Exploring Strategy Text & Cases (10th Edition) Johnson

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TENTH EDITION

•
TENTH
EDITION
•

ANGWIN • REGN R
JOHNSON • WHITTINGTON • SCHOLES
•

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 Exploring Strategy Text & Cases (10th Edition) Johnson

WELCOME TO
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Strategy is a crucial subject. It’s about the development, success and failure of all kinds of
organisations, from multinationals to entrepreneurial start-ups, from charities to government
agencies, and many more. Strategy raises the big questions about these organisations – how
they grow, how they innovate and how they change. As a manager of today or tomorrow,
you will be involved in shaping, implementing or communicating these strategies.
Our primary aim with Exploring Strategy is to give you a comprehensive understanding of
the issues and techniques of strategy. We can also help you get a great final result in your
course. You can make the most of the text by:
● Exploring hot topics in cutting-edge issues such as competition, corporate governance,
innovation and entrepreneurship and strategy in practice.
● Engaging with the ‘Key Debates’ and the different strategy ‘lenses’ to get new perspec-
tives and set you on your way to better grades in your assignments and exams.
● Pursuing some of the recommended readings at the end of each chapter. They’re spe-
cially selected as accessible and valuable sources that will enhance your learning and
give you an extra edge in your course work.
After you’ve registered with the access code (either in the back of this book or available
separately online), visit Exploring Strategy at www.mystrategylab.com to find essential student
learning material including:
● The Strategy Experience simulation, which gives you practical hands-on experience of
strategic decision making in organisations. As a Director of the Board, you must deal
with opportunities as they arise, and your decisions will affect the company’s perfor-
mance. Choose wisely!
● A personalised study plan based on feedback that identifies your strengths and weak-
nesses, then recommends a tailored set of resources that will help to develop your
understanding of strategy.
● Video case studies on organisations including Eurostar, Sony Pictures and the British
Heart Foundation that put a spotlight on strategy in practice.
We want Exploring Strategy to give you what you need: a comprehensive view of the sub-
ject, an ambition to put that into practice, and – of course – success in your studies. We
hope that you’ll be as excited by the key issues of strategy as we are!
So, read on and good luck!

Gerry Johnson
Richard Whittington
Kevan Scholes
Duncan Angwin
Patrick Regnér

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 Exploring Strategy Text & Cases (10th Edition) Johnson

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Gerry Johnson, BA, PhD, is Emeritus Professor of Strategic Management at Lancaster University School of
Management. He has also taught at Strathclyde Business School, Cranfield School of Management, Manchester
Business School and Aston University. He is the author of numerous books and his research has been published in
many of the world’s foremost management journals. He is also a partner in the consultancy partnership Strategy
Explorers (see www.strategyexplorers.com), where he works on issues of strategy development and strategic change.

Richard Whittington, MA, MBA, PhD, is Professor of Strategic Management at the Saïd Business School, University
of Oxford. He is author or co-author of nine books and serves on several editorial boards. He has had full or visiting
positions at the Harvard Business School, HEC Paris, Imperial College London, the University of Toulouse and the
University of Warwick. He is a partner in Strategy Explorers and active in executive education and consulting. His current
research focuses on strategy practice.

Kevan Scholes, MA, PhD, DMS, CIMgt, FRSA, is Principal Partner of Scholes Associates, specialising in strategic
management. He is also Emeritus Professor of Strategic Management and formerly Director of the Sheffield Business
School. He has extensive experience of teaching strategy internationally as well as working in the private and public
sector. He is a Companion of The Chartered Management Institute.

Duncan Angwin, MA, MPhil, MBA, PhD, is Professor of Strategy at Oxford Brookes University. He is author of six
books and 38 journal articles and serves on several editorial boards. He sits on the advisory board of the M&A
research centre, Cass Business School, London and on the Academic Council of ENPC Paris. He is active interna-
tionally in executive education and consulting, His current research focuses on mergers and acquisitions, strategy
practice and international management.

Patrick Regnér, BSc, MSc, PhD, is Associate Professor of Strategic Management at Stockholm School of Economics.
He serves on several editorial boards and has published numerous articles in leading academic journals. He has
extensive experience of teaching strategy internationally. He conducts executive training and consulting with organ-
isations worldwide. His research interests are in strategy creation and change and international management.

Follow the authors’ latest comments on the strategy issues of this book at https://twitter.com/ExploreStrategy.

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 Exploring Strategy Text & Cases (10th Edition) Johnson

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TE NTH EDIT ION

GERRY JOHNSON
Lancaster University Management School

RICHARD WHITTINGTON
Saı¨d Business School, University of Oxford

KEVAN SCHOLES
Sheffield Business School

DUNCAN ANGWIN
Oxford Brookes University

PATRICK REGNÉR
Stockholm School of Economics

With the assistance of Steve Pyle

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 Exploring Strategy Text & Cases (10th Edition) Johnson

Pearson Education Limited

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First edition (print) published under the Prentice Hall imprint 1984
Fifth edition (print) published under the Prentice Hall imprint 1998
Sixth edition (print) published under the Financial Times Prentice Hall imprint 2002
Seventh (print) edition 2005
Eighth (print) edition 2008
Ninth edition (print) 2011
Tenth edition published 2014 (print and electronic)

© Simon & Schuster Europe Limited 1998 (print)

© Pearson Education 2002, 2011 (print)
© Pearson Education Limited 2014 (print and electronic)

The rights of Gerry Johnson, Richard Whittington, Kevan Scholes, Duncan Angwin and Patrick Regnér
to be identified as authors of this work have been asserted by them in accordance with the Copyright,
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Text only
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Text and cases

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NOTE THAT ANY PAGE CROSS-REFERENCES REFER TO THE PRINT EDITION

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Chapter 1 Introducing strategy 2

PART I THE STRATEGIC POSITION 29

Introduction to Part I 30
Chapter 2 The environment 32
Chapter 3 Strategic capabilities 68
Chapter 4 Strategic purpose 106
Chapter 5 Culture and strategy 140
Commentary on Part I The Strategy Lenses and the Strategic Position 174

PART II STRATEGIC CHOICES 187

Introduction to Part II 188
Chapter 6 Business strategy 190
Chapter 7 Corporate strategy and diversification 224
Chapter 8 International strategy 260
Chapter 9 Innovation and entrepreneurship 294
Chapter 10 Mergers, acquisitions and alliances 328
Commentary on Part II Strategic Choices 360

PART III STRATEGY IN ACTION 363

Introduction to Part III 365
Chapter 11 Evaluating strategies 366
Chapter 12 Strategy development processes 402
Chapter 13 Organising for success 432
Chapter 14 Leading strategic change 464
Chapter 15 The practice of strategy 500
Commentary on Part III Strategy in Action 534

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 Exploring Strategy Text & Cases (10th Edition) Johnson
vi BRIEF CONTENTS

Glossary 537
Index of names 543
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General index 549
Acknowledgements 559

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The authors ii
Illustrations and Key Debates xvii
Figures xx
Tables xxiii
Preface xxv
Exploring Strategy xxvii
Guided tour xxix

1 INTRODUCING STRATEGY 2
Learning outcomes 2
Key terms 2
1.1 Introduction 3
1.2 What is strategy? 3
1.2.1 Defining strategy 3
1.2.2 Levels of strategy 7
1.2.3 Strategy statements 8
1.3 The Exploring Strategy Model 10
1.3.1 Strategic position 11
1.3.2 Strategic choices 12
1.3.3 Strategy in action 13
1.4 Working with strategy 15
1.5 Studying strategy 17
1.6 Doing strategy differently 19
1.6.1 Exploring strategy in different contexts 19
1.6.2 Exploring strategy through different ‘strategy lenses’ 20
Summary 22
Video assignments 22
Work assignments 22
Recommended key readings 23
References 23
Case example: Glastonbury: from hippy weekend to international festival 24

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 Exploring Strategy Text & Cases (10th Edition) Johnson
viii DETAILED CONTENTS

PART I
THE STRATEGIC POSITION
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Introduction to Part I 30

2 THE ENVIRONMENT 32
Learning outcomes 32
Key terms 32
2.1 Introduction 33
2.2 The macro-environment 34
2.2.1 The PESTEL framework 34
2.2.2 Building scenarios 37
2.3 Industries and sectors 41
2.3.1 Competitive forces – the Five Forces Framework 41
2.3.2 The dynamics of industry structure 49
2.4 Competitors and markets 54
2.4.1 Strategic groups 54
2.4.2 Market segments 56
2.4.3 Competitor analysis and ‘Blue Oceans’ 58
2.5 Opportunities and threats 59
Summary 61
Video assignments 61
Work assignments 62
Recommended key readings 62
References 63
Case example: Global forces and the advertising industry 64

3 STRATEGIC CAPABILITIES 68

Learning outcomes 68
Key terms 68
3.1 Introduction 69
3.2 Foundations of strategic capability 70
3.2.1 Resources and competences 70
3.2.2 Dynamic capabilities 71
3.2.3 Threshold and distinctive capabilities 73
3.3 ‘VRIO’ strategic capabilities as a basis of competitive advantage 76
3.3.1 V – value of strategic capabilities 76
3.3.2 R – rarity 77
3.3.3 I – inimitability 77
3.3.4 O – organisational support 80
3.3.5 Organisational knowledge as a basis of competitive advantage 80
3.4 Diagnosing strategic capabilities 82
3.4.1 Benchmarking 82
3.4.2 The value chain and value system 83
3.4.3 Activity systems 88
3.4.4 SWOT 91
3.5 Managing strategic capability 94

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DETAILED CONTENTS ix

Summary 97
Video assignments 98
Work assignments 98
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Recommended key readings 99
References 99
Case example: Rocket Internet – will the copycat be imitated? 102

4 STRATEGIC PURPOSE 106

Learning outcomes 106

Key terms 106
4.1 Introduction 107
4.2 Mission, vision, values and objectives 108
4.3 Owners and managers 111
4.3.1 Ownership models 111
4.3.2 Corporate governance 113
4.3.3 Different governance models 115
4.3.4 How boards of directors influence strategy 119
4.4 Stakeholder expectations 121
4.4.1 Stakeholder groups 121
4.4.2 Stakeholder mapping 122
4.4.3 Power 126
4.5 Social responsibility and ethics 127
4.5.1 Corporate social responsibility 127
4.5.2 The ethics of individuals and managers 129
Summary 133
Video assignments 133
Work assignments 134
Recommended key readings 135
References 135
Case example: Drinking partners: India’s United Breweries Holdings Ltd 137

5 CULTURE AND STRATEGY 140

Learning outcomes 140
Key terms 140
5.1 Introduction 141
5.2 Why is history important? 142
5.2.1 Path dependency 143
5.2.2 Historical analysis 145
5.3 What is culture and why is it important? 147
5.3.1 Geographically based cultures 148
5.3.2 Organisational fields 150
5.3.3 Organisational culture 152
5.3.4 Organisational subcultures 153
5.3.5 Culture’s influence on strategy 154
5.3.6 Analysing culture: the cultural web 155
5.3.7 Undertaking cultural analysis 160
5.4 Strategic drift 162
5.4.1 Incremental strategic change 162

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