategies, case stories, and topics of
interest to students and professors of strategic management. Through this partnership, we get uncon-
ditional access to BusinessWeek material for this book and the use of their cutting-edge stories and
topical coverage. From our point of view, this is a unique four-way win-win; teachers, students, au-
thors, and BusinessWeek all stand to gain in many ways. The most direct way you can see the impact
of the BusinessWeek alliance is in three book features: chapter discussion cases, Strategy in Action
modules, and hundreds of examples woven into each chapters narrative.

Strategy in Action Modules

Another pedagogical feature, Strategy in Action modules, has become standard in most strategy
books. We have drawn on the work of BusinessWeek field correspondents worldwide to fill over 60
new BusinessWeek Strategy in Action modules with short, hard-hitting current illustrations of key
chapter topics. We are energized by the excitement, interest, and practical illustration value our stu-
dents tell us they provide.

Chapter Discussion Cases

As professors of strategic management, we continually look for content or pedagogical developments
and enhancements that make the strategy course more valuable. We have been concerned for some
time about a need for short cases at the end of each text chapter. So each chapter in this book is fol-
lowed by at least one short case from BusinessWeek to play a role in learning about strategic man-
agement by providing a springboard for a brief discussion of real time situations involving chapter
topics, perhaps supplemented by website and Internet-derived information. These short cases gener-
ate useful class discussions or serve as supplements and sources of variety to accompany the text ma-
terial. They are designed for self study use in the event they are not discussed in class.

OUR WEBSITE
A substantial website has been designed to aid your use of this book. It includes areas accessible only
to instructors and areas specifically designed to assist students. The instructor section includes sup-
plement files, which include detailed teaching notes and PowerPoint slides, which keep your work
area less cluttered and let you quickly obtain information. Students are provided company and re-
lated business periodical (and other) website linkages to aid and expedite their research and prepa-
ration efforts. Practice quizzes are provided to help students prepare for tests on the text material and
attempt to lower their anxiety in that regard. Access to BusinessWeek.com articles that update the
chapter discussion cases and key illustration modules in the book are provided. We expect students
will find the website useful and interesting. Please visit us at www.mhhe.com/pearce10e.

SUPPLEMENTS
Components of our teaching package include a revised, comprehensive instructors manual, test bank,
PowerPoint presentation, a large collection of videos chosen to complement many of the concepts in
the book, and a computerized test bank. These are all available to qualified adopters of the text. Pro-
fessors can also use a simulation game as a possible package with this text: the Business Strategy
Game (Thompson/Stappenbeck). The Business Strategy Game provides an exercise to help students
understand how the functional pieces of a business fit together. Students will work with the numbers,
explore options, and try to unite production, marketing, finance, and human resource decisions into
a coherent strategy.
Acknowledgments
We have benefited from the help of many people in the evolution of this project over nine
editions. Students, adopters, colleagues, reviewers, and business contacts have provided
hundreds of insightful comments, suggestions, and contributions that have progressively
enhanced this book and its supplements. We are indebted to the researchers and practicing
managers who have accelerated the development of the literature on strategic management.
Several reviewers provided feedback to us for the tenth edition. We are grateful for their
honest and compelling suggestions, which facilitated the revisions to this edition:
Henry Beam Phyllis Holland
Western Michigan University Valdosta State University
Thomas Boyle Janice Jackson
Seton Hill University Western New England College
Sam D. Cappel Patrick Langan
Southeastern Louisiana University Wartburg College
David R. Conley Jennifer Mailey
Louisiana State University at Alexandria SUNY Empire State College
Lon Doty Michael W. Pitts
University of Phoenix/San Jose State Virginia Commonwealth University
University KC Oshaughnessy
Raed Elaydi Western Michigan University
University of North CarolinaChapel Hill Greg Schultz
Mark Fox Carroll College
IUSB Cleon Wiggins
David Gilliss Park University
San Jose State University Diana Wong
William B. Hartley Eastern Michigan University
SUNY Fredonia
The development of this book through ten editions has benefited from the generous com-
mitments of time, energy, and ideas from the following colleagues. The valuable ideas, rec-
ommendations, and support from these outstanding scholars, teachers, and practitioners
have added quality to this book:
Mary Ackenhusen, INSEAD; A. J. Almaney, DePaul University; James Almeida, Fair-
leigh Dickinson University; B. Alpert, San Francisco State University; Alan Amason, Uni-
versity of Georgia; Sonny Aries, University of Toledo; Katherine A. Auer, The
Pennsylvania State University; Amy Vernberg Beekman, University of Tampa; Patricia Bi-
lafer, Bentley College; Robert Earl Bolick, Metropolitan State University; Bill Boulton,
Auburn University; Charles Boyd, Southwest Missouri State University; Jeff Bracker, Uni-
versity of Louisville; Dorothy Brawley, Kennesaw State College; James W. Bronson, Wash-
ington State University; Eric Brown, George Mason University; Robert F. Bruner,
INSEAD; William Burr, University of Oregon; Gene E. Burton, California State Univer-
sityFresno; Edgar T. Busch, Western Kentucky University; Charles M. Byles, Virginia
Commonwealth University; Jim Callahan, University of LaVerne; James W. Camerius,
Northern Michigan University; Richard Castaldi, San Francisco State University; Gary J.
Castogiovanni, Louisiana State University; Jafor Chowdbury, University of Scranton;

xiii
xiv Acknowledgments

James J. Chrisman, University of Calgary; Neil Churchill, INSEAD; J. Carl Clamp, Uni-
versity of South Carolina; Earl D. Cooper, Florida Institute of Technology; Louis Corag-
gio, Troy State University; Jeff Covin, Indiana University; John P. Cragin, Oklahoma
Baptist University; Larry Cummings, Northwestern University; Peter Davis, University of
Memphis; William Davis, Auburn University; Julio DeCastro, University of Colorado;
Kim DeDee, University of Wisconsin; Philippe Demigne, INSEAD; D. Keith Denton,
Southwest Missouri State University; F. Derakhshan, California State UniversitySan
Bernardino; Brook Dobni, University of Saskatchewan; Mark Dollinger, Indiana Univer-
sity; JeanChristopher Donck, INSEAD; Max E. Douglas, Indiana State University; Yves
Doz, INSEAD; Julie Driscoll, Bentley College; Derrick Dsouza, University of North Texas;
Thomas J. Dudley, Pepperdine University; John Dunkelberg, Wake Forest University;
Soumitra Dutta, INSEAD; Harold Dyck, California State University; Norbert Esser, Cen-
tral Wesleyan College; Forest D. Etheredge, Aurora University; Liam Fahey, Babson Col-
lege; Mary Fandel, Bentley College; Mark Fiegener, University of WashingtonTacoma;
Calvin D. Fowler, Embry-Riddle Aeronautical University; Debbie Francis, Jacksonville
State University; Elizabeth Freeman, Southern Methodist University; Mahmound A. Ga-
balla, Mansfield University; Donna M. Gallo, Boston College; Diane Garsombke, Brenau
University; Betsy Gatewood, Wake Forest University; Bertrand George, INSEAD; Michael
Geringer, Southern Methodist University; Manton C. Gibbs, Indiana University of Penn-
sylvania; Nicholas A. Glaskowsky, Jr., University of Miami; Tom Goho, Wake Forest Uni-
versity; Jon Goodman, University of Southern California; Pradeep Gopalakrishna, Hofstra
University; R. H. Gordon, Hofstra University; Barbara Gottfried, Bentley College; Peter
Goulet, University of Northern Iowa; Walter E. Greene, University of TexasPan Ameri-
can; Sue Greenfeld, California State UniversitySan Bernardino; David W. Grigsby,
Clemson University; Daniel E. Hallock, St. Edwards University; Don Hambrick, Pennsyl-
vania State University; Barry Hand, Indiana State University; Jean M. Hanebury, Texas
A&M University; Karen Hare, Bentley College; Earl Harper, Grand Valley State Univer-
sity; Samuel Hazen, Tarleton State University; W. Harvey Hegarty, Indiana University; Ed-
ward A. Hegner, California State UniversitySacramento; Marilyn M. Helms, Dalton
State College; Lanny Herron, University of Baltimore; D. Higginbothan, University of
Missouri; Roger Higgs, Western Carolina University; William H. Hinkle, Johns Hopkins
University; Charles T. Hofer, University of Georgia; Alan N. Hoffman, Bentley College;
Richard Hoffman, Salisbury University; Eileen Hogan, Kutztown University; Phyllis G.
Holland, Valdosta State University; Gary L. Holman, St. Martins College; Don Hopkins,
Temple University; Cecil Horst, Keller Graduate School of Management; Mel Horwitch,
Theseus; Henry F. House, Auburn UniversityMontgomery; William C. House, University
of ArkansasFayetteville; Frank Hoy, University of TexasEl Paso; Warren Huckabay,
Sammamish, WA; Eugene H. Hunt, Virginia Commonwealth University; Tammy G. Hunt,
University of North CarolinaWilmington; John W. Huonker, University of Arizona;
Stephen R. Jenner, California State University; Shailendra Jha, Wilfrid Laurier Univer-
sityOntario; C. Boyd Johnson, California State UniversityFresno; Troy Jones, Univer-
sity of Central Florida; Jon Kalinowski, Mankato State University; Al Kayloe, Lake Erie
College; Michael J. Keefe, Southwest Texas State University; Kay Keels, Brenau Univer-
sity; James A. Kidney, Southern Connecticut State University; John D. King, Embry-Rid-
dle Aeronautical University; Raymond M. Kinnunen, Northeastern University; John B.
Knauff, University of St. Thomas; Rose Knotts, University of North Texas; Dan Kopp,
Southwest Missouri State University; Michael Koshuta, Valparaiso University; Jeffrey A.
Krug, The University of Illinois; Myroslaw Kyj, Widener University of Pennsylvania; Dick
LaBarre, Ferris State University; Joseph Lampel, City UniversityLondon; Ryan Lan-
caster, The University of Phoenix; Sharon Ungar Lane, Bentley College; Roland Larose,
 Acknowledgments xv

Bentley College; Anne T. Lawrence, San Jose State University; Joseph Leonard, Miami
UniversityOhio; Robert Letovsky, Saint Michaels College; Michael Levy, INSEAD; Ben-
jamin Litt, Lehigh University; Frank S. Lockwood, Western Carolina University; John Lo-
gan, University of South Carolina; Sandra Logan, Newberry College; Jean M. Lundin,
Lake Superior State University; Rodney H. Mabry, Clemson University; Donald C. Malm,
University of MissouriSt. Louis; Charles C. Manz, University of Massachusetts; John
Maurer, Wayne State University; Denise Mazur, Aquinas College; Edward McClelland,
Roanoke College; Bob McDonald, Central Wesleyan College; Patricia P. McDougall, Indi-
ana University; S. Mehta, San Jose State University; Ralph Melaragno, Pepperdine Uni-
versity; Richard Merner, University of Delaware; Linda Merrill, Bentley College; Timothy
Mescon, Kennesaw State College; Philip C. Micka, Park College; Bill J. Middlebrook,
Southwest Texas State University; Robert Mockler, St. Johns University; James F. Molly,
Jr., Northeastern University; Cynthia Montgomery, Harvard University; W. Kent Moore,
Valdosta State University; Jaideep Motwani, Grand Valley State University; Karen Mullen,
Bentley College; Gary W. Muller, Hofstra University; Terry Muson, Northern Montana
College; Daniel Muzyka, INSEAD; Stephanie Newell, Eastern Michigan University;
Michael E. Nix, Trinity College of Vermont; Kenneth Olm, University of TexasAustin;
Benjamin M. Oviatt, Georgia State University; Joseph Paolillo, University of Mississippi;
Gerald Parker, St. Louis University; Paul J. Patinka, University of Colorado; James W.
Pearce, Western Carolina University; Michael W. Pitts, Virginia Commonwealth Univer-
sity; Douglas Polley, St. Cloud State University; Carlos de Pommes, Theseus; Valerie J.
Porciello, Bentley College; Mark S. Poulous, St. Edwards University; John B. Pratt, Saint
Josephs College; Oliver Ray Price, West Coast University; John Primus, Golden Gate Uni-
versity; Norris Rath, Shepard College; Paula Rechner, California State UniversityFresno;
Richard Reed, Washington State University; J. Bruce Regan, University of St. Thomas; H.
Lee Remmers, INSEAD; F. A. Ricci, Georgetown University; Keith Robbins, Winthrop
University; Gary Roberts, Kennesaw State College; Lloyd E. Roberts, Mississippi College;
John K. Ross III, Southwest Texas State University; George C. Rubenson, Salisbury State
University; Alison Rude, Bentley College; Les Rue, Georgia State University; Carol Rugg,
Bentley College; J. A. Ruslyk, Memphis State University; Ronald J. Salazar, Human Skills
Management, LLC; Bill Sandberg, University of South Carolina; Uri Savoray, INSEAD;
Jack Scarborough, Barry University; Paul J. Schlachter, Florida International University;
David Schweiger, University of South Carolina; John Seeger, Bentley College; Martin
Shapiro, Iona College; Arthur Sharplin, McNeese State University; Frank M. Shipper, Sal-
isbury State University; Rodney C. Shrader, University of Illinois; Lois Shufeldt, South-
west Missouri State University; Bonnie Silvieria, Bentley College; F. Bruce Simmons III,
The University of Akron; Mark Simon, Oakland University; Michael Skipton, Memorial
University; Fred Smith, Western Illinois University; Scott Snell, Michigan State Univer-
sity; Coral R. Snodgrass, Canisius College; Rudolph P. Snowadzky, University of Maine;
Neil Snyder, University of Virginia; Melvin J. Stanford, Mankato State University; Ro-
muald A. Stone, DeVry University; Warren S. Stone, Virginia Commonwealth University;
Ram Subramanian, Grand Valley State University; Paul M. Swiercz, George Washington
University; Robert L. Swinth, Montana State University; Chris Taubman, INSEAD; Rus-
sell Teasley, Western Carolina University; James Teboul, INSEAD; George H. Tompson,
University of Tampa; Melanie Trevino, University of TexasElPaso; Howard Tu, Univer-
sity of Memphis; Craig Tunwall, Empire State College; Elaine M. Tweedy, University
of Scranton; Arieh A. Ullmann, Binghamton University; P. Veglahn, James Madison
University; George Vozikis, University of Tulsa; William Waddell, California State Uni-
versityLos Angeles; Bill Warren, College of William and Mary; Kirby Warren, Columbia
University; Steven J. Warren, Rutgers University; Michael White, University of Tulsa;
xvi Acknowledgments

Randy White, Auburn University; Sam E. White, Portland State University; Frank Win-
frey, Lyon College; Joseph Wolfe, Experiential Adventures; Robley Wood, Virginia Com-
monwealth University; Edware D. Writh, Jr., Florida Institute of Technology; John Young,
University of New Mexico; S. David Young, INSEAD; Jan Zahrly, Old Dominion Univer-
sity; and Alan Zeiber, Portland State University.
We are affiliated with two separate universities, both of which provide environments that
deserve thanks. As the Endowed Chair of the College of Commerce and Finance at Vil-
lanova University, Jack is able to combine his scholarly and teaching activities with his
coauthorship of this text. He is grateful to Villanova University and his colleagues for the
support and encouragement they provide.
Richard appreciates the support provided within the Moore School of Business by Mr.
Dean Kress. Mr. Kress provides multifaceted assistance on projects, classes, and research
that leverages the scope of what can be accomplished each year. Moore School colleagues
in the management department along with Dean Joel Smith and Program Director Brian
Klass provide encouragement while staff members Cheryl Fowler, Susie Gorsage, and
Carol Lucas provide logistical support for which Richard is grateful.
Leadership from McGraw-Hill/Irwin deserves our utmost thanks and appreciation. Ger-
ald Saykes got us started and gave continued support. John Black, John Biernat and Craig
Beytein too. Kelly Lowerys editorial leadership has enhanced our quality and success. Ed-
itorial assistance from Natalie Ruffatto and production assistance from Marlena Pechan
helped this to become a much better book. The Irwin/McGraw-Hill field organization de-
serves particular recognition and thanks for the success of this project.
We also want to thank BusinessWeek, which is proving to be an excellent strategic partner.
We hope that you will find our book and ancillaries all that you expect. We welcome your
ideas and recommendations about our material, and we wish you the utmost success in
teaching and studying strategic management.
Dr. John A. Pearce II Dr. Richard Robinson
College of Commerce and Finance Moore School of Business
Villanova University University of South Carolina
Villanova, PA 190851678 Columbia, SC 29208