CHP 5: Strategies in Action

slow mover

(also called fast follower or late mover) can be effective when a firm can easily copy or imitate the lead firm's products or services. If technology is advancing rapidly, slow movers can often leapfrog a first mover's products with improved second-generation products.

actions: forward integration, backward integration, horizontal integration, market penetration, market development, product development, related diversification, unrelated diversification, retrenchment, divestiture, and liquidation.

TYPES OF STRATEGIES

Type 4 and Type 5.

Two alternative types of focus strategies are

financial and strategic

Two types of objectives

position over rivals.

Ultimately, the best way to sustain competitive advantage over the long run is to relentlessly pursue strategic objectives that strengthen a firm's business

• Transferring competitively valuable expertise, technological know-how, or other capabilities from one business to another • Combining the related activities of separate businesses into a single operation to achieve lower costs • Exploiting common use of a well-known brand name • Cross-business collaboration to create competitively valuable resource strengths and capabilities12

exist.11 Most companies favor related diversification strategies to capitalize on synergies as follows:

strategic objectives

include things such as a larger market share, quicker on time delievery than rivals, shorter design to market times than rivals, lower costs than rivals, higher product quality than rivals, wider geographic coverage than rivals, achieving technological leadership, consistently getting new or improved products to market ahead of rivals,

financial objectives

include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, greater return on investment, higher earnings per share, a rising stock price, improved cash flow, and so on

Outsourcing

involves companies hiring other companies to take over various parts of their functional operations, such as human resources, information systems, payroll, accounting, customer service, and even marketing. For more than a decade, U.S. and

Type 5

is a best-value focus strategy that offers products or services to a small range of customers at the best price-value available on the market. Sometimes called "focused differentiation," the best-value focus strategy aims to offer a niche group of customers the products or services that meet their tastes and requirements better than rivals' products do.

Type 2

is a best-value strategy that offers products or services to a wide range of customers at the best price-value available on the market. The best-value strategy aims to offer customers a range of products or services at the lowest price available compared to a rival's products with similar attributes.

Chapter 7 bankruptcy,

is a liquidation procedure used only when a corporation sees no hope of being able to operate successfully or to obtain the necessary creditor agreement. All the organization's assets are sold in parts for their tangible worth. Several hundred thousand companies declare Chapter 7 bankruptcy annually.

Type 1

is a low-cost strategy that offers products or services to a wide range of customers at the lowest price available on the market.

Type 4

is a lowcost focus strategy that offers products or services to a small range (niche group) of customers at the lowest price available on the market.

Joint venture

is a popular strategy that occurs when two or more companies form a temporary partnership or consortium for the purpose of capitalizing on some opportunity.

Liquidation

is a recognition of defeat and consequently can be an emotionally difficult strategy. However, it may be better to cease operating than to continue losing large sums of money.

Chapter 13 bankruptcy

is a reorganization plan similar to Chapter 11, but it is available only to small businesses owned by individuals with unsecured debts of less than $100,000 and secured debts of less than $350,000. The Chapter 13 debtor is allowed to operate the business while a plan is being developed to provide for the successful operation of the business in the future.

unreliable, too costly, or cannot meet the firm's needs.

Backward integration can be especially appropriate when a firm's current suppliers are

charge a higher price for its product and to gain customer loyalty because consumers may become strongly attached to the differentiation factors.

. A differentiation strategy should be pursued only after a careful study of buyers' needs and preferences to determine the feasibility of incorporating one or more differentiating features into a unique product that showcases the desired attributes. A successful differentiation strategy allows a firm to

selling off land and buildings to raise needed cash, pruning product lines, closing marginal businesses, closing obsolete factories, automating processes, reducing the number of employees, and instituting expense control systems.

. Sometimes called a turnaround or reorganizational strategy, retrenchment is designed to fortify an organization's basic distinctive competence. During retrenchment, strategists work with limited resources and face pressure from shareholders, employees, and the media. Retrenchment can involve

type 1 and type 2 focus on large markets

. Two alternative types of cost leadership strategies can be defined.

1. Secure access and commitments to rare resources. 2. Gain new knowledge of critical success factors and issues. 3. Gain market share and position in the best locations. 4. Establish and secure long-term relationships with customers, suppliers, distributors, and investors. 5. Gain customer loyalty and commitments.

5-7 Five Benefits of a Firm Being the First Mover

1. Quantitative 2. Measurable 3. Realistic 4. Understandable 5. Challenging 6. Hierarchical 7. Obtainable 8. Congruent across departments

8 desired characteristics of objectives

related diversification

Adding new but related products or services ex Facebook acquired the text-messaging firm WhatsApp for $19 billion.

unrelated diversification

Adding new, unrelated products or services ex Kroger and Whole Foods Market are cooking meals, becoming restaurants.

1. Price competition among rival sellers is especially vigorous. 2. Products of rival sellers are essentially identical and supplies are readily available from any of several eager sellers. 3. There are few ways to achieve product differentiation that have value to buyers. 4. Most buyers use the product in the same ways. 5. Buyers incur low costs in switching their purchases from one seller to another. 6. Buyers are large and have significant power to bargain down prices. 7. Industry newcomers use introductory low prices to attract buyers and build a customer base.

A Type 1 or Type 2 cost leadership strategy can be especially effective under the following conditions:19

1. The target market niche is large, profitable, and growing. 2. Industry leaders do not consider the niche to be crucial to their own success. 3. Industry leaders consider it too costly or difficult to meet the specialized needs of the target market niche while taking care of their mainstream customers. 4. The industry has many different niches and segments, thereby allowing a focuser to pick a competitively attractive niche suited to its own resources. 5. Few, if any, other rivals are attempting to specialize in the same target segment.

A low-cost (Type 4) or best-value (Type 5) focus strategy can be especially attractive under these conditions:22

be valued highly enough by customers to justify the higher price.

A risk of pursuing a differentiation strategy is that the unique product may not

industry segment that is of sufficient size, has good growth potential, and is not crucial to the success of other major competitors. Strategies such as market penetration and market development offer substantial focusing advantages.

A successful focus strategy depends on an

cost leadership, differentiation, and focus.

According to Porter, strategies allow organizations to gain competitive advantage from three different bases: Porter calls these bases generic strategies.

1. Managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture. 2. The venture may benefit the partnering companies but may not benefit customers, who then complain about poorer service or criticize the companies in other ways. 3. The venture may not be supported equally by both partners. If supported unequally, problems arise. 4. The venture may begin to compete more with one of the partners than the other.24

Although joint ventures and partnerships are increasingly preferred over mergers as a means for achieving strategies, they are not always successful, for four primary reasons:

franchising

An effective means of implementing forward integration is .

financial performance in their respective industries, rather than striving to capitalize on value chain strategic fits among the businesses.

An unrelated diversification strategy favors capitalizing on a portfolio of businesses that are capable of delivering excellent

Type 4 strategies offer products or services to a niche group at the lowest price, whereas Type 5 offers products and services to a niche group at higher prices but loaded with features so the offerings are perceived as the best value.

Both Type 4 and Type 5 focus strategies target a small market. However, the difference is that

related

Businesses are said to be ____ when their value chains possess competitively valuable cross-business strategic fits;

differentiation.

But cost leadership generally must be pursued in conjunction with

direction, allow synergy, assist in evaluation, establish priorities, reduce uncertainty, minimize conflicts, stimulate exertion, and aid in both the allocation of resources and the design of jobs.

Clearly established objectives offer many benefits. They provide

difficult for competitors to copy or match.

Companies employing a low-cost (Type 1) or best-value (Type 2) cost leadership strategy must achieve their competitive advantage in ways that are

sources of supply.

De-integration makes sense in industries that have global

shareholder value than what shareholders could accomplish acting individually.

Diversification makes sense only to the extent that the strategy adds more to

difficult to manage diverse business activities.

Diversification strategies are becoming less popular because organizations are finding it more

1. To provide improved capacity utilization 2. To make better use of the existing sales force 3. To reduce managerial staff 4. To gain economies of scale 5. To smooth out seasonal trends in sales 6. To gain access to new suppliers, distributors, customers, products, and creditors 7. To gain new technology 8. To gain market share 9. To enter global markets 10. To gain pricing power 11. To reduce tax obligations

Eleven Potential Benefits of Merging with or Acquiring Another Firm

strategic objectives that improve a firm's competitiveness and market strength.

Financial objectives can best be met by focusing first and foremost on achieving

1. An organization has a clearly distinctive competence but has failed consistently to meet its objectives and goals over time. 2. An organization is one of the weaker competitors in a given industry. 3. An organization is plagued by inefficiency, low profitability, poor employee morale, and pressure from stockholders to improve performance. 4. An organization has failed to capitalize on external opportunities, minimize external threats, take advantage of internal strengths, and overcome internal weaknesses over time; that is, when the organization's strategic managers have failed (and possibly will be replaced by more competent individuals). 5. An organization has grown so large so quickly that major internal reorganization is needed.

Five guidelines for when retrenchment may be an especially effective strategy to pursue are as follows:15

distinctive preferences or requirements and when rival firms are not attempting to specialize in the same target segment.

Focus strategies are most effective when consumers have

vertical integration.

Forward integration and backward integration are sometimes collectively referred to as

forward integration

Gaining ownership or increased control over distributors or retailers ex: Amazon began rapid delivery services in some U.S. cities.

1. Revenues derived from an organization's current products or services would increase significantly by adding the new, unrelated products. 2. An organization competes in a highly competitive or a no-growth industry, as indicated by low industry profit margins and returns. 3. An organization's present channels of distribution can be used to market the new products to current customers. 4. New products have countercyclical sales patterns compared to an organization's present products. 5. An organization's basic industry is experiencing declining annual sales and profits. 6. An organization has the capital and managerial talent needed to compete successfully in a new industry. 7. An organization has the opportunity to purchase an unrelated business that is an attractive investment opportunity. 8. Financial synergy exists between the acquired and acquiring firm. (Note that a key difference between related and unrelated diversification is that the former should be based on some commonality in markets, products, or technology, whereas the latter is based more on profit considerations.) 9. Existing markets for an organization's present products are saturated. 10. Antitrust action could be charged against an organization that historically has concentrated on a single industry.

Given below are 10 guidelines when unrelated diversification may be an especially effective strategy.14

1. An organization has pursued a retrenchment strategy and failed to accomplish needed improvements. 2. To be competitive, a division needs more resources than the company can provide. 3. A division is responsible for an organization's overall poor performance. 4. A division is a misfit with the rest of an organization; this can result from radically different markets, customers, managers, employees, values, or needs. 5. A large amount of cash is needed quickly and cannot be obtained reasonably from other sources. 6. Government antitrust action threatens an organization.

Here are some guidelines for when divestiture may be an especially effective strategy to pursue:16

1. Stable wages 2. Reduced gas and electricity costs 3. Excellent security to protect designs from overseas copycats 4. Enable closer tabs on quality control and supply chains 5. Excellent economy with consumers purchasing more 6. Less shipment costs with consumers nearby 7. Excellent human rights, education, legal, and political systems that promote freedom and opportunity for citizens

However, seven benefits of reshoring back into the United States are as follows:

hostile takeover, as opposed to a friendly merger.

If a merger or acquisition is not desired by both parties, it is called a

mergers and acquisitions.26

In a global market tied together by the Internet, joint ventures, partnerships, and alliances are proving to be a more effective way to enhance corporate growth than

corporate, divisional, functional, and operational

In large firms there are four levels of strategies

company, functional, and operational

In small firms, there are 3 levels of strategies

bankruptcy

In some cases, declaring _____ can be an effective retrenchment strategy. ____ can allow a firm to avoid major debt obligations and to void union contracts.

market development

Introducing present products or services into new geographic area ex Gap opened its first five stores in China.

communications and networking, to globalize operations, and to minimize risk. They are formed when a given opportunity is too complex, uneconomical, or risky for a single firm to pursue alone, or when an endeavor requires a broader range of competencies and know-how than any one firm can marshal.

Joint ventures are being used increasingly because they allow companies to improve

managerial performance.

Long term objectives are an important measure of

corporate, divisional, and functional

Long-term objectives are needed at the ______ levels of an organization.

short-term, rather than long-term, strategy orientation of managers in the United States.

Many practitioners and academicians attribute a significant part of U.S. industry's competitive decline to the

increasing the number of salespersons, increasing advertising expenditures, offering extensive sales promotion items, or increasing publicity efforts.

Market penetration includes

intensive strategies

Market penetration, market development, and product development are sometimes referred to as _____ because they require intensive efforts if a firm's competitive position with existing products is to improve.

publically traded companies.

Most often, divested segments become separate,

combination

Most organizations simultaneously pursue a combination of two or more strategies, but a _______ strategy can be exceptionally risky if carried too far. Normally employed when there are different divisions that pursue different strategies No organization can afford to pursue all the strategies that might benefit the firm. Both organizations and individuals must choose among alternative strategies and avoid excessive indebtedness.

increased economies of scale and enhanced transfer of resources and competencies.

Nearly all horizontal integration transactions aim for

1. Integration difficulties 2. Inadequate evaluation of target 3. Large or extraordinary debt 4. Inability to achieve synergy 5. Too much diversification 6. Managers overly focused on acquisitions 7. Too large an acquisition 8. Difficult to integrate different organizational cultures 9. Reduced employee morale due to layoffs and relocations

Nine Reasons Why Many Mergers and Acquisitions Fail

growth in assets, growth in sales, profitability, market share, degree and nature of diversification, degree and nature of vertical integration, earnings per share, and social responsibility.

Objectives are commonly stated in terms such as

differentiation

Porter's Type 3 generic strategy is _____, a strategy aimed at producing products and services considered unique to the industry and directed at consumers who are relatively price insensitive.

research and development expenditures.

Product development usually entails large

hunt to acquire companies whose assets are undervalued, companies that are financially distressed, or companies that have high-growth prospects but are short on investment capital.

Pursuing unrelated diversification entails being on the

retrenchment

Regrouping through cost and asset reduction to reverse declining sales and profit ex Staples closed 250 stores and reduced by 50% the size of other stores.

long-term objectives

Results expected from pursuing certain strategies

that numerous competitors will recognize the successful focus strategy and copy it or that consumer preferences will drift toward the product attributes desired by the market as a whole.

Risks of pursuing a focus strategy include the possibility

market penetration

Seeking increased market share for present products or services in present markets through greater marketing efforts ex Under Armour signed tennis champion Andy Murray to a 4-year, $23 million marketing deal.

product development

Seeking increased sales by improving present products or services or developing new ones ex Amazon just began offering its own line of baby diapers and wipes.

most common growth strategy.

Seeking ownership of or control over a firm's competitors, horizontal integration is arguably the

horizontal integration

Seeking ownership or increased control over competitors ex: BB&T acquired Susquehanna Bancshares.

divestiture

Selling a division or part of an organization ex: Sears Holdings divested its Land's End division to Sears' shareholders.

liquidation

Selling all of a company's assets, in parts, for their tangible worth ex The Trump Taj Mahal in Atlantic City, New Jersey, faces liquidation.

1. An organization's present suppliers are especially expensive, unreliable, or incapable of meeting the firm's needs for parts, components, assemblies, or raw materials. 2. The number of suppliers is small and the number of competitors is large. 3. An organization competes in an industry that is growing rapidly; this is a factor because integrative-type strategies (forward, backward, and horizontal) reduce an organization's ability to diversify in a declining industry. 4. An organization has both capital and human resources to manage the new business of supplying its own raw materials. 5. The advantages of stable prices are particularly important; this is a factor because an organization can stabilize the cost of its raw materials and the associated price of its product(s) through backward integration. 6. Present suppliers have high profit margins, which suggest that the business of supplying products or services in a given industry is a worthwhile venture. 7. An organization needs to quickly acquire a needed resource.

Seven guidelines when backward integration may be an especially effective strategy are:5

1. A privately owned organization is forming a joint venture with a publicly owned organization. There are some advantages to being privately held, such as closed ownership. There are also some advantages of being publicly held, such as access to stock issuances as a source of capital. Sometimes the unique advantages of being privately and publicly held can be synergistically combined in a joint venture. 2. A domestic organization is forming a joint venture with a foreign company. A joint venture can provide a domestic company with the opportunity for obtaining local management in a foreign country, thereby reducing risks such as expropriation and harassment by host country officials. 3. The distinct competencies of two or more firms complement each other especially well. 4. Some project is potentially profitable but requires overwhelming resources and risks. 5. Two or more smaller firms have trouble competing with a large firm. 6. There is a need to quickly introduce a new technology.

Six guidelines for when a joint venture may be an especially effective means for pursuing strategies are:27

greater product flexibility, greater compatibility, lower costs, improved service, less maintenance, greater convenience, or more features. Product development is an example of a strategy that offers the advantages of differentiation.

Successful differentiation can mean

1. An organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for "tending substantially" to reduce competition. 2. An organization competes in a growing industry. 3. Increased economies of scale provide major competitive advantages. 4. An organization has both the capital and human talent needed to successfully manage an expanded organization. 5. Competitors are faltering as a result of a lack of managerial expertise or a need for particular resources that an organization possesses; note that horizontal integration would not be appropriate if competitors are doing poorly because in that case overall industry sales are declining.

The following five guidelines indicate when horizontal integration may be an especially effective strategy:7

1. Current markets are not saturated with a particular product or service. 2. The usage rate of present customers could be increased significantly. 3. The market shares of major competitors have been declining while total industry sales have been increasing. 4. The correlation between dollar sales and dollar marketing expenditures historically has been high. 5. Increased economies of scale provide major competitive advantages.

The following five guidelines indicate when market penetration may be an especially effective strategy:8

1. An organization's present distributors are especially expensive, unreliable, or incapable of meeting the firm's distribution needs. 2. The availability of quality distributors is so limited as to offer a competitive advantage to those firms that promote forward integration. 3. An organization competes in an industry that is growing and is expected to continue to grow markedly; this is a factor because forward integration reduces an organization's ability to diversify if its basic industry falters. 4. An organization has both the capital and human resources needed to manage the new business of distributing its own products. 5. The advantages of stable production are particularly high; this is a consideration because an organization can increase the predictability of the demand for its output through forward integration. 6. Present distributors or retailers have high profit margins; this situation suggests that a company could profitably distribute its own products and price them more competitively by integrating forward.

The following six guidelines indicate when forward integration may be an especially effective strategy:4

1. An organization competes in a no-growth or a slow-growth industry. 2. Adding new, but related, products would significantly enhance the sales of current products. 3. New, but related, products could be offered at highly competitive prices. 4. New, but related, products have seasonal sales levels that counterbalance an organization's existing peaks and valleys. 5. An organization's products are currently in the declining stage of the product's life cycle. 6. An organization has a strong management team.

The guidelines for when related diversification may be an effective strategy are as follows.13

the CEO or business owner at the corporate level; the president or executive vice president at the divisional level; the chief finance officer (CFO), chief information officer (CIO), human resource manager (HRM), chief marketing officer (CMO), and so on at the functional level; and the plant manager, regional sales manager, and so on at the operational level.

The persons primarily responsible for having effective strategies at the various levels include

usually from 2 to 5 years

The time frame for objectives and strategies should be consistent

related diversification and unrelated diversification.

The two general types of diversification strategies are

Chapter 7, Chapter 9, Chapter 11, Chapter 12, and Chapter 13.

There are five major types of bankruptcy:

1. An organization has successful products that are in the maturity stage of the product life cycle; the idea here is to attract satisfied customers to try new (improved) products as a result of their positive experience with the organization's present products or services. 2. An organization competes in an industry that is characterized by rapid technological developments. 3. Major competitors offer better-quality products at comparable prices. 4. An organization competes in a high-growth industry. 5. An organization has especially strong research and development capabilities.

These following five guidelines indicate when product development may be an especially effective strategy to pursue:10

1. New channels of distribution are available that are reliable, inexpensive, and of good quality. 2. An organization is successful at what it does. 3. New untapped or unsaturated markets exist. 4. An organization has the needed capital and human resources to manage expanded operations. 5. An organization has excess production capacity. 6. An organization's basic industry is rapidly becoming global in scope.

These six guidelines indicate when market development may be an especially effective strategy:9

1. An organization has pursued both a retrenchment strategy and a divestiture strategy, and neither has been successful. 2. An organization's only alternative is bankruptcy. Liquidation represents an orderly and planned means of obtaining the greatest possible amount of cash for an organization's assets. A company can legally declare bankruptcy first and then liquidate various divisions to raise needed capital. 3. The stockholders of a firm can minimize their losses by selling the organization's assets.

These three guidelines indicate when liquidation may be an especially effective strategy to pursue:17

that its total costs across its overall value chain are lower than competitors' total costs. There are two ways to accomplish this:18 1. Perform value chain activities more efficiently than rivals and control the factors that drive the costs of value chain activities. Such activities could include altering the plant layout, mastering newly introduced technologies, using common parts or components in different products, simplifying product design, finding ways to operate close to full capacity year-round, and so on. 2. Revamp the firm's overall value chain to eliminate or bypass some cost-producing activities. Such activities could include securing new suppliers or distributors, selling products online, relocating manufacturing facilities, avoiding the use of union labor, and so on. When employing a cost leadership strategy, a firm must be careful not to use

To employ a cost leadership strategy successfully, a firm must ensure

fast learner. There are, however, risks associated with being the first mover, such as unexpected and unanticipated problems and costs that occur from being the first firm doing business in the new market.

To sustain the competitive advantage gained by being the first mover, a firm needs to be a

integration strategies.

Vertical and horizontal actions by firms are broadly referred to as

Dividend Recapitalization

When a company incurs a new debt in order to pay a special dividend to private investors or shareholders. This usually involves a company owned by a private investment firm, which can authorize a dividend recapitalization as an alternative to selling its equity stake in the company.

Chapter 11 bankruptcy

allows organizations to reorganize and come back after filing a petition for protection.

Chapter 9 bankruptcy

applies to municipalities. Detroit, Michigan, is the largest U.S. city to declare bankruptcy, but others include Stockton, California, and Birmingham, Alabama.

Nonprofit organizations

are basically just like for-profit companies except for two major differences: (1) nonprofits do not pay taxes and (2) nonprofits do not have shareholders to provide capital.

retrenchment, divestiture, or liquidation.

defensive strategies INCLUDE

unrelated

businesses are said to be ___ when their value chains are so dissimilar that no competitively valuable cross-business relationships exist.11

strategic planning

educated wager based on predicitions and hypotheses that are continually tested and refined by knowledge, research, experience and learning

Cost leadership

emphasizes producing standardized products at a low per-unit cost for consumers who are price sensitive.

Divestiture

is often used to raise capital for further strategic acquisitions or investments. _____ can be part of an overall retrenchment strategy to rid an organization of businesses that are unprofitable, that require too much capital, or that do not fit well with the firm's other activities. Divestiture has also become a popular strategy for firms to focus on their core businesses and become less diversified.

Reshoring

is the new term that refers to U.S. companies planning to move some of their manufacturing back to the United States.

Focus

means producing products and services that fulfill the needs of small groups of consumers.

cooperation among competitors

more. For collaboration between competitors to succeed, both firms must contribute something distinctive, such as technology, distribution, basic research, or manufacturing capacity.

merger

occur when two orgs of about equal size unite to form one enterprise

leveraged buyout (LBO)

occurs when a corporation's shareholders are bought (hence buyout) by the company's management and other private investors using borrowed funds (hence leverage).

acquisition

occurs when a large organization purchases (acquires) a smaller firm or vice versa.

1. There are many ways to differentiate the product or service and many buyers perceive these differences as having value. 2. The buyer's needs and uses are diverse. 3. Few rival firms are following a similar differentiation approach. 4. Technological change is fast paced and competition revolves around rapidly evolving product features.

profitability of the company, perceived value may be more important to customers than actual value. A Type 3 differentiation strategy can be especially effective under the following four conditions:21

deintegration

reduce their number of suppliers and to demand higher levels of service and quality from those they keep.

First mover advantages

refer to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms. As indicated in Table 5-7, some advantages of being a first mover include securing access to rare resources, gaining new knowledge of key factors and issues, and carving out market share and a position that is easy to defend and costly for rival firms to overtake.

strategies

represent the actions to be taken to accomplish long-term objectives

backward integration

seeking ownership or increased control of a firm's suppliers ex: Starbucks purchased a coffee farm.

Chapter 12 bankruptcy

was created by the Family Farmer Bankruptcy Act of 1986. This law provides special relief to family farmers with debt equal to or less than $1.5 million.

secondary buyouts

when private-equity firms buy companies from other private-equity firms

Managing by Extrapolation

—Adheres to the principle "If it ain't broke, don't fix it." The idea is to keep on doing the same things in the same ways because things are going well. •

Managing by Crisis

—Based on the belief that the true measure of a really good strategist is the ability to solve problems. Because there are plenty of crises and problems to go around for every person and organization, strategists ought to bring their time and creative energy to bear on solving the most pressing problems of the day. Managing by crisis is actually a form of reacting, letting events dictate the what and when of management decisions. •

Managing by Hope

—Based on the fact that the future is laden with great uncertainty and that if we try and do not succeed, then we hope our second (or third) attempt will succeed. Decisions are predicated on the hope that they will work and that good times are just around the corner, especially if luck and good fortune are on our side!2

Managing by Subjectives

—Built on the idea that there is no general plan for which way to go and what to do; just do the best you can to accomplish what you think should be done. In short, "Do your own thing, the best way you know how" (sometimes referred to as the mystery approach to decision making because subordinates are left to figure out what is happening and why).