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FOURTH EDITION

Strategic
Management

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Frank T. Rothaermel
Georgia Institute of Technology

FOURTH EDITION

Strategic
Management

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STRATEGIC MANAGEMENT, FOURTH EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright ? 2019 by McGraw-
Hill Education. All rights reserved. Printed in the United States of America. Previous editions ? 2017, 2015,
and 2013. 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.

Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 LWI 21 20 19 18

Bound:
ISBN 978-1-259-92762-1 (student edition)
MHID 1-259-92762-8 (student edition)
ISBN 978-1-260-14192-4 (instructor edition)
MHID 1-260-14192-6 (instructor edition)

Looseleaf:
ISBN 978-1-260-14186-3
MHID 1-260-14186-1

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Library of Congress Cataloging-in-Publication Data

Names: Rothaermel, Frank T., author.
Title: Strategic management: concepts / Frank T. Rothaermel, Georgia
Institute of Technology.
Description: Fourth Edition. | Dubuque: McGraw-Hill Education, 2018. |
Revised edition of the author?s Strategic management, [2017]
Identifiers: LCCN 2017049706 | ISBN 9781259927621 (paperback)
Subjects: LCSH: Strategic planning. | Management. | BISAC: BUSINESS &
ECONOMICS / Management.
Classification: LCC HD30.28 .R6646 2018 | DDC 658.4/012?dc23 LC record available
at https://lccn.loc.gov/2017049706

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mheducation.com/highered

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DEDICATION

To my eternal family for their love, support, and sacrifice: Kelleyn, Harris,
Winston, Roman, Adelaide, Avery, and Ivy.

?FRANK T. ROTHAERMEL

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vi

PART ONE / ANALYSIS 2

CHAPTER 1 What Is Strateg y? 4

CHAPTER 2 Strategic Leadership: Managing the Strateg y Process 30

CHAPTER 3 External Analysis: Industry Structure, Competitive Forces,
and Strategic Groups 64

CHAPTER 4 Internal Analysis: Resources, Capabilities, and Core
Competencies 106

CHAPTER 5 Competitive Advantage, Firm Performance, and Business
Models 144

PART TWO / FORMULATION 180

CHAPTER 6 Business Strateg y: Differentiation, Cost Leadership,
and Blue Oceans 182

CHAPTER 7 Business Strateg y: Innovation, Entrepreneurship,
and Platforms 218

CHAPTER 8 Corporate Strateg y: Vertical Integration and
Diversification 264

CHAPTER 9 Corporate Strateg y: Strategic Alliances, Mergers,
and Acquisitions 308

CHAPTER 10 Global Strateg y: Competing Around the World 338

PART THREE / IMPLEMENTATION 376

CHAPTER 11 Organizational Design: Structure, Culture, and Control 378

CHAPTER 12 Corporate Governance and Business Ethics 418

PART FOUR / MINICASES 447

HOW TO CONDUCT A CASE ANALYSIS 528

PART FIVE / FULL-LENGTH CASES Available through McGraw-Hill Create
www.McGrawHillCreate.com/Rothaermel

CONTENTS IN BRIEF

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MINICASES /

1 Michael Phelps: The Role of Strategy in Olympics and
Business 448

2 PepsiCo?s Indra Nooyi: Performance with Purpose 450
3 Yahoo: From Internet Darling to Fire Sale 453
4 How the Strategy Process Killed?Innovation at

Microsoft 456

5 Apple: The iPhone Turns 10, so What?s Next? 459
6 Nike?s Core Competency: The Risky Business of

Creating?Heroes 463

7 Dynamic Capabilities at IBM 466
8 Starbucks after Schultz: How to Sustain a Competitive

Advantage? 470

9 Business Model Innovation: How Dollar Shave Club
Disrupted Gillette 474

10 Competing on Business Models: Google vs.
Microsoft 476

11 Can Amazon Trim the Fat at Whole Foods? 481
12 LEGO?s Turnaround: Brick by Brick 484
13 Cirque du Soleil: Searching for a New Blue Ocean 488
14 Wikipedia: Disrupting the Encyclopedia Business 491
15 Disney: Building Billion-Dollar Franchises 494
16 Hollywood Goes Global 498
17 Samsung Electronics: Burned by Success? 503
18 Does GM?s Future Lie in China? 509
19 Flipkart vs. Amazon in India: Who?s Winning? 512
20 Alibaba?China?s Ecommerce Giant: Challenging

Amazon? 516

21 HP?s Boardroom Drama and Divorce 520
22 UBS: A Pattern of Ethics Scandals 524

FULL-LENGTH CASES /

All available through McGraw-Hill Create,
www.McGrawHillCreate.com/Rothaermel

Uber Technologies*

Starbucks Corporation*

Netflix, Inc.*

Walmart*

The Walt Disney Company*

Tesla, Inc. >>

Apple Inc. >>

Amazon.com, Inc. >>

Best Buy Co., Inc. >>

Facebook, Inc. >>

McDonald?s Corporation >>

Alphabet?s Google >>

Delta Air Lines, Inc. >>

UPS in India >>

The Movie Exhibition Industry >>+
Space X* +
Kickstarter: Using Crowdfunding to Launch
a New Board Game +
Better World Books and the Triple Bottom Line

General Electric after GE Capital

IBM at the Crossroads

Merck & Co., Inc.

Grok: Action Intelligence for Fast Data

Make or Break at RIM: Launching BlackBerry 10

MINICASES & FULL-LENGTH CASES

* NEW TO THE FOURTH EDITION >> REVISED AND UPDATED FOR THE FOURTH EDITION + THIRD-PARTY CASE

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CHAPTERCASES /

1 Tesla?s Secret Strategy 5
2 Sheryl Sandberg: Leaning in at Facebook 31
3 Airbnb: Disrupting the Hotel Industry 65
4 Dr. Dre?s Core Competency: Coolness Factor 107
5 The Quest for Competitive Advantage: Apple vs.

Microsoft 145
6 JetBlue Airways: Finding a New Blue Ocean? 183
7 Netflix: Disrupting the TV Industry 219
8 Amazon.com: To Infinity and Beyond 265
9 Little Lyft Gets Big Alliance Partners 309
10 Sweden?s IKEA: The World?s Most Profitable

Retailer 339
11 Zappos: Of Happiness and Holacracy 379
12 Uber: Most Ethically Challenged Tech

Company? 419

STRATEGY HIGHLIGHTS /

1.1 Teach for America: How Wendy Kopp Inspires
Future Leaders 12

1.2 Merck: Reconfirming Its Core Values 18
2.1 Starbucks CEO: ?It?s Not What We Do? 44
2.2 BP ?Grossly Negligent? in Gulf of Mexico

Disaster 55
3.1 BlackBerry?s Bust 71
3.2 The Five Forces in the Airline Industry 75
4.1 Applying VRIO: The Rise and Fall of Groupon 119
4.2 When Will P&G Play to Win Again? 125
5.1 Interface: The World?s First Sustainable

Company 165
5.2 Threadless: Leveraging Crowdsourcing to Design

Cool T-Shirts 166
6.1 Dr. Shetty: ?The Henry Ford of Heart

Surgery? 200
6.2 How JCPenney Sailed Deeper into the Red

Ocean 208
7.1 Standards Battle: Which Automotive Technology

Will Win? 230
7.2 GE?s Innovation Mantra: Disrupt Yourself! 248
8.1 Is Coke Becoming a Monster? 276
8.2 The Tata Group: Integration at the Corporate

Level 289
9.1 How Tesla Used Alliances Strategically 315
9.2 Kraft?s Specialty: Hostile Takeovers 326
10.1 The Gulf Airlines Are Landing in the

United?States 347
10.2 Walmart Retreats from Germany, and Lidl Invades

the United States 351
11.1 W.L. Gore & Associates: Informality and

Innovation 386
11.2 Sony vs. Apple: Whatever Happened to Sony? 400
12.1 GE?s Board of Directors 430
12.2 Why the Mild Response to Goldman Sachs

and?Securities Fraud? 435

CHAPTERCASES & STRATEGY HIGHLIGHTS

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PART ONE / ANALYSIS 2
CHAPTER 1
WHAT IS STRATEGY? 4

CHAPTERCASE 1
Tesla?s Secret Strategy 5

1.1 What Strategy Is: Gaining and Sustaining
Competitive Advantage 6

What Is Competitive Advantage? 8
1.2 Vision, Mission, and Values 11

Vision 11
Mission 13
Values 17

1.3 The AFI Strategy Framework 19
1.4 Implications for Strategic Leaders 20

CHAPTERCASE 1 / Consider This… 21

CHAPTER 2
STRATEGIC LEADERSHIP: MANAGING THE STRATEGY
PROCESS 30

CHAPTERCASE 2
Sheryl Sandberg: Leaning in at Facebook 31

2.1 Strategic Leadership 32
What Do Strategic Leaders Do? 33
How Do You Become a Strategic Leader? 33
The Strategy Process Across Levels: Corporate, Business,
and Functional Managers 36

2.2 The Strategic Management Process 38
Top-Down Strategic Planning 38
Scenario Planning 39
Strategy as Planned Emergence: Top-Down and Bottom-Up 41

2.3 Stakeholders and Competitive Advantage 47
Stakeholder Strategy 48
Stakeholder Impact Analysis 50

2.4 Implications for Strategic Leaders 55

CHAPTERCASE 2 / Consider This… 56

CHAPTER 3
EXTERNAL ANALYSIS: INDUSTRY STRUCTURE,
COMPETITIVE FORCES, AND STRATEGIC GROUPS 64

CHAPTERCASE 3
Airbnb: Disrupting the Hotel Industry 65

3.1 The PESTEL Framework 67
Political Factors 68
Economic Factors 68
Sociocultural Factors 70
Technological Factors 70
Ecological Factors 70
Legal Factors 72

3.2 Industry Structure and Firm Strategy: The Five
Forces Model 73

Industry vs. Firm Effects In Determining Firm
Performance 73
Competition In the Five Forces Model 74
The Threat of Entry 76
The Power of Suppliers 79
The Power of Buyers 80
The Threat of Substitutes 82
Rivalry Among Existing Competitors 83
A Sixth Force: The Strategic Role of Complements 88

3.3 Changes over Time: Entry Choices and Industry
Dynamics 90

Entry Choices 90
Industry Dynamics 92

3.4 Performance Differences within the Same Industry:
Strategic Groups 93

The Strategic Group Model 93
Mobility Barriers 95

3.5 Implications for Strategic Leaders 96

CHAPTERCASE 3 / Consider This… 97

CHAPTER 4
INTERNAL ANALYSIS: RESOURCES, CAPABILITIES,
AND CORE COMPETENCIES 106

CHAPTERCASE 4
Dr. Dre?s Core Competency: Coolness Factor 107

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4.1 Core Competencies 110
4.2 The Resource-Based View 113

Two Critical Assumptions 114
The Vrio Framework 115
Isolating Mechanisms: How to Sustain A Competitive
Advantage 120

4.3 The Dynamic Capabilities Perspective 124
4.4 The Value Chain and Strategic Activity
Systems 128

The Value Chain 128
Strategic Activity Systems 130

4.5 Implications for Strategic Leaders 133
Using Swot Analysis to Generate Insights From External
and Internal Analysis 134

CHAPTERCASE 4 / Consider This… 135

CHAPTER 5
COMPETITIVE ADVANTAGE, FIRM PERFORMANCE,
AND BUSINESS MODELS 144

CHAPTERCASE 5
The Quest for Competitive Advantage:
Apple vs. Microsoft 145

5.1 Competitive Advantage and Firm Performance 146
Accounting Profitability 146
Shareholder Value Creation 153
Economic Value Creation 155
The Balanced Scorecard 161
The Triple Bottom Line 164

5.2 Business Models: Putting Strategy into Action 165
The Why, What, Who, and How of Business Models
Framework 167
Popular Business Models 168
Dynamic Nature of Business Models 170

5.3 Implications for Strategic Leaders 171

CHAPTERCASE 5 / Consider This… 172

PART TWO / FORMULATION 180
CHAPTER 6
BUSINESS STRATEGY: DIFFERENTIATION, COST
LEADERSHIP, AND BLUE OCEANS 182

CHAPTERCASE 6
JetBlue Airways: Finding a New Blue Ocean? 183

6.1 Business-Level Strategy: How to Compete
for Advantage 185

Strategic Position 186
Generic Business Strategies 186

6.2 Differentiation Strategy: Understanding Value
Drivers 188

Product Features 191
Customer Service 191
Complements 191

6.3 Cost-Leadership Strategy: Understanding Cost
Drivers 192

Cost of Input Factors 194
Economies of Scale 194
Learning Curve 196
Experience Curve 199

6.4 Business-Level Strategy and the Five Forces:
Benefits and Risks 201

Differentiation Strategy: Benefits and Risks 201
Cost-Leadership Strategy: Benefits and Risks 203

6.5 Blue Ocean Strategy: Combining Differentiation
and Cost Leadership 204

Value Innovation 205
Blue Ocean Strategy Gone Bad: ?Stuck In the Middle? 207

6.6 Implications for Strategic Leaders 210

CHAPTERCASE 6 / Consider This… 211

CHAPTER 7
BUSINESS STRATEGY: INNOVATION,
ENTREPRENEURSHIP, AND PLATFORMS 218

CHAPTERCASE 7
Netflix: Disrupting the TV Industry 219

7.1 Competition Driven by Innovation 221
The Innovation Process 222

7.2 Strategic and Social Entrepreneurship 225
7.3 Innovation and the Industry Life Cycle 227

Introduction Stage 228
Growth Stage 230
Shakeout Stage 233
Maturity Stage 234
Decline Stage 234
Crossing the Chasm 235

7.4 Types of Innovation 242
Incremental vs. Radical Innovation 243
Architectural vs. Disruptive Innovation 245

7.5 Platform Strategy 249
The Platform vs. Pipeline?Business Models 249
The Platform Ecosystem 250

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7.6 Implications for Strategic Leaders 254

CHAPTERCASE 7 / Consider This… 254

CHAPTER 8
CORPORATE STRATEGY: VERTICAL INTEGRATION
AND DIVERSIFICATION 264

CHAPTERCASE 8
Amazon.com: To Infinity and Beyond 265

8.1 What Is Corporate Strategy? 268
Why Firms Need to Grow 268
Three Dimensions of Corporate Strategy 269

8.2 The Boundaries of the Firm 271
Firms vs. Markets: Make or Buy? 272
Alternatives on the Make-or-Buy Continuum 274

8.3 Vertical Integration along the Industry Value
Chain 278

Types of Vertical Integration 279
Benefits and Risks of Vertical Integration 281
When Does Vertical Integration Make Sense? 283
Alternatives to Vertical Integration 284

8.4 Corporate Diversification: Expanding Beyond
a Single Market 285

Types of Corporate Diversification 287
Leveraging Core Competencies for Corporate
Diversification 291
Corporate Diversification and Firm Performance 293

8.5 Implications for Strategic Leaders 297

CHAPTERCASE 8 / Consider This… 298

CHAPTER 9
CORPORATE STRATEGY: STRATEGIC ALLIANCES,
MERGERS, AND ACQUISITIONS 308

CHAPTERCASE 9
Little Lyft Gets Big Alliance Partners 309

9.1 How Firms Achieve Growth 310
The Build-Borrow-Buy Framework 310

9.2 Strategic Alliances 313
Why Do Firms Enter Strategic Alliances? 314
Governing Strategic Alliances 317
Alliance Management Capability 320

9.3 Mergers and Acquisitions 323
Why Do Firms Merge With Competitors? 323
Why Do Firms Acquire Other Firms? 325
M&A and Competitive Advantage 327

9.4 Implications for Strategic Leaders 329

CHAPTERCASE 9 / Consider This… 330

CHAPTER 10
GLOBAL STRATEGY: COMPETING AROUND
THE WORLD 338

CHAPTERCASE 10
Sweden?s IKEA: The World?s Most Profitable Retailer 339

10.1 What Is Globalization? 342
Stages of Globalization 343
State of Globalization 344

10.2 Going Global: Why? 346
Advantages of Going Global 346
Disadvantages of Going Global 350

10.3 Going Global: Where and How? 353
Where In the World to Compete? The Cage Distance
Framework 353
How Do MNES Enter Foreign Markets? 357

10.4 Cost Reductions vs. Local Responsiveness:
The?Integration-Responsiveness Framework 358

International Strategy 359
Multidomestic Strategy 360
Global-Standardization Strategy 360
Transnational Strategy 361

10.5 National Competitive Advantage: World Leadership
in Specific Industries 362

Porter?s Diamond Framework 364
10.6 Implications for Strategic Leaders 366

CHAPTERCASE 10 / Consider This… 367

PART THREE / IMPLEMENTATION 376
CHAPTER 11
ORGANIZATIONAL DESIGN: STRUCTURE, CULTURE,
AND CONTROL 378

CHAPTERCASE 11
Zappos: Of Happiness and Holacracy 379

11.1 Organizational Design and Competitive
Advantage 381

Organizational Inertia: The Failure of Established Firms 382
Organizational Structure 384
Mechanistic vs. Organic Organizations 385

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11.2 Strategy and Structure 387
Simple Structure 387
Functional Structure 388
Multidivisional Structure 390
Matrix Structure 394

11.3 Organizing for Innovation 398
11.4 Organizational Culture: Values, Norms, and
Artifacts 401

Where Do Organizational Cultures Come From? 403
How Does Organizational Culture Change? 404
Organizational Culture and Competitive Advantage 405

11.5 Strategic Control-and-Reward Systems 407
Input Controls 408
Output Controls 408

11.6 Implications for Strategic Leaders 409

CHAPTERCASE 11 / Consider This… 410

CHAPTER 12
CORPORATE GOVERNANCE AND BUSINESS
ETHICS 418

CHAPTERCASE 12
Uber: Most Ethically Challenged Tech Company? 419

12.1 The Shared Value Creation Framework 421
Public Stock Companies and Shareholder Capitalism 421
Creating Shared Value 423

12.2 Corporate Governance 425
Agency Theory 426
The Board of Directors 428
Other Governance Mechanisms 430

12.3 Strategy and Business Ethics 433
Bad Apples vs. Bad Barrels 434

12.4 Implications for Strategic Leaders 437

CHAPTERCASE 12 / Consider This… 438

PART FOUR / MINICASES 447

PART FIVE / FULL-LENGTH CASES
All available through McGraw-Hill Create,
www.McGrawHillCreate.com/Rothaermel

Company Index 539
Name Index 545
Subject Index 547

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Frank T. Rothaermel
Georgia Institute of Technology

FRANK T. ROTHAERMEL (PH.D.) is a Professor of Strategy & Innovation, holds
the Russell and Nancy McDonough Chair in the Scheller College of Business at
the Georgia Institute of Technology (GT), and is an Alfred P. Sloan Industry Stud-
ies Fellow. He received a National Science Foundation (NSF) CAREER award,
which ?is a Foundation-wide activity that offers the National Science Founda-
tion?s most prestigious awards in support of . . . those teacher-scholars who most
effectively integrate research and education? (NSF CAREER Award description).

Frank?s research interests lie in the areas of strategy, innovation, and entre-
preneurship. Frank has published over 30 articles in leading academic journals
such as the Strategic Management Journal, Organization Science, Academy of
Management Journal, Academy of Management Review, and elsewhere. Based
on having published papers in the top 1 percent based on citations, Thomson
Reuters identified Frank as one of the ?world?s most influential scientific
minds.? He is listed among the top-100 scholars based on impact over more
than a decade in both economics and business. Bloomberg Businessweek named
Frank one of Georgia Tech?s Prominent Faculty in its national survey of business
schools. The Kauffman Foundation views Frank as one of the world?s 75 thought
leaders in entrepreneurship and innovation.

Frank has received several recognitions for his research, including the Sloan
Industry Studies Best Paper Award, the Academy of Management Newman Award, the Strategic
Management Society Conference Best Paper Prize, the DRUID Conference Best Paper Award, the
Israel Strategy Conference Best Paper Prize, and is the inaugural recipient of the Byars Faculty
Excellence Award. Frank currently serves (or served) on the editorial boards of the Strategic Man-
agement Journal, Organization Science, Academy of Management Journal, Academy of Manage-
ment Review, and Strategic Organization.

Frank regularly translates his research findings for wider audiences in articles in the MIT Sloan
Management Review, The Wall Street Journal, Forbes, and elsewhere. To inform his research Frank
has conducted extensive field work and executive training with leading corporations such as Amgen,
Daimler, Eli Lilly, Equifax, GE Energy, GE Healthcare, Hyundai Heavy Industries (South Korea),
Kimberly-Clark, Microsoft, McKesson, NCR, Turner (TBS), UPS, among others.

Frank has a wide range of executive education experience, including teaching in programs at GE
Management Development Institute (Crotonville, NY), Georgia Institute of Technology, George-
town University, ICN Business School (France), Politecnico di Milano (Italy), St. Gallen University
(Switzerland), and the University of Washington. He received numerous teaching awards for excel-
lence in the classroom including the GT-wide Georgia Power Professor of Excellence award.

When launched in 2012, Frank?s Strategic Management text received the McGraw-Hill
1st Edition of the Year Award in Business & Economics. His Strategic Management text has been
translated into Mandarin, Korean, and Greek. Several of his case studies are Most Popular among the
cases distributed by Harvard Business Publishing.

Frank held visiting professorships at the EBS University of Business and Law (Germany), Singapore
Management University (Tommie Goh Professorship), and the University of St. Gallen (Switzerland).
He is a member of the Academy of Management and the Strategic Management Society.

Frank holds a PhD degree in strategic management from the University of Washington; an MBA
from the Marriott School of Management at Brigham Young University; and is Diplom-Volkswirt
(M.Sc. equivalent) in economics from the University of Duisburg-Essen, Germany. Frank completed
training in the case teaching method at the Harvard Business School.

VISIT THE AUTHOR AT: http://ftrStrategy.com/

ABOUT THE AUTHOR

?Tony Benner

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PREFACE

The market for strategy texts can be broadly separated into two overarching categories:
traditional, application-based and research-based. Traditional, application-based strategy
books represent the first-generation texts with first editions published in the 1980s. The
research-based strategy books represent the second-generation texts with first editions
published in the 1990s. I wrote this book to address a needed new category?a third
generation of strategy text that combines into one the student-accessible, application-
oriented frameworks of the first-generation texts with the research-based frameworks of
the second-generation texts.

The market response to this unique approach to teaching and studying strategy was
overwhelmingly enthusiastic. Enthusiasm and support increased with each subsequent edi-
tion. I?m truly grateful for the sustained support.

To facilitate an enjoyable and refreshing reading experience that enhances student
learning and retention, I synthesize and integrate strategy frameworks, empirical research,
and practical applications with current real-world examples. This approach and emphasis
on real-world examples offers students a learning experience that uniquely combines rigor
and relevance. As Dr. John Media of the University of Washington?s School of Medicine
and life long researcher on how the mind organizes information explains:

How does one communicate meaning in such a fashion that learning is improved? A simple
trick involves the liberal use of relevant real-world examples, thus peppering main learning
points with meaningful experiences. . . . Numerous studies show this works. . . . The greater
the number of examples . . . the more likely the students were to remember the informa-
tion. It?s best to use real-world situations familiar to the learner. . . . Examples work because
they take advantage of the brain?s natural predilection for pattern matching. Information is
more readily processed if it can be immediately associated with information already present
in the brain. We compare the two inputs, looking for similarities and differences as we encode
the new information. Providing examples is the cognitive equivalent of adding more handles
to the door. [The more handles one creates at the moment of learning, the more likely the
information can be accessed at a later date.] Providing examples makes the information more
elaborative, more complex, better encoded, and therefore better learned.*

Strategic Management brings conceptual frameworks to life via examples that cover
products and services from companies with which students are familiar, such as Facebook,
Google, Tesla, Starbucks, Apple, McDonald?s, Disney, Airbnb, and Uber. Liberal use of
such examples aids in making strategy relevant to students? lives and helps them internal-
ize strategy concepts and frameworks. Integrating current examples with modern strategy
thinking, I prepare students with the foundation they need to understand how companies
gain and sustain competitive advantage. I also develop students? skills to become success-
ful leaders capable of making well-reasoned strategic decisions in a globalized and turbu-
lent 21st century.

I?m pleased to introduce the new 4th edition of Strategic Management. My distinctive
approach to teaching and transmitting strategy not only offers students a unique learning
experience that combines theory and practice, but also provides tight linkages between
concepts and cases. In this new 4th edition, I build upon the unique strengths of this prod-
uct, and continue to add improvements based upon hundreds of insightful reviews and

*Source: Medina, J. (2014), Brain Rules: 12 Principles for Surviving and Thriving at Work, Home, and School (pp. 139?140).
(Seattle: Pear Press).

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PREFACE xv

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important feedback from professors, students, and working professionals. The hallmark
features of this text continue to be:

? Student engagement via practical and relevant application of strategy concepts using a
holistic Analysis, Formulation, and Implementation (AFI) Strategy Framework.

? Synthesis and integration of empirical research and practical applications combined
with relevant strategy material to focus on ?What is important?? for the student and
?Why is it important??

? Emphasis on diversity by featuring a wide range of strategic leaders from different
backgrounds and fields, not just in business, but also in entertainment, professional
sports, and so forth.

? Coverage of an array of firms, including for-profit public (Fortune 100) companies,
but also private companies (including startups) as well as non profit organizations.
All of them need a good strategy!

? Global perspective, with a focus on competing around the world, featuring many lead-
ing companies from Asia, Europe, and Latin America, as well as the United States.
I was fortunate to study, live, and work across the globe, and I attempt to bring this
cosmopolitan perspective to bear in this text.

? Direct personal applications of strategy concepts to careers and lives to help internal-
ize the content (including the popular myStrategy modules at the end of each chapter).

? Industry-leading digital delivery option (Create), adaptive learning system (Smart-
Book), and online assignment and assessment system (Connect).

? Standalone module on How to Conduct a Case Analysis.
? High-quality Cases, well integrated with text chapters and standardized, high-quality

teaching notes; there are two types of cases that come with this text:
? 12 ChapterCases begin and end each chapter, framing the chapter topic

and content.
? 22 MiniCases (Part 4 of the book), all based on original research, provide

dynamic opportunities for students to apply strategy concepts by assigning them
as add-ons to chapters, either as individual assignments or as group work, or by
using them for class discussion.

I have taken great pride in authoring all 12 ChapterCases, Strategy Highlights (2 per
chapter, for a total of 24), and 22 MiniCases. This additional touch allows quality control
and ensures that chapter content and cases use one voice and are closely interconnected.
Both types of case materials come with sets of questions to stimulate class discussion or
provide guidance for written assignments. The instructor resources offer sample answers
that apply chapter content to the cases.

In addition to these in-text cases, 23 full-length Cases, with 20 of them (that is almost
90 percent!) authored or co-authored by me specifically to accompany this textbook, are
available through McGraw-Hill?s custom-publishing Create program (www.McGrawHill-
Create.com/Rothaermel). Full-length cases NEW to the 4th edition are:

? Uber
? Netflix
? Starbucks
? Disney
? Walmart
? SpaceX

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xvi PREFACE

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Popular cases about Apple, Amazon, Facebook, McDonald?s, Tesla, and Best Buy
among several others are significantly updated and revised. Robust and structurally updated
case teaching notes are also available and accessible through Create; financial data for
these cases may be accessed from the Instructor Resource Center in the Connect Library.

What?s New in the 4th Edition?
I have revised and updated the 4th edition in the following ways, many of which were
inspired by conversations and feedback from the many users and reviewers of the prior
editions.

OVERVIEW OF MAJOR CHANGES IN 4E:
? New A-head section on ?Changes over Time: Entry Choices and Industry Dynamics?

in Cha