Chapters 1 and 2 contain fresh presentations on the importance of a clear, motivating strategic vision, stretch objectives, and rapid adaptation of strategy to newly unfolding market conditions and customer expectations. We continue to place strong emphasis on how and why a company’s strategy emerges from (a) the deliberate and purposeful actions of management and (b) as-needed reactions to unanticipated developments and fresh competitive pressures. The material in Chapter 1 underscores even more strongly that a company’s strategic plan is a collection of strategies devised by different managers at different levels in the organizational hierarchy and builds a case for why all managers are on a company’s strategy-making, strategy-implementing team. The worldwide organizational shift to empowered employees and managers makes it imperative for company personnel to be "students of the business" and skilled users of the concepts and tools of strategic management.

Chapter 4 now incorporates a full-blown discussion of all the concepts and analytical tools required to understand why a company’s strategy must be well matched to its internal resources and competitive capabilities. The roles of core competencies and organizational resources and capabilities in creating customer value and helping build competitive advantage have been given center stage in the discussions of company resource strengths and weaknesses. SWOT analysis has been recast as a tool for assessing a company’s resource strengths and resource weaknesses. There are new sections on determining the competitive value of specific company resources and assets and on selecting the competencies and capabilities having the biggest competitive advantage potential. The now standard tools of value-chain analysis, strategic cost analysis, benchmarking, and competitive strength assessments, however, continue to have a prominent role in the methodology of evaluating a company’s situation—they are an essential part of understanding a company’s relative cost position and competitive standing vis-à-vis rivals.

Together, the material in Chapter 3 (Industry and Competitive Analysis) and Chapter 4 (Evaluating Company Resources and Competitive Capabilities) creates the understanding for why managers must carefully match company strategy both to industry and competitive conditions and to company resources and capabilities. The role of Chapter 3 is to set forth the now familiar analytical tools and concepts of industry and competitive analysis and demonstrate the importance of tailoring strategy to fit the circumstances of a company’s industry and competitive environment. The role of Chapter 4 is to establish the equal importance of doing solid company situation analysis as a basis for matching strategy to organizational resources, competencies, and competitive capabilities.

Chapter 5 contains a major new section on using cooperative strategies to build competitive advantage. Chapter 6 features a new section on competing in industry situations characterized by rapid-fire technological change, short product life-cycles, frequent moves by competitors, and/or rapidly evolving customer requirements and expectations. It also includes more extensive discussions of strategic alliances to enhance a company’s competitiveness in both high-velocity and global markets.

We continue to believe that global competition and global strategy issues are best dealt with by integrating the relevant discussions into each chapter rather than partitioning the treatment off in a separate chapter. The globalization of each chapter, a prominent feature of the two previous editions, is carried over and strengthened in this edition, plus we’ve added more illustration capsules to highlight the strategies of non-U.S. companies.

We have recast our analytical treatment of corporate diversification strategies in Chapters 7 and 8, eliminating much of the attention formerly given to drawing business portfolio matrices and instead putting the analytical emphasis on (1) assessing industry attractiveness, (2) evaluating the company’s competitive strength in each of its lines of business, (3) appraising the degree of strategic fits among a diversified company’s different businesses, and (4) appraising the degree of resource fit among the different businesses. You’ll find a very strong resource-based view of the firm in the recommended methodology for evaluating the pros and cons of a company’s diversification strategy. Chapter 8 continues to incorporate analytical use of the industry attractiveness/business strength portfolio matrix because of its conceptual soundness and practical relevance, but we have abandoned coverage of the flawed growth-share matrix and the little-used life-cycle matrix.

The three-chapter module (Chapters 9–11) on strategy implementation features a solid, compelling conceptual framework structured around (1) building the resource strengths and organizational capabilities needed to execute the strategy in competent fashion; (2) developing budgets to steer ample resources into those value-chain activities critical to strategic success; (3) establishing strategically appropriate policies and procedures; (4) instituting the best practices and mechanisms for continuous improvement; (5) installing information, communication, and operating systems that enable company personnel to carry out their strategic roles successfully day in and day out; (6) tying rewards and incentives tightly to the achievement of performance objectives and good strategy execution; (7) creating a strategy-supportive work environment and corporate culture; and (8) exerting the internal leadership needed to drive implementation forward and to keep improving on how the strategy is being executed.

The eight-task framework for understanding the managerial components of strategy implementation and execution is explained in the first section of Chapter 9. The remainder of Chapter 9 focuses on building an organization with the competencies, capabilities, and resource strengths needed for successful strategy execution. You’ll find welcome coverage of what it takes for an organization to build and enhance its competencies and capabilities, develop the dominating depth in competence-related activities needed for competitive advantage, and forge arrangements to achieve the necessary degree of collaboration and cooperation both among internal departments and with outside resource providers. There is much-expanded treatment of the task of building resource strengths through collaborative alliances and partnerships. We’ve continued the coverage initiated in the last two editions concerning the pros and cons of outsourcing noncritical activities, downsizing and delayering hierarchical structures, employee empowerment, reengineering core business processes, and the use of cross-functional and self-contained work teams. The result is a powerful treatment of building resource capabilities and structuring organizational activities that ties together and makes strategic sense out of all the revolutionary organizational changes sweeping through today’s corporations. So far, the efforts of companies across the world to organize the work effort around teams, reengineer core business processes, compete on organizational capabilities (as much as on differentiated product attributes), and install leaner, flatter organization structures are proving to be durable, fundamental additions to the conventional wisdom about how to manage and valuable approaches for improving the caliber of strategy execution.

As before, Chapter 10 surveys the role of strategy-supportive budgets, policies, reward structures, and internal support systems and explains why the benchmarking of best practices, total quality management, reengineering, and continuous improvement programs are important managerial tools for enhancing organizational competencies in executing strategy. Chapter 11 continues to deal with creating a strategy-supportive corporate culture and exercising the internal leadership needed to drive implementation forward. There’s coverage of strong versus weak cultures, low-performance and unhealthy cultures, adaptive cultures, and the sustained leadership commitment it takes to change a company with a problem culture, plus sections on ethics management and what managers can do to improve the caliber of strategy execution.

There are 17 new or revised Illustration Capsules.