Read chapter 11 Thompson text
Company strategies cannot be executed well without a number of support systems to carry on business operations.

Using the Library resources, search for recent (five years) articles that discuss how a company has used real-time information systems to aid the cause of effective strategy execution(I have searched and attached that).  Explain their use of the information and how it relates to our coursework from this week.  Based on our readings (Thompson text and other material) from this week, what one enhancement or addition would you recommend the company make and why?

NOTE: Make sure you choose a company that has not been selected by one of your classmates.

Your initial response to the discussion question should be 250-300 words.
You must have at least one course and one non-course scholarly/peer reviewed source in your initial posting.
Sources require in-text citations and must be incorporated into the body of the post in addition to a full APA citation at the end of the post.

Incorporate a minimum of one outside scholarly source to support your initial post.

Making IT global – what facility management brings to the table? Bartlomiej Gawin and Bartosz Marcinkowski

Department of Business Informatics, University of Gdansk, Sopot, Poland

ABSTRACT Globalization retains an imposing future for the managers of numerous companies, while the global information systems (IS) play a significant role in the connection, collection, access and analysis of information produced in interrelated operations from numerous national markets. The popularity of such systems in textile, manufacturing, finance and supply chain grows, as well as the development of IT support for global services remains a challenge. Through a Participatory Action Research project in a global service provider specialized in Facility Management, we investigated the necessity of introducing a systematic integrative approach by a national company for the Global System Development and approaching the issues emerging in a multinational context. As a result, an expansion model for a globalizing company was synthesized and the issues regarding its application discussed. The cultural differences involved in Facility Management market operation regarding both developing and developed European countries were identified and functionality, non-functional requirements and architecture of a global IS were elaborated. Finally, IS development strategy/development process management is outlined for corporations to achieve and maintain global competitiveness.

KEYWORDS Global IS; global operations system; global system development; IT and the global community; facility management

1. Introduction

Nowadays, numerous companies regardless of size and specialty attempt to expand beyond domestic markets – and such a global roll out of a national company requires a systematic integrative approach. In to achieve and maintain a competitive advan- tage through global markets, companies need to develop unique, company-specific assets (Zucchella & Siano, 2014) and consider adopting globally integrative strategies. As stated by Ives and Jarvenpaa (1991), foreign expansion can be categorized as one of the following approaches: multinational, global, international or transnational. While the definitional distinction of these concepts is important for the study of company business models, from an Information Technology (IT) standpoint these concepts might be gener- alized into Global Operations Systems (Chen & Fu, 2015) or Global Information Systems (IS) (Biehl, 2007). Furthermore, global trade and global market terms often refer – without

© 2017 Commonwealth Secretariat

CONTACT Bartosz Marcinkowski [email protected] Department of Business Informatics, University of Gdansk, Piaskowa 9, 81-864 Sopot, Poland Kweku-Muata Osei-Bryson is the accepting Associate Editor for this article.




distinguishing the aforementioned categories – to companies that transfer business beyond the b s of their domestic market in many ways.

Bartlett and Ghoshal (2002) suggest that companies operating in global markets need to control their worldwide operations, manage them in a globally coordinated manner as well as focus on the closer coordination of more and more complex global processes. Companies seek techniques for managing increasingly dense networks of subsidiaries, customers and suppliers (Biehl, 2007), while global coordination demands the control of information and communication between headquarters (HQ) and subsidiaries (Ives & Jar- venpaa, 1991). Successfully executing operations in different countries with varying cur- rencies, local government regulations, time zones, suppliers, labor laws, language and culture is considered a major advantage (Gray, 1999; Wager, 2010; Wang, 1993; Zorzini, Stevenson, & Hendry, 2012). While the aforementioned elements play an important role in business, the foundation of all these global endeavors is provided by IS that store, manipulate and disseminate data generated by daily business activity (Gray, 1999).

IS can coordinate global business, but a systematic approach is needed for the Global System Development (GSD) and for anticipating any special problems that may be faced in a multinational context (Gray, 1999). Silvius (2013) defines the Business/IT-alignment concept as “the degree to which IT applications, infrastructure and organization enable and shape the business strategy and processes, as well as the process to develop this.” However, the Business/IT-alignment complexity grows when it when it comes to GSD.

Related research review revealed that significant improvements in organizational per- formance can be achieved by resolving the problems of global IS implementation (Linton, 2002). The growing business trend towards globalization has boosted the popularity of enterprise resource planning (ERP), supply chain management (SCM) and customer relationship management-class (CRM) global IS with numerous examples of international implementations. Noticeable research interest refers to investigating different business areas of global IS application: textile (Chen & Fu, 2015), manufacturing (Laplante, 2005), finance (Pratt, 2010), supply chain (Ali & Kurnia, 2011; Zorzini et al., 2012) or tourism (Ior- dache & Voiculet, 2010). The goals behind the accomplished research include discovering reasons for global IS implementation (Chen & Fu, 2015; Zorzini et al., 2012), success factors (Averweg & Roldán, 2006; Subramanian, Jiang, & Klein, 2007) and expected results (Ali & Kurnia, 2011; Hanseth, Ciborra, & Braa, 2001). It should be noted as well that the economic development of the country hosting an enterprise system implementation contributes to the implementation determinants and their criticality across the system lifecycle (Soja, Themistocleous, Cunha, & Mira da Silva, 2015). Yet, the studies tend to undervalue both the aspect of global solution functionality as well as the IT globalization process itself.

This article explores a new area. Our primary contribution lies in understanding the process by which the domestic IS in Facility Management is changed in response to an organization entering a globalization phase. The IT solution for Facility Management built by the SESCOM Group in Poland may act as a real-life example. This is the Participa- tory Action Research (PAR) that is the primary method behind the study. We were motiv- ated by the following questions: what happens to the IT of a national business as a growth and expansion period begins? What triggers this need for change, and what new or revised requirements would these decisions have on the existing IT infrastructure? What is the evolution path of IT within Facility Management while growing from domestic to global? The secondary goal of the research is to moot a proposal for a GSD approach




for a global service provider. The study sheds some light on vital cultural differences between developed and developing countries in terms of how the Facility Management market functions as a result. Some practices identified by the study contribute to the current body of knowledge regarding global software development in Facility Manage- ment and may act as a reference model to the companies from developing countries that attempt to internationalize their businesses.

The remainder of the article is organized as follows: the theoretical framework in Section 2 addresses the previous studies with respect to strategies of Global Business and Global Systems Development issues. The theoretical framework is followed by the description of the global service provider under research, its IT development to achieve an “as-is” state as well as research methods. Section 4 introduces data collection and analytical techniques. Section 5 summarizes the findings of the study, while section 6 high- lights implications for research and practice – along with limitations of the study. Section 7 concludes the article with potential extensions for the research.

2. Related research

2.1. Strategies of global business and global systems development

Global business strategy examines the relationship between a HQ and a subsidiary that are separated by an international b (Wang, 1993). Literature distinguishes four types of business strategy: global, multinational, international and transnational. Bartlett and Ghoshal (2002) arrange them in a path from multinational, then international, global, and finally to transnational as the route of a company’s development. However, the Global IS development strategy is based on the business strategy of a company. Ives and Jarvenpaa (1991) define Global IT as an application that contributes to the achieve- ment of a company’s global business strategy by using IT platforms to store, transmit and manipulate data across cultural environments. The major GSD strategies can be cate- gorized as decentralized global IS (supports mainly the multinational business strategy), centralized (supports the global business strategy), integrated-distributed (supports the transnational business strategy) (Wang, 1993). Bartlett and Ghoshal (2002) distinguish independent global IT operation (multinational strategy), and HQ-driven global IT (global strategy). In addition, the business and IS strategy affect the architecture of IS, Tel- ecommunication and locus of IS management (Wang, 1993).

As stated by Su (2013), considering the formation process, the companies can be cate- gorized into two types: incremental internationalization (companies gradually enter foreign markets) and born global (present in foreign markets right from or shortly after their birth) – (Oviatt & McDougall, 2005). Challenges in the development of global appli- cations were the determination of global versus local requirements and the maintenance of high levels of local user involvement and ownership (Ives & Jarvenpaa, 1991). The Global IS is vastly more varied and complex than its domestic counterpart (Gray, 1999) and pre- sents management with problems that are far more challenging than those encountered in sharing systems across domestic divisions (Ives & Jarvenpaa, 1991). Anyway, both com- panies that were “born global” and those which underwent a process of incremental inter- nationalization have unique information requirements compared to domestic ones (Ghosh, 2002). One of the reasons for such a state of affairs is that they run their business




in different time zones (Yap, 2005). Furthermore, the necessity to seamlessly integrate both business activities and data from geographically dispersed business units (Buckley & Casson, 2009) and business processes might be another factor. Finally, global/inter- national companies have to cope with global SCM (Koren, 2010) – a notion that is abstract for businesses remaining local in nature.

2.2. GSD issues

A misalignment of the global IS with global business strategy can severely hamper efforts for a company to seek global pre-eminence (Ives & Jarvenpaa, 1991) while the implemen- tation of a system to support multinational company networks poses an even greater chal- lenge (Biehl, 2007). The contribution of Applegate, McFarlan, and Mckenney (1999) brings up problems that can be traced back to language, currency, culture, national infrastruc- ture, availability of IT staff, data export control and trade unions. Biehl (2007) highlights similar complications, exploring business/legal environments, technology and vendor support and local market size as well. User interfaces, product functionality and training materials (Laplante, 2005) along with embedded applications, data sources, business process management, administrative activities and security (Gray, 1999) must also be loca- lized for successful global marketing. Ives and Jarvenpaa (1991) attempt categorization of key problems facing managers responsible for GSD, highlighting the linkage to business strategy, IT platforms, international data sharing and cultural environments.

The technical requirements for Global IS include providing an IT backbone in all countries in which a company and its partners do business, ensuring the exchange of highly structured information worldwide, managing a vast amount of information, includ- ing b procedures, duties, tariffs and exchange rates (Biehl, 2007). Hardware, software, communication costs and availability also pose major challenges (Ives & Jarvenpaa, 1991) similar to Transb Data Flow Management (TBDF) and alternative communication channels (Wang, 1993). Independent systems, local technology and non-integrated plat- forms may impede efforts to implement global business strategies and can be problematic because of the high prices of local maintenance. On top of that, system developers are charged with providing standardized data definitions to global users in to enable the consolidation of local data and storage of data in centralized databases. Moreover, data processed globally demand 24-hour system availability and support.

In addition to IT problems, variations in work values, willing to share knowledge with others and considerably overstated their own proficiency were perceived across cultures in global teams. The complexity of implementing a global IS increases along with the cul- tural differences in the countries involved (Tractinsky & Jarvenpaa, 1995). As a result, managing the planning and development of the Global IS (Gray, 1999) and effectively coordinating worldwide requirements while remaining responsive to the needs of regional business units and operation sites (Monczka, Trent, & Petersen, 2008) are among the most pressing challenges. Alzoubi and Gill (2014) propose agile GSD as the effective and effi- cient communication between dispersed teams and customers. Agility in service of GSD brings added value itself – especially in conjunction with Business Process Management – as more enhancements might be tackled within a limited timeframe and the business departments iterate in close cycles together with the IT departments with the high fre- quency of feedback cycles and the daily synchronization of the progress to implement




the processes that are really needed (Thiemich & Puhlmann, 2013). Gray (1999) highlights issues in managing the planning and development of the system, data collection and tech- nological and legal challenges related to transb data flows. However, Brandes, Lillie- creutz and Brege (1997), Lee (2001) and Rao (2004) suggest that global IS implementation success is geared towards organizational issues rather than any technical aspects of implementation. It can vary according to the characteristics of the organization and the determinants are subject to where and how an IS has been implemented (Teoh, Jais, Ahmad, & Nasirin, 2010).

3. Research design

3.1. Study emplacement

SESCOM Group is a multinational company, founded in 2008 in Poland. The company con- centrates on its key expertise to deliver solid and reliable building maintenance and techni- cal services to customers across many countries in Europe. The core business of the company includes facility management, design/maintenance/repair services in the areas of heating, ventilation, air conditioning (HVAC), IT infrastructure, energy efficiency, data col- lection and knowledge management. SESCOM develops its own IS – SES Support – that includes functionalities of ERP, CRM and workflow solutions to manage the core business processes. SESCOM cooperates with more than 100 customers and maintains about 30,000 facilities (stores, hypermarkets etc.) across Europe – including Austria, Czech Republic, Germany, Hungary, Italy, Poland, Romania, Russian Federation and Switzerland.

In 2008, SES Support acted as a communication platform between clients (the owners/ managers of stores/shopping centers), HVAC services and SESCOM itself. A simple process has been implemented and the automatic assignment of tasks to services along with establishing and monitoring the workflow were the primary functionality of the system. Before SESCOM initiated its overseas operations, the increased number of customers in Poland empowered the development of many new functionalities. In addition, three main processes have been created in the IS as rigidly organized chains of activities: the workflow of failures, inspections and investments. SES Support was also integrated with both internal and external (customer-specific) systems and grew rapidly. Furthermore, the company lost control over the development of its functionalities.

The international expansion began in 2011 with the Czech Republic. A separate SES Support instance along with a database was launched in the Czech subsidiary. Unfortunately, this caused a lot of issues: the IT teamhad tomaintain two systems and, additionally, no com- plete up-to-date functionality could be activated in the Czech Republic. Due to these issues, the databases were finally combined and the interface was translated into the national language of the end-user. Taking into account lessons learnt from this experience, the data- base and the main application with the “multi language” option has a single instance in Poland for all the subsidiaries. While most issues have been resolved, many features remain disabled abroad because of some differences in real-life workflows. However, this approach was successfully replicated in other countries during the international expansion.

After a few years, the IT strategy turned out to be misaligned with the business strat- egies. An increasing number of customers and their specific requirements made it difficult to standardize the service processes. The IT solution guarded only the major milestones in




the process, while some actions were coordinated out of the system. There were also new processes which were forcibly driven into SES Support and at the same heavily distorted. These problems began to hinder the development and expansion of the company. The main imperfections included global reporting and analytics, billing for services, integration with other systems, data gaps, deficiencies in documents flow and lack of concept on man- agement functionalities.

Nowadays, single-instance SES Support supporting multi-language and multi-currency helps to coordinate activities over all countries running physical operations. SESCOM coor- dinators operate from the HQ in Poland, while the services and customers can access the system via the Internet. The solution supports local processes in each country with a large degree of autonomy. Cross-b operations go beyond the system (e.g. knowledge sharing), while some global activities such as reports, analytics, demand additional activi- ties with the support of external tools. The Polish instance of SES Support has been inte- grated with the domestic ERP system that supports storage management, accounting and finances for activities in Poland.

In addition to the development of functionalities, between 2008 and 2015 the SES Support underwent three significant overhauls (from v1.0 to the current v4.0). The over- hauls were dictated by upgrades in technology, introducing complex packages of func- tionalities and changing the database architecture. The moment came for SES Support to evolve into SES Global. Conceptual and research endeavors were initiated as scalability and international expansion limits were reached. SES Global is to feature existing solutions and functionalities while incorporating the latest technologies and be adaptive enough to evolve according to emerging global needs.

3.2. Research method

To fill the gap regarding GSD for Facility Management, we attempted to understand the process of GSD in terms of collecting and analyzing the requirements, identifying and involving the stakeholders, designing the business processes and system, developing the system, testing and improvements as well as including the business needs and strat- egy. To achieve this objective, the authors administrated research among employees from different countries, departments and levels of the SESCOM Group. After some initial meet- ings with SESCOM managers, we reached an agreement regarding an important aspect of our research: the first item on the list for the researches was to apply their technical and business process management expertise to discover and understand the current system development process. Only an actual analysis of the IS development would enable the causes of failure to be identified. Both parties believed that actions must be taken in the company in to improve the IS development process.

To refine the plan, we adopted PAR (Baskerville, 1999; Eden & Huxham, 1996). Generally, action research aims to resolve practical problems while expanding scientific knowledge and provides one potential method for improving the practical relevance of IS research. PAR enables researchers to become profoundly involved with the organization and engage business representatives with research questions. If the change process itself is the subject of inquiry, an insider’s view of the problem context is beneficial. Being based on the contribution by Street and Meister (2004), Figure 1 describes the research framework we incorporated for PAR execution.




The research plan involved three stages:

. Baseline Analysis: intensive requirement analysis, investigating GSD process, under- standing the current situation and mapping it in respect of the technical and business aspects of the company’s internationalization;

. Global IS Aspects Improvement: planning GSD strategy to support internationalization as well as articulating a common business strategy that, in turn, might be used to identify relevant IS needs;

. Requirements Specification: a final document including recommendations for GSD, back- ground IS specification, best practices and implementation plan would then be generated.

Each cycle consisted of five steps reflecting the iterative nature of PAR. The description of each step within is summarized in Table 1.

Figure 1. PAR-based research framework.

Table 1. Research overview. Baseline analysis Global IS aspects improvement Requirements specification

Action planning

Specifying data collection methods, planning meetings and identifying data sources

Planning a session devoted to common GSD strategy development

Planning the final document preparation

Action taking

Meetings and interviews in company premises; the first approach to describing GSD process within SESCOM

Identifying strategic GSD-oriented initiatives; developing a GSD model

The final document preparation

Evaluating Assessment and analysis of the GSD process

Assessment of the strategy as well as GSD model

The final document evaluation

Learning Elaborating conclusions and findings

Identification of necessary changes within the corporate culture of the company in to adopt new GSD rules

Identification of the requirements for the continuous GSD improvement

Diagnosis Identifying the key factors behind failures within GSD

Identifying the key sources of reaction to the new GSD approach

Identifying the possibilities for implementation and development of the new GSD policy




4. Data collection and analysis

The research plan was formalized in the proposal as an 8-month-long project running from September, 2015 until April, 2016. Firstly, three workshops were held together with IT and business staff to identify key problems with SES Support global functionalities and global system improvement. Following the workshops, the authors reviewed relevant literature. Based on both practical input and theory, the authors prepared 25 questions to initiate this three-stage research. Table 1 introduces the distribution of the research activities between the phases and cycles.

4.1. Baseline analysis as the first PAR iteration

The first PAR iteration was devoted to an intense requirements analysis and followed general system development activities to meet current organizational practices and direc- tions. We needed to understand why the managers felt that the current SES Support tool had to be changed.

We started the Action Planning with a review of the project scope and data collection methods. We decided to interview SESCOM employees who use SES Support in the global market. They represented diverse countries, different departments (Finance, IT, Technical, Logistics, Services, Services Management and Marketing) and various positions. The ques- tions were designed to gain knowledge about the current and desired tool support in the company’s internationalization process (Gawin & Marcinkowski, 2016).

Within PAR’s Action Taking we recorded 17 interviews and each lasted approximately 2 h. Most of the questions asked were open-ended, allowing the interviewees to describe and explain any stories related to the internationalization of the company. The transcribed data were coded using NVivo v11 and analyzed by finding common themes and related concepts. The introduction of dedicated analysis software was dictated by its ability to enhance coding process (auto-coding and queries-related functionality), to provide flexi- bility regarding reorganizing coding and node structures as further research milestones are achieved and to enable efficient sharing processed data among research team. The interview data were also triangulated with secondary data: internal documents, SES Support instruction and description of architecture as well as IT project reports. We created a multi-view perspective on the SES Support internationalization process: SESCOM business model evolution, IT and business alignment, functional and non-func- tional requirements evolution and “from SES Support to SES Global evolution” process management.

In to evaluate, we arranged an open group meeting to present the organizational snapshot. Interviewers and other meeting members agreed with the results of the analysis. It was clear that the current process of SES Support globalization, which mainly involved user interface translation, did not meet expectations. Relevant issues of functional and non-functional requirements became apparent. In addition, the process of IT tool develop- ment also proved to be a weakness of the company.

It turned out that the foreign SESCOM expansion meant that the same IT tool was run as separate views in different countries with adjusted language and currency. To fulfill con- tracts, rigid business processes require manual operation beyond the scope of the tool. The lack of strategy for development of the tool caused chaos in the management of




functionalities. Unfortunately, PAR’s Specifying Learning concluded that this approach does not provide a global view of processes in many countries performed for global clients.

Diagnosing stage revealed that an increased number of SESCOM customers and inter- nationalization processes forced SES Support’s adaptation from a domestic to a global tool. Currency and language adjustment were insufficient. On an operational level, differ- ent customers from different countries need different functionalities tailored to their needs. However, on a managerial level, the customers expect global statistics and analysis as a “one page view” to compare processes in different countries.

4.2. Global IS aspects improvement as the second PAR iteration

The first PAR iteration accomplished implied that SESCOM international expansion needs both global functionalities in IS and a common strategy to develop the IT tool. For this study, the authors proposed separately identified areas and will continue the second issue of “system development management” in a further study. The purpose of the second PAR iteration was to identify the global system functionalities which allow global Facility Management processes to be performed.

Within Action Planning, the authors suggested two planning sessions as one day work- shops. The authors offered two interview dates to assure each participant’s presence at the meeting.

The morning session covering PAR’s Action Taking provided an overview of the “conclusions and recommendations” from the interviews. Then global IS functionalities were revealed. The authors suggested additional features that had been identified in the scientific literature and case studies. The afternoon session consisted of work aimed at grouping “conclusions and recommendations” from interviews into groups. Then the global IS functionalities were written down as an input for the system requirements. The results from this session were documented according to an MS Word template.

While evaluating, the research team members embraced the results of the workshop session. In our opinion, the participants were deeply involved in the workshops because they saw that reported problems were discussed and reviewed. They tried to find solutions to these ideas and some input from the authors often met with acceptance.

Specifying Learning demonstrated the need to develop a number of new global functionalities and to manage them (observing, changing, adopting and deleting). The second finding was that the Facility Management processes are often difficult to duplicate with different clients. Therefore, processes cannot be rigidly implemented in the IS. They should be created on-the-hop on the basis of contract with the custo- mer. The global functionalities should be treated as a component for agile processes, which should be obligatorily implemented in the system but optionally used in the process.

The diagnosis of the second PAR cycle is that the SESCOM should give serious consider- ation to the development of a new SES Global system. SESCOM developers involved in the research confirmed that the existing system architecture and technological limitations do not allow global functionality to develop or agile business processes to be created. The current situation slows down the international expansion of the company.




4.3. Requirements specification as the third PAR iteration

The final cycle translated both the set of “conclusions and recommendations” and grouped functionalities into the system requirements. These materials constitute a formal specification containing the business requirements for the SES Global development – a Business Requirements Document (BRD).

At the stage of Action Planning, the project transitioned to elaborating the BRD for SES Global. The authors anticipated two months for these activities. They received help from SESCOM business analysts in the drafting of the document. The BRD should include a list of SES Global stakeholders (positions and roles Process) lists of affected business processes, functional and non-functional requirements, and a list of cooperating applications.

Creating the final BRD was a joint effort on the part of both the researchers and the business analysts. The activities mainly covered cataloguing, indexing and describing the global requirements for IS. The analyst also systemized the functionalities from the cur- rently used SES Support that were considered worth adopting in SES Global. However, since additional work proved to be necessary at this stage, it exceeded the original research timeframe.

The evaluation stage resulted from the BRD calling for SES Global and new global func- tionalities with the capability to communicate with SESCOM external applications. The new system should replace the existing IS as one global approach instead of multi- instanced poorly adopted tool. The decision either to totally or partially outsource the IS development had been a topic of debate and needed some additional work such as project description and business plan elaboration.

The result of the third cycle had an important effect of the real functional view of SES Global system for Facility Management. As far as Specifying Learning is concerned, the management team and business stakeholders of the company understand the complexity of the system and the importance of the user’s participation in the design, development and implementation of a global platform. However, one subtle change was apparent: the attitude of the employees involved in the study. They saw how important it is to formulate the functionality of the system. One thing was certain: the BRD document will undergo changes even after the implementation of SES Global.

As the requirements analysis progressed it became clear that the problem not only lay in improving global functionalities but also in the alignment of business for international IT without limiting organizational options. Such alignment requires a mutual understanding of the company’s overall global strategy. For managers, SES Global was not only seen as support for Facility Management global processes but also seen as a “physical reflection” of the SESCOM international expansion model. While the definition of the SESCOM business process model is beyond the scope of this article, reaching the Diagnosis through the BRD generation process forced managers to think differently about function- alities, system improvement and the Facility Management processes.

5. Findings

5.1. SESCOM’s globalization strategy approach

The service provision business model is based upon sub-contractors that are organized into a global service network. In each country, there are local groups operating that




perform servicing workflows for retail facilities. Some groups specialize in a particular industry, while others provide universal services.

The expansion model might be described as follows:

(1) The provision of services in a given country is usually initiated by a global customer who has already been working with SESCOM in another country and expects world- wide services provision based on homogenous standards. In some cases, the expan- sion is a result of SESCOM’s strategic decision.

(2) At times, while entering a given market, it is advisable to set up a special company in the target country (for instance Germany, Hungary). There are also cases when a company with experience on a specific market handles operations in another, legally/culturally compatible country (such as the Polish-seated company supporting Romania).

(3) During expansion into a new area, the interface is translated into the target language; the functionality of clearing workflows in the local currency is implemented (provided that the country in not a Eurozone member).

(4) A coordinator, supported by the sales department, builds the service network and supplies the platform with operational data.

(5) Service process management is centralized and handled from Poland. In line with the strengthening of the company responsible for a given market, local structures to support the coordination processes are established.

(6) Initially, the business process handling requires a lot of commitment from the service coordinator. This is due to the fact that customers and services do not operate using the IT solution directly right from the very start. Thus, SESCOM’s service coordinator is involved in the majority of the process stages and puts data regarding the events in the system.

(7) Considering the whole area the services are provided, it is the Polish Facility Manage- ment service market that may be considered to be more sophisticated. Experiences gained there are gradually transferred abroad.

(8) Some operations for international markets, such as accounting or technical support, are covered by Polish structures set up centrally to back all the countries involved.

The study revealed that the expansion model under discussion tends to have certain imperfections. The imperfections vary in potential impact regarding future operations. The major issues that ought to be addressed without further delay are discussed below.

(1) The solution supports rigid processes, once arranged in response to business demands within the domestic Polish market. Some of the business processes are b line out- dated, lacking a number of essential functionalities. The application of process speci- fications to operations run abroad often results in rough process management using the platform. A lot of activities are performed outside the system.

(2) The Polish-specific financial accounting system is firmly inscribed within the service processes. The lack of such a system in foreign companies makes it necessary to limit the functionality of the SES Support instances handling these companies.

(3) Due to the lack of uniformity in the architecture of IS between companies, a number of activities covering workflows executed abroad are done manually with no detailed processing by the system. In rare cases this causes the conscious necessity of the group incurring financial losses.




(4) Neither the functionality management process nor IT solution development are meth- odologically formalized. The demand for functionality is not subjected to rigid verifi- cation by business stakeholders.

Moreover, as a result of the research conducted, strong signals emerged that the expan- sion model ought to be subjected to adaptive treatment. In fact, the customer is often not fully aware what functionality would address his needs best and therefore requires SESCOM’s know-how and advice. The study revealed that system requirements tend to be generated on an ongoing basis without a deeper reflection of their actual utility, which has a negative impact on the functionality development process and the final product itself. Besides customer demands not being homogenous, further heterogeneity is brought by the markets – domestic customers often have different requirements than foreign ones. On the other hand, large global players are counting on the business model in each country being reproducible, regardless of their business being seated in different regional/local realities. A significant share of the activities performed by SESCOM is experimental and proves to be pioneering for local partners and customers. As a result, it happens that new customers do not know themselves what kind of business model they would prefer regarding the cooperation with SESCOM.

Globalization emerges as an important component of the company’s change strategies. Having said that, the developing expansion model had to confront some culture-related background that is likely to have an impact on the SES Global project. Developed econom- ies tend to rely on more specialized services – this makes it difficult to process comprehen- sive s. Moreover, it is the mobility of the services that is significantly reduced – the providers are reluctant to execute workflows in remote sites regardless of the other con- tract parameters. As a result, the automatic assignment of service providers to the facilities (highly successful in the company’s place of origin) fails to be an optimal strategy for markets such as Germany. Therefore, in to gain a competitive advantage, the SESCOM Group cooperates closely with partners set up by Central European owners that build the flexibility in the organizational culture. In some countries with a less flexible working culture, the operations are based solely on local resources and the model is changed accordingly – the partner network is denser, cooperation less intensive and risk more evenly distributed. Additionally, the Service Level Agreements offered to custo- mers are less ambitious as, paradoxically, customers from developed countries have lower expectations regarding handling times while the bulk of the partners follow rigid working hours and do not provide services on weekends regardless of priority. Emerging markets are quite the opposite in that respect – partners are more oriented toward build- ing up income and willing to take the opportunity of additional s. One should mention diverse attitudes regarding the commitment of potential partners from different countries to a long-term cooperation with a company with foreign origins, especially one set up in former communist countries. It is the professionalism of the initial mutual business ventures that makes such barriers disappear.

5.2. Requirements for SES global

Given that service processes are handled separately in countries, globalization requires a centralized process of reporting and analyzing in parallel to customizing business




processes based on customer/regional demands. Action Research discovered a set of func- tional (what the system does), non-functional (technical aspects) and managerial require- ments of SES Global. While the BRD for SES Global shows global functional needs, Table 2 shows additional areas that require further development in the global IS introduction process as well. While in qualitative research data coding constitutes a way of identifying themes in the text, areas introduced in Table 2 are derived from the interviews transcrip- tion encoding method (Bernauer, Lichtman, Jacobs, & Robinson, 2013). The areas are coding results that authors identified initially as very broad categories: a respondent emphasized that something is important, a given fact raised our attention and/or refer- enced to the subject-related theory, a similar statement was repeated in interviews many times etc. Then we captured the details, executed clearing/arranging iteration and merged it into the areas – nodes – as shown in Table 2.

To allow SES Global development as a central application serving processes in different parts of the world, common development approaches, tools and methodologies must be agreed upon. However, of most critical importance is the need to implement global func- tionalities and integrate external application to allow global processes to be carried out.

6. Implications

The findings of the research presented in the study have implications for both theory and practice in GSD. First of all, the literature highlights four approaches for internationaliza- tion (Hanseth et al., 2001; Ives & Jarvenpaa, 1991) –that is, Independent Global IT Oper- ations, HQ-Driven Global IT, Intellectual Cooperation in Global IT and Integrated Global IT – while our study revealed that even with the global strategy and global IS, repeatable processes must be adapted to the specific needs of both the customer and the country. While the fulfillment of local needs is characteristic for multinational businesses, a mixed Global/Multinational model can be considered not as temporary, but as the target business model. Secondly, we extend the commonly acknowledged global IS pro- blems with currency, time zones, languages and regulations (Gray, 1999; Wager, 2010; Wang, 1993; Zorzini et al., 2012) by adding the urgent need for a “global view” of both the data and processes that even occur in different geographical locations. As we con- clude, this is a critical SES Global functionality for both global customers and SESCOM coor- dinators. Finally, research brings up the cultural differences between developed and developing markets regarding providing a Facility Management service.

The research also contributes to the practice of two distinct market players: global clients that locate retail objects in many countries and global system providers. From the global client perspective, this study shows that global Facility Management processes can be repeatable in different countries and all of them can be supported by one system. From the perspective of a global service provider, this study shows that it is critical to understand the final customers’ needs and align the system functionalities with the service processes demanded by the clients. Since the functional requirements for SES Global are so complex, the preparation of their implementation is crucial. Our research allowed BRD to be developed with a set of functional requirements that reflect the require- ments of the global system and global Facility Management processes (global service).

As with any research, there are some limitations that should be considered. Primarily, the interviews regarding global functionalities might be extended to include direct




Table 2. Areas requiring in-depth development in global IS introduction process. Area Description

Global functionalities Carefully crafted investments in global IT offer businesses an opportunity to increase control and enhance coordination. In SES Global, some local principles should be transformed into common ones. Global customers demand greater information processing and communication capabilities, but also better controlled feedback mechanisms. SES Global should support a “global view for global customers” both for data and processes even if they occur in different geographical locations. On the other hand, a “global view for coordinators” is also needed to allow service processes for global customers to be managed regardless of the country in which they locate retail objects.

Agile Business Process Management

Despite it being a single business (Facility Management), customer requirements differ in many process steps. SES Global should be adaptive in nature to support adaptive (not rigid) business processes execution. System functionalities constitute a catalog of “digital options” and the user selects them “on demand” to compose and handle most business scenarios. Digital options can be regarded as adaptive, unique IT-fueled capabilities in the form of flexible digitized enterprise activities. Facility Management processes occur independently in each country with the same milestones yet different workflow variants, customized to the region and customer. However, SES Global should also support cross-b processes (SCM, knowledge sharing) to quickly harmonize business units for global operations. The global operations model requires appropriate operations and planning, according to the characteristics of each geographic region, which can quickly respond to the market and develop an optimal operational plan on the network level (Chen & Fu, 2015).

Process roles & permissions management

Every business process execution involves different stakeholders, comprehended as individuals, groups or organizations that might affect or be affected by the system. For the stakeholders, different functions and roles can be identified (Millerand & Baker, 2010).

System architecture SES Global should be integrated with other systems in a way that makes them part of the overall corporate information infrastructure. Mainly, the domestic ERP-class system from SESCOM Poland needs an extension to the global ERP available for all subsidiaries. Being SESCOM Group core IT solutions, both systems should be centralized physically in one place (e.g. SESCOM HQ in Poland) with appropriate technical support. Adaptive functionalities rather than a separate application make the infrastructure global and ensure effective flow of information and data collection across the entire operation network. Maintaining one integrated system shall be cheaper than maintaining all the individual ones plus all the ad-hoc links between them (Ives & Jarvenpaa, 1991). The more closely the components are integrated, the more a change in one component will have implications for the others (Alanne, Pekkola, & Kahkonen, 2014).

SES Global development process management

The development of IT global solutions involves a number of challenges, in particular when the requirements of both the engineering and software development processes are not implemented properly. The SES Global project calls for strengthening in four areas: Functional requirements collection and management: Alanne et al. (2014) state that it is common to have an executive steering team or a steering committee that is responsible for the overall SES Global project. Releasing “software functionality versions” and “corrections” (Hot Packages) to IS avoid errors (Hanseth et al., 2001). Data management: Global systems require well-defined and standard data definitions. As mentioned by Wang (1993), TBDF and some issues have to be considered. Guarding attributes of global IT tool: Watching of global views, reports and statistics, taking into account different currencies, time zones, languages (for tool interface and content) Global process management: Cudahy, Mulani, and Cases (2008) proposed setting up a central office or a head of staff to account for global operations and deal with the inevitable conflict among local, regional and global divisions. A center-led and coordinated decision-making function is called a “Center of Excellence” (CoE) (Hochman & Dorf, 2008). Engineering such global systems presents numerous challenges to management (Ives & Jarvenpaa, 1991).

Application Programming Interface (API)

Nowadays, the maintenance of the interfaces between SES Support and other systems is difficult and resource consuming. SES Global should be integrated with a number of other applications – internal and external systems linked not through various interfaces developed ad hoc, but rather by a standard API.




interviews with global customers (although SESCOM’s employees often represented the customer’s point of view) to obtain a deeper and more complete view of GSD. Additionally, neither identifying the root causes of the expansion model imperfections nor definition of the SESCOM business process model were attempted within this study, as aforementioned research falls beyond the scope of the current article.

7. Conclusions and future work

This research delivers two goals. First of all, the project team was able to address how the IT solutions of a relatively small business were forced to adapt in response to the growth and internationalization of the company. Secondly, the authors established the kind of requirements development policy that IT evolution and business strategy would need to conform to if a system for global service maintenance was in place. We conducted a three-stage PAR that included workshops, interviews and focus group meetings with employees of SECOM involved in global activities.

The first PAR iteration suggested that SESCOM international business development has elements of both Multinational and Global strategy. On the operational level, a sub- sidiary retains its autonomy while the HQ in Poland plays a supervisory role and requires aggregated information for reporting purposes (Alavi & Young, 1992; Bartlett & Ghoshal, 2002). The global service provider has organized its business into indepen- dent national subsidiaries, but is not able to carry out the required global coordination across national b s. We discovered the SES Support development process as a route from a domestic to a global system. However, we confirmed that the growing number of customers, fast expansion, outdated technology of the SES Support and the lack of global functionalities inhibit any further internationalization process. More- over, differences in business cultures and market structures among those nations and regions emerged. These local aspects must be accounted for while designing business processes and IT solutions.

The second PAR iteration served to identify the global system functionalities that enable the global Facility Management processes to work. We discovered that SESCOM’s international expansion requires both global functionalities in IS and a common strategy to develop IT solutions. We revealed that in such a diverse business environment, processes must be assembled in accordance with the Facility Management contract. As a result, the SES Global should be adaptive and a vast range of functionalities ought to be used “on demand” in accordance with the needs of a specific customer.

The final PAR cycle translated both the set of “conclusions and recommendations” and grouped functionalities into the BRD that satisfied the SESCOM requirements for global Facility Management processes. One thing was certain: the BRD document will undergo changes even after the implementation of SES Global. The BRD includes set of functional- ities typical for IS, but the global functions prove to be the most valuable. The solution must offer global statistics, reports and views for Facility Management processes regarding the roles and permissions of a given user. Global coordination is one of the most important functions that companies perform for optimal global operations to achieve operational flexibility (Hanseth et al., 2001).

The research process made it clear that the expansion lies not only in improving global functionalities, but in the alignment of the business for international IT while not limiting




organizational options as well. Such alignment requires a mutual understanding of the company’s overall global strategy. For managers, SES Global was not only seen as a support for Facility Management global processes but also seen as a “physical reflection” of the SESCOM international expansion model. Going through the BRD generation process forced the managers to re-think functionality definition, system improvement and Facility Management process execution.

Implementing a successful IS is perhaps one of the main obstacles to the increased uptake of IS on a continental or global level (Bradley, 2008). The key issues are linking IT and global business strategy and ensuring system availability and support for global applications. SES Global implementation is an aspect of globalization and seems to be a component of reengineering strategies in to obtain increased efficiency and man- agerial control over the business. The development of the IT strategy should be based on the corporate global business strategy (Alavi & Young, 1992; King & Seith, 1992). SESCOM is moving toward a centralized SES Global system eliminating national distinction and reducing integration to selected systems. SESCOM also requires a global ERP system to unify business processes and manage differences in national legislation concerning accounting, taxes, environmental issues in different nations/regions. The challenge for SESCOM is to create best practices for Facility Management processes and inform custo- mers about reliable, proven solutions.

The study opened up new areas for further research. In future studies we shall explore the issue of GSD management further by integrating the agile approach to system con- struction. The desired effect is to elaborate a proposal for a GSD approach for the SESCOM Group based on the Agile Business Process Management model that was elabo- rated as a general framework for all improvement-oriented endeavors undertaken by this group. Few businesses had considered a common methodology for system development projects to facilitate cooperation in global projects (Street & Meister, 2004) and there was little activity in implementing common automated development tools. Secondly, the process of global functionality development needs to be further conceptualized. This process is critical to both GSD approach and management of the functionalities’ lifecycle within business/IT alignment.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Bartlomiej Gawin, PhD, provides a synergy between business activity as an IT Director and academic research. He has actively participated in numerous projects regarding the development, implemen- tation and use of business applications, workflow tools as well as analytical techniques. He deals pri- marily with research regarding application of modern techniques and tools for analysis, design and simulation of business processes and IT solutions as well as Business Intelligence in service of energy efficiency.

Bartosz Marcinkowski, PhD, is currently engaged in research regarding IT solutions development within globalizing enterprises. The author of several best-seller SAND books published on Polish market. He is also an expert in computer networking and an instructor at numerous professional training ventures aimed at IT competences development. His professional skills are confirmed by




international certificates, inter alia: OMG Certified UML Professional, OMG Certified Expert in BPM, Cisco Certified Network Associate Instructor Trainer, and ITIL V3.


Bartosz Marcinkowski


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  • Abstract
  • 1. Introduction
  • 2. Related research
    • 2.1. Strategies of global business and global systems development
    • 2.2. GSD issues
  • 3. Research design
    • 3.1. Study emplacement
    • 3.2. Research method
  • 4. Data collection and analysis
    • 4.1. Baseline analysis as the first PAR iteration
    • 4.2. Global IS aspects improvement as the second PAR iteration
    • 4.3. Requirements specification as the third PAR iteration
  • 5. Findings
    • 5.1. SESCOM’s globalization strategy approach
    • 5.2. Requirements for SES global
  • 6. Implications
  • 7. Conclusions and future work
  • Disclosure statement
  • Notes on contributors
  • References


The Quest for Competitive Advantage

Concepts and Cases




page iii




The Quest for Competitive Advantage

Concepts and Cases  |  22ND EDITION

Arthur A. Thompson Margaret A. Peteraf The University of Alabama Dartmouth College

John E. Gamble A.J. Strickland III Texas A&M University–Corpus Christi The University of Alabama




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Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2020 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2018, 2016, and 2014. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

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Names: Thompson, Arthur A., 1940- author. Title: Crafting & executing strategy: the quest for competitive advantage:

concepts and cases / Arthur A. Thompson, Jr., University of Alabama Tuscaloosa, Margaret A. Peteraf, Dartmouth College, John E. Gamble, University of South Alabama Mobile, A.J. Strickland III, University of Alabama Tuscaloosa.

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To our families and especially our spouses: Hasseline, Paul, Heather, and Kitty.



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About the Authors

Arthur A. Thompson, Jr., earned his BS and PhD degrees in economics from The University of Tennessee, spent three years on the economics faculty at Virginia Tech, and served on the faculty of The University of Alabama’s College of Commerce and Business Administration for 24 years. In 1974 and again in 1982, Dr. Thompson spent semester-long sabbaticals as a visiting scholar at the Harvard Business School.

His areas of specialization are business strategy, competition and market analysis, and the economics of business enterprises. In addition to publishing over 30 articles in some 25 different professional and trade publications, he has authored or co-authored five textbooks and six computer-based simulation exercises. His textbooks and strategy simulations have been used at well over 1,000 college and university campuses worldwide.

Dr. Thompson and his wife of 58 years have two daughters, two grandchildren, and a Yorkshire Terrier.



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Margaret A. Peteraf is the Leon E. Williams Professor of Management Emerita at the Tuck School of Business at Dartmouth College. She is an internationally recognized scholar of strategic management, with a long list of publications in top management journals. She has earned myriad honors and prizes for her contributions, including the 1999 Strategic Management Society Best Paper Award recognizing the deep influence of her work on the field of Strategic Management. Professor Peteraf is a fellow of the Strategic Management Society and the Academy of Management. She served previously as a member of the Board of Governors of both the Society and the Academy of Management and as Chair of the Business Policy and Strategy Division of the Academy. She has also served in various editorial roles and on numerous editorial boards, including the Strategic Management Journal, the Academy of Management Review, and Organization Science. She has taught in Executive Education programs in various programs around the world and has won teaching awards at the MBA and Executive level.

Professor Peteraf earned her PhD, MA, and MPhil at Yale University and held previous faculty appointments at Northwestern University’s Kellogg Graduate School of Management and at the University of Minnesota’s Carlson School of Management.




John E. Gamble is a Professor of Management and Dean of the College of Business at Texas A&M University–Corpus Christi. His teaching and research for more than 20 years has focused on strategic management at the undergraduate and graduate levels. He has conducted courses in strategic management in Germany since 2001, which have been sponsored by the University of Applied Sciences in Worms.

Dr. Gamble’s research has been published in various scholarly journals and he is the author or co-author of more than 75 case studies published in an assortment of strategic management and strategic marketing texts. He has done consulting on industry and market analysis for clients in a diverse mix of industries.

Professor Gamble received his PhD, MA, and BS degrees from The University of Alabama and was a faculty member in the Mitchell College of Business at the University of South Alabama before his appointment to the faculty at Texas A&M University–Corpus Christi.

Dr. A. J. (Lonnie) Strickland is the Thomas R. Miller Professor of Strategic Management at the Culverhouse School of Business at The University of Alabama. He is a native of north Georgia, and attended the



University of Georgia, where he received a BS degree in math and physics; Georgia Institute of Technology, where he received an MS in industrial management; and Georgia State University, where he received his PhD in business administration.

Lonnie’s experience in consulting and executive development is in the strategic management arena, with a concentration in industry and competitive analysis. He has developed strategic planning systems for numerous firms all over the world. He served as Director of Marketing and Strategy at BellSouth, has taken two companies to the New York Stock Exchange, is one of the founders and directors of American Equity Investment Life Holding (AEL), and serves on numerous boards of directors. He is a very popular speaker in the area of strategic management.

Lonnie and his wife, Kitty, have been married for over 49 years. They have two children and two grandchildren. Each summer, Lonnie and his wife live on their private game reserve in South Africa where they enjoy taking their friends on safaris.



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B Preface

y offering the most engaging, clearly articulated, and conceptually sound text on strategic management, Crafting and Executing Strategy has been able to maintain its position as the leading

textbook in strategic management for over 30 years. With this latest edition, we build on this strong foundation, maintaining the attributes of the book that have long made it the most teachable text on the market, while updating the content, sharpening its presentation, and providing enlightening new illustrations and examples.

The distinguishing mark of the 22nd edition is its enriched and enlivened presentation of the material in each of the 12 chapters, providing an as up-to- date and engrossing discussion of the core concepts and analytical tools as you will find anywhere. As with each of our new editions, there is an accompanying lineup of exciting new cases that bring the content to life and are sure to provoke interesting classroom discussions, deepening students’ understanding of the material in the process.

While this 22nd edition retains the 12-chapter structure of the prior edition, every chapter—indeed every paragraph and every line—has been reexamined, refined, and refreshed. New content has been added to keep the material in line with the latest developments in the theory and practice of strategic management. In other areas, coverage has been trimmed to keep the book at a more manageable size. Scores of new examples have been added, along with 16 new Illustration Capsules, to enrich understanding of the content and to provide students with a ringside view of strategy in action. The result is a text that cuts straight to the chase in terms of what students really need to know and gives instructors a leg up on teaching that material effectively. It remains, as always, solidly mainstream and balanced, mirroring both the penetrating insight of academic thought and the pragmatism of real-world strategic management.

A standout feature of this text has always been the tight linkage between the content of the chapters and the cases. The lineup of cases that accompany



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the 22nd edition is outstanding in this respect—a truly appealing mix of strategically relevant and thoughtfully crafted cases, certain to engage students and sharpen their skills in applying the concepts and tools of strategic analysis. Many involve high-profile companies that the students will immediately recognize and relate to; all are framed around key strategic issues and serve to add depth and context to the topical content of the chapters. We are confident you will be impressed with how well these cases work in the classroom and the amount of student interest they will spark.

For some years now, growing numbers of strategy instructors at business schools worldwide have been transitioning from a purely text-case course structure to a more robust and energizing text-case-simulation course structure. Incorporating a competition-based strategy simulation has the strong appeal of providing class members with an immediate and engaging opportunity to apply the concepts and analytical tools covered in the chapters and to become personally involved in crafting and executing a strategy for a virtual company that they have been assigned to manage and that competes head-to-head with companies run by other class members. Two widely used and pedagogically effective online strategy simulations, The Business Strategy Game and GLO-BUS, are optional companions for this text. Both simulations were created by Arthur Thompson, one of the text authors, and, like the cases, are closely linked to the content of each chapter in the text. The Exercises for Simulation Participants, found at the end of each chapter, provide clear guidance to class members in applying the concepts and analytical tools covered in the chapters to the issues and decisions that they have to wrestle with in managing their simulation company.


To assist instructors in assessing student achievement of program learning objectives, in line with AACSB requirements, the 22nd edition includes a set of Assurance of Learning Exercises at the end of each chapter that link to the specific learning objectives appearing at the beginning of each chapter and highlighted throughout the text. An important instructional feature of the 22nd edition is its more closely integrated linkage of selected chapter-end Assurance of Learning Exercises and cases to the publisher’s



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web-based assignment and assessment platform called Connect™. Your students will be able to use the online Connect™ supplement to (1) complete selected Assurance of Learning Exercises appearing at the end of each of the 12 chapters, (2) complete chapter-end quizzes, and (3) enter their answers to a number of the suggested assignment questions for 14 of the 32 cases in this edition. The analysis portion of the Connect™ exercises is automatically graded, thereby enabling you to easily assess the learning that has occurred.

In addition, both of the companion strategy simulations have a built-in Learning Assurance Report that quantifies how well each member of your class performed on nine skills/learning measures versus tens of thousands of other students worldwide who completed the simulation in the past 12 months. We believe the chapter-end Assurance of Learning Exercises, the all-new online and automatically graded Connect™ exercises, and the Learning Assurance Report generated at the conclusion of The Business Strategy Game and GLO-BUS simulations provide you with easy-to-use, empirical measures of student learning in your course. All can be used in conjunction with other instructor-developed or school-developed scoring rubrics and assessment tools to comprehensively evaluate course or program learning outcomes and measure compliance with AACSB accreditation standards.

Taken together, the various components of the 22nd edition package and the supporting set of instructor resources provide you with enormous course design flexibility and a powerful kit of teaching/learning tools. We’ve done our very best to ensure that the elements constituting the 22nd edition will work well for you in the classroom, help you economize on the time needed to be well prepared for each class, and cause students to conclude that your course is one of the very best they have ever taken—from the standpoint of both enjoyment and learning.





Eight standout features strongly differentiate this text and the accompanying instructional package from others in the field:

. Our integrated coverage of the two most popular perspectives on strategic management—positioning theory and resource-based theory—is unsurpassed by any other leading strategy text. Principles and concepts from both the positioning perspective and the resource-based perspective are prominently and comprehensively integrated into our coverage of crafting both single-business and multibusiness strategies. By highlighting the relationship between a firm’s resources and capabilities to the activities it conducts along its value chain, we show explicitly how these two perspectives relate to one another. Moreover, in Chapters 3 through 8 it is emphasized repeatedly that a company’s strategy must be matched not only to its external market circumstances but also to its internal resources and competitive capabilities.

. With this new edition, we provide the clearest, easiest to understand presentation of the value-price-cost framework. In recent years, this framework has become an essential aid to teaching students how companies create economic value in the course of conducting business. We show how this simple framework informs the concept of the business model as well as the all-important concept of competitive advantage. In Chapter 5, we add further clarity by showing in pictorial fashion how the value-price-cost framework relates to the different sources of competitive advantage that underlie the five generic strategies.

. Our coverage of cooperative strategies and the role that interorganizational activity can play in the pursuit of competitive advantage is similarly distinguished. The topics of the value net, ecosystems, strategic alliances, licensing, joint ventures, and other types of collaborative relationships are featured prominently in a number of chapters and are integrated into other material throughout the text. We show how strategies of this nature can contribute to the success of single-business companies as well as multibusiness enterprises, whether with respect to firms operating in domestic markets or those operating in the international realm.

. The attention we give to international strategies, in all their dimensions, make this textbook an indispensable aid to understanding strategy formulation and execution in an increasingly connected, global world. Our treatment of this topic as one of the most critical elements of the scope of a



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company’s activities brings home to students the connection between the topic of international strategy with other topics concerning firm scope, such as multibusiness (or corporate) strategy, outsourcing, insourcing, and vertical integration.

. With a standalone chapter devoted to these topics, our coverage of business ethics, corporate social responsibility, and environmental sustainability goes well beyond that offered by any other leading strategy text. Chapter 9, “Ethics, Corporate Social Responsibility, Environmental Sustainability, and Strategy,” fulfills the important functions of (1) alerting students to the role and importance of ethical and socially responsible decision making and (2) addressing the accreditation requirement of the AACSB International that business ethics be visibly and thoroughly embedded in the core curriculum. Moreover, discussions of the roles of values and ethics are integrated into portions of other chapters, beginning with the first chapter, to further reinforce why and how considerations relating to ethics, values, social responsibility, and sustainability should figure prominently into the managerial task of crafting and executing company strategies.

. Long known as an important differentiator of this text, the case collection in the 22nd edition is truly unrivaled from the standpoints of student appeal, teachability, and suitability for drilling students in the use of the concepts and analytical treatments in Chapters 1 through 12. The 32 cases included in this edition are the very latest, the best, and the most on target that we could find. The ample information about the cases in the Instructor’s Manual makes it effortless to select a set of cases each term that will capture the interest of students from start to finish.

. The text is now more tightly linked to the publisher’s trailblazing web-based assignment and assessment platform called Connect™. This will enable professors to gauge class members’ prowess in accurately completing (a) selected chapter-end exercises, (b) chapter-end quizzes, and (c) the creative author-developed exercises for seven of the cases in this edition.

. Two cutting-edge and widely used strategy simulations—The Business Strategy Game and GLO-BUS—are optional companions to the 22nd edition. These give you an unmatched capability to employ a text-case- simulation model of course delivery.




Chapter 1 serves as a brief, general introduction to the topic of strategy, focusing on the central questions of “What is strategy?” and “Why is it important?” As such, it serves as the perfect accompaniment for your opening-day lecture on what the course is all about and why it matters. Using the newly added example of Apple, Inc., to drive home the concepts in this chapter, we introduce students to what we mean by “competitive advantage” and the key features of business-level strategy. Describing strategy making as a process, we explain why a company’s strategy is partly planned and partly reactive and why a strategy tends to co-evolve with its environment over time. We discuss the importance of ethics in choosing among strategic alternatives and introduce the concept of a business model. We show that a viable business model must provide both an attractive value proposition for the company’s customers and a formula for making profits for the company. A key feature of this chapter is a depiction of how the value-price-cost framework can be used to frame this discussion. We show how the mark of a winning strategy is its ability to pass three tests: (1) the fit test (for internal and external fit), (2) the competitive advantage test, and (3) the performance test. And we explain why good company performance depends not only upon a sound strategy but upon solid strategy execution as well. Chapter 2 presents a more complete overview of the strategic management process, covering topics ranging from the role of vision, mission, and values to what constitutes good corporate governance. It makes a great assignment for the second day of class and provides a smooth transition into the heart of the course. It introduces students to such core concepts as strategic versus financial objectives, the balanced scorecard, strategic intent, and business-level versus corporate-level strategies. It explains why all managers are on a company’s strategy-making, strategy-executing team and why a company’s strategic plan is a collection of strategies devised by different managers at different levels in the organizational hierarchy. The chapter concludes with a section on the role of the board of directors in the

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