The Essence of Corporate Strategy

Davis, J. and Devinney, T., The Essence of Corporate Strategy, Allen & Unwin Australia, September 1997

TABLE OF CONTENTS

Chapter 1: The Philosophy of Corporate Strategy

• The Logical Foundations of Strategy
• The Art and Science of Strategy

• The Domain of Strategy
  • Case 2.1: Michelin Pneumatics
  • Case 2.2: Game Theory and John Deere vs Caterpillar
• Implicit Theories of Strategy
  • Market Imperfections and Transaction Costs
    • Bounded Rationality and Uncertainty/Complexity
    • Commitment and Opportunism
  • The Resource Based Theory
    • Imitability
    • Durability
    • Appropriability
    • Substitutability
  • Summary - The Strategy Model
• The Manager and Society in Corporate Strategy
  • Goals
• Summary - The Role of Corporate Strategy

• Rational Decision Making
  • The Limits of Rational Decision Making
  • Avoiding Decision Traps
• Belief Systems
  • Case 3.1: Industrial Recipes and Iron Foundries
  • Mapping Belief Systems
    • Case 3.2: Cognitive Maps and Kinder-Care
  • The Rigidity of Belief Systems
• Recognising and Evaluating Corporate Culture
• Changing Beliefs and Culture
  • Changing Culture
    • Case 3.3: Changing Corporate Culture at FAI
  • Transferring Knowledge and Beliefs
• Summary - The Importance of Culture and Belief Systems

• Strategy as Matching Customer Value to Resources Through Business Processes
• The Value Chain
  • Case 4.1: Caterpillar Tractor - Using the Value Chain
• Sources of Competitive Advantage
  • Competitive Advantage - Time and Innovation
    • Case 4.2: Process and Product Innovation
  • Competitive Advantage - Capacity and Cost Position
  • Competitive Advantage - Segmentation
  • Vertical and Horizontal Integration
    • Case 4.3: The Benefits of Mini-Mills
  • Diversification and the Asset Portfolio
• Summary - Integrating the Framework

• What is Innovation?
  • Product Innovation
  • Process Innovation
    • Case 5.1: QFD - Developing Process and Product Innovation
• What Drives Innovation?
  • Case 5.2: The Historical Development of IBM
• What are the Advantages of Innovation?
  • First-Mover Advantages
    • Case 5.3: The Great Australian Bite
    • Case 5.4: Entry and Trial in the Face of First-Mover Advantage
  • Is Innovation Profitable?
  • The Follower's Strategy
• Cumulative Innovation and Time Based Competition
  • The Lessons of Time Based Competition
• Summary - Strategic Issues Associated with Innovation
  • Case 5.5: The Newton Saga

• What Determines Cost Differences?
  • Summary
• Learning, Experience and Technical Progress
  • Case 6.2: Organisational Learning at Analog Devices
  • The Learning Curve
    • Case 6.3: Learning at Volvo
  • The Role of Technical Progress
  • The Experience Curve
    • Case 6.4: Allis-Chalmers Up Against the Experience Curve
  • The Total Cost Dynamic
• Time Based Competition and Cost Determination
• Strategy and Cost Position
  • Case 6.5: The Fall and Rise of Compaq
• Summary - The Role of Cost in Competitive Strategy

• Case 7.1: ABB Electric - Achieving the Fruits of Segmentation
• The Logic of Market Segmentation
  • Case 7.2: The Average Cost Pricing Trap
• A Supply and Demand Perspective on Segmentation
  • Segmentation as Aggregation
• The Process of Strategic Market Segmentation
  • Segmenting Markets
  • Describing Market Segments
    • Case 7.3: Failed Segmentation in the Financial Planning Market
  • Evaluating Segment Attractiveness
  • Selecting Target Segments
    • Case 7.4: Market Upheaval and Market Segmentation in the Personal Computer Industry
    • Case 7.5: The Cost of Product Line Complexity
  • Positioning
• Summary - The Role of Segmentation

• Vertical vs Horizontal Integration
  • Case 8.1: Benetton - The Perfectly Vertically De-Integrated Company
• The Drivers of Vertical Integration
  • Joint Production Economics
  • Trade in Intermediate Products
    • Taxation and Vertical Integration
    • Market Failure and Vertical Integration
      • Case 8.2: Vertical Integration in the Aluminium Industry
  • Summary
• The Dark Side of Vertical Integration
  • Case 8.3: Du Pont/GM - Does Vertical Ownership Restrict Competition?
• Vertical Integration Strategy
  • Different Types of Vertical Integration
    • Case 8.4: Franchising the McDonald's Way
  • A Vertical Integration Strategy Matrix
• Summary - Benefits and Costs of Vertical Integration

• Related vs Unrelated Diversification
  • The Financial Returns to Diversification
    • Case 9.1: Bringing Focus and Performance to Parbury
  • What is Related Diversification?
  • Accounting for Market Failure in HI and Diversification
• What is the Role of the Corporate Centre?
  • Strategic Mission - The HQ as Leader
  • Performance Criteria - The HQ as Controller
    • Case 9.2: GE's Nightmare on Wall Street
  • Management of Cash Flows - The HQ as Banker
  • Management Interrelationships - The HQ as Coordinator
  • Management of Intangibles - The HQ as Protector
  • Summary
• The Product / Market Portfolio
  • The Growth Share Matrix
    • Case 9.3: The GSM and Texas Instruments
  • The Competitive Strength Matrix
  • The Life Cycle Matrix
  • Dissecting the Matrix Approaches
  • Understanding Risk and Diversification
• Summary - What Should go with What?

• A Framework for Understanding Rivalry
  • Case 10.1: The Five Forces and The Biotechnology Industry
• Defining Competitors
  • Table 10.1: BHP and Competitors
• Competitive Reaction
  • Payoffs and Complete Information
    • Case 10.2: Marlboro Friday
    • Case 10.3: Scheduling Rivalry in Film and Television
  • Payoffs, Outcomes and Mixed Strategies
  • Incomplete Information
    • Case 10.4: Incomplete Information and Litigation
• Enforcing Compliance - Reacting to Competitors' Reactions
  • Signalling
    • Case 10.5: The Anglo-Hanse Trade Wars, 1300-1700
• Summary - Rules for Rivalry
• Appendix to Chapter 10: Standard Industrial Classification Codes

• Dissecting Strategic Business Problems
  • Organisational Constraints on Strategy Formulation
    • History and Belief Systems
    • Stakeholder Conflict
  • Understanding Business Process
  • Comparative and Competitive Advantage
  • Firm Structure
  • Competitors
• The Role of Strategic Planning
• The Role of the Strategist in the Strategic Planning System
• Summary - The Totality of Corporate Strategy