Strategic Management

Full contents
List of figures and tables
xviii
Preface
Part
Part
Part
Part
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xxii
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xxiii
xxiii
I: The context and environment of strategic management

II: Strategic management in practice
III: Key priorities in strategic management
IV: The development of strategic management
Acknowledgements
xxiv
PART I
The context and environment of strategic management
1
Introduction
Introduction
Strategy and strategic management
CONTEMPORARY INSIGHT 1.1 Faddish Approaches to Business Policy
Economic and environmental pressures
CONTEMPORARY INSIGHT 1.2 Frozen Foods
CONTEMPORARY INSIGHT 1.3 International Airlines
CONTEMPORARY INSIGHT 1.4 Swatch
CONTEMPORARY INSIGHT 1.5 The Millennium Dome
CONTEMPORARY INSIGHT 1.6 World Class
CONTEMPORARY INSIGHT 1.7 A Bridge Too Far: the Arnhem Landings 1944
Trading conditions
Received wisdom
CONTEMPORARY INSIGHT 1.8 Marks & Spencer and Clothes Manufacture
in Scotland
CONTEMPORARY INSIGHT 1.9 The Body Shop
The broader context
Conclusions
WORK ASSIGNMENTS AND DISCUSSION QUESTIONS
Further reading
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2
Strategic thinking
23
Introduction
The professionalisation of management
The components and discipline of strategic thinking
CONTEMPORARY INSIGHT 2.1 The Glaxo and SmithKline Merger 1999
CONTEMPORARY INSIGHT 2.2 The Dot.com Revolution
CONTEMPORARY INSIGHT 2.3 The Finances of the Construction of the
Channel Tunnel
CONTEMPORARY INSIGHT 2.4 Redundancy, Redeployment and Restructuring
CONTEMPORARY INSIGHT 2.5 If you want what you expect, go to McDonalds
CONTEMPORARY INSIGHT 2.6 Caterpillar and Komatsu
CONTEMPORARY INSIGHT 2.7 Barbie
CONTEMPORARY INSIGHT 2.8 Rail Travel in the UK in the 21st Century
CONTEMPORARY INSIGHT 2.9 At the Bank
CONTEMPORARY INSIGHT 2.10 Projections and Forecasts in the Air Travel Sector
CONTEMPORARY INSIGHT 2.11 Care in the Community
CONTEMPORARY INSIGHT 2.12 Christmas Fads
CONTEMPORARY INSIGHT 2.13 Milliken and Co.
CONTEMPORARY INSIGHT 2.14 The Strategic Base of the Virgin Organisation
CONTEMPORARY INSIGHT 2.15 The Strategic Base of SEMCO
CONTEMPORARY INSIGHT 2.16 Healthcare in the UK and Stakeholder Interests
Conclusions
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Further reading
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The nature of competition
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Introduction
Competition
Further reading
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Analysing the environment
73
Introduction
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Competing with Whom: Competing for What?

The competitive environment
Rivalry
CONTEMPORARY INSIGHT 3.2 Innovate or Die
Opportunities and concerns
Competitive positioning
The threat of entry and entry barriers
CONTEMPORARY INSIGHT 3.3 Railway Maintenance Work
Exit barriers
Conclusions
CONTEMPORARY INSIGHT 3.1
Primary and Other Beneficiaries

The SPECTACLES approach
Strengths, weaknesses, opportunities, threats: SWOT analysis
Social, technological, economic, political: STEP analysis
Industry structure analysis
CONTEMPORARY INSIGHT 4.2 The Bargaining Power of Buyers
Cost analyses
CONTEMPORARY INSIGHT 4.3 Cost Management and Pricing Policies
Full contents
Costbenefit analysis
Value analysis
Further reading
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The foundations of competitive strategy
98
Value Criteria for Low-cost Air Travel Sector

Loss of Value and External Reporting
CONTEMPORARY INSIGHT 4.6 The Body Shop as Model Employer
Conclusions
CONTEMPORARY INSIGHT 4.7 Failure to Analyse the Environment: Examples
Introduction
The work of Michael Porter
CONTEMPORARY INSIGHT 5.1 Top Brands
Johnson and Scholes
CONTEMPORARY INSIGHT 5.2 Value-added Strategies in the Restaurant Sector
CONTEMPORARY INSIGHT 5.3 Declining Market Position at
Sainsburys Supermarkets
Cost advantage
Differentiation strategies
CONTEMPORARY INSIGHT 5.4 Differentiation and Price in the Butter Sector
Focus strategies
Incremental strategies
Radical strategies
Offensive and defensive strategies
Key factors
CONTEMPORARY INSIGHT 5.5 Location and Branding
CONTEMPORARY INSIGHT 5.6 Utility Watchdogs and Price
CONTEMPORARY INSIGHT 5.7 Pret a Manger
Conclusions
Further reading
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PART II
Strategic management in practice
125
Strategic management in practice
127
Introduction
Gaining commitment
Activities
Making strategic decisions and choices
Critical success factors
CONTEMPORARY INSIGHT 6.1 Examples of Critical Factors
Harmonisation of activities
Resource allocation
Control mechanisms and activities
Critical paths and networks
Monitoring and review processes
Organisation design and characteristics
CONTEMPORARY INSIGHT 6.2 The Time Clock
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Full contents
Human resources
140
Human Resource Management Strategy
at Sanyo UK
Marketing
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CONTEMPORARY INSIGHT 6.4 Marketing Strategies at Eurostar
143
Purchasing and supply
144
CONTEMPORARY INSIGHT 6.5 The Supply of Aggregates to the Building Industry 145
Distribution
146
CONTEMPORARY INSIGHT 6.6 Distribution Strategies at British Bakeries
146
Strategic drift
147
Other problems in development and implementation
149
CONTEMPORARY INSIGHT 6.7 Investment at Mitsubishi
151
CONTEMPORARY INSIGHT 6.8 The Involvement of Unions as Stakeholders
151
Projections of success
152
Conclusions
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153
Further reading
154
Investment appraisal
155
Introduction
Context
A strategic management consideration of investment appraisal
CONTEMPORARY INSIGHT 7.1 UK Supermarkets and Profiteering
CONTEMPORARY INSIGHT 7.2 Taittinger Champagne
Behavioural aspects of investment appraisal
CONTEMPORARY INSIGHT 7.3 Errol Flynn
Investment appraisal and risk
CONTEMPORARY INSIGHT 7.4 Investment Appraisal and Risk in the Cosmetics
Industry: Henkel, Procter & Gamble, Wella
Success and failure
CONTEMPORARY INSIGHT 7.5 Examples of Success or Failure
Timescales
CONTEMPORARY INSIGHT 7.6 Ins and Outs of Adding Value
CONTEMPORARY INSIGHT 7.7 De Havilland Comet
Priorities
Investment appraisal and decision-making processes
CONTEMPORARY INSIGHT 7.8 Rebuilding Iraq
CONTEMPORARY INSIGHT 7.9 Make/Buy Decisions in the Garment Industry
CONTEMPORARY INSIGHT 7.10 Problems and Issues with Outsourcing
CONTEMPORARY INSIGHT 7.11 Fair Trade
Conclusions
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Further reading
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Strategic management of market segments
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Introduction
Social segmentation
Demographic segmentation
CONTEMPORARY INSIGHT 8.1 Barbie
Economic segmentation
Segmentation by buying patterns
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Full contents
Personality
Further reading
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Strategic management of customers and clients
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Introduction
Further reading
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Strategic management of products and services
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Introduction
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Celebrities Identity and Segmentation
Quality
CONTEMPORARY INSIGHT 8.3 The Multipurpose Vehicle Sector
Nature of products and services
Core business
CONTEMPORARY INSIGHT 8.4 Barbie and Manufacturing
CONTEMPORARY INSIGHT 8.5 Richard Branson and the Virgin Brand
CONTEMPORARY INSIGHT 8.6 Core Business and Single Customers: Examples
CONTEMPORARY INSIGHT 8.7 Abbey National
The core customer
Core image
Peripheral business
CONTEMPORARY INSIGHT 8.8 Publishing
Conclusions
Sales of Fresh Fish

CONTEMPORARY INSIGHT 9.2 Customer and Client Analyses at Tesco
Customer and client analyses
CONTEMPORARY INSIGHT 9.3 Competing on Price in the Building Industry
CONTEMPORARY INSIGHT 9.4 The Cinema
CONTEMPORARY INSIGHT 9.5 Variations in Customer and Client Behaviour
CONTEMPORARY INSIGHT 9.6 Convenience and the Use of Call Centres
Managing customer and client relationships
CONTEMPORARY INSIGHT 9.7 Too Important to Speak to Me
CONTEMPORARY INSIGHT 9.8 Technology Fails the Customer
CONTEMPORARY INSIGHT 9.9 Sealink
CONTEMPORARY INSIGHT 9.10 Marks & Spencer
CONTEMPORARY INSIGHT 9.11 Handling Contentious Issues
Conclusions
10
Products and Services in Context: Examples

Matching capability, resources and demands
CONTEMPORARY INSIGHT 10.2 Madame Tussauds
CONTEMPORARY INSIGHT 10.3 Tetleys Tea
Products and services
CONTEMPORARY INSIGHT 10.4 Product Life Cycle Illustration
CONTEMPORARY INSIGHT 10.5 The Life of Products and Services:
the Fire Allegory
Analysing competitors
CONTEMPORARY INSIGHT 10.6 The Mercenary Relationship Between
Customers and Brands
A note on alternatives
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Alternative Purchases in the Public
Transport Sector
Conclusions
Further reading
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PART III
The development of strategic management
235
11
Managing change
237
Introduction
Reasons for change
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Redundancies and Lay-offs

The Branding of Change Management:
TQM and BPR

GEC
CONTEMPORARY INSIGHT 11.4 National Training Initiatives
Specific issues in the management of change
Barriers to change
Sources of power and influence
CONTEMPORARY INSIGHT 11.5 I Am the Boss. I Can Do as I Like
Strategic approaches to the management of change
CONTEMPORARY INSIGHT 11.6 The Proposed Merger of University College
London and Imperial College
CONTEMPORARY INSIGHT 11.7 Shortcomings in the Unfreezing Approach
to Change
CONTEMPORARY INSIGHT 11.8 Ten Commandments for Executing Change
Change catalysts and change agents
CONTEMPORARY INSIGHT 11.9 The Expertise of the Change Agent
CONTEMPORARY INSIGHT 11.10 Changes in Local Government
Conclusions
252
Further reading
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Strategic management and organisation structure
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Introduction
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easyJet
Structural forms
Cancer Research Campaign

Management Problems in Tree and
Pyramid Structures
Centralisation and decentralisation
The role and function of head office
Structural relationships
Core and peripheral organisations
CONTEMPORARY INSIGHT 12.4 Counting the Cost
CONTEMPORARY INSIGHT 12.5 Airbus Industrie
CONTEMPORARY INSIGHT 12.6 Cleaning Contracts in Public Service Institutions
Keiretsu and chaebol
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Full contents
Further reading
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Strategic approaches to risk management
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Introduction
292
Managing in Chinese Cultures
Conclusions
13
The Greater the Risk, the Greater
the Reward Myth

Components of risk assessment
CONTEMPORARY INSIGHT 13.2 London Congestion Charge
CONTEMPORARY INSIGHT 13.3 Cain and Glow Ltd
CONTEMPORARY INSIGHT 13.4 Wawel Magazine
Risk analysis
Spreading the risk
CONTEMPORARY INSIGHT 13.5 Manchester United Football Club
Risk and sensitivity
What if? approaches
CONTEMPORARY INSIGHT 13.6 Investment Opportunities in Serbia in
the 21st Century
Duration
Payback and returns
CONTEMPORARY INSIGHT 13.7 The Payback Method
Size, scope and scale of markets
CONTEMPORARY INSIGHT 13.8 Lockheed
CONTEMPORARY INSIGHT 13.9 Excuses for Failure
CONTEMPORARY INSIGHT 13.10 Failure and the Football Industry
Crises
CONTEMPORARY INSIGHT 13.11 Private Prisons
Conclusions
Further reading
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Strategic management and ethics
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Introduction
Obligations to stakeholders
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Cadbury
Models and frameworks

Ethics and Language
The model employer

Trappings
The Model Employer and Staff Involvement
Corporate citizenship
Chernobyl and Other Issues in Central and
Eastern Europe
Clean-up
CONTEMPORARY INSIGHT 14.7 Redlining
Conclusions
CONTEMPORARY INSIGHT 14.8 Accidents and Disasters
Further reading
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Full contents
15
Strategic performance management
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Introduction
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Band Aid and Live Aid

Prerequisites for successful performance
CONTEMPORARY INSIGHT 15.2 Gaining the Support of Stakeholders
Components of successful performance
CONTEMPORARY INSIGHT 15.3 Dinner in Belfast
CONTEMPORARY INSIGHT 15.4 Never Promise What You Cannot Deliver
Forecasting, extrapolation and inference
Aims and objectives
CONTEMPORARY INSIGHT 15.5 Public Standing
Performance gaps
CONTEMPORARY INSIGHT 15.6 The Turnover Target
Performance development
CONTEMPORARY INSIGHT 15.7 Performance Development at Unilever
Conclusions
Further reading
PART IV
Enduring priorities in strategic management
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16
Leadership
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Introduction
Attitudes
Further reading
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Organisation development
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Introduction
Organisation development
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Status, Prestige and Expertise

Spring 2003
Roles
Leader as Champion
Role Models
CONTEMPORARY INSIGHT 16.5 Time Out
CONTEMPORARY INSIGHT 16.6 Concorde
Functions
Traits and characteristics
CONTEMPORARY INSIGHT 16.7 Leadership
CONTEMPORARY INSIGHT 16.8 The Reality of Leadership
Leadership styles
CONTEMPORARY INSIGHT 16.9 Varying the Style: Examples
Succession and continuity
CONTEMPORARY INSIGHT 16.10 New Brooms
Conclusions
17
and Work
Structure and culture
High Wages for High Levels of Commitment

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Full contents
Organisation and Management Development
at the BBC
Key and Other Characteristics
CONTEMPORARY INSIGHT 17.4 OD Initiatives at the Metropolitan Police
CONTEMPORARY INSIGHT 17.5 Appropriateness and Effectiveness in Banking
and Financial Services
CONTEMPORARY INSIGHT 17.6 Name Changes: Examples
Communication and information flows
CONTEMPORARY INSIGHT 17.7 Failure to Communicate at Pan-Am
CONTEMPORARY INSIGHT 17.8 Empathy and Understanding
CONTEMPORARY INSIGHT 17.9 Communications and Strategic
Management: Examples
Organisation development and product and service performance
CONTEMPORARY INSIGHT 17.10 Harvester Restaurants
CONTEMPORARY INSIGHT 17.11 Sandals Weddings
Conclusions
Further reading
Strategic management development
407
Introduction
The body of knowledge and expertise
The scope of management development
CONTEMPORARY INSIGHT 18.1 Browns Fruit and Vegetables Ltd
Strategic basis for management development
CONTEMPORARY INSIGHT 18.2 Stew Leonard
CONTEMPORARY INSIGHT 18.3 Developing Effective Management in
Bureaucracies
CONTEMPORARY INSIGHT 18.4 Attitudinal Development and Transformation
at Sony
CONTEMPORARY INSIGHT 18.5 Lincoln Electric
CONTEMPORARY INSIGHT 18.6 Action Learning in Practice at Greenwood plc
CONTEMPORARY INSIGHT 18.7 The Future of Executive Coaching
CONTEMPORARY INSIGHT 18.8 Pay and Conditions for Top Managers
CONTEMPORARY INSIGHT 18.9 The Appointment of Key Figures at
GlaxoSmithKline
CONTEMPORARY INSIGHT 18.10 360o Appraisal at Unilever
CONTEMPORARY INSIGHT 18.11 Continuous Development Needs in
Some Professions
Developing key figures
Conclusions
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Further reading
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Strategic management and globalisation
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Introduction
Global influence
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Lastminute.com
A Historic View of Globalisation
The axis of globalisation

Nissan
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Full contents
Resources, expertise, capability and willingness
CONTEMPORARY INSIGHT 19.4 Following the Logo Trail
Strategies for globalisation
CONTEMPORARY INSIGHT 19.5 Developing Further Opportunities
CONTEMPORARY INSIGHT 19.6 Marks & Spencer and the Sell-off of Brooks
Dominance and dependence
CONTEMPORARY INSIGHT 19.7 Comparing and Contrasting Dominant Employers
Culture and behaviour
CONTEMPORARY INSIGHT 19.8 Specific Local Issues
Responsibility
Strategic thinking
CONTEMPORARY INSIGHT 19.9 The Good, the Bad and the Ugly
Leadership
Conclusions
Further reading
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The strategic management of public services
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Introduction
Generic strategy
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20
Airport Developments in the London

Region in the Early 21st Century
Issues surrounding the cost focus position
CONTEMPORARY INSIGHT 20.2 The Complexities of Managing Public Services:
Employment in the NHS
CONTEMPORARY INSIGHT 20.3 West London Hospital
CONTEMPORARY INSIGHT 20.4 Highway and Footpath Repairs
CONTEMPORARY INSIGHT 20.5 Crossrail
CONTEMPORARY INSIGHT 20.6 Other Approaches to Service Delivery
CONTEMPORARY INSIGHT 20.7 Falling NHS Waiting Lists in 2003
Customer and client analyses in public services
CONTEMPORARY INSIGHT 20.8 Body Armour for Nurses
CONTEMPORARY INSIGHT 20.9 Train Times
Financial management in public services
Managing performance in public services
CONTEMPORARY INSIGHT 20.10 The Use and Value of Precise Targets in
Public Services
Privatisation and restructuring
CONTEMPORARY INSIGHT 20.11 Criticisms of the Political Reasons
for Privatisation
Management development in public services
Conclusions
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Further reading
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Conclusions
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Introduction
E-business
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AIDA
A Glamorous Mess
CONTEMPORARY INSIGHT 21.3 NHS Online
Full contents
Mergers and acquisitions
Job and Work Evaluation
CONTEMPORARY INSIGHT 21.5 Lines of Reasoning in Merger and
Acquisition Activities
CONTEMPORARY INSIGHT 21.6 Why University Mergers do not Work
Knowledge, talent and expertise
CONTEMPORARY INSIGHT 21.7 Managing Working Conditions
CONTEMPORARY INSIGHT 21.8 Pragmatic or Expedient?
From management to leadership
CONTEMPORARY INSIGHT 21.9 Masters of the Universe
CONTEMPORARY INSIGHT 21.10 Clarity of Vision and Purpose: Accor
CONTEMPORARY INSIGHT 21.11 The Exclusion of Particular Stakeholder Needs:
Examples
CONTEMPORARY INSIGHT 21.12 The Case of GlaxoSmithKline
CONTEMPORARY INSIGHT 21.13 BT and its Indian Call Centres
Conclusions
Further reading
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Bibliography
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Index
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xv
PA R T
The context and I

environment of
strategic
management
CHAPTER
Introduction 1
CHAPTER OUTLINE
The relationship between business strategy, policy, direction and priorities
and strategic management

Responses to events and lessons to be learned
The nature and context of trading conditions
The need to question received wisdom
An introduction to the full context in which activities take place
KEY HEADINGS
Strategy and strategic management

Trading conditions
The broader context
CHAPTER OBJECTIVES
After studying this chapter, you should be able to:
understand the broad context in which strategic management takes place

understand the need to be able to operate within this context
understand the ways in which different organisations respond to
circumstances, both inside and outside their control
understand the advantages and shortcomings of the different approaches
Contemporary Strategic Management
INTRODUCTION
Corporate strategy is concerned with directing and guiding the inception and
growth of organisations, and the changes that occur as they conduct their activities.
Clearly understood strategy is at the core of all successful commercial and public
service activities. Indeed, where success is not forthcoming, this is invariably
because clarity and understanding are missing.
Corporate strategy, business and public service policy and strategic management
are all concerned with reconciling the need for organisational stability and continuity in a turbulent, commercial and public service world. Conflicting demands for
resources must be reconciled. Priorities must be established and agreed. Different
resources capital, premises, technology, information and expertise must be
secured in ways that ensure that the best possible return on their acquisition and
usage is achieved.
S T R AT E G Y A N D S T R AT E G I C M A N A G E M E N T
The main priority of organisation strategy and strategic management is to secure
the long-term future of the organisation. This is possible only if products and
services are made available at the right price and quality, and in the volumes and
locations required by those who are to use and consume them. Organisations, and
their managers, must be able to achieve this in the context of the present range and
state of activities, and also in terms of past history and traditions, and future expectations and aspirations.
It is much easier to do this if purpose, aims and objectives are expressed clearly
and understood by all concerned. Organisations, and their senior managers, must
therefore be clear in their own minds about strategy, policies, priorities, direction,
aims and objectives. This involves being able to see:
markets: size, scope, volume, permanence/transience, location; and also in terms

of development, both positive and negative
products and services: past, present and envisaged future ranges; and the benefits
and value brought to the markets
the supply side: ensuring access to the nature and volume of supplies (including
the supply of information) required in order to be able to produce the product
and service volumes necessary to keep the markets satisfied
staff and expertise: ensuring an adequate supply of the necessary expertise in
terms of both volume and quality; and taking steps to develop this once people
are employed
technology: access to production, service delivery, administrative and support
technology; and access to the expertise required to maximise the returns on
what has been invested.
Universal clarity and understanding at the outset are vital. Both the commercial
and public service worlds are competitive. For everything there is always the option
Introduction
to refuse. If customers and clients are not quite certain about what an organisation
has to offer them, they will take their business to companies and service providers
that set out their stalls clearly. Potential staff members are attracted by the certainty
of what is on offer for them at particular organisations and, again, tend not to
pursue their interest in working for someone who is not clear in these ways if they
have any choice in the matter. Suppliers also want to be certain that an organisation with whom they do business is going to be able to pay its way.
This is the background against which all organisations decide and determine their
activities. Activities must then be matched and harmonised with the environment,
resource and expertise capacity and capability; and within resource and other environmental and operational constraints. Effective activities must also accord with
the expectations and values of everyone involved, and this includes the communities in which activities are located (see Contemporary insight 1.1).
Contemporary insight 1.1
Faddish Approaches to Business Policy

Strategic management is complex, requiring distinctive expertise in a variety of fields.
This has led many organisations at present, and in the recent past, to adopt prescribed
approaches to organisation, product and service development, rather than tackling the
full complexities themselves.
Management thinkers are rubbishing those fashionable ideas that until recently were
hyped to the skies. Take the following quotes:
One of the stickiest issues today is how to clean up the mess created by an illconsidered rush into family-friendly workplaces.
You can overdo knowledge sharing.
First mover advantage is a myth.
The business model approach to management taken by internet players
becomes an invitation for faulty thinking and self-delusion.
Each of these approaches has a superficial attractiveness, because each is so simple.

However, each deals in general terms only. While these approaches imply the need for
high levels of expertise and attention to detail, these are not stated explicitly. In many
cases, such approaches become a substitute for clear direction and a replacement
(rather than encouragement) for the necessary attention to detail.
Michael Porter, Professor of Strategy at Harvard Business School, tells us to forget first
mover advantage, forget partnering, forget business models, chuck out words like
e-business and e-strategy. It is time to retire the phrases old and new economy to
reduce the confusion that has been so destructive of economic value in recent years.
The fundamentals of competition remain unchanged.
Sources: A. Eadie (22 February 2001) Management matters, Daily Telegraph; M.E. Porter
(1996) Strategy and the Internet Harvard University Press
E C O N O M I C A N D E N V I R O N M E N TA L P R E S S U R E S
All organisations have to work within the constraints present in their particular
sphere. The initial demand, therefore, is to understand the nature and influence of
these constraints upon the clarity, consistency and complexity indicated above.
The main constraints are as follows:
1.
2.
The present and envisaged state of the macroeconomy. This includes understanding the actual, likely and possible effects on activities of changes in
currency values, interest rates and economic confidence. This in turn affects
the activities and perceptions of customers, clients and suppliers. Customer
bases in particular are influenced to increase or reduce their propensity to
spend through a combination of general levels of prosperity, believed and
perceived collective and individual confidence, and the availability or otherwise of credit, as well as the range and nature of products and services
on offer.
The price of primary commodities of energy, telecommunications and information affects all activities. It is also essential that organisations understand the
actual, likely and potential effects of changes in these on customer and
consumer behaviour. Increases in costs have normally to be passed on to
customers and consumers, and this in turn is likely to affect the actual and
perceived value of the particular goods and services. Those responsible for the
strategic management of organisations need to be able to understand the
following in their own specific context:
the cost of oil, electricity and information may rise but their availability may
not be affected, so that they remain available in the desired volumes but at
an increased price
the cost of these commodities may rise as the result of reductions in availability or output
reductions in availability and/or output can sometimes mean that these
commodities are not available at any price in the required or desired
volumes
reductions in prices of these commodities do not necessarily lead to their
wider availability or access; for example, in California in 200102, reductions
in electricity prices led, in turn, to reductions of the volume of electricity
produced, because the companies responsible for electricity production could
not afford to increase output
increases in the availability of information and telecommunications services
may be at the expense of quality of provision; and organisations may in turn
find themselves paying increased prices for the quality desired in what is an
overtly expanding market
presumptions of the availability of energy, telecommunications and information services should never be taken at face value; those responsible for
the strategic management of organisations must always be aware of things
that can go wrong, that can, and do, disrupt these provisions.
Introduction
More generally, it is vital that organisations understand where their particular
products and services feature in the priority order of customers, consumers and
clients. Downturns in economic activity, upturns in interest rates and unemployment all affect the demand for products and services. Customers and consumers
reprioritise their needs and wants according to these pressures. Organisations must
therefore fully understand those factors and features which ensure that customers
and clients keep coming to them; and when downturns do occur, those responsible
for strategic management should at least understand the likely and possible range
of effects and consequences for their business.
Economic pressures on the supply side

Fluctuations in economic activity cause variations in demand for finished products
and services. This, by implication, indicates fluctuations on the supply side also.
Supplying organisations need to be as sure as possible about the required volumes
of components, raw materials, information and other services. Faced with demandled fluctuations, supply side organisations tend to prioritise their activities so as to
deal as far as possible with those organisations that are prepared to take steady and
assured volumes; while those whose requirements on the supply side are more
uncertain or intermittent are likely to get pushed to the back of the queue. Organisations whose supply side requirements are less assured or more intermittent are
therefore often faced with having to pay premium prices in order to ensure the
necessary volumes as and when these are required.
In particular, dependence on supplies from elsewhere in the world brings
specific constraints. In many sectors, using supplies and resources from Africa,
Asia, Russia and South America is overtly attractive because of the much lower
cost bases. Present costs and prices may be more or less assured and predictable,
and manageable even if there are fluctuations in the particular supply side localities. However, these can change quickly as the result of the activities of others.
For example:
crops for foodstuffs may be assured only so long as these are not affected by
drought, blight or disease
branded garment manufacture in the Third World is only assured until the
factories find other outlets, or uses to which their machines, technology, expertise and raw materials may be put; transport lines can become more expensive
as the result of political changes as well as economic and operational uncertainties. The creation of no-fly zones means that air transport has to go around
them. The creation of no-go zones on land or sea mean that alternative routes
for the mode of transport have also to be found
conduit transport pipelines for gas, water, electricity cables and information
lines requires constant maintenance and upgrade. In remote areas, conduits
often become the subject of war or terrorist attack. There are also special difficulties when there are breakdowns and malfunctions
transport difficulties can arise anywhere (see Contemporary insight 1.2).
Frozen Foods
Polegate Ltd is a small food processing company. Located in the West Midlands, its core
business is the processing and manufacture of fish fingers, fish cakes, fish pies and other
fish products for the frozen and processed food industries.
Until recently, the company has always taken its fish supplies from FND Ltd, a fish
wholesale company in Liverpool. Both companies were happy with the arrangement. In
particular, because of their close proximity (the two companies were almost exactly 100
miles apart only) the supplies of fish to Polegate Ltd were always assured.
Polegate Ltd employed a new chief executive. He instructed his sales director to find
cheaper bulk supplies of fish. The sales manager scoured all the fishing ports of the UK,
France and Spain. The best price he found was in Cadiz, Spain. The company in Cadiz
was much larger than FND Ltd and was a major supplier of wholesale fish and fish products to the food industries of nine countries within the EU.
The new company undertook to supply the required volumes of fish at 35% of the
cost charged by FND Ltd. Even with the transport arrangement required, the total cost
amounted to little more than half of that charged by FND.
Polegate therefore cancelled its contract with FND and began to use the Spanish
supplier. For a while, the arrangement worked extremely well. However, three things
then happened in quick succession.
First, the lorry fleet was caught in a customs border dispute at the FrenchSpanish
border. The ensuing hold-up resulted in the complete loss of one supply batch. Shortly
afterwards, the lorry fleet was again held up, this time during a French transport strike
which blockaded the Channel ports meaning that the lorries were unable to cross.
Again the whole consignment was lost. Finally, the lorry fleet company went into liquidation, blaming high fuel and tax charges in the UK.
Polegate tried to re-establish relationships with FND, only to find that, as the result of
having lost its main contract, FND had gone into receivership. Production was seriously
disrupted for a period of three months, while Polegate sought desperately to engage
other UK suppliers. Knowing the companys history, suppliers were only prepared to deal
with Polegate on the basis of premium prices for assured wholesale volumes. Polegate
also lost two major contracts, one to the top brand frozen and processed fish providers.
Each of these points illustrates some of the things that can, and do, happen, and
of which those responsible for the strategic management of organisations must be
aware, and be able to respond to. They also illustrate a key part of the range and
nature of general constraints within which organisations must be prepared to
operate. The strategic management priority is to understand the likelihood and
potential for each and all of these events happening, and the likely and possible
effects on the business as the result.
It is also necessary to look at derived effects the effects of events on the activities of one organisation, leading in turn to effects on others, for example:
Introduction
a military garrison being moved from its home base to a theatre of war leads to a
downturn in business for local restaurants, cafs, clubs, pubs and supermarkets
the opening of a new hospital in a small town puts pressure on those organisations presently employing secretarial and administrative staff; and this may also
put upward pressure on property prices as professional people doctors,
surgeons, senior managers seek to move into the area.
Responses to economic pressures

Those responsible for strategic management need to be aware of every pressure in
their own area in order to be able to operate effectively. Each of the above factors
is largely or totally outside their control. The following responses are possible.
Some organisations take the view that these factors are outside the control of the
organisation and therefore cannot be influenced. These factors can however be
blamed for business decline, cost increases and poor performance (see Contemporary insight 1.3).
International Airlines
Following the terrorist attack on the World Trade Center on 11 September 2001, all the
worlds major airlines suffered downturns in business as the result of collective loss of
confidence in the absolute security and safety of the industry. Customers believed and
perceived that international flying was not safe, and so they simply did not fly. This attitude also extended to many airlines serving the internal market in the USA.
This belief was reinforced by the subsequent inquiry into events that had led up to
the tragedy at Boston airport where the airliners had been hijacked. The inquiry found
that security was lax and complacent, and that anyone could get on to any airliner,
whatever their intent.
Smaller regional airlines in Western Europe did not experience the same problems.
easyJet and Ryanair both had increases of between 30% and 50% in sales, turnover and
profits in the following year. Buzz and Go, also low-cost regional airlines, experienced
similar upturns in sales although profits remained low.
Reporting at the end of the final quarter of 2002, Rod Eddington, the chief executive
officer of British Airways, stated that conditions remained difficult following the 11
September tragedy for the whole airline industry.
Ryanair and easyJet reported no such difficulties. Both ordered substantial additions
to their airliner fleets. In late 2002 easyJet took over Go; in early 2003, Ryanair took
over Buzz.
Lessons
These are two contrasting views of the possible responses to events which, if
10

unmanaged, do indeed cause the collapse of sectors and therefore companies. Lack
of consumer confidence is a problem that has to be actively addressed.
By distancing themselves from the global market and concentrating on regional
activities, the low-cost airlines were much better able to weather the storms and
crises caused by the downturn in confidence. The international airlines were much
slower to restructure their activities in order to regionalise or prioritise the routes
on which profitable activity could take place.
Some organisations take the view that these factors are outside the organisations
control, but that nevertheless it is essential to be able to operate and remain viable
within this context. It therefore becomes necessary to create the conditions in
which these factors have as little effect as possible on overall effectiveness and
viability (see Contemporary insight 1.4).
Swatch
For centuries Switzerland was the centre of the worlds watch-making industry. However,
in the late 1960s, Japanese digital technology used to manufacture calculators began to
be adopted to make wristwatches and clocks that were much more accurate than the
Swiss, and for a fraction of the cost. Accordingly, the Swiss watch industry collapsed.
Nicholas Hayek, a Lebanese businessman, was engaged to re-energise it. He reviewed
the entire industry and then took the following actions.
He secured long-term backing at levels that would give the greatest possible chance
of rebirth for the whole industry, provided that the products could be made attractive
to customers and commercially viable to the industry.
Hayek founded the Swatch company. This was to produce three main products:
luxury, high value designer Swiss watches as in the past, but with the additional benefit
of being fully accurate; mid-range watches made out of stainless steel, silver and gold
to appeal to affluent customers; and the main new product excellent value, highly
branded, accurate and fashionable watches.
Swatch concentrated its primary activities on the fashionable good value end of the
market. The watches were designed so that they became fashion items, as well as useful
and accurate timepieces. The company ensured that their accuracy and reliability were
competitive with the Japanese and other Asian offerings.
The other key issue was manufacturing cost. Hayek secured levels of funding and
investment necessary to have available production technology that enabled the
company to compete in Switzerland with Asian factory labour. Production technology
was precisely engineered. Production rates were established so as to negate the Asian
labour market cost advantage.
The result was to produce a basis on which the Swiss industry was able to compete
successfully with the Asian producers, within the constraints present, above all the high
Swiss land and labour values.
Introduction
Contemporary insight 1.4 contd
Speaking to the BBCs Business Matters programme (BBC2, 11 February 1998), Mr

Hayek stated:
Rather than going with everybody else and locating in the same place as everyone
else, we tackled the problem in reverse. Our objective was to produce products
that could be made to the same quality, accuracy and specification as the Asian
equivalent, but in Switzerland. Rather than saying it couldnt be done, we established the constraints under which we had to operate high labour charges, the
levels of investment required in manufacturing equipment, and some of the most
expensive land values in the world and worked from there. The result was that
we ensured that the Swiss watch industry continued. We also generated a whole
new market by using different materials, appearances and designs, and gaining a
universal understanding and perception of the Swatch brand.
Other responses
Some organisations avoid the issues by resorting to blandness. This blandness is
reflected in statements of presumed business strategy. Presumed business strategy
uses phrases such as: We will seek opportunities as and when they arise, We are
well placed to take advantage of the impending upturn/interest rate cut/increase in
consumer confidence without going on to say in detail how these are to be
achieved, when the upturns will occur or why customers will suddenly come and
use this particular company.
Other organisations and their top managers respond by resorting to comparisons
with other companies in the industry or sector. Phrases such as: We are no worse
than company X, We are fifth in a league of 80 organisations in terms of
turnover/production values/work in progress are used, again without going on
to say how this set of circumstances is a strength, or how this benefits the particular organisation, which has, after all, to stand on its own merits, whatever its position in leagues or sectors.
Others still seek increased market share, without saying how or why this is to be
achieved, why customers and clients are certain suddenly to switch from existing
providers. Many organisations that take this approach also do not always say how
much increase is required; rather they use words such as significant or considerable without full definition.
There is also the curse of percentages using percentage increase projections or
realities to justify performance without always stating why this is necessary, desirable or appropriate. Phrases such as: We will gain a 25% increase in sales/
turnover are used. This appears to be a large figure and therefore overtly impressive. Organisations that take this approach must be clear as to why the 25% increase
is both desirable and achievable; many simply use it as a general figure without
defining why 25% was the target figure rather than 26% or 24% (or any other).
Others use figures as the driving force rather than as projections to support
11
12
The Millennium Dome

The Millennium Dome in Greenwich, southeast London, was first conceived in 1994 as
a monument to 2000 years of Christianity and Western civilisation. A large area of land
was taken for the project. It was to be a once in a lifetime visit for all those who went
to see it. It was to be educational, informative and cover culture, society, religion and
business from all conceivable points of view. Many of the exhibits were to be interactive. The Dome would also be a celebration of the entertainment and information age
present at the end of the 20th century. Throughout the days on which it was open,
the Dome provided acrobatic and dancing displays and full access to video and
computer games.
As the project came to fruition, sets of figures were arrived at demonstrating how
many visitors were required to cover the costs. The final set of figures arrived at required
12 million visitors to visit the Dome in the year 2000 in order for the project to break
even. This worked out at one million per month or 35,000 per day every day.
These figures should have given cause for concern. The other major attractions in
London attracted an average of 12 million visitors per annum. In 1999, the year before
the dome opened, the most visited attraction in London was Westminster Abbey with
6.5 million visitors. Twice as many people were therefore going to be required to visit
the Dome, and in a much less convenient location.
All this should have given cause for concern and examination. Instead, this simply
became the basis on which calculations were made. The figure of 12 million visitors was
accepted without question. A ticket price was established for the project based on the
fact that 12 million visitors would visit the attraction.
At the end of 2000, the Dome declared a loss of 700 million. For the period 200103
the site was mothballed at a cost of 1 million per week. It was not until late 2003 that
any firm bid for the future usage of the site was agreed.
strategic initiatives and decision-making processes, and to identify issues for further
consideration (see Contemporary insight 1.5).
Other organisations talk up their status, performance and real or perceived reputation in exaggerated terms. Phrases such as a record year, a year for record
results and first-class performance are used, but without quantifying or justifying
why the year is record-breaking or top class. Most insidiously, some organisations
become prone to talking about themselves as being global or world class, again
without the substance to justify the statement (see Contemporary insight 1.6).
Each of the above approaches is both inadequate and unacceptable as the foundation for strategic management, business policy development and organisation
effectiveness. There is a range of additional responses available. Each is at least
better than any of the above, or guessing, taking a bland approach or substituting
any effort for productive activity. For example, some organisations establish project
Introduction
World Class
A small study by Laurel Kenner and Victor Niederhoffer in 2002 identified a direct relationship between organisations that describe themselves as the best, number one or
world class and poor performance. The starting point of the study was a statement by
Enron chairman and chief executive Kenneth Lay. On 14 August 2001, Lay emailed all
employees of Enron: our performance has never been stronger, our business model has
never been more robust. We have the finest organisation in American business today.
Kenner and Niederhoffer then entered the phrases were the best, best company and
were number one into the Google search engine. This yielded over 100,000 responses.
Niederhoffer and Kenner limited their enquiry to 11 companies that used these
phrases. They then calculated the performance of the company against the S&P 500
from the data gathered through the rest of the year 2001.
Niederhoffer and Kenner state that:
The sample size is too small for any degree of statistical confidence, but the
results are shockingly bad. The average relative performance was an astonishing
24 percentage points below the Standard & Poor 500. Five of the companies
Enron, Gateway, Human Genome Sciences, Priceline.com and Sprint PCS fell
more than 50%.
The date, the quote that triggered the investigation and the subsequent performance
are given below.
Enron
31/12/1999
98
76
Priceline.com
17/08/1999
92
77
Gateway
26/03/1999
80
69
Sprint PCS
21/07/2000
71
48
From the worlds leading energy company to

the worlds leading company
Priceline will reinvent the environmental DNA
of global business
Gateways goal is to become number one on
the web not because we are the biggest but
because we are the best
Were the best wireless phone service available
Kenner and Niederhoffer conclude:

While we may have missed some boastful remarks, we made an effort to include
the performance of all companies that satisfied the criteria regardless of subsequent performance.
Source: Adapted from L. Kenner and V. Niederhoffer (2002) Where number
one usually means not much longer (MSN/Money Central)
teams and work improvement groups. Others hire consultants, still others restructure, downsize or rightsize.
Each of these is the right response only insofar as they lead to action. Each is
capable of producing results that cover the key issues and purpose within a given
13
14

set of constraints present. Each is also capable of producing additional pressures,
processes, checks and analyses that add to the cost base and dilute still further the
ability to work effectively.
The other vital issue is that any problems and issues that project groups, consultants or restructuring processes do produce must be acknowledged and addressed.
If an overtly good idea has gained a life of its own and is now seen as a matter of
absolute fact and assured success, there are strong perceptual and behavioural pressures to edit out any information that requires fuller examination or evaluation
(see Contemporary insight 1.7).
A Bridge Too Far: the Arnhem Landings 1944

Towards the end of World War II, when the allies were recapturing Western Europe and
pushing on with the conquest of Nazi Germany, a plan named Operation Market
Garden was devised by Field Marshall Sir Bernard Montgomery.
The plan was to parachute an army of 10,000 men into the Arnhem area of central
Holland. This army was to capture the road bridges over the Rhine, so that when the
main armies did arrive, they would have an assured and straightforward passage, rather
than having to fight for the crossings.
Accordingly, an army was trained and prepared. The airborne transport was gathered
together in eastern England. Everything was made ready for the assault.
Then two things happened. First, the weather became foggy and take-off, travelling
and arrival times could not be guaranteed. Second and much more seriously a late
reconnaissance of the proposed landing area showed a strong and well-equipped
German army in precisely the location chosen for the parachute landings.
The late reconnaissance consisted of three photographs. On the one hand, therefore,
there was an army all prepared and ready to go and, on the other, the three
photographs. Lieutenant General Browning, one of the senior officers, asked the RAF
officer who had produced the photographs: Are you saying that we should cancel the
biggest ever airborne landing because of three photographs?
Accordingly, the attack went ahead. Because of the fog, the army could not all be
landed in one go. Also the photographs turned out to be accurate and those who did
get through landed right on top of a well-equipped German army. Consequently the
bridges were not secured and most of those who were dropped into the area were either
killed or taken prisoner or else they had to fight their way back to the advancing allied
troops, some hundreds of miles away.
Source: R. Attenborough (1974) A Bridge Too Far United Artists
TRADING CONDITIONS
Organisations have to be able to operate effectively within the economic constraints
Introduction
imposed on them as above. These influence the general and specific trading conditions in which activities take place.
Economic upturns in which consumer confidence is high and there are high
propensities to spend and ready availability of capital, cash, credit, work, goods and
services still have to be managed effectively. Many organisations take the view
that so long as demand for their product continues to outstrip supply, they will
enjoy guaranteed prosperity.
This is self-evidently not the case. Organisations unable to supply the demands of
the customer base initially experience excellent public relations and levels of business. Continued inability to supply increasing markets does, however, lead to frustration. Some organisations take the view that they will be able to limit demand by
increasing prices to try and maintain a perception of scarcity or exclusivity. For
long-term customer and consumer confidence to continue, however, it is necessary
to either increase capacity or else make it easy for alternative providers to come
into the sector. Otherwise, customers levels of satisfaction quickly turn to frustration and they will turn elsewhere to alternatives.
This reinforces the need to be able to match opportunities with resources, capability and willingness to respond to demand. Clearly, it is not possible to maintain
resource levels on the off chance that there will be a faddish, seasonal or even
continued upsurge in demand. However, a key feature of the effective management
of trading conditions is knowing and understanding the markets and environments
and the likelihood and possibility of potential for both sudden and sustained
upsurges in demand.
Organisations also require a strategic view of how they are going to respond to
downturns. Loss of confidence, increased unemployment and economic, social
and political uncertainty have all to be managed; organisations must be able to
exist in each of these conditions. Some of these can be forecast and are predictable
to an extent.
However, downturns can be and are fuelled by subjective, individual and
collective perceptions, statements from powerful and influential figures, media
coverage and news agenda, and the responses to these are often unpredictable.
Organisations faced with declines in demand for their products and services need to:
understand the real reasons for this decline

assess the full range of impact
assess the likely and possible duration of the downturn
assess what it will take to get them out of this downturn and, in particular, the
actions that the organisations themselves can take in these circumstances
assess what customers and clients now expect in terms of their own spending
priorities in the present situation
look to the supply side in order to ensure, as far as possible, a full flexibility of
supply
review the scope and scale of activities
consider cost bases, especially those not incurred at the front line of activities
ensure both the capital and revenue base that, as far as possible, will see them
through such difficulties.
15
16
RECEIVED WISDOM
In much of the UK, EU and USA, the attitude to downturns is to resort to lay-offs,
reduce or rationalise the product range and/or divest assets and non-core activities.
Each is superficially attractive. Each shows an instant paper solution in accounting,
commitments and liabilities. Each is also widely practised. From a strategic management point of view, each needs to be reviewed in the context of the particular situation. The following issues have always to be addressed.
Lay-offs
Lay-offs and redundancies mean that staff are being paid to go away rather than to
come to work. This can be a considerable and enduring expense and liability when
laying off senior staff. It is an enduring expense if staff are given early retirement,
because they are simply translated from one budget heading (payroll) to another
(pension scheme).
Staff redundancies and lay-offs always adversely affect the morale and commitment of those left behind. Lay-offs change work practices and relations and they
send a clear signal to everyone that they too can be disposed off. This leads to many
considering changing jobs before the axe falls on them.
Product and service withdrawals

No organisation should keep unprofitable or ineffective activities, products and
services without good reason. However, strategic approaches to withdrawals must
consider the effect on the reputation and effectiveness of the remaining activities.
Organisations need to be clear about their own products and services in terms of:
those on which the organisations reputation is based

those that attract customers interests
those that customers buy and use on a regular basis
those that make money and reputation
those that lose money and reputation.
Organisations need a full understanding of the ways in which all their products
and services interact with each other. Withdrawing products and services simply
because, in linear and isolated terms, they do not make money is often an instant
and unconsidered response. It is essential to take the broadest possible consideration before engaging in activities that may show a budget saving, but may lead to
loss of reputation or wider confidence.
Product and service withdrawal also defies the convention of using loss leaders as
part of the attraction and business development process. Many organisations that
do use loss leaders also try to put the price up once they know or perceive that the
particular product or service is firmly established. This may or may not work
depending on the nature of the organisation, its customers and environment. In
most cases, they then have to find the next generation of loss leaders. This is a
Introduction
clearer alternative to product and service withdrawal and should be considered
(before being either accepted or rejected) as part of the strategic review process
undertaken in such circumstances.
Divestment of assets
Divestment of assets is superficially attractive because it can be shown as an instant
improvement to the balance sheet. From a strategic management point of view, this
is always viewed as a divestment of liabilities. What is being sold off is of greater
value at the time, in terms of cash generation, than its enduring value if retained.
Major divestments nearly always take place in buyers markets. This is because
once it becomes known that a particular organisation needs or wants to sell things
off, the price goes down. The only circumstances in which the price goes up are:
when a buyer approaches the particular organisation for a part of its assets
which the buyer actively needs or wants
when the selling organisation is able to persuade two or more potential buyers
into an option.
Each of these approaches also has implications for what happens when the upturn
does arise. Reputations, asset levels and capability all have to be restored to levels
of best acceptable (if not ideal) for the particular markets, customers and clients,
which are now expanding and have a greater propensity to spend. This is certain
to require capital expenditure in some shape or form. It is also likely to mean that
expertise and equipment can command premium rates.
Hammering the supply side

The other instant response to downturns is to hammer the supply side. This supposedly is to force prices down. Hammering the supply side may also be used to try and
force up the quality or volumes delivered for the same price; others will use it to
improve the flexibility of deliveries. For large and dominant organisations,
hammering the supply side is often almost irresistible (see Contemporary insight 1.8).
Other organisations shop around for cheaper suppliers, often multisourcing. This
effectively puts suppliers in competition with each other. A balance has to be struck
here between, on the one hand, ensuring a full flexibility on the supply side and,
on the other, putting suppliers in competition with each other. The need is to
ensure that whatever business relationships are entered into on the supply side are
secured from the point of view of a combination of cost advantages, reliability of
supplies and flexibility and responsiveness to production and service demands.
There is therefore nothing wrong (and everything right) with the approach,
provided that:
the relationship remains in both parties enduring interests

the cheap, good value or price advantage supplier is willing rather than forced
to do business on these terms.
17
18
Marks & Spencer and Clothes Manufacture

in Scotland
Marks & Spencer, the UK department store/chain, made and gained its reputation on a
combination of distinctive brand value and quality of products. In particular, Marks &
Spencer took great pride in ensuring that as much of its clothing range as possible was
manufactured within the UK.
In early 2000, the company announced that it was to change this policy and source
as much as possible of its clothing manufacture in the Far East, in order to be able to
compete effectively with all the other clothing brands.
The company was going through a bad trading period at the time. Desperate to try and
increase its market share, it sought to attract younger buyers to its stores, rather than
concentrating on its core market, those in the age range 3065. Sourcing its clothing
products overseas would, the company reasoned, be a good step towards achieving this.
In practice, once the new clothing ranges were introduced to the stores, the core
customer base continued to take its business elsewhere.
The company also damaged its standing in the media by cancelling its contracts to
clothing manufacturers in Scotland, giving only 24 hours notice. The company received
nationwide news coverage of hundreds of clothing manufacturing staff being forced out
of work at a days notice. The action diminished the companys reputation still further,
more than offsetting any real or perceived advantages to be gained on the cost side by
sourcing supplies from the Far East.
Hammering the supply side is wrong when it is used by dominant organisations

in their own short-term, narrow and expedient interests. Those responsible for
the strategic management of dominant and powerful organisations need to
remember that when upturns do come about, they are then going to need
increased supply volumes. Dominant organisations find themselves having to
overpay in the short to medium term at least, if the supplier has found alternative outlets for its outputs and if some suppliers have gone out of business as the
result of the activities of dominant players.
Trading conditions are therefore the summary of the economic and commercial
pressures in which organisations find themselves at given periods of time. In times
of difficulty, the superficial reaction is often to blame adverse trading conditions
for the present predicament of the organisation and use this to give a spurious legitimacy to redundancies, withdrawals, divestments and supply side domination. The
pressure on strategic managers to do this can become overwhelming if it is
demanded by shareholders, backers and media analysts, or if everybody else in the
sector is known, believed or perceived to do it.
Other organisations take the view that they structure themselves for the long
term in order to be able to survive and prosper whatever the trading conditions.
Introduction
The clear implication from this is that organisations which do not do so only pay
attention to economic pressures when actively forced to do so. This invariably
means a lack of full clarity or understanding of purpose and direction, and a lack
of understanding of the full context in which activities take place. If this persists,
then wider questions of lack of confidence arise. Subsequent withdrawals, divestments and lay-offs have an ever-reducing impact on confidence and an evergreater disruptive effect on the conduct of the business of the particular
organisation. Therefore the general conclusions are that:
understanding the full range of trading conditions possible in a particular

sector is a precursor to effective strategic management and business policy
development
the ability to operate within the full range of trading conditions is a primary
drive of strategic management
using adverse trading conditions as an excuse (or even a legitimate reason) for
declining performance requires a considered, rather than instant or pressurised,
response
organisations that have this level of understanding and capability, and a willingness to work within all conditions, stand a much greater chance of prosperity
than those that do not (see Contemporary insight 1.9).
The Body Shop

Inspired by the knowledge of other cultures we make: exclusive products to our
own recipes. Committed to fairer trading and the environment, we bring you
The Body Shop.
This statement is The Body Shops own version of the principles on which the company
was founded and within which it continues to trade to the present day.
The Body Shop was founded in 1975 by Gordon and Anita Roddick. At this time,
there was rising unemployment in every sector in the USA, UK and EU. Consumer
confidence was declining, interest rates were high and there was a low collective
propensity to invest, consume or undertake expenditure.
The cosmetics industry is worth 30 billion per annum. At the time of the foundation
of The Body Shop, the cosmetics industry was saturated with both multinational and
also exclusive providers. The last thing the industry needed was a new small exclusive
provider and if The Body Shop had not set out its own distinctive position, it would not
have survived.
Accordingly, the company came into existence during a consumer recession, at a time
when customers were reducing their expenditure on cosmetics as well as other nonessential goods and services.
The company recognised this from the outset. It understood that, whatever the
trading conditions, it was necessary to provide an active attraction that would ensure
19
20

Contemporary insight 1.9 contd
that customers would continue to buy from the company, rather than go elsewhere. The
company concentrated on the perceived uniqueness of the products. Additionally, it
invested in establishing and developing a high and distinctive brand value and identity.
This in turn was reinforced with high levels of staff motivation and customer service.
Consequently The Body Shop was able to establish itself as an effective and profitable
niche player in this huge market and maintain this position whatever the prevailing
trading conditions.
THE BROADER CONTEXT

All organisations have to operate within the broader context of their business,
commercial or public service environment. All activity therefore takes place in that
context. The specific pressures that must be considered are as follows:
Social: the customs and priorities of the society or societies in which the organisation operates; the wider social respect and regard in which the organisation is
held; religious and other ethical constraints including the prevalence and dominance of religious and sectarian interests; those factors that the particular societies, and groups within those societies, consider to be right and wrong.
Political: in which organisations are placed under political pressures and drives,
for example many large organisations find themselves under pressure to accept
government contracts in return for future strategic investment and commercial
opportunities; other organisations may find themselves under pressure to work
in partnership with governments in order to ensure the success of particular
political initiatives.
Technological: the opportunities accruing from technological invention and
development; the availability of technology; the availability of expertise to use
and exploit the technology; the relationships between organisations and those
who invent, manufacture and supply particular equipment.
Legal: the limitations placed on activities by law; specific legal pressures and
constraints concerning: employment practice; marketing, advertising and sales;
hours of work; conditions of work; trading standards, product and service
descriptions and specifications; after-sales and guarantees; health and safety at
work; safety and security of products and services; and legal constraints
concerning ownership of expertise, intellectual capital, patents and inventions.
All organisations must be aware of the ways in which laws may change in
specific locations and the need to be able to operate within the legal environment in any given location. It is also essential to recognise that the ability to
comply with the law in any given location does not, of itself, guarantee a
commercially viable presence or the ability to conduct business.
Introduction
More generally, organisations must be aware of the present nature of competition
within their sectors and the specific competitive pressures that prevail. It is also
essential to be aware of the ways in which these may change, for example due to
the withdrawal of players from the sector, the introduction of new players to the
sector or the production of substitutes and alternatives for the present range of
goods and services.
It is also essential to be aware of burning issues. Burning issues are factors that
are politically, socially or legally driven, to which organisations are normally
required to comply. At the beginning of the 21st century, concern for the environment and waste management are major concerns. There is common consent that
the amount of waste, effluent and exhaust gases must be reduced and that more
effective, enduring ways must be found for dealing with these. It is also of common
concern that all this has to be paid for somehow. The best organisations and their
senior managers are aware of these factors and their possible effects on their organisations and range of activities. Many organisations are taking an active position on
this redesigning and re-engineering their products and processes so as to reduce
the amounts of waste, effluent and exhaust produced. Other organisations work on
the basis that they have the capability to respond to specific initiatives and directives when required.
CONCLUSIONS
Clearly, strategic management is based on a set of principles and a body of knowledge that have to be applied in an environment and context largely outside the
control of managers and organisations. Within this context, strategic management
is concerned with identifying opportunities for successful and effective activities.
These come from either the capabilities and expertise of the organisation or actual
and potential market demands, or a combination of both.
Strategic management is concerned with engaging the range, scale and scope of an
organisations resources and expertise and delivering these within the boundaries
within which it chooses to operate. It is also necessary to be concerned with the
ways in which activities are conducted and the means by which these are controlled.
Effective strategic management is founded on commitment. Once opportunities
have been identified, commitment of resources and expertise is essential in order
to turn purposes into achievement.
Strategic management is concerned with creating direction and understanding for
all those involved. This is so that everything that is carried out is positive and effective. This includes setting behavioural and ethical standards, as well as delivering
effective and successful products and services.
Finally, strategic management is concerned with ensuring the long-term survival
and viability of the organisation and the continuous evolution and development
necessary as a consequence. This has clear implications for the creation of attitudes
and values, as well as products, services and operations. It indicates the range of
expertise required in the area of effective strategic management.
21
22

1 From an organisation of your choice, identify the key actions it has taken
to secure its long-term future and the nature of its responses to forces
outside its control.
2 Compare and contrast the responses of British Airways and easyJet
(Contemporary insight 1.3) to the tragedy of 11 September 2001. What
lessons should each learn from the other? What other actions do all
organisations faced with sudden crises of confidence need to be
prepared to take and why?
3 What are the advantages and disadvantages of the approach adopted by
Swatch to its operating costs (see Contemporary insight 1.4)? How else
might Nicholas Hayek have structured and located the companys
manufacturing activities?
4 From the organisation of your choice, identify the main social, legal and
political pressures and changes that it is likely to have to face in the next
five years. What evidence is there that the organisation has plans in place
to ensure that this is undertaken successfully?
FURTHER READING
C Bowman & D Asch (1994) Strategic Management Macmillan now Palgrave
Macmillan
R Heller (1990) The New Naked Manager Coronet
W Hutton (1995) The State We're In Cape
G Johnson & K Scholes (2002) Exploring Corporate Strategy FT/Pitman
H Mintzberg, B Ahlstrand & J Lampel (2001) Strategy Safari Prentice Hall
Index
Page numbers in bold type refer to tables; those in italic to figures. An asterisk (*)
against a page number indicates a reference to a Contemporary insight box
A
Abbey National, core business *191
acceptance, global management and
448
access, global 434
accidents *331
Accor spirit *500
accountability, in coaching/mentoring
422
acquiescence, global management and
448
acquisitions
globalisation and 4434
see also mergers and acquisitions
action learning 4201
external scrutiny 420, 421
activities
harmonisation of 134
segmentation by 1856
translating strategy into 128
types of 129
added value 945, *1656
perceived 102, 103
restaurant sector *104
ad hocracy 272, 285
advertising campaigns, data input to
forecasting 347
aero engine testing *133
aesthetic issues, in organisational
analysis 77
after-sales support 143
agencies, external 248
aggregates supply to the building
industry *145
AIDA (attention, interest, desire,
action) *484
Airbus Industrie *2845
aircraft, see Concorde; De Havilland
Comet; Lockheed Corporation
airlines
after 11/9 *9, 910
discounted tickets *87
low-cost *9, 910, *8990, *133,
485
price/quality/value/volume/time
mix 11617
projections and forecasts *401
see also British Airways; easyJet;
public transport; Ryanair
air miles 197
airports
developments in London region
*4589
London Underground link to
Heathrow *1734
alliances, globalisation and 4456
analytical approaches
constraints 74
cost analyses 846
costbenefit analysis 878
environmental 7397
further reading 97
industry structure analysis 814
pressures 74
primary beneficiary approach
756, *767
SPECTACLES approach 778
STEP (PEST) analysis 801
strategic/environmental 7397
SWOT analysis 7880
value analysis 8896
see also competitor analyses;
customer/client analyses;
industry analysis; product and
service portfolio
appointments
high-profile 388
key 3889
key characteristics *389
low profile 388
appraisal, see investment appraisal;
performance
measurement/appraisal
appropriateness and effectiveness
appropriatenesseffectiveness
spectrum 392
in banking/financial services *391
Armani *101
Arnhem landings *14
arrogance, in communication 397
Asda
Competition Commission Report
*158
market position *106
assessment
of organisation 59, *5960
risk assessment, see risk assessment
assets, divestment of 17
Atari, computer games *215
attendance management, at Sanyo
UK *142
attitudes
influencing success 340
in leadership 3603, 371
in management development 409
attitudinal aims and objectives 348
attitudinal development and
transformation *417
authority 279
in coaching/mentoring 422
functional 279
autocrat, as leadership/management
type 376
benevolent 376
automobile manufacturing, value
chain in cost analysis 93
see also motor vehicles
autonomy v. supervision 4012
B
backers, obligations to 314
back-stabbing 398
Balfour Beatty *1734
Band Aid *336
banking, appropriateness and
effectiveness in *391
Barbie *356, *225
code of conduct in manufacturing
*189
bargaining powers
buyers 82, *83
suppliers 82
BASKET, summary of knowledge and
expertise 40810
BBC, organisation and management
development *3878
Bechtel, rebuilding Iraq *1701
Beetle (Volkswagen), product life
cycle *223
behaviour
in management development
409
and the model employer 3234
organisational, see organisation
behaviour
behavioural aims and objectives 348
behavioural aspects, as entry barriers
67
behavioural barriers to change 2456
beneficiaries
changing *76
continuing *76
non-beneficiaries *77
political *76
primary 756, *767
ultimate *76
benevolent autocrat, as
leadership/management type 376
bibliography 5056
blandness 11
in communication 396
507
508
Index
blockage analysis 346

blue-sky thinking 28
The Body Shop *1920, *201
environmental concerns 332
fair trade *175
as model employer *96
book sales, website activity 485
boredom, at work *495
BPR (business process re-engineering)
*2401
brands
assurance 197
brand loyalty 107, 1801, 182
brand stretching *18990
customer/client relationships with
*230
customer confidence 197
e-business and 488
fluctuating popularity of *230
global 435
leading *101
location and *118
nature of 188
Branson, Sir Richard, see Virgin Group
British Airways *41, *491
failure to analyse environment
*97
British Bakeries, distribution strategies
*1467
Brooks Brothers *447
Browns Fruit and Vegetables Ltd,
management development
*41112
browsers 202, 231
BT
failure to analyse environment
*967
innovation *60
relocation of call centres *503
budgets 39
budget cycle management in
public services 4712
fixed 135
planning and control, concepts
and techniques 27
in public services 4702
building and construction industry
aggregates supply *145
competing on price *199
bureaucracies
characteristics of *416
developing effective management
in *416
bureaucracy
as barrier to change 245
divisionalised 272
professional 272
bureaucrat, as
leadership/management type 372,
376
burning issues 21
business changes and development

392
business concepts 28
business environment, broader
context of 201
business models 29, *30
business organisations, primary
beneficiaries 75
business process re-engineering (BPR)
*2401
business processservice interface 207
business strategy, presumed 11
butter, differentiation and price
*1089
buyer groups 58
buyers, bargaining powers 82, *83
buying patterns, segmentation by 182
Buzz (airline) *9
C
Cadbury *315
Cain and Glow Ltd *296
call centres *203
BT relocation of *503
Cancer Research Campaign *2678
capability
matching resources, demands and
21518
opportunitycapability match 149
capacity excess, as exit barrier 701
capital equipment
keiretsu/chaebol approach 287
replacement 171, 176
capital investment
as entry barrier 636
pre-investment analysis 646
returns on capital employed
(ROCE) 36, 132, 134, 156
captive market
competition and *199200, 212
hostages 201
market captivity 55, 299
car (automobile) manufacturing,
value chain in cost analysis 93
see also motor vehicles
Care in the Community *42
Caterpillar Inc. *345
CD sales, website activity 485
celebrity endorsements *1834
centralisation 270
chaebol 2879
champagne *15960
champion role, in leadership 363,
*364
change
action phase 256
barriers to 2446
behavioural barriers to 2456
business changes and development
392
commitment to 238
communication need 246
delivering effective *257, 261
driving forces 2501
emergent 2568
exploration phase 255, 256
further reading 262
influence, sources of 24750
integration phase 256
leadership factor 258
management of, see change
management
name changes 393, *393
phases of 2556
planning phase 2556
power, sources of 24750
reasons for 23843
restraining forces 2512
stakeholder drives and restraints
24850
starting point 243, *253
see also change agents; change
catalysts; organisation
development
change agents 25861
expertise of *259
management consultants as 255,
259, 260, *2601
change catalysts 258, 25960
change management 23762
branding of *2401
business process re-engineering
(BPR) *2401
commitment 238
emergent change 2568
expectational issues 244
force field analysis 2503
phases of change 2556
political issues 2423, 244, 248
social issues 244
strategic approaches to 2508
technological issues 244
total quality management (TQM)
*2401
unfreezing-change-refreezing
approach 2535
see also change
Channel ferries *133
Channel Tunnel
construction costs *31
see also Eurostar
charismatic power 247, 372
charities, branding 3356
cheerleader role, in leadership 363
Chernobyl *327
Chiltern Railways, service delivery
*4656
Chinese cultures *289
choice
competition and 523
in education *475
Index
in healthcare *475
influences on process of 135
in public transport *475
cinema facilities, captive market
*199200, 212
clarity of purpose 499500
in performance management 337
cleaning contracts, outsourcing
*2867
clients, see customers/clients
clothing
garment manufacture 7
Marks & Spencer *18
see also garment industry; textiles
cluster groups 247
coaching
leadership role 3667
4212, *423
Coca-Cola *101, 111
customer confidence 197
product life cycle *2223
coercive costs 85
Comet (aircraft) *167
commitment 21
gaining 1289
in leadership 370
levels of v. wage levels *386
in organisation development
3856, 405
in the professions 26
commodities, costs and availability 6
common general organisations,
primary beneficiaries 76
communication
channels of 394, 395
clarity of purpose in 394
complex structures and 275
cross-cultural *399
data input to forecasting 347
effective, blockages to 397
effective, necessary elements for
3946
face-to-face 394, 396, 400
failure in *3989
formal/informal 393
language in 394, 396
in leadership 370
media 394, 397
and the model employer 321
need for, in change 246
negativity in 396, 397
organisational toxicity in 396,
397401
in organisation development
393401
positive approaches to 394, 396
and strategic management *4001
threatening 396
volume and quality 394
see also information; language

community
Care in the Community *42
corporate citizenship and 32730
expectations *337
links with 2889
obligations to 314
relationships with 24, 32930
support for 143
value criteria 89, *90
compact disc (CD) sales, website
activity 485
compartmentalisation, in hierarchies
276
competition
choice and 523
definition 52
fast food *53
further reading 72
knowledge of 21
nature of 5172
rivalry 57
competitive advantage
cycle of 356
search for 27
competitive advantage model 102
competitive aims and objectives 348
competitive environment 547
assessment of organisation 59
captivity/fluidity of market 55
entry barriers, see entry barriers
ethical concerns 55
exit barriers, see exit barriers
failure measures 61
legal constraints 56
market trends in 55
nature of market 59
nature of products and services
59, 61
opportunities and concerns 61
risk assessment 61
segmentation 61
success measures 61
volume of activities 567
competitive position(ing) 323, 54,
613
external pressures 65
pre-investment analysis 646
competitive strategy 98123
cost advantage 99, 101, 1067
cost leadership 99, 100, 101, 107
defensive strategies 100, 113,
11415
differentiation strategies 99, 100,
101, 103, 1079
failure strategies 102, 103, 1045
focus (specialisation) strategies 99,
100, 102, 10911
further reading 123
hybrid strategy 103, 103
incremental strategies 99, 11113
key factors 11518
509
market dominance 99, 119

offensive strategies 100, 11314
price-based strategies 102, 103
radical/transformatory strategies
99, 113
value-added strategies 102, 103
competitive strategy model 100
competitive thinking 326
competitor analyses 22831
concepts and techniques 27
competitors, industry competitors 81
complaints, from customers/clients
20912
contentious issues 211, *21112
minor 209, *209
product and service defects 210
product and service
refunds/replacements 210
serious 210
compliance, global management and
448
component manufacture,
specialisation 110
compromiser, as
computer games *215
Concorde *367
conduit transport 7
confidence
aims and objectives 348
collective 161
consumer confidence 10
as entry barrier 67
lack of 19
loss of, as exit barrier 689
conformity 320
congestion charge, London *294
constraints
legal 56
range of 74
resources 39
construction, see building and
construction industry
consultants, employment of, in
change 255, 259, 260, *2601
consumer confidence 10
consumer pullproduct push 186
consumer spending patterns 231
continuous professional development
413, 427, *427
control 279
activities 1367
mechanisms 1367, 139, *13940
spans of 2745
convenience customers/clients 202
convenience organisations, primary
beneficiaries 75
cooperatives, primary beneficiaries
75
core business 18791
components of 18891
core customer 192
510
Index
core image 192

core organisations 2802
corporate aims and objectives 348
corporate citizenship 32730
corporate ego 240
see also ego gratification
corporate expansion, globalisation
and 443
corporate planning, concepts and
techniques 27
corporate strategy, concepts and
techniques 27
cosmetics industry
investment appraisal and risk
*162
see also (The) Body Shop
cost advantage 99, 101, 1067
cost analyses 846
value chain in 93
costbenefit analysis 878
cost-effectiveness 5013
cost focus 102, 109
in public services, see cost focus in
public services
cost focus in public services 4589,
480
airport developments in London
region *4589
issues surrounding 45967
operational drives 460, *475
personal drives/issues 4601
political drives 459
cost leadership 99, 100, 101, 107
cost management, and pricing policies
*867
costs
coercive 85
commodity costs 6
as entry barrier 66
as exit barrier 68
fixed 84
hidden 85
in hierarchies 277
increases as reason for change
238
marginal 84
opportunity 86
sunk 85
switching 67, 85, 438
total 86
variable 84
withdrawal 856
see also cost focus
courses
certificate level and foundation, in
professional practice 410
diploma in professional and
occupational expertise 410
undergraduate business studies
410
see also education
coverage, global 434
creative ethos 419

creativity, influencing success 339
creativity needs, products/services
relating to 21920
critical mass 28, *29
critical paths/networks 1378
critical success factors 1304, *133
crops, for foodstuffs 7
cross-cultural communication *399
Crossrail *465
cruises 223
cultural fit, in mergers and
acquisitions 489
cultural issues, in organisational
analysis 77
cultural orientation 48
culture
cross-cultural communication *399
globalisation and 446, 450, 454
organisational, see organisation
culture
customer/client analyses 196,
*1978, 198200
enquiries 198200
outcome 203
purpose of 198
customermanagement interface 206
customers/clients
alternative purchases 231, *2312
analysis of information about, see
customer/client analyses
apostles 200, *202
attitudes of 1968
behaviour, consequences of 306
brands, relationships with *230
browsers 202, 231
competitive thinking and 33,
*334
complaints from, see complaints
contact points 2068
convenience customers/clients 202
core customers 192
customer value 27
defectors 201
dominant customers 188
expectations 117, *196, 204
further reading 213
hostages 201
identity with large/small
organisations 229
issues in organisational analysis 77
lapsed 34, *345
loyalists 200, *2012
loyalty of 118, 2003
mercenaries 2001, *202
obligations to 314
organisations relationships with
1967, 20412
passing trade 202, 231
perceptions 205, *2056, 206
personal assurance/confidence 197
satisfaction 2003
single 188, *190
spending patterns 117, 231
strategic management of 195213
terrorists 201, *202, 4689
types of 2003
types of, in public services 4689
window shoppers 202
see also loyalty; segmentation
customer service
e-businesses 488
technology and *208
theory v. practice *2056
customerstaff interface 207
D
damp squib products *225
data services, services privatised 475
decentralisation 2702
decision-making 12930
basis of 129
in hierarchies 277
and investment appraisal 16876
in leadership 370
range and context of 131
decommissioning process 70
defects, in products/services 210
defence bodies, primary beneficiaries
76
defensive strategies 100, 113, 11415
De Havilland Comet *167
demand
decline in 15
demand-led fluctuations and
supply 7
matching capability, resources and
21518
demeanour, and the model employer
3234
demographic segmentation 1801
dependence, globalisation and 4478
dependency, in leadership 371
derived effects 89
deserter, as leadership/management
type 376
destabilisation, as exit barrier 69
developer, as leadership/management
type 376
development, organisational, see
organisation development
differentiation 56, 57
and competitive positioning 61
as entry barrier 68
focus differentiation 102, 109
and price 108, *1089
strategies 99, 100, 101, 103, 1079
disasters *331
Chernobyl *327
dishonesty, in communication 396,
397
Index
distance, as barrier to communication
397
distribution
in axis of globalisation 437
British Bakeries *1467
distribution chain 94
strategies 146
distributors, obligations to 314
divestment of assets 17
divisionalised bureaucracy 272
dominance
dominant customers 188
dominant organisation,
competitive responses to 229
dominant products 188
globalisation and 4478, *449
domino effect, as exit barrier 6970
dot.com revolution *30
downturns, economic 7, 1516
attitude to (received wisdom)
1620
dramatist role, in leadership 366
E
early warning systems, in risk
management 2989
easyJet *9
organisation structure *265
e-business 4839
access to 4834
brand reinforcement 488
cost advantage 4878
current activities 485
customer service 488
effectiveness loss 4889
efficiency loss 4889
identity reinforcement 488
information-gathering/distribution
4856
information management 4868
marketing 484
public relations 484
economic issues
in organisational analysis 77, 80, 81
in risk assessment 2945
economic pressures 614
acknowledging problems 14
derived effects 89
downturns 7, 1516
responses to 914
supply side 79, 1720, 32
upturns 15
economic rent 117
economic segmentation 1812
economies of scale 28, *29
education
choice in *475
management
education/qualifications 410
management problems in *26970
services privatised 475

updating, see continuous
professional development
effectiveness
loss of, in e-businesses 4889
see also appropriateness and
effectiveness
efficiency loss, e-businesses 4889
effluent
disposal of, in axis of globalisation
437
management 314, 3289
see also pollution; waste
management
ego gratification 219, 232
corporate ego 240
as reason for change 240, 241
80/20 rule 192
electricity, costs and availability 6
emails 394, 400
see also internet
empathetic orientation 48
empathy, in coaching/mentoring 422
employee development 323
employee maintenance 324
employees
trust in *417
see also staff
employers, see model employer
energy, costs and availability 6
Enron *13
entertainment, lastminute.com *4345
enthusiast role
in global leadership 454
in leadership 364
entry barriers 638
behavioural aspects 67
capital investment 636
confidence 67
cost 66
cost switching 67
differentiation 68
familiarity 667
identification of 61
legislation 67
market size 68
nature of 556
staff and expertise 66
technology 63
threat of 63
environment
obligations to 314
pollution *327, 3289
waste management 21, 3289
see also business environment
environmental analysis 7397
environmental issues
affecting product/service life-cycle
2234
failure to analyse *967
511
environmental lobbies 37
environmental pressures 614
equality 3246
equanimity, in coaching/mentoring
422
equity, in leadership 371
Errol Flynns *161
esprit de corps 385
ethics 31333
aims and objectives 348
ethical pressures and strategy
determination 316, 317
factors affecting product/service
life cycle 2234
factors influencing success 341
further reading 333
and language *318, 31819
models and frameworks 31519
see also model employer
Eurostar, marketing strategies *1434
exclusivity 146, *15960, 184, *185
weddings *4034
executive, as leadership/management
type 376
exit barriers 6871
capacity excess 701
confidence loss 689
costs 68
destabilisation 69
domino effect 6970
familiarity 69
identification of 61
nature of 556
reputation 69
rivalry and 57
secrets 70
wastage 70
expectations
issues in change management 244
raising 4245
expediency, as reason for change 240
expedient approach *327
experience, in management
development 409
expertise 4948
applications of 25
body of 40810
as entry barrier 66
influencing core business 191
internal/external 4225
for strategic responsibility 25
strategy considerations 4
expert power 247
expert services, keiretsu/chaebol
approach 2878
extrapolation 3458
F
fads
in business policy *5
at Christmas *43
512
Index
as reason for change 240

resource allocation and 136
failure 1635
consequences of 1634, 3079
in emergent change 2578
excuses for *308
in the football industry *309
strategies for 102, 103, 1045
fairness 3246
fair trade *1745
familiarity
as entry barrier 667
as exit barrier 69
familiaritypioneering mix 149
family links 2889
fast food, competition in *53
feasibility studies 132
federations 2825
feuding, departmental 398
finance
explanations needed 367
questions about 37
strategic approach to 368
see also projections and forecasts
financial elements, data input to
forecasting 346
financial management, in public
services 4702
financial products/services 221
financial services
appropriateness and effectiveness
in *391
website activity 485
financial services industry, risk
spreading 301
financial stability, globalisation and
joint ventures 446
first mover advantage *5
fish, customer expectations *196
fixed costs 84
flexibility, in coaching/mentoring
422
flexibilityfocuspurpose mixture
149
fluctuations, demand-led, and supply
7
focus (specialisation)
149
by location 109
product concentration 119
strategies 99, 100, 102, 10911
see also cost focus
foodstuffs, crops for 7
football industry
failure and *309
Manchester City FC *37980
Manchester United FC *3012
Newcastle United FC *309
footpath repairs *463

force field analysis 2503
Ford, customer complaints *211
forecasting 3458
accuracy of data 3458
see also projections and forecasts
formalisation, global management
and 448
friendship links 2889
functional management, influencing
success 339
furniture 232
G
Garley, Stephen *4034
garment industry
make or buy *1723
sweatshop supplies 449
garment manufacture 7
see also clothing; textiles
Gateway *13
GEC *242
communication in *4001
generic position 337
geographical factors 120
see also location
gift industry, lastminute.com *4345
GIGO (garbage in, garbage out), see
RIRO
GlaxoSmithKline *29
key appointments *425
management rewards *502
pay and conditions for top
managers *424
global influence 4336
sources of 433
globalisation 43155
access/reach/coverage 434
alliances 4456
axis of 43640, 454
behaviour 450
brands 435
chain approach 433
corporate expansion 443
culture 446, 450, 454
definition 432
dominance/dependence 4478,
*449
employment conditions in
outsourced production *442
further reading 455
historic view *436
identity 435
joint ventures 4467
leadership 4534
local issues *4501
mergers, acquisitions, takeovers
4434
partnering 4446
physical presence 432
piggybacking 4456
reputation 432
responsibility 4512
strategic thinking 4523
strategies for 4437
subcontracting 4456
global standards 434
global thinking 433, 4523
Go (airline) *9
government
management problems *269
responsibilities 4578
Greenwood plc, action learning *420
grocery sales, website activity 485
groups, see buyer groups; cluster
groups; pressure groups; specialist
groups; stakeholder groups;
supplier groups
Gucci *101
guidance
4212
H
Hangartner GmbH *1734
harmonisation of activities 134, 153
Harry Potter, product life cycle *222
Harvester Restaurants, organisation
development *402
Hayek, Nicholas *1011
Hay Group, Executive Coaching
report *423
head office, role and functions 2723
health authorities
relationship with central
government 460
see also NHS
healthcare
choice in *475
service delivery *466
and stakeholder interests *489
see also NHS
Heathrow, London Underground link
to *1734
Henkel Kgaa, investment appraisal
and risk *162
heroism role, in leadership 364
hidden costs 85
hierarchies 2757
problems with 2767
highway repairs *463
holding companies, structure 273
holidays, see package holidays; travel;
travel agencies
honesty, of leaders 368
hospitals
body armour for nurses *469
waiting lists *4667
West London Hospital *462
HSBC, reward levels *497
human resource management, in
mergers and acquisitions 4901
human resource strategy 1401
Index
Sanyo UK *1412
humility, in global leadership 453
hybrid strategy 103, 103
Hyundai 288
I
identity
e-business and 488
global 435
IKEA 232
illusions associated with products 186
image, core image 192
IMG, communication in *4001
improvement, constant 149
income, from core business 188
incremental strategies 99, 11113
current activities influencing 112
industrial training boards (ITBs) *243
industrial wastelands *328
industry analysis, concepts and
techniques 27
industry competitors 81
industry structure analysis 814
inference 3458
influence
global 4336
over-influence of
departments/officials 248
sources of 24750
stakeholders knowledgeinfluence
axis 2489
information
costs and availability 6
flow of, in organisation
development 393401
RIRO (rubbish in = rubbish out)
152
in risk management 2978
see also communication; e-business
innovation *5960
in leadership 360
institutionalisation, global
management and 448
institutions, primary beneficiaries 75
integration, backwards/forwards 58
integrity
in global leadership 453
in leadership 371
of products and services 187
interests, segmentation by 1856
internet
to determine sources of supply 145
dot.com revolution *30
glamour and chaos *487
lastminute.com *4345
a means to an end 489
NHS Online *488
virtual distribution 146
see also e-business; emails
intrapreneurship *60, 41819

investment
levels of 1501
at Mitsubishi *151
as a process 1578
returns on (ROI) 36, 132, 134,
156, 1578, 171
sources 151
investment appraisal 15577
behavioural aspects 1601
buy or lease 1712
context of 156
and decision-making processes
16876
factors for consideration 1567
further reading 177
influence of consultants 168
influence of key personnel 1601,
168
make or buy 172, *1723
managerial approach 1578
market foothold 1756
outsourcing or in-house 173,
*1734
policy and direction 15860
priorities in 1678
product/service range 1756
real cost 174
results-driven approach 1578
and risk 1615
strategic management approach
15660
subjective elements 1716
success/failure 1634, *1645
timescales 1657
investment ventures, failure of *308
Iraq
rebuilding *1701
war in *363
J
Japanese organisations in the West
113
as employers 325, 326, 332
product and service performance
405
product reliability 108
wage levels and work commitment
*386
Jarvis, John, Ltd *3656
job design, at Sanyo UK *142
job enlargement 401
job rotation 401
John Jarvis Ltd *3656
joint ventures 161
just business 317
just-in-time purchasing 1445
K
keiretsu 2879
King, Martin Luther *365
513
kitchen cabinet 269

knowledge 4948
applications of 25
40810
stakeholders knowledgeinfluence
axis 2489
knowledge sharing *5
Komatsu *345
value chain 91
L
language
in communication 394, 396
ethics and *318, 31819
impressions formed from 312
precision and clarity in 2831
use of 2832
see also communication
lay-offs 16, *32, *239
leaders
appointed 372
appropriate 376
bureaucratic 372, 376
champion role 363, *364
charismatic 247, 372
coach/mentor/guide role 3667
dramatist role 366
effective 376, 381
expert 372
functional 372
further reading 382
inappropriate 376
ineffective 376
informal 372
inspirational/energising role 368
known 372
v. non-leaders *36970
successful, examples of 381
surgeon role 367
traditional 372
types of 372
visionary role 363
wanderer role 364, *3656, 380,
*400
see also leadership
leadership 35982
attitudes 3603, 371
in change 258
characteristics 36972
cheerleader role 363
continuity 37981
disruption in succession 3801
dynamic orientation 362, *363
enthusiast role 364
functions 368, 3789
further reading 382
generalist orientation 360
global 4534
heroism role 364
514
Index
honesty in 368
innovation orientation 360
negative attributes *3712
new brooms *37980
positive attributes *371
positive orientation 3601
practitioner orientation 360
professional orientation 360
reality of *3712
responsibility in 368
responsiveness orientation 362,
*363
results, measurement of 368
role models 364, *365
roles 3637
shift from management 498503
situational orientation 361
styles, see leadership styles
succession 37981
traits 36972
values in 360, 371
see also leaders; management
leadership styles 3729
leadership spectrum 373
style/function relationship 3789
variation in 3756
legal constraints, in markets and
sectors 56
legal issues, in organisational analysis
77
legal pressures 20
legislation, as entry barrier 67
lifestyle, segmentation by *185, 185
Lincoln Electric *418
Live Aid *336
lobbies
environmental 37
see also pressure groups
local government
changes *2601
relationship with central
government 460
location
branding and *118
focus by 109
price/quality/value/volume/location
mix 120
see also geographical factors
Lockheed Corporation *307
Heathrow *1734
loss leaders 1617, 118
loss-making branches 175
love objects 220
loyalty
brand loyalty 107, 1801, 182
of customers/clients 2003
generation of 118
organisation loyalty 118, 182
to small firms 229
store loyalty 182
loyalty cards 118, 197
M
McCormack, Mark *4001
McDonalds *334, *104, 111
customer complaints *21112
macroeconomy 6
Madame Tussauds *217
management
awareness (introductory) level 362
education 410
expert level 362
functions 368
generalist level 362
overstaffing in *499
professionalisation of 246
shift to leadership 498503
standards *3612
status, prestige and expertise
*3612
styles 3768
see also leadership
managementcustomer interface 206
management development 40730
action learning 4201
application of 408
areas of need and want 41213
BBC *3878
coaching 4212, *423
expertise 4089, 4225
further reading 430
guidance 4212
individual and collective action
41921
individual and collective enterprise
41819
of key figures 4279
key principles 414
knowledge 4089
mentoring 4212
occupational aspects 413
organisational aspects 413
performance
measurement/appraisal 4267
personal aspects 413
product and service enhancement
and 41416
professional aspects 413
scope of 408, 41112
strategic basis for 41227
succession 41618
top managers 428
transformation 41618
managementstaff interface 207
management systems
as barriers to change 245
customer interface and 207
managerial grid 3768
managers
ability to survive 4289
clarity of thought 429

credibility 428
pay and rewards, top managers
*424
see also management entries
Manchester City football club, new
brooms at *37980
Manchester United football club
*3012
Manpower Services Commission
(MSC) *243
manufacturing
manufacturing chain 94
Marconi *242, *343
margarine, differentiation and price
*1089
marginal costs 84
market captivity, see captive market
market fluidity 5, 299
market foothold 1756
marketing
e-businesses 484
Eurostar *1434
joint activities 143
strategies 143
market orientation 48
market position, influencing success
339
market research 143
markets
incremental approach to 99
market segmentation, see
segmentation
market size, as entry barrier 68
market standing, influencing success
3389
Marks & Spencer *447
clothing *18
refund and replacement policy
*210
Mattel Inc. *356, *181
code of conduct in manufacturing
*189
meddling 398
Melton Windows Ltd *190
mentoring
4212
mergers and acquisitions 163, 48994
cultural fit 489
factors in *4923
forecasts and projections 4913
human resource management
4901
job and work evaluation *4901
Index
results 4913
share value 493
staff integration *4901
technology and 490
University mergers *2523, *4934
Metropolitan Police, organisation
development (OD) initiatives *390
Millennium Dome *12
Milliken and Co. *45
missionary, as
missionary structure 272
Mitsubishi, investment levels *151
model employer 95, 31930
behaviour 3234
The Body Shop as *96
communication and 321
conformity 320
demeanour 3234
employee development 323
employee maintenance 324
equality 3246
fairness 3246
participation 3201
paternalism 320
pay and reward 3212
professionalism 319, 31920
staff involvement *3256
summary of standards for 3301
workforce as stakeholder 321
workplace 322
monitoring processes 138
moral pricing 119, 121
motor vehicles
car manufacturing 93
Ford *211
multipurpose vehicles (MPVs)
*185
Toyota *211
Volkswagen Beetle *223
multi-industry companies 288
multimarket companies 288
multinational organisations 112
multiproduct companies 288
multipurpose vehicles (MPVs) *185
multisourcing 17
mutual benefit organisations, primary
beneficiaries 75
mutuality, in leadership 371
N
name changes 393, *393
National Health Service, see NHS
national vocational qualifications
(NVQs) *362
network organisation 272
Network Rail, maintenance work *64
Newcastle United football club *309
NHS
body armour for nurses *469
employment in *461
services privatised 474
waiting lists *4667

see also health authorities;
healthcare
NHS Online *488
Nissan *924
globalisation *43840
non-leaders, v. leaders *36970
not-for-profit sector 3356
nurses, body armour for *469
NVQs (national vocational
qualifications) *362
O
objectives, divergence of, in
hierarchies 276
offensive strategies 100, 11314
oil
costs and availability 6
supplier groups 58
operational aims and objectives 348
operational groups 401
operational integration 4034
operational management, influencing
success 339
opportunities, in SWOT analysis 79
opportunitycapability match 149
opportunity costs 86
organisation behaviour, influencing
success 340
organisation characteristics 1389
organisation constitution, risk
assessment and 295
organisation culture 150
risk assessment and 2956
strategic influences on 38893
and structure 38793
organisation design 1389
organisation development (OD)
383406
at the BBC *3878
commitment in 3856, 405
definition 384
enduring and effective 386
further reading 406
key outputs 385
key qualities for 3845
at the Metropolitan Police *390
organisation structure 38793
outputs 385
and product and service
performance 4015
organisation loyalty 118, 182
organisation structure 26390
ad hocracy 272, 285
authority 279
capabilities of 2645
centralisation 270
core organisations 2802
and culture 38793
515
decentralisation 2702
dispersed 267
divisional 267
divisionalised bureaucracy 272
easyJet *265
factors affecting 264
federations 2825
flat structures 270
functional 267
functional relationships 2789
further reading 290
head office 2723
hierarchies 2757
holding companies 273
line and staff 267
line relationships 2778
Mintzberg model 271
missionary 272
network organisation 272
peripheral organisations 2802
principles of 272
professional bureaucracy 272
pyramid structures 266, *26970
relationships 27780
reporting relationships 280
service relationships 280
simple 267, 272
spans of control 2745
staff relationships 2789
strategic influences on 38893
structural forms 26670
tall structures 26670
technocracy 272
traditional 268
tree structures 266, *26970
ostentation *322
outsourcing 173, 2857
problems and issues *1734
public service cleaning contracts
*2867
terminology 30
overcapacity, as reason for change 238
P
package holidays *225
mix 11617
see also travel; travel agencies
Packard effect 192
Pan-Am, failure to communicate
*3989
participation 3201
partnering, globalisation and 4446
partnerships 161
passing trade 202, 231
paternalism 320
patience, in coaching/mentoring 422
pay and rewards 3212, 4978
payroll costs *239
for top managers *424
see also wage levels
516
Index
payback and returns, in risk analysis

305
people carriers *185
percentages, curse of 11
performance
assessing 343
gaps 3512
quantitative measures 3434
performance development 3536
contribution of strategic
management 3534
at Unilever *354
performance management 33456
aims and objectives of 34851
clarity of purpose in 337
further reading 356
precise measures 338
see also performance; performance
development; success
performance measurement/appraisal
4267
peripheral businesses 1923
reasons for 192
peripheral organisations 2802
personality segmentation 183, *1834
PEST analysis, see STEP analysis
PFIs (private finance initiatives) 4767
physical power 247
piggybacking, globalisation and 4456
pilot studies 132
pioneering, familiaritypioneering
mix 149
pipelines 7
Polegate Ltd *8
political issues
in change management 2423,
244, 248
pressures 20
in privatisation 475, *4756
politics, organisational 429
pollution 314, *327, 3289
see also effluent; waste management
Porter, Michael 1002
competitive advantage model 102
competitive strategy model 100
value chain 91, 95
portfolio analyses, see product and
service portfolio
power
charismatic 247, 372
expert 247
physical 247
of products/services 220
resource 247
sources of 24750
traditional 247
PPPs (publicprivate partnerships)
4767
pressure groups 37, 130, 247
pressures
in competitive positioning 65
environmental 614
external 65, 130
legal 20
political 20
range of 74
technological 20
see also economic pressures;
pressure groups; social
pressures
presumed business strategy 11
Pret a Manger *121
price-based strategies 102, 103
Priceline.com *13
price regulation
utilities *119
see also regulatory bodies
prices
considerations in setting 120
geographical factors 120
moral pricing 119, 121
price/quality/value mix 115, 118
mix 120
mix 11517, 121, *121, 187
price/value balance 117
price/value/quality balance 120
regulation of, see price regulation;
regulatory bodies
skimming 11819
value lines 184
pricing policies, cost management and
*867
primary beneficiaries 756, *767
priorities 1289
changing 1678
establishing 39
investment appraisal and 1678
resources 167
of strategic management 4
of strategy 4
prison service
private prisons *310
targets *474
private finance initiatives (PFIs) 4767
privatisation
political reasons for 475, *4756
of public services 4747
problem-solving model 131
Procter & Gamble, investment
appraisal and risk *162
product and service performance
operational extension 402
organisation development and
4015
product and service portfolio
analyses 2268
Boston Group matrix 2278
Drucker approach 2267, 2278
production
spare 192
statistics 346
production time 165
productivity, redundancies/lay-offs
and *239
products and services
after-sales support 143
ageing/obsolescence as reason for
change 238
benefits 21921
in context of total selling process
215
creativity needs and 21920
damp squibs *225
decline phases 223
defects 210
dominant 188
dominant product strategy 11011
durability 187
economic rent 117
effective portfolios 193
ego gratification 219
enhancement of, and management
development 41416
ethical/environmental factors
2234
exclusivity 146, *15960, 184, *185
familiarity of 224
financial 221
fire allegory *2245
further reading 233
illusions associated with 186
incremental approach to 99
life cycle assessment 143
life cycles 2215
locational factors 223
as love objects 220
market-led 21819
nature of 1867
one-product strategy 11011
performance, see product and
service performance
personal endorsement 223
portfolio analyses 2268
power of 220
product and service-led 21819
product range 1756
providing emotional security,
comfort and confidence 219
range of, and value-added process
945
reassurance of worth 219
refunds and replacements 210
reliability 108
seasonal sales 223
specialisation 110
strategic management of 21433
substitution of 834
traditions and roots 220
and value added concept 945
withdrawals 1617, *330
Index
professional assurance/confidence 197
professional bureaucracy 272
professionalisation 31920
professionalism 31920
professional products/services, website
activity 485
professions
commitment in 26
status and rewards 24, 26
tenets and values of 245
profit 534
definition 53
profitability, influencing success 341
profit margins, as reason for change
238
projections and forecasts 3844, 132,
3458
air travel *401
evaluation of 40
external factors 41
in mergers and acquisitions 4913
resource constraints 39
in risk management 297
what if? 414
project work, individual 418
promises
needing to be kept 3940, *40,
*344, 355
raising expectations 4245
publicprivate partnerships (PPPs)
4767
public relations, e-business 484
public service institutions
imbalance between service
delivery staffing and
administration 2423
need for triumphs 2423
outsourcing *2867
public services 45681
budget cycle management 4712
budgets 4702
capital and revenue expenditure
*476
choice in 468
cost focus, see cost focus in public
services
customer/client analyses 46770
customer/client types 4689
decision-making in 47880
effectiveness 54
financial figures 378
financial management 4702
footpath repairs *463
funding analysis 37
further reading 481
generic strategy 4589
government responsibilities 4578
highway repairs *463
information from 378
management development in
47780
moral pricing 121
operational hierarchy 460

performance management 4724
private finance initiatives (PFIs)
4767
privatisation 4747
publicprivate partnerships (PPPs)
4767
restructuring 4747
service location 4647
service provision 4647
statistics and financial figures 378
targets in *474
volume of activities 567
what if? thinking 44
see also NHS; public transport;
public utilities; railways
public standing *3501
and use of resources *3423
public transport
alternative purchases *2312
choice in *475
privatisation 474
see also airlines; railways
public utilities
market for *475
primary beneficiary 75
privatisation *119, 474
publishing, back-list sales *193
purchasing
just-in-time approach 1445
patterns 1445
strategies 1445
purpose
149
see also clarity of purpose
pursuits, segmentation by 1856
Q
qualifications, management 410
quality
mix 120
mix 11517, 121, *121, 187
segmentation by 1845
understanding of, in leadership 371
quality assurance, in practice *1734
quality orientation 47
queuing 347
R
R&D, see research and development
radical strategies 99, 113
Japanese organisations in the West
113
517
railways
Channel Tunnel construction costs
*31
Chiltern Railways service delivery
*4656
Crossrail scheme *465
Eurostar marketing strategies
*1434
Heathrow *1734
maintenance work *64
punctuality *46970
reliability *46970
Strategic Rail Authority (SRA)
*46970
UK rail travel *38
Virgin Rail *18990
see also public transport
reach, global 434
realpolitik 398
redeployment *32
redlining *32930
redundancies 16, *32, *239
re-entry, threat of 84
refunds 210
regulation, threat of 84
regulatory bodies
see also price regulation
rejection, global management and
448
relationships
with customers/clients 1967,
20412
international organisations and
local community 4413
workplace relations 38991
relocation 2445
replacements 210
reputation
core business influencing 188
as exit barrier 69
factors in achieving 187
global 432
research and development
resource allocation 1356
resource bargaining 135
resource power 247
resources
adequate levels of 338
constraints 39
matching demands, capability and
21518
pecking order 134, 136
prioritising 167
profligacy in use of? *3423
utilisation influencing success 339
518
Index
respect, in globalisation 441, 454

responses, to economic pressures 914
responsibilities, of government 4578
responsibility
in hierarchies 276
of leaders 368
responsiveness, in leadership 362,
*363
restaurants, value-added strategies
*104
restructuring *32
of public services 4747
returns on capital employed (ROCE)
36, 132, 134, 156
returns on investment (ROI) 36, 132,
134, 156, 1578
range of 1578
technology/capital equipment 171
review processes 138
reward cards 197
reward levels, see pay and rewards
rigidity, in hierarchies 277
ringi *438
RIRO (rubbish in = rubbish out) 152
risk
duration/durability considerations
3045
and reward *2923
and sensitivity 302
spreading the risk 3001
v. uncertainty 293
what if? approaches 3024, 305
risk analysis 300
crises 309
customer/client behaviour 306
failure, consequences and
assessment of 3079
market size/scope/scale 3069
payback and returns 305, *305
success, assessment of 309
success, consequences of 3067
risk assessment
components of 293300
economic issues 2945
evaluation 2979
in investment appraisal 1615
monitoring 2979
organisation constitution 295
political issues 2945
review 2978
social issues 2945
strategic base 296
risk management 291312
early warning systems 298
further reading 312
high risk strategies *2923
increased emphasis on 292
information 2978
interdependence of activities 300
market captivity 299

operational effectiveness 299
projections 297
sectoral trends 299
strategic aspects 299
substitutes 299
success, requirements critical to
299300
time factors 299
rivalry 5760
role models, in leadership 364, *365
Rolls-Royce *101
Ryanair *9
S
Safeway, Competition Commission
Report *158
Sainsburys
*158
salary levels
see also pay and reward
sales, turnover target *352
Sandals weddings *4034
Sanyo UK
human resource strategy *1412
trade unions *142, *152
SARS epidemic *363
satisfaction, of customers/clients 2003
scapegoating 397
sea travel
Channel ferries *133
costbenefit analysis for cruise
liner 88
sea cruises 223
Sealink, minor complaints *209
secrets 398
as exit barrier 70
sectoral issues, in organisational
analysis 78
sectors, obligations to 314
segment, definition 179
segmentation 17986
by activities 1856
by buying patterns 182
demographic 1801
economic 1812
further reading 194
by interests 1856
by lifestyle *185, 185
by personality 183, *1834
by pursuits 1856
by quality 1845
social 17980
by status *185, 186
value of 1934
self-deception, corporate 398
self-managed workloads 401
SEMCO, strategic base *47
sensitivity, and risk 302

Serbia, investment opportunities in
*3034
servicebusiness process interface 207
service delivery, keiretsu/chaebol
approach 287
service organisations, primary
beneficiaries 75
service profit chain 204
service range 1756
services, see products and services;
public services
shared values 150
shareholders
expectations *337
share price and value concentration
27
short-term advantage, as reason for
change 240
sidetracks *242
as reasons for change 241
Sinclair C5 *215
skills, in management development
409
skimming 11819
social issues
in change management 244
in organisational analysis 77, 80,
80, 81
social pressures 20
and strategy determination 316,
317
social segmentation 17980
social services, services privatised 475
soft drinks
competitive positioning 62
see also Coca Cola; Virgin Cola
Sony *164
attitudinal development and
transformation *417
sources of supply, multiplicity of 145
spans of control 2745
specialisation
component manufacture 110
see also focus
specialist groups 2478
specialist services
website activity 485
SPECTACLES analytical approach
778
spending patterns 117
of customers/clients 231
Sprint PCS *13
staff
availability of, as entry barrier 66
concern for, in leadership 371
costs 4945
expectations *337
hierarchies and 276
Index
integration in mergers and
acquisitions *4901
involvement *3256
levels/expertise as reason for
change 238
obligations to 314
performance influencing success
340
at Sanyo UK *1412
training 1401
trust in *417
use of time clocks *13940
see also lay-offs; pay and rewards;
redundancies; workforce
staffcustomer interface 207
staffmanagement interface 207
stakeholder groups 248, 343
stakeholder interests, in UK
healthcare *489
stakeholders
drives to change 2489
exclusion of needs *5001
expectations *337
fairness in dealing with varying
interests 343
gaining support of *337
knowledgeinfluence axis 2489
obligations to 31415
orientation 48
restraints to change 2489
trade unions as *1512
value creation for 24
workforce as 321
standards, global 434
Starbucks, fair trade *175
statistics
explanations needed 367
questions about 37
strategic approach to 368
status, segmentation by *185, 186
STEP (social, technological, economic,
political) analysis 801
Stew Leonard Inc. *196
core needs *415
store loyalty 182
strategic analysis 7397
strategic base 469
components of 479
risk assessment and 296
SEMCO *47
Virgin Group *46
strategic drift 1479
strategic management
evolution of 27
further reading 22, 154, 504
overview 21
Strategic Rail Authority (SRA)
*46970
strategic thinking 2350
competitive thinking 326
components of 268
development of 49
discipline of 268, 49
expertise as basis for 25
further reading 50
in globalisation organisations 4523
a management essential 4950
strategic base 469
timescales 445
see also language
strategy 414
aspects for consideration 4
corporate strategy 27
for globalisation 4437
goal/objective 24, 33
human resource strategy 1401
implementation 12930
presumed business strategy 11
priority of 4
see also competitive strategy
strengths, in SWOT analysis 789
structure, see organisation structure
structure/systems/style mix 14950
style, structure/systems/style mix
14950
subcontracting, globalisation and
4456
substance, product durability 187
substitution, of products and services
834
success 1635
assessment 309
components of 33844
consequences of 1634, 3067
critical factors 1304, *133
prerequisites for 3368
projections of 1523
requirements critical to 299300
see also triumphs
suggestion schemes 418
sunk costs 85
supermarkets
bargaining powers *83
and profiteering *158
supervision v. autonomy 4012
supplier groups 58
suppliers
bargaining powers 82
expectations *337
obligations to 314
overseas 7, *8
supply side
demand fluctuations 7
economic pressures 79
hammering 1720, 32
management 27
supply strategies 1445
519
surgeon role, in leadership 367

Swatch *1011
switching costs 67, 85
SWOT (strengths, weaknesses,
opportunities, threats) analysis
7880
sympathy, in coaching/mentoring 422
synergies 28, *29
systems, structure/systems/style mix
14950
T
Taittinger Champagne *15960
takeovers 163
talent 4948
targets, in public services *474
technocracy 272
technological issues
in change management 244
globalisation and joint ventures
447
technological pressures 20
technology
and the customer *208
as entry barrier 63
in management development 409
maximisation 128
mergers and acquisitions and 490
time for familiarisation with 405
telecommunications, costs and
availability 6
terminology, see language
terrorism, effect on airlines of 9/11
910, *9
Tesco
*158
customers/client analyses *1978
Tetleys Tea *21718
textiles
Milliken and Co. *45
see also clothing; garment
manufacture
thinking
blue-sky thinking 28
competitive 326
global 433, 4523
the unthinkable 28
what if? 414, 3024, 305
see also strategic thinking
threats, in SWOT analysis 79
3M, innovation *5960
time, price/quality/value/volume/time
mix 11517, 121, *121, 187
time clocks *13940
520
Index
timescales 146, 1657

at British Bakeries *1467
investment appraisal 1657
medium/long-term 445
profit and 54
seasonal deadlines 45
short-term 445
in strategic thinking 446
total costs 86
total quality management (TQM)
*2401
touch-time *165
toxicity, organisational, in
communication 396, 397401
Toyota, customer complaints *211
toys *43
TQM (total quality management)
*2401
trade unions 248
at Sanyo UK *142, *152
as stakeholders *1512
trading conditions 1415, 18, 19
tradition(s)
promoting products/services 220
traditional power 247
traffic congestion charge *294
training
national initiatives *243
of staff 1401
transcendence, global management
and 448
transformatory strategies, see radical
strategies
transport
difficulties with 7, *8
see also public transport
trappings *322
travel
ticket sales, website activity 485
see also airlines; public transport;
railways; sea travel
travel agencies 224
see also package holidays
triumphs
need for, as reason for change
2423
see also success
trust, in employees *417
turnover target *352
tyrant, as leadership/management
type 376
U
uncertainty, v. risk 293
undercapacity, as reason for change
238
understanding
unfreezing-change-refreezing
approach to change management
2535
shortcomings in *2545
Unilever
performance appraisal strategy
*426
performance development *354
Union Antiques Ltd *190
Universities, mergers *2523, *4934
upturns, economic 15
user-friendliness, of management
systems 207
utilities, see public utilities
V
value 1201
loss of, external reporting *924
mix 120
mix 11517, 121, *121, 187
price/value balance 117
value-added process 945, *1656
value-added strategies 102, 103
restaurant sector *104
value analysis 8896
value chain 902, 95
in cost analysis 93
value creation 33
as goal/objective of strategy 24,
33
value criteria, low cost airlines *8990
values
in leadership 360, 371
see also shared values
variable costs 84
vehicles, multipurpose (MPVs) *185
venture capitalists 151
ventures, new
confidence in 161
policy and direction 15860
vested interests 24, 247
as barriers to change 245
Virgin Cola *1645
failure to analyse environment *97
SWOT analysis 79
Virgin Group 288, *2923
brand stretching *18990
and Concorde *367
strategic base *46
Virgin Rail *18990
see also Virgin Cola
visionary role, in leadership 363

Volkswagen Beetle, product life cycle
*223
volume
mix 120
mix 11517, 121, *121, 187
W
wage levels
v. work commitment *386
see also pay and rewards
wanderer role, in leadership 364,
*3656, 380, *400
wastage, as exit barrier 70
wastelands, industrial *328
waste management 21, 314, 3289
see also effluent; pollution
watch making, Swiss *1011
Wawel (The Castle) Magazine *2989
weaknesses, in SWOT analysis 79
websites, see e-business; internet
weddings *4034
Weinstock, Arnold *242, *4001
Wella, investment appraisal and risk
*162
what if? 414, 3024, 305
wholesaling, website activity 485
willingness, globalisation and 4403
window shoppers 202
withdrawal
costs 856
decommissioning process 70
products and services 1617
threat of 84
work design, at Sanyo UK *142
workforce
as stakeholder 321
structure influencing success 340
work groups 401
work hours 401
working conditions, management of
*495
workloads, self-managed 401
work locations 3912
work methods 4956
work patterns 3912
workplace 322
family-friendly *5
relations 38991
World class, application of term *13
Y
Yamaha 288

Strategic Management

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Strategic Management

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Full contents

List of figures and tables

I: The context and environment of strategic management

The nature of competition

Analysing the environment

WORK ASSIGNMENTS AND DISCUSSION QUESTIONS

Competing with Whom: Competing for What?

WORK ASSIGNMENTS AND DISCUSSION QUESTIONS

Primary and Other Beneficiaries

The foundations of competitive strategy

Value Criteria for Low-cost Air Travel Sector

WORK ASSIGNMENTS AND DISCUSSION QUESTIONS