BOOK REVIEW: “Essentials of Strategic Management” by J. David Hunger and Thomas L. Wheelen (2010)

Key words

Strategy, management, information systems, corporate culture, technology management

Summary

The book gives an excellent outline of some of the fundementals issues in strategic management. The book is short and generally to the point. It provides good data summaries and ideas that can be put into practice in the business world. It is also realatively easy to read. It deals quite heavily with corporate culture and has some useful ideas on the importance of technology management in strategy.

Interesting quotes from the book:

Strategic management is that set of managerial decisions and actions that determines the long-run performance of a corporation.

 Bruce Henderson of the Boston Consulting Group concluded that intuitive strategies cannot be continued successfully if: 1. the corporation becomes large, 2. the layers of management increase, 3. the environment changes substantially.

Adapted from Hunger and Wheelen 2010

It often takes more than a year for a large company to move from situation assessment to a final decision agreement.

Henry Mintzberg discovered that strategy formulation is typically not a regular, continuous process: “It is most often an irregular, discontinuous process, proceeding in fits and starts.”

Strategic management within a firm generally evolves through four sequential phases of development:

Adapted from Hunger and Wheelen 2010

When Cisco decided upon a strategy of growth through acquisitions, it established a policy to consider only companies with no more than 75 employees, 75 percent of whom were engineers.

Home Depot`s management instituted “power hours” on weekdays from 10 a.m. to 2 p.m. when employees were supposed to do nothing but serve customers

World’s population growth – 3.71 billion people in 1970 to 6.82 billion in 2010 to 8.72 billion by 2040, not all regions will grow equally.

77 percent of all product innovations in the scientific instruments were initiated by the customer in the form of inquiries and complaints

Companies who are known to be exemplars in supply-chain management, such as Wal-Mart, Dell Computer, and Toyota, spend only 4 percent of their revenues on supply chain costs compared to 10 percent by the average firm.

Instead of competing directly against Microsoft’s Pocket PC and Palm Pilot for the handheld computer market, Apple introduced the iPod as a personal digital music player. By redefining the market, Apple successfully sidestepped both Intel and Microsoft, leaving them to play “catch-up”. Each of the top 500 global business firms now average 60 major alliances. A study by Cooper and Lybrand found that firms involved in strategic alliances had 11 percent higher revenue and 20 percent higher growth rate than did companies not involved in alliances.

Despite its success in athletic shoes, no one expected Nike to be successful when it diversified in 1995 from shoes into golf apparel, balls, and equipment. 

Oracle purchased over 56 companies in order to quickly achieve the size needed to complete effectively with SAP and Microsoft. 

Avon Company, for example, was able to turn around its unprofitable inner-city markets by putting African Americans and Hispanic managers in charge of marketing to these markets.

Many companies, such as Lockheed Martin, General Electric, and Whirpool, use information technology to form closer relationships with both their customers and suppliers through sophisticated extranets.

 General policies, such as:

The success of Wal-Mart has been management’s use of the company’s sophisticated information system to control purchasing decisions

“Low prices every day” (Wal-Mart)

can become, in time, part of a corporation’s culture.

Chandler proposed that the most appropriate CEO of a company changes as a firm moves from one stage of development to another. At Procter & Gamble, for example, the route to the CEO’s position has always been through brand management. 42.4 percent of U.S. firms have any sort of succession plan in place. 85 percent of the CEOs selected to run S&P 500 companies in 2006 were insiders.

 Robert Nardelli tried unsuccessfully to replace Home Depot’s informal, collegial culture with one of military efficiency, customer satisfaction fell and he was replaced as CEO.

 Although ROI gives the impression of objectivity and precision, it can be easily manipulated.

 A recent survey of 1,430 international executives indicated that benchmarking was used by 76 percent of the companies – the most widely used management tool.

The success of Wal-Mart has been management’s use of the company’s sophisticated information system to control purchasing decisions.

[Business School  Grenoble EM  International Affairs   Higher Education   ESC Grenodble   Strategy  Blog  Global Ed   Graduate Business School    Mark Thomas

See also:

Great book. Advocates the creation of a learning organization as a way of achieving sustainable competitive advantage over your competitors	One of the most important business  books of the 1990s and has been in the best seller list ever since. Fantastic read for anyone thinking about their leadership style	Nobel Prize winner and one of the best sellers this year. A must read for any business student

 

Classic book that gives the ins and outs of creating new markets	An excellent outline of some of the fundamental issues in strategic management. The book is short and generally to the point	Discussion on some of the key issues in strategic management. The book requires some background knowledge of the subject

 

 

The opposite of ‘success’ is not ‘failure’, but ‘mediocrity’