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Chapter 1: Strategic Management and Strategic Competitiveness
MINI-CASE
ADDITIONAL QUESTIONS AND EXERCISES
INSTRUCTOR’S NOTES FOR MINDTAP
What Would You Do?
Video Quiz
Guided Case
Group Project
CHAPTER OVERVIEW
This chapter is an introductory chapter. Its purpose is to define critical concepts and
introduce the main components of strategic management and strategic competitiveness.
This chapter serves to establish the context within which subsequent chapters fit.
© 2020 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
2
Chapter 1 begins by introducing several key concepts that will be woven throughout the
text. The most important of these is the strategic management process, which is the set of
commitments, decisions, and actions firms take to achieve strategic competitiveness so
they can earn above-average returns. The process begins with performing both internal
and external analyses, after which a firm can determine how to create superior value for
customers in ways that cannot be imitated, thus creating a competitive advantage.
The strategic management process is influenced by the competitive landscape, or the

nature of competition within any given industry. Digitalization is among the factors that
have recently influenced the competitive landscape, as are hypercompetition, technology,
and knowledge. Another important factor is globalization, the increasing economic
interdependence among countries and their organizations as reflected in the flow of
products, financial capital, and knowledge across borders.
The next two sections of the chapter explore two different models firms can use to
determine the best strategies for achieving above-average returns. The older industrial
organization model, or I/O model, assumes that the external environment imposes
pressures and constraints that determine the best strategies. This model is also based on
the idea that firms possess the same types of resources and can thus choose to compete in
the most attractive industries. A more contemporary model is the resource-based model,
which is based on the idea that every firm has unique resources, capabilities, and core
competencies, thus the internal environment has greater impact on a firm’s selection of the
best strategies.
After analyzing the external environment and the internal organization, a firm can then
develop both its vision and its mission, which are covered in the following section of the
chapter. Vision is the broad-strokes picture of what a firm wants to be and to achieve,
while mission is a specific statement of the industry in which the firm intends to compete
and the customers it intends to serve.
Next, students are introduced to the concept of stakeholders, which are the individuals,
groups, and organizations that have enforceable claims on a firm’s performance.
Stakeholders both affect a firm’s vision and mission, and are affected by a firm’s strategic
outcomes. Stakeholders can be classified into three important categories: capital market
(shareholders), product market (customers, suppliers), and organizational (employees,
managers).
The final two sections wrap up the chapter with a discussion of how strategic leaders at all
levels and in all areas of a firm can help drive the strategic direction of the organization.
The text then goes on to detail how each subsequent chapter of the book will reveal
various aspects of the strategic management process: Part 1, analyses used to develop
1-3
strategies; Part 2, strategies firms choose to use; and Part 3, the implementation of
strategies.
LEARNING OBJECTIVES
1. Define strategic competitiveness, strategy, competitive advantage, above-average returns,
and the strategic management process.
2. Describe the competitive landscape and explain how globalization and technological
changes shape it.
3. Use the industrial organization (I/O) model to explain how firms can earn above-average
returns.
4. Use the resource-based model to explain how firms can earn above average-returns.
5. Describe vision and mission and discuss their value.
6. Define stakeholders and describe their ability to influence organizations.
7. Describe the work of strategic leaders.
8. Explain the strategic management process.
Lecture Notes
Chapter Introduction: You may want to begin this lecture with a general comment that
Chapter 1 provides an overview of the strategic management process. This chapter
introduces a number of key terms and models that students will study in more detail in
Chapters 2 through 13. Stress the importance of students paying careful attention to the
concepts introduced in this chapter so that they are well-grounded in strategic
management concepts before proceeding further.
OPENING CASE
The Honest Co.: Can It Become an Iconic Global Brand?
Co-founded by actress and parent Jessica Alba, The Honest Co. launched in 2011 with a
mission to be a wellness brand offering safe, effective, reliable products, such as diapers,
vitamins, personal care, and cleaning agents. The U.S.-based organization took steps to
achieve its vision as an iconic global brand by expanding into the European market in
2019, and plans for further growth are being funded in part by a recent $200 million
investment from a private equity firm. Despite some challenges and setbacks, analysts
attribute The Honest Co.’s success to brand equity, innovative and quality products, and a
loyal following.
4
Teaching Note
To initiate discussion, ask students to distinguish between The Honest Co.’s vision and
mission. Help students make the connection between other key terms defined in the text
and the elements of the opening case, such as strategy, strategic competitiveness,
competitive advantage, and core competencies.
Define strategic competitiveness, strategy, competitive advantage,

1
above-average returns, and the strategic management process.
STRATEGIC FOCUS
Competitive Advantage as a Source of Strategic Competitiveness
Every firm needs to possess some kind of competitive advantage, something that sets the
firm apart from competitors in ways that are important to customers and in ways that can’t
be duplicated by rivals. When a firm can create superior value for its customers, it can
create superior profits for itself.
Teaching Note
The boxed feature offers several examples of competitive advantage. For example,
Salesforce.com and Netflix have both used technology to create superior value for
customers. Home Depot’s culture of excellent customer service sets that organization
apart. Encourage students to think of their own examples and to identify each
example’s source of competitive advantage.
DEFINING STRATEGY
Strategic competitiveness is achieved when a firm successfully formulates and
implements a value-creating strategy. By implementing a value-creating strategy that
current and potential competitors are not simultaneously implementing and that
competitors are unable to duplicate, or find too costly to imitate, a firm achieves a
competitive advantage.
Strategy can be defined as an integrated and coordinated set of commitments and actions
designed to exploit core competencies and gain a competitive advantage.
So long as a firm can sustain (or maintain) a competitive advantage, investors will earn
above-average returns. Above-average returns represent returns that exceed returns that
investors expect to earn from other investments with similar levels of risk (investor
uncertainty about the economic gains or losses that will result from a particular
investment). In other words, above average-returns exceed investors’ expected levels of
1-5
return for given risk levels. Firms without a competitive advantage or those that do not
compete in an attractive industry earn, at best, average returns, equal to those an investor
expects to earn from other investments possessing a similar amount of risk.
Teaching Note
Point out that in the long run, firms must earn at least average returns and provide
investors with average returns if they are to survive. If a firm earns below-average
returns and provides investors with below-average returns, investors will withdraw
their funds and place them in investments that earn at least average returns. At this
point it may be useful to highlight the role institutional investors’ play in regulating
above-average performances.
In smaller new venture firms, performance is sometimes measured in terms of the amount
and speed of growth rather than more traditional profitability measures; new ventures
require time to earn acceptable returns.
A framework that can assist firms in their quest for strategic competitiveness is the
strategic management process, the full set of commitments, decisions, and actions
required for a firm to systematically achieve strategic competitiveness and earn above-
average returns. This process is illustrated in Figure 1.1.
FIGURE 1.1
The Strategic Management Process
Figure 1.1 illustrates the dynamic, interrelated nature of the elements of the strategic
management process and provides an outline of where the different elements of the
process are covered in this text.
Feedback linkages among the three primary elements indicate the dynamic nature of the
strategic management process: strategic inputs, strategic actions, and strategic outcomes.
• Analysis, in the form of information gained by scrutinizing the internal environment and
scanning the external environment, is used to develop the firm’s vision and mission.
• Strategic actions are guided by the firm’s vision and mission, and are represented by
strategies that are formulated or developed and subsequently implemented or put into
action.
• Desired performance—strategic competitiveness and above-average returns—results
when a firm is able to successfully formulate and implement value-creating strategies that
others are unable to duplicate.
6
• Feedback links together the elements of the strategic management process and helps firms
continuously adjust or revise strategic inputs and strategic actions in order to achieve
desired strategic outcomes.
In addition to describing the impact of globalization and technological change on the

current business environment, this chapter also discusses two approaches to the strategic
management process. The first, the industrial organization model, suggests that the
external environment should be considered as the primary determinant of a firm’s strategic
actions. The second is the resource-based model, which perceives the firm’s resources and
capabilities (the internal environment) as critical links to strategic competitiveness.
Following the discussion in this chapter, as well as in Chapters 2 and 3, students should
see that these models must be integrated to achieve strategic competitiveness.
Describe the competitive landscape and explain how

2
globalization and technological changes shape it.
1-1 THE COMPETITIVE LANDSCAPE

The competitive landscape can be described as one in which the fundamental nature of
competition is changing in a number of the world’s industries. Further, the boundaries of
industries are becoming blurred and more difficult to define.
Consider recent changes that have taken place in the telecommunication and TV
industries: Not only do cable companies and satellite networks compete for entertainment
revenue from television, but telecommunication companies also are stepping into the
entertainment business through significant improvements in fiber-optic lines. Partnerships
further blur industry boundaries (e.g., MSNBC is co-owned by NBC, which itself is
owned by General Electric and Microsoft).
The contemporary competitive landscape thus implies that traditional sources of

competitive advantage—economies of scale and large advertising budgets—may not be as
important in the future as they were in the past. The rapid and unpredictable technological
change that characterizes this new competitive landscape implies that managers must
adopt new ways of thinking. The new competitive mindset must value flexibility, speed,
innovation, integration, and the challenges that evolve from constantly changing
conditions.
A term often used to describe the new realities of competition is hypercompetition, a

condition that results from the dynamics of strategic moves and countermoves among
innovative, global firms: a condition of rapidly escalating competition that is based on
price-quality positioning, efforts to create new know-how and achieve first-mover
1-7
advantage, and battles to protect or to invade established product or geographic markets

(discussed in more detail in Chapter 5).
1-1a The Global Economy

A global economy is one in which goods, services, people, skills, and ideas move freely
across geographic borders.
The emergence of this global economy results in a number of challenges and

opportunities. For instance, Europe is now the world’s largest single market (despite the
difficulties of adapting to multiple national cultures and the lack of a single currency. The
European Union has become one of the world’s largest markets, with 700 million potential
customers.
Today, China is seen as an extremely competitive market in which local market-seeking

MNCs (multinational corporations) fiercely compete against other MNCs and local low-
cost producers. China has long been viewed as a low-cost producer of goods, but here’s an
interesting twist. China is now an exporter of local management talent. Procter & Gamble
actually exports Chinese management talent; it has been dispatching more Chinese abroad
than it has been importing expatriates to China.
Teaching Note
The relative competitiveness of nations can be found in the World Economic Forum’s
Global Competitiveness Report, which can be accessed for free on the Internet. It is
useful to assemble these data into an overhead or PowerPoint slide and show it in class.
Students find it interesting to see where their country stands relative to the others listed.
Allow enough time for them to see these numbers and sort out what it all means.
The March of Globalization

Globalization is the increasing economic interdependence among countries as reflected in
the flow of goods and services, financial capital, and knowledge across country borders.
This is illustrated by the following:
• Financial capital might be obtained in one national market and used to buy raw materials
in another one.
• Manufacturing equipment bought from another market produces products sold in yet
another market.
• Globalization enhances the available range of opportunities for firms.
8
Global competition has increased performance standards in many dimensions, including

quality, cost, productivity, product introduction time, and operational efficiency.
Moreover, these standards are not static; they are exacting, requiring continuous
improvement from a firm and its employees. Thus, companies must improve their
capabilities, and individual workers need to sharpen their skills. In the twenty-first century
competitive landscape, only firms that meet, and perhaps exceed, global standards are
likely to earn strategic competitiveness.
Teaching Note
As a result of the new competitive landscape, firms of all sizes must re-think how they
can achieve strategic competitiveness by positioning themselves to ask questions from
a more global perspective to enable them to (at least) meet or exceed global standards:
• Where should value-adding activities be performed?
• Where are the most cost-effective markets for new capital?
• Can products designed in one market be successfully adapted for sale in others?
• How can we develop cooperative relationships or joint ventures with other firms that
will enable us to capitalize on international growth opportunities?
Although globalization seems an attractive strategy for competing in the current
competitive landscape, there are risks as well. These include such factors as:
• The “liability of foreignness” (i.e., the risk of competing internationally)

• Over-diversification beyond the firm’s ability to successfully manage operations in
multiple foreign markets
A point to emphasize: Entry into international markets requires proper use of the strategic
management process.
Though global markets are attractive strategic options for some companies, they are not
the only source of strategic competitiveness. In fact, for most companies, even for those
capable of competing successfully in global markets, it is critical to remain committed to
and strategically competitive in the domestic market. And domestic markets can be testing
grounds for possibly entering an international market at some point in the future.
Teaching Note
Indicate that the risks that often accompany internationalization and strategies for
minimizing their impact on firms are discussed in more detail in Chapter 8.
Teaching Note
As a result of globalization and the spread of technology, competition will become
more intense. Some principles to consider include the following:
• Customers will continue to expect high levels of product quality at competitive prices.
1-9
• Global competition will continue to pressure companies to shorten product-

development–introduction time frames.
• Strategically competitive companies successfully leverage insights learned both in
domestic and global markets, modifying them as necessary.
• Before a company can hope to achieve any measure of success in global markets, it
must be strategically competitive in its domestic market.
1-1b Technology and Technological Changes

Three technological trends and conditions are significantly altering the nature of
competition:
• Increasing rate of technological change and diffusion

• The information age
• Increasing knowledge intensity
Technologic Diffusion and Disruptive Technologies

Both the rate of change and the introduction of new technologies have increased greatly
over the last 15 to 20 years.
A term that is used to describe rapid and consistent replacement of current technologies by
new, information-intensive technologies is perpetual innovation. This implies that
innovation —discussed in more detail in Chapter 13—must be continuous and carry a high
priority for all organizations.
The shorter product life cycles that result from rapid diffusion of innovation often means
that products may be replicated within very short time periods, placing a competitive
premium on a firm’s ability to rapidly introduce new products into the marketplace. In
fact, speed-to-market may become the sole source of competitive advantage. In the
computer industry during the early 1980s, hard disk drives typically remained current for
four to six years, after which a new and better product became available. By the late
1980s, the expected life had fallen to two to three years. By the 1990s, it was just six to
nine months.
The rapid diffusion of innovation may have made patents a source of competitive
advantage only in the pharmaceutical and chemical industries. Many firms do not file
patent applications to safeguard (for at least a time) the technical knowledge that would be
disclosed explicitly in a patent application.
10
Disruptive technologies (in line with the Schumpeterian notion of “creative destruction”)
can destroy the value of existing technologies by replacing them with new ones. Current
examples include the success of iPods, PDAs, and Wi-Fi.
The Information Age

Changes in information technology have given firms all over the world, regardless of size,
rapid access to information. Consider the rapid growth in the following technologies:
personal computers (PCs), cellular phones, computers, personal digital assistants (PDAs),
artificial intelligence, virtual reality, and massive databases. These examples show how
information is used differently as a result of new technologies. The ability to access and
use information has become an important source of competitive advantage in almost every
industry.
• There have been dramatic changes in information technology in recent years.

• The number of PCs is expected to grow to 2.3 billion by 2015.
• The cost of information technology is declining.
• The Internet provides an information-carrying infrastructure available to individuals and
firms worldwide.
The ability to access a high level of relatively inexpensive information has created
strategic opportunities for many information-intensive businesses. For example, retailers
now offer online shopping to customers from virtually anywhere.
Increasing Knowledge Intensity

It is becoming increasingly apparent that knowledge—information, intelligence, and
expertise—is a critical organizational resource, and increasingly, a source of competitive
advantage. As a result,
• Many companies are working to convert the accumulated knowledge of employees into a
corporate asset;
• Shareholder value is increasingly influenced by the value of a firm’s intangible assets,
such as knowledge;
• There is a strong link between knowledge and innovation.
Note: Intangible assets are discussed more fully in Chapter 3.
1-11
Teaching Note
This means that to achieve competitive advantage in the information-intensive
competitive landscape, firms must move beyond accessing information to exploiting
information by:
• Capturing intelligence
• Transforming intelligence into usable knowledge
• Embedding it as organizational learning
• Diffusing it rapidly throughout the organization
The implication of this discussion is that to achieve strategic competitiveness and earn
above-average returns, firms must develop the ability to adapt rapidly to change or
achieve strategic flexibility.
Strategic flexibility represents the set of capabilities, in all areas of their operations, that
firms use to respond to the various demands and opportunities that are found in dynamic,
uncertain environments. This implies that firms must develop certain capabilities,
including the capacity to learn continuously, that will provide the firm with new skill sets.
However, those working within firms to develop strategic flexibility should understand
that the task is not an easy one, largely because of inertia that can build up over time. A
firm’s focus and past core competencies may actually slow change and strategic
flexibility.
Teaching Note
Firms capable of rapidly and broadly applying what they learn achieve strategic
flexibility and the resulting capacity to change in ways that will increase the probability
of succeeding in uncertain, hypercompetitive environments. Some firms must change
dramatically to remain competitive or return to competitiveness. How often are firms
able to make this shift? Overall, does it take more effort to make small, periodic
changes, or to wait and make more dramatic changes when these become necessary?
Two models describing key strategic inputs to a firm’s strategic actions—the Industrial
Organization (or externally focused) model and the Resource-Based (or internally
focused) model—are discussed next.
Use the industrial organization (I/O) model to explain how firms

3
can earn above-average returns.
1-2 THE I/O MODEL OF ABOVE-AVERAGE RETURNS

Teaching Note
The recommended teaching strategy for this section is to first discuss the assumptions
12
underlying the I/O model. Then, using Figure 1.2, introduce linkages in the I/O model
and provide the background for an expanded discussion of the model in Chapter 2.
The I/O or Industrial Organization model adopts an external perspective to explain that
forces outside of the organization represent the dominant influences on a firm’s strategic
actions. In other words, this model presumes that the characteristics of and conditions
present in the external environment determine the appropriateness of strategies that are
formulated and implemented in order for a firm to earn above-average returns. In short,
the I/O model specifies that the choice of industries in which to compete has more
influence on firm performance than the decisions made by managers inside their firm.
The I/O model is based on the following four assumptions:
1. The external environment imposes pressures and constraints on firms that determine
strategies that will result in above-average returns. In other words, the external
environment pressures the firm to adopt strategies to meet that pressure while
simultaneously constraining or limiting the scope of strategies that might be appropriate
and eventually successful.
2. Most firms competing in an industry or in an industry segment control similar sets of
strategically relevant resources and thus pursue similar strategies. This assumption
presumes that, given a similar availability of resources, most firms competing in a
specific industry (or industry segment) have similar capabilities and thus follow strategies
that are similar. In other words, there are few significant differences among firms in an
industry.
3. Resources used to implement strategies are highly mobile across firms. Significant
differences in strategically relevant resources among firms in an industry tend to
disappear because of resource mobility. Thus, any resource differences soon disappear as
they are observed and acquired or learned by other firms in the industry.
4. Organizational decision makers are assumed to be rational and committed to acting only
in the best interests of the firm. The implication of this assumption is that organizational
decision makers will consistently exhibit profit-maximizing behaviors.
According to the I/O model, which was a dominant paradigm from the 1960s through the
1980s, firms must pay careful attention to the structured characteristics of the industry in
which they choose to compete, searching for one that is the most attractive to the firm,
given the firm’s strategically relevant resources. Then, the firm must be able to
successfully implement strategies required by the industry’s characteristics to be able to
increase their level of competitiveness. The five forces model is an analytical tool used to
address and describe these industry characteristics.
1-13
FIGURE 1.2
The I/O Model of Above-Average Returns
Based on its four underlying assumptions, the I/O model prescribes a five-step process for
firms to achieve above-average returns:
1. Study the external environment—general, industry, and competitive—to determine the

characteristics of the external environment that will both determine and constrain the
firm’s strategic alternatives.
2. Locate an industry (or industries) with a high potential for returns based on the structural
characteristics of the industry. A model for assessing these characteristics, the Five Forces
Model of Competition, is discussed in Chapter 2.
3. Based on the characteristics of the industry in which the firm chooses to compete,
strategies that are linked with above-average returns should be selected. A model or
framework that can be used to assess the requirements and risks of these strategies (the
generic strategies are called cost leadership & differentiation) are discussed in detail in
Chapter 4.
4. Acquire or develop the critical resources—skills and assets—needed to successfully
implement the strategy that has been selected. A process for scrutinizing the internal
environment to identify the presence or absence of critical skills is discussed in Chapter
3. Skill-enhancement strategies, including training and development, are discussed in
Chapter 11.
5. The I/O model indicates that above-average returns will accrue to firms that successfully
implement relevant strategic actions that enable the firm to leverage its strengths (skills
and resources) to meet the demands or pressures and constraints of the industry in which
it has elected to compete. The implementation process is described in Chapters 10
through 13.
The I/O model has been supported by research indicating:
• 20% of firm profitability can be explained by industry characteristics.

• 36% of firm profitability can be attributed to firm characteristics and the actions taken by
the firm.
• Overall, this indicates a reciprocal relationship, or even an interrelationship, between
industry characteristics (attractiveness) and firm strategies that result in firm performance
14
Use the resource-based model to explain how firms can earn

4
above-average returns.
1-3 THE RESOURCE-BASED MODEL OF ABOVE-AVERAGE

RETURNS
Teaching Note
The recommended teaching strategy for this section is similar to that suggested for the
I/O model. First explain the assumptions of the resource-based model. Then use Figure
1.3 to introduce linkages in the resource-based model and provide the background for
an expanded discussion of the model in Chapter 3.
The resource-based model adopts an internal perspective to explain how a firm’s unique
bundle or collection of internal resources and capabilities represent the foundation on
which value-creating strategies should be built.
Resources are inputs into a firm’s production process, such as capital equipment,
individual employee’s skills, patents, brand names, finance, and talented managers. These
resources can be tangible or intangible.
Capabilities are the capacity for a set of resources to perform, in combination, a task or
activity.
Teaching Note
Thus, according to the resource-based model, a firm’s resources and capabilities, found
in its internal environment, are more critical to determining the appropriateness of
strategic actions than are the conditions and characteristics of the external environment.
So, strategies should be selected that enable the firm to best exploit its core
competencies, relative to opportunities in the external environment. One example of the
way Amazon used its capabilities to market and distribute books by successfully using
the Internet to capture a 20-month, first-mover advantage in this new marketplace.
However, Amazon’s capabilities may be imitable. In fact, many experts expect that
Barnes & Noble will continue to be a formidable competitor due to its extensive
resources.
Core competencies are resources and capabilities that serve as a source of competitive
advantage for a firm. Often related to functional skills, core competencies—when
developed, nurtured, and applied throughout a firm—may result in strategic
competitiveness.
1-15
FIGURE 1.3
The Resource-Based Model of Above-Average Returns
The resource-based model of above-average returns is grounded in the uniqueness of a

firm’s internal resources and capabilities. The five-step model describes the linkages
between resource identification and strategy selection that will lead to above-average
returns.
1. Firms should identify their internal resources and assess their strengths and weaknesses.
The strengths and weaknesses of firm resources should be assessed relative to
competitors.
2. Firms should identify the set of resources that provide the firm with capabilities that are
unique to the firm, relative to its competitors. The firm should identify those capabilities
that enable the firm to perform a task or activity better than its competitors.
3. Firms should determine the potential for their unique sets of resources and capabilities to
outperform rivals in terms of returns. Determine how a firm’s resources and capabilities
can be used to gain competitive advantage.
4. Locate an attractive industry. Determine the industry that provides the best fit between
the characteristics of the industry and the firm’s resources and capabilities.
5. To attain a sustainable competitive advantage and earn above-average returns, firms
should formulate and implement strategies that enable them to exploit their resources and
capabilities to take advantage of opportunities in the external environment better than
their competitors.
Resources and capabilities can lead to a competitive advantage when they are valuable,
rare, costly to imitate, and non-substitutable.
• Resources are valuable when they support taking advantage of opportunities or

neutralizing external threats.
• Resources are rare when possessed by few, if any, competitors.
• Resources are costly to imitate when other firms cannot obtain them inexpensively
(relative to other firms).
• Resources are non-substitutable when they have no structural equivalents.
16
5 Describe vision and mission and discuss their value.
1-4 VISION AND MISSION

Teaching Note
Refer students to Figure 1.1, which indicates the link or relationship between
identifying a firm’s internal resources and capabilities and the conditions and
characteristics of the external environment with the development of the firm’s vision
and mission.
1-4a Vision
Vision is a picture of what the firm wants to be, and in broad terms, what it wants to
ultimately achieve. Vision is “big picture” thinking with passion that helps people feel
what they are supposed to be doing.
Vision statements:
• Reflect a firm’s values and aspirations

• Are intended to capture the heart and mind of each employee (and hopefully, many of its
other stakeholders)
• Tend to be enduring, whereas its mission can change in light of changing environmental
conditions
• Tend to be relatively short and concise, easily remembered
• Rely on input from multiple key stakeholders
Examples of vision statements:
• Our vision is to be the world’s best quick-service restaurant. (McDonald’s)

• To make the automobile accessible to every American (Ford’s vision when established by
Henry Ford)
The CEO is responsible for working with others to form the firm’s vision. However,
experience shows that the most effective vision statement results when the CEO involves a
host of people to develop it.
A vision statement should be clearly tied to the conditions in the firm’s external and
internal environments, and it must be achievable. Moreover, the decisions and actions of
those involved with developing the vision must be consistent with that vision.
1-17
1-4b Mission
A firm’s mission is an externally focused application of its vision that states the firm’s
unique purpose and the scope of its operations in product and market terms.
As with the vision, the final responsibility for forming the firm’s mission rests with the
CEO, though the CEO and other top-level managers tend to involve a larger number of
people in forming the mission. This is because middle- and first-level managers and other
employees have more direct contact with customers and their markets.
A firm’s vision and mission must provide the guidance that enables the firm to achieve the
desired strategic outcomes (strategic competitiveness and above-average returns—
illustrated in Figure 1.1) that enable the firm to satisfy the demands of those parties
having an interest in the firm’s success: organizational stakeholders.
Earning above-average returns often is not mentioned in mission statements. The reasons
for this are that all firms want to earn above-average returns and that desired financial
outcomes result from properly serving certain customers while trying to achieve the firm’s
intended future. In fact, research has shown that having an effectively formed vision and
mission has a positive effect on performance (growth in sales, profits, employment, and
net worth).
6 Define stakeholders and describe their ability to influence organizations.
1-5 STAKEHOLDERS
Stakeholders are the individuals and groups who can affect and are affected by the
strategic outcomes achieved and who have enforceable claims on a firm’s performance.
1-5a Classification of Stakeholders

The stakeholder concept reflects that individuals and groups have a “stake” in the strategic
outcomes of the firm because they can be either positively or negatively affected by those
outcomes and because achieving the strategic outcomes may be dependent on the support
or active participation of certain stakeholder groups.
Figure Note: Students can use Figure 1.4 to visualize the three stakeholder groups.
FIGURE 1.4
The Three Stakeholder Groups
18
Figure 1.4 provides a definition of a stakeholder and illustrates the three general
classifications and members of each stakeholder group:
• Capital market stakeholders

• Product market stakeholders
• Organizational stakeholders
Note: Students can use Figure 1.4 while you discuss the challenges of meeting conflicting
stakeholder expectations.
Teaching Note
The following table was developed from the text’s presentation (and more) to assist you
in organizing a discussion of each stakeholder group’s expectations or demands,
potential conflicts, and stakeholder management strategies.
Stakeholder Groups, Membership, and Primary Expectation or Demand

Stakeholder group Membership Primary expectation/demand
Capital market Shareholders Wealth enhancement
Lenders Wealth preservation
Product market Customers Product reliability at lowest possible price
Suppliers Receive highest sustainable prices
Host communities Long-term employment, tax revenues,
minimum use of public support services
Unions Ideal working conditions and job security for
membership
Organizational Employees Secure, dynamic, stimulating, and rewarding
work environment
Teaching Note
From reviewing the primary expectations or demands of each stakeholder group, it
becomes obvious that a potential for conflict exists. For instance, shareholders
generally invest for wealth-maximization purposes and are therefore interested in a firm
maximizing its return on investment or ROI. However, if a firm increases its ROI by
making short-term decisions, the firm can negatively affect employee or customer
stakeholders.
If the firm is strategically competitive and earns above-average returns, it can afford to
simultaneously satisfy all stakeholders. When earning average or below-average returns,
tradeoffs must be made. At the level of average returns, firms must at least minimally
1-19
satisfy all stakeholders. When returns are below average, some stakeholders can be
minimally satisfied, while others may be dissatisfied.
For example, reducing the level of research and development expenditures (to increase
short-term profits) enables the firm to pay out the additional short-term profits to
shareholders as dividends. However, if reducing R&D expenditures results in a decline in
the long-term strategic competitiveness of the firm’s products or services, it is possible
that employees will not enjoy a secure or rewarding career environment (which violates a
primary union expectation or demand for job security for its membership). At the same
time, customers may be offered products that are less reliable at unattractive prices,
relative to those offered by firms that did not reduce R&D expenditures.
Thus, the stakeholder management process may involve a series of tradeoffs dependent on
the extent to which the firm is dependent on the support of each affected stakeholder and
the firm’s ability to earn above-average returns.
Teaching Note
Stakeholder management has introduced some interesting notions into business
practice. For example, business schools typically teach that there are three main
stakeholder groups (owners, customers, and employees) and that they should be tended
to in that order. That is, it is important to begin with the idea that the primary purpose
of the firm is to maximize shareholder wealth (i.e., tend to the interests of the owners
first). Then it is common to introduce notions such as, “The customer is always right.”
This suggests that customer interests are to be tended to next. Finally, we get around to
looking to the needs of employees, if resources make that possible. This is the standard
approach, but some firms have turned this idea on its head. For example, Southwest
Airlines has been extremely successful by taking great efforts to select the right
employees and treat them well, which then spills over into appropriate treatment of the
customer. As you might guess, the company assumes that these emphases will naturally
lead to positive outcomes for stockholders as well (as has been the case). This issue can
lead to interesting discussions with students about their thoughts on the topic.
7 Describe the work of strategic leaders.
1-6 STRATEGIC LEADERS

Teaching Note
One way of covering this section is through a series of questions and answers as
presented in the following format.
20
Strategic leaders are people located in different areas and levels of the firm using the
strategic management process to select actions that help the firm achieve its vision and
fulfill its mission. Although it depends on the size of the organization, all organizations
have a CEO or top manager, and this individual is the primary organizational strategist in
every organization. Small organizations may have a single strategist: the CEO or owner.
Large organizations may have few or several top-level managers, executives, or a top
management team. All of these individuals are organizational strategists.
Top managers play decisive roles in firms’ efforts to achieve their desired strategic
outcomes. As organizational strategists, top managers are responsible for deciding how
resources will be developed or acquired, at what cost, and how they will be used or
allocated throughout the organization. Strategists also must consider the risks of actions
under consideration, along with the firm’s vision and managers’ strategic orientations.
Organizational strategists also are responsible for determining how the organization does
business. This responsibility is reflected in the organizational culture, which refers to the
complex set of ideologies, symbols, and core values shared throughout the firm and that
influences the way it conducts business. The organization’s culture is the social energy
that drives—or fails to drive—the organization.
1-6a The Work of Effective Strategic Leaders

Though it seems simplistic, performing their role effectively requires strategists to work
hard, perform thorough analyses of available information, be brutally honest, desire high
performance, exercise common sense, think clearly, ask questions, and listen. In addition,
strategic leaders must be able to “think seriously and deeply … about the purposes of the
organizations they head or functions they perform, about the strategies, tactics,
technologies, systems, and people necessary to attain these purposes and about the
important questions that always need to be asked.” Additionally, effective strategic leaders
work to set an ethical tone in their firms.
Strategists work long hours and face ambiguous decision situations, but they also have
opportunities to dream and act in concert with a compelling vision that motivates others in
creating competitive advantage.
1-21
8 Explain the strategic management process.
STRATEGIC FOCUS
Strategic Leaders’ Decisions as a Path to Firms’ Efforts to Deal Successfully with
Their Challenges
Rapid and continuous change in the competitive landscape poses a tremendous challenge
to organizations and the managers leading these firms. Strategic leaders have found that a
global mindset and a passion for meeting people’s needs are essential to making informed
decisions regarding strategy.
Teaching Note
The boxed feature offers several examples of the impact of rapid change. For example,
Hilton Worldwide is challenged to adapt to the changing tastes of millennial customers,
while Procter & Gamble must respond to, among other factors, the demand for lower
prices. Encourage students to think of their own examples of challenges to specific
organizations posed by recent changes in the competitive landscape.
1-7 THE STRATEGIC MANAGEMENT PROCESS

Teaching Note
The final section of this chapter reviews Figure 1.1 (The Strategic Management
Process), providing both an outline of the process and the framework for the next 12
chapters. Thus, students should refer back to Figure 1.1 as you present the material to
come next.
Chapters 2 and 3 provide more detail regarding the strategic inputs to the strategic
management process: analysis of the firm’s external and internal environments that must
be performed so that sufficient knowledge is developed regarding external opportunities
and internal capabilities. This enables the development of the firm’s vision and mission.
Chapters 4 through 9 discuss the strategy formulation stage of the process. Topics covered
include:
• Deciding on business-level strategy, or how to compete in a given business (Chapter 4)

• Understanding competitive dynamics, in that strategies are not formulated and
implemented in isolation but require understanding and responding to competitors’ actions
(Chapter 5)
22
• Setting corporate-level strategy, or deciding in which industries or businesses the firm will
compete, how resources will be allocated, and how the different business units will be
managed (Chapter 6)
• The acquisition of business units and the restructuring of the firm’s portfolio of businesses
(Chapter 7)
• Selecting appropriate international strategies that are consistent with the firm’s resources,
capabilities and core competencies, and external opportunities (Chapter 8)
• Developing cooperative strategies with other firms to gain competitive advantage (Chapter
9)
The final sections of the text, Chapters 10–13, examine actions necessary to effectively
implement strategies. Effective implementation has a significant impact on firm
performance. Topics covered include:
• Methods for governing to ensure satisfaction of stakeholder demands and attainment of

strategic outcomes (Chapter 10)
• Structures that are used and actions taken to control a firm’s operations (Chapter 11)
• Patterns of strategic leadership that are most appropriate given the competitive
environment (Chapter 12)
• Linkages among corporate entrepreneurship, innovation, and strategic competitiveness
(Chapter 13)
Teaching Note
Students should realize that none of the chapters stand alone, just as no single step or
facet of the strategic management process stands alone. If the strategic management
process is to result in a firm being strategically competitive and earning above-average
returns, all facets of the process must be treated as both interdependent and interrelated.
ANSWERS TO REVIEW QUESTIONS
1. What are strategic competitiveness, strategy, competitive advantage, above-average

returns, and the strategic management process?
Strategic competitiveness is achieved when a firm successfully formulates and

implements a value-creating strategy.
A strategy is an integrated and coordinated set of commitments and actions designed to
exploit core competencies and gain a competitive advantage.
1-23
A competitive advantage is achieved when a firm’s current and potential competitors

either are not able to simultaneously formulate and implement its value-creating strategy,
are unable to duplicate the benefits of the strategy, or find the strategy too costly to
imitate.
Above-average returns are returns that are in excess of what an investor expects to earn
from other investments with a similar level or amount of risk.
The strategic management process (see Figure 1.1) is the full set of commitments,
decisions, and actions required for a firm to achieve strategic competitiveness and earn
above-average returns.
2. What are the characteristics of the current competitive landscape? What two factors
are the primary drivers of this landscape?
In the current competitive landscape, the nature of competition has changed. As a result,
managers making strategic decisions must adopt a new mindset that is global in
orientation. Firms must learn to compete in highly chaotic environments that produce
disorder and a great deal of uncertainty.
The two primary factors that have created the current competitive landscape are
globalization of industries and markets and rapid and significant technological change.
The implication for business firms is that to be successful, they must be able to meet or
exceed global performance standards (in terms of such factors as quality, price, product
features, speed to market) and be able to keep up with both the rapid pace of
technological change as well as the rapid diffusion of innovation.
3. According to the I/O model, what should a firm do to earn above-average returns?
The I/O model suggests that conditions and characteristics of the external environment
(the general, industry, and competitive environments) are the primary inputs to and
determinants of strategies that firms should formulate and implement to earn above-
average returns. Assumptions of the I/O model are that: (1) the external environment
imposes pressures and constraints that determine which strategies will result in superior
profitability, (2) most firms competing in an industry (or industry segment) control
similar strategically relevant resources and pursue similar strategies in light of resource
similarity, (3) resources used to implement strategies are highly mobile across firms, and
(4) decision makers are assumed to be rational and committed to acting in the firm’s best
interests.
24
The I/O model thus challenges firms to seek out the industry (or industry segment) with
the greatest profit potential and then learn how to use their resources to implement value-
creating strategies given the structural characteristics of the industry.
4. What does the resource-based model suggest a firm should do to earn above-average
returns?
The resource-based model assumes that each firm is a collection of unique resources and
capabilities that provides the basis for its strategy and is the primary source of its
profitability. It also assumes that over time, firms acquire different resources and develop
unique capabilities. Thus, all firms competing within an industry (or industry segment)
may not possess the same strategically relevant resources and capabilities. In addition,
resources may not be highly mobile across firms.
Thus, the resource-based model challenges firms to formulate and implement strategies
that allow the firm to best exploit its core competencies—capabilities that are valuable,
rare, costly to imitate, and non-substitutable—relative to opportunities in the external
environment. Resources and capabilities that meet the criteria of core competencies then
serve as the basis of a firm’s sustainable competitive advantage, enabling it to achieve
strategic competitiveness and earn above-average returns.
5. What are vision and mission? What is their value for the strategic management
process?
Vision is a picture of what the firm wants to be, and in broad terms, what it wants to
ultimately achieve. Vision is “big picture” thinking with passion that helps people feel
what they are supposed to be doing.
Strategic mission is externally focused and represents a statement of a firm’s unique
purpose and the scope of its operations in product and market terms. It provides general
descriptions of the products a firm intends to produce and the markets it will serve using
its internally based core competencies.
The differences between vision and mission are important because of their different
focuses. However, they are both highly interdependent and add value to the strategic
management process. The externally focused mission provides a sense of purpose for the
firm by indicating the products to be provided to specific markets, while the internally set
vision indicates what ultimately will be achieved. In other words, taken together, the
vision and mission will provide a firm’s managers with the insights needed to effectively
formulate and implement the firm’s strategies.
1-25
6. What are stakeholders? How do the three primary stakeholder groups influence
organizations?
Stakeholders are individuals and groups who can affect and are affected by strategic
outcomes achieved and who have enforceable claims on a firm’s performance. In other
words, stakeholders have a stake (or a vested interest) in the actions of the firm.
Stakeholders can influence organizations because they have the ability to withhold
participation that is essential to a firm’s survival, competitiveness, and profitability. The
three primary stakeholder groups are: (1) capital market stakeholders (e.g., shareholders,
lenders), (2) product market stakeholders (e.g., customers, suppliers, host communities,
unions), and (3) organizational stakeholders (e.g., employees, managers, and others).
There are many ways that stakeholders can influence organizations. For example,
dissatisfied lenders can impose stricter covenants on subsequent borrowing of capital.
Dissatisfied stockholders can reflect this sentiment through several means, including
selling their stock (which can have a negative effect on its price). Dissatisfied employees
can organize for collective bargaining. Dissatisfied community groups could express their
disapproval by boycotting the firm’s goods. Each stakeholder group has ways of bringing
their influence to bear on the firm.
7. How would you describe the work of strategic leaders?
Strategic leaders are people located in different parts of the firm using the strategic
management process to help the firm reach its vision and mission. Regardless of their
location in the firm, successful strategic leaders are decisive and committed to nurturing
those around them and are committed to helping the firm create value for customers and
returns for shareholders and other stakeholders.
Strategic leaders can be described as hard working, thorough, honest, questioning,

visionary, persuasive, analytical, and decision makers. They also have a penchant for
wanting the firm and its people to accomplish more.
The work of strategists includes scanning the environment—both internally and
externally—to seek out information that will assist the firm in achieving its mission and
satisfying its vision. Strategists would think about how the resources and capabilities of
the firm could be nurtured and exploited to develop core competencies that would enable
the firm to make use of environmental opportunities, achieve strategic competitiveness,
and attain a competitive advantage that results in above-average returns.
26
8. What are the elements of the strategic management process? How are they
interrelated?
The parts of the strategic management process (illustrated in Figure 1.1) are strategic
inputs, strategic actions, and strategic outcomes. Strategic inputs are represented by the
firm’s vision and mission that result from the assessment of the firm’s resources,
capabilities, and competencies and conditions in the external environment. These
strategic inputs—vision and mission—drive the firm’s strategic actions or the
formulation and implementation of strategy. The strategic outcomes of successfully
formulating and implementing value-creating strategies are strategic competitiveness and
above-average returns. A feedback loop links strategic outcomes with strategic inputs.
MINI CASE
Starbucks Is Juicing its Earnings per Store Through Technological Innovations
Note: To prepare students for class discussion and to introduce them to the
fundamentals of the Strategic Management process, each chapter Mini-Case is
prepared as an auto-graded Guided Case Analysis activity in MindTap™. More
information below.
In 2015, Kevin Johnson, a former chief executive of Juniper Networks and 16-year
veteran of Microsoft, took over as CEO of Starbucks, succeeding Howard Schultz. Since
then, Johnson has engaged with the company’s digital operations and supervised
information technology and supply chain operations. In the fourth quarter of 2014,
Starbucks sales store operations rose 5 percent; this gain in revenue came from increased
traffic (2 percent from growth in sales and 3 percent in increased ticket size). The
application of more sophisticated technology is credited for driving this increase in
revenues. To continue this trend, Starbucks has been ramping up its digital tools, such as
mobile-payment platforms.
Teaching Note
Firms that pay attention to technology-related trends are more likely to succeed in
rapidly changing business environments. Technology-related trends and conditions can
be placed into three categories: technology diffusion and disruptive technologies, the
information age, and increasing knowledge intensity. Through these categories,
technology is significantly altering the nature of competition and contributing to highly
dynamic competitive environments.
1-27
Answers to Case Discussion Questions

1. What competitive advantage or competitive advantages do you believe Starbucks seeks to
establish? What are the main challenges the firm faces as it tries to maintain the
advantage or advantages you identified?
Starbucks is easily the most widely recognized brand of coffee and coffee store the world
over. Thanks to the consistent quality of the firm’s products and customer service,
customers can walk into any Starbucks location and know exactly what to expect.
However, this poses a challenge, as the organization must constantly be improving on its
service and innovating on its products to keep customers returning. Students may be able
to support additional answers.
2. Identify three or four capabilities you believe Starbucks possesses. Of these, are any a
core competence? If so, explain your reasoning.
Several key capabilities are described in the case. First, Starbucks is dedicated to utilizing
technology to enhance the customer experience, for instance, by enabling online ordering
and faster mobile payments. Employees are also a source of innovation, as they are
encouraged to make suggestions and experiment with creating new products. The firm’s
impressive benefits package is designed to attract the best employees.
3. Starbucks’s mission is “To inspire and nurture the human spirit—one person, one cup and
one neighborhood at a time.” What actions do you recommend the firm take to reach this
mission?
Given the size of the organization, it would be easy for Starbucks to become an
impersonal corporation. To pursue its mission, Starbucks should look for ways to
personalize its products and services to individuals as well as neighborhoods. Perhaps
technology could be used to maintain personal profiles of customers and their
preferences. Also, perhaps within the parameters of the Starbucks corporate identity, there
could be some room for store customization to fit into the unique cultural preferences of
various neighborhoods or regions. Students will probably offer additional suggestions.
4. As Starbucks’s new chief executive officer and strategic leader, what key challenges does
Kevin Johnson and his firm face?
As a global corporation, Starbucks must face the challenges of meeting the widely
varying preferences and demands of its worldwide customers. Kevin Johnson must
continue to encourage managers at all levels to innovate on both products and services.
28
ADDITIONAL QUESTIONS AND EXERCISES
The following questions and exercises can be presented for in-class discussion or assigned
as homework.
Application Discussion Questions

1. Business success is often tied to effectively managed strategies. Using the Internet, study
Starbuck’s current performance. Based on analysis, do you judge Starbucks to be a
success? Why or why not?
2. Choose several firms in your local community with which you are familiar. Describe the
twenty-first-century competitive landscape to them, and ask for their feedback about how
they anticipate the landscape will affect their operations during the next five years.
3. Select an organization (e.g., school, club, or church) that is important to you. Who are the
organization’s stakeholders? What degree of influence do you believe each has over the
organization and why?
4. Are you a stakeholder at your university or college? If so, of what stakeholder group or
groups are you a part?
5. Think of an industry in which you want to work. In your opinion, which of the three
primary stakeholder groups is the most powerful in that industry today? Why? Which do
you expect to be the most powerful group in five years? Why?
6. Do you agree or disagree with the following statement? “I think managers have little
responsibility for the failure of business firms.” Justify your view.
7. Do vision and mission have any meaning in your personal life? If so, describe it. Are your
current actions being guided by a vision and mission? If not, why not?
Ethics Questions
1. Can a firm achieve a competitive advantage and, thereby, strategic competitiveness
without acting ethically? Explain.
2. What are a firm’s ethical responsibilities if it earns above-average returns?
3. What are some of the critical ethical challenges to firms competing in the global
economy?
4. How should ethical considerations be included in analyses of a firm’s internal and
external environments?
5. Can ethical issues be integrated into a firm’s vision and mission? Explain.
1-29
6. What is the relationship between ethics and stakeholders?

7. What is the importance of ethics for organizational strategists?
INSTRUCTOR’S NOTES FOR MINDTAP

Cengage offers additional online activities, assessments and resources inside MindTap,
our online learning platform. Here is a comprehensive listing of the activities available
within each chapter of MindTap for Hitt, Ireland Hoskisson’s Strategic Management:
Competitiveness and Globalization, 13th edition:
Course Level Resource: Cornerstone to Capstone Diagnostic- features short quizzes in

the key business areas of: Finance, Marketing, Accounting, Management and Economics.
Averaging between 7-9 questions per topical area, these quizzes are designed to help
students review content from courses offered earlier in the business curriculum, so they
are prepared to succeed in the Strategic Management course.
Chapter Level Resources:

• What Would You Do Video
• MindTap Reader (eBook)
• Assignments:
o Multiple Choice Quiz
o Video Quiz
o Guided Case
o You Make the Decision (every other chapter)
o Group Project
• Student Study Tools:
o A+ Test Prep
o Concept Clip Videos (where applicable)
o Flashcards
Course Level Case Resources:
• Text Cases (Readings)
• Group Case Activities (Group Case Assignments)
• Supplemental Cases (Readings)
To view more information on each of these MindTap activities, along with the default
grading settings and additional support information, view or download the
“hitt_ins_manual_13e_ch00_mindTap Outline_final” file on the Instructor Companion
Site for this title.
30
ADDITIONAL INFORMATION FOR SELECT MINDTAP RESOURCES:
WHAT WOULD YOU DO? LULULEMON

This exercise introduces students to strategic decisions as they are made in the real world.
Students should come to class prepared to discuss this exercise, and why they chose the
answer they did. All answers are graded as correct – the point of the exercise is to engage
your student's interest.
Students read a brief case about Lululemon and have to decide how they would help
Lululemon to grow in the future. They are given the choice of changing Lululemon's
advertising strategy, increasing R&D spending, or changing Lululemon's products. Each
of these three approaches should help Lululemon gain more male customers. Any answer
the student picks is correct – in fact, the company did all three of these things. If you
choose to discuss this exercise in class, this is a good time to point out that there is often
no single best answer to strategy questions.
VIDEO QUIZ: LULULEMON

The media quiz offers additional opportunities for students to apply the concepts in the
chapter to a real-world scenario as it is described in news reports.
Title: Lululemon
RT: 2:10
Topic Key: Strategic Competitiveness, Strategy, Strategic Leaders
Laurent Potdevin, chief executive officer at Lululemon Athletica Inc., talks about the
strength of his company’s brand and its ability to connect products with customers. He
describes the firm’s competitive advantage as its unique position “at the intersection of
function and fashion.” The quiz will reinforce topics learned in this chapter, including
strategy, competitive advantage, and mission while relating these concepts to a real-world
situation.
Suggested Discussion Questions and Answers

• What are the two types of competitors Potdevin describes, and how does Lululemon have
a unique competitive advantage over both of them?
Potdevin compares Lululemon to other athletic wear manufacturers, such as
Adidas and Nike, as well as other fashion brands, but he states that Lululemon is
superior at working directly with athletes to solve problems through innovation,
such as their development of unique fabrics.
1-31
• Potdevin also touches upon one of Lululemon’s important strategies, which is the “vertical
model” by which he means that the company sells direct to consumers through branded
stores. What advantages does this strategy offer?
Potdevin explains that the vertical model allows Lululemon to be “the best in the
world at the human connection.” Being so close to consumers allows the
organization to know and understand their customers’ needs in a very real way and
to keep pace with their changing needs and preferences; the high profit margins of
the model allow the firm to invest in innovative products that meet those
expectations.
GUIDED CASE: STARBUCKS

This auto-graded activity asks students to read the short end-of-chapter case on Starbucks,
and answer questions in the areas of Analysis, Strategy, and Implementation &
Performance.
Starbucks is arguably the world’s most widely recognized brand of coffee. In 2017, long-
time CEO Howard Schultz stepped down, and Kevin Johnson, a Microsoft veteran,
assumed the role. Since then, while other brick-and-mortar stores have seen declines,
Starbucks’s sales have increased. The company is adopting technological innovations, and
it continues to rely on innovations from on-the-ground employees. The brand is also
experimenting with a few new store models.
In answering the Guided Case Questions, students will review these concepts:
• The competitive landscape
• Competitive advantages and core competencies
• Vision and mission
• Strategy
• Strategic leadership
GROUP PROJECT: THE HEART OF PLANNING: A NON-

PROFIT ORGANIZATION
In this student team exercise, students will practice the analysis and strategy formulation
portion of the strategic management process for a non-profit organization. Students will
analyze organizational stakeholders, develop a mission and vision, and consider a strategic
initiative. Students will have the opportunity to practice valuable strategic management
skills, including research, critical thinking, and teamwork. Students have been asked to
32
assist a local community non-profit organization with the development of a strategic plan.
The organization has been operating for a few years, supported by individual donors who
are passionate about the mission and respect the founder. Most of the work of the
organization has been done by volunteers and two full-time employees. The
founder/executive director is ready to take it to the next level, and there has been a request
to extend their work for greater impact. They believe there may be funding sources to
support growth. The founder realizes that it is time to reexamine the organization’s vision,
mission, and strategic initiatives. The founder and the board of directors want to be sure
they’ve identified all of their stakeholders and developed plans to satisfy their needs and
create value for them.
Students will be asked to:
• Develop a mission and vision.

• Identify stakeholders.
• Suggest a strategic initiative.
• Prepare a strategic plan in the form of a three- to five-page executive summary and present
a stakeholder analysis to the class.
1-33
Another random document with
no related content on Scribd:
ease and slight alteration it was possible for the two geared engines
supplied to the Great Western Railway by the Haigh Foundry to have been
altered to ordinary direct action engines.
Large wheels were also to be used for the tender, the axles passing
through the water-tank, so that the centre of gravity was lowered.
James Pearson, the locomotive superintendent of the Bristol and Exeter
Railway, obtained a patent on October 7th, 1847, for a double locomotive.
Fairlie’s “Little Wonder” narrow-gauge engines were probably suggested by
Pearson’s design of 1847; whilst the latter’s famous broad-gauge double-
bogie tanks were decidedly evolved from his earlier form of locomotive.
The boiler was to have the fire-box in the centre, the latter being divided
into two parts, connected below the furnace doors; the driving axle was
across this central foot-plate, to allow of very large wheels and a low centre
of gravity. Each boiler (there being practically two, one each side of the
central double fire-box) was carried on a four-wheel bogie, so that the
locomotive was carried on ten wheels, as in the later design. The bogie
frames were connected by tension-rods, passing outside the fire-box. India-
rubber springs were employed, their use being to allow each bogie to adjust
itself to any inequality of the road, and to bring the bogies back to the
straight position on an even road. The coke was to be stowed in bunkers
over the boilers, and the water could be either in tanks between the tops of
the boilers and the coke bunkers, or a separate tender could be provided.
The steam domes were on the fire-box, and were to be of abnormal height,
and connected over the head of the foot-plate, thus forming the roof of the
cab. An exhaust fan was fixed in the smoke-box to draw the heated air
through the tubes and discharge it up the chimney, or it could be used again
as a hot blast for the furnace, and a chimney and a smoke-box were
provided for each boiler. The fans were to be driven by pulleys off one of the
axles, and it was claimed that, as the exhaust steam was not required for
the purpose of creating a blast, extra large exhaust pipes could be used,
and the cylinders thereby relieved of “back pressure.” The cylinders were
outside, and the valves were beyond the cylinders. These were fixed
between the wheels of one of the bogies. The general design of this engine,
as shown in the drawings, was very ingenious, and is certainly the most
symmetrical “double-ended” type of engine we have seen illustrated.
Pearson for some reason did not construct an engine after this style, but
produced the well-known 9ft. “single” (double-bogie) tanks instead.
The third patent now to be described had also for its leading feature
extra large driving wheels. The specification is that of Charles Ritchie, of
Aberdeen, the patent being granted to him on March 2nd, 1848. The
principal feature was the providing of two piston-rods to each piston, one on
each side. Four driving wheels were proposed, one pair placed in front of
the smoke-box and one pair behind the fire-box. The cylinders were outside,
and were, of course, fixed at an equal distance between the two pairs of
driving wheels. One pair of carrying wheels was to be used, placed below
the cylinders. It was claimed that this arrangement of pistons and
connecting-rods exactly balanced the reciprocating parts of the machinery,
and therefore abolished oscillation. Another improvement related to the
slide-valves, the starting, stopping, and reversing of the engine, together
with the expansive working of the steam, the whole to be controlled by a
wheel on the foot-plate, connected by cogs with the link of the valve gear.
Other improvements were compensating safety valves, an “anti-primer,”
and an improved feed-water apparatus. The last is described as follows:
—“Upon steam being admitted from the boiler into the cylinder, through the
steam-port, the piston will be acted upon, and the ram be withdrawn; the
water will then raise the valve and enter the barrel, to occupy the space
previously occupied by the ram. By this time the piston will have acted upon
a lever, so as to cause the slide-valve to uncover one port and cover the
other, thereby allowing the steam on the other side of the piston to escape
through the exhaust pipe.
“The piston will now be impelled in a contrary direction, and the ram
entering the barrel will cause the one valve to be closed and the other to be
opened by pressure of the water therein, which, as the ram advances, will
be forced into the boiler.”
Another part of the specification related to an “anti-fluctuator.” A partition-
plate was to be fixed between the tube-plate and the fire-box, and the water
was to be let into the boiler at the fire-box end, and would only reach that
portion of the boiler beyond the fire-box by flowing over the top of the
partition-plate. By this means the fire-box would always be covered with
water. It will be seen that the specification contained several useful
propositions, which, however, do not appear to have been put into practice.
Fig. 56.—TIMOTHY HACKWORTH’S “SANSPAREIL NO. 2”
We have previously, upon more occasions than one, shown the

important position occupied in the evolution of the steam locomotive by the
engines built or designed by Timothy Hackworth. We now have to give an
account of his last locomotive, the “Sanspareil No. 2.”
A comparison of the drawings of this engine (copies of which are in our
possession) with Hackworth’s earlier efforts of 20 years before, clearly
discloses the remarkable strides made in the improvement of the locomotive
during that period, and also most clearly shows that in 1849 Hackworth was
still in the very van of locomotive construction, even as he had been in the
days of his “Royal George.”
The “Sanspareil No. 2” (Fig. 56) was constructed by Timothy Hackworth
at his Soho Engine Works at Shildon. The patent was obtained in the name
of his son, the late John Wesley Hackworth. We are indebted to the executor
of the will of Timothy Hackworth for many of the following details concerning
the engine now under review.
The locomotive was of the six-wheel “single” type, with outside bearings
to the L. and T. wheels, and inside bearings of the driving wheels. The
cylinders were inside. A cylindrical steam dome was placed on the boiler
barrel close to the smoke-box. The fire-box was of the raised pattern, and on
it was an encased Salter safety valve. Cylindrical sand-boxes were fixed on
the frame-plates in front of the driving wheels. The principal dimensions of
the engine were:—Driving wheels, 6ft. 6in. diameter; leading and trailing, 4ft.
diameter; cylinders, 15in. diameter, 22in. stroke. Weight in working order:—
L., 8 tons 6 cwt.; D., 11 tons 4 cwt.; T., 4 tons 5 cwt. Total, 23 tons 15 cwt.
It would be well if we mentioned the principal novelties in construction—
viz.: Welded longitudinal seams in boiler barrel; the boiler was connected to
the smoke-box and fire-box by means of welded angle-irons, instead of the
usual riveted angle-irons; the lagging of the boiler was also covered with
sheet-iron, as is now general, instead of the wood being left to view, as was
at that time the usual practice.
A baffle-plate was fitted at the smoke-box end of tubes, as well as at the
fire-box end.
The pistons and rods were made of wrought-iron in one forging.
The valves were constructed under Hackworth’s patent, and were
designed to allow a portion of the steam required to perform the return
stroke to be in the cylinder before the forward stroke was completed, and
thus to form a steam cushion between the piston and cylinder covers. Such
working was said to economise 25 to 30 per cent. of fuel.
The engine conveyed 200 tons 45 miles in 95 minutes, consuming 21
cwt. of coke, and evaporating 1,806 gallons of water. She also drew a train
of six carriages over the same distance without a stop, in 63 minutes, with
an expenditure of 13 cwt. of coke and 1,155 gallons of water.
Upon the completion of this engine, J. W. Hackworth sent the following
challenge to Robert Stephenson:—
“Sir,—It is now about 20 years since the competition for the premium of
locomotive superiority was played off at Rainhill, on the Liverpool and
Manchester Railway. Your father and mine were the principal competitors.
Since that period you have generally been looked to by the public as
standing first in the construction of locomotive engines. Understanding that
you are now running on the York, Newcastle and Berwick Railway a
locomotive engine which is said to be the best production that ever issued
from Forth Street Works, I come forward to tell you publicly that I am
prepared to contest with you, and prove to whom the superiority in the
construction of locomotive engines now belongs.
“At the present crisis, when any reduction in the expense of working the
locomotive engine would justly be hailed as a boon to railway companies,
this experiment will no doubt be regarded with deep interest as tending to
their mutual advantage. I fully believe that the York, Newcastle and Berwick
Railway Company will willingly afford every facility towards the carrying out
of this experiment.
“Relying upon your honour as a gentleman, I hold this open for a
fortnight after the date of publication.
“I am, Sir, yours, etc., John W. Hackworth.”
We do not think Robert Stephenson accepted the challenge; at all

events, no records of such a competition have ever been made public, and
had it taken place the victor would have doubtless well published the result.
The “Sanspareil” frequently attained a speed of 75 miles an hour on
favourable portions of the line. She was sold to the North Eastern Railway
by the executors shortly after the death of Timothy Hackworth, something
like £3,000 being obtained for the engine, which continued to work upon the
North Eastern Railway until recent years, having, of course, been rebuilt
during the long time it was in active service.
We have now to describe another specimen of the locomotives
constructed by the celebrated firm of Bury, Curtis and Kennedy. This
locomotive was one of the last engines built by the firm before its final
dissolution. The “Wrekin” was a six-wheel engine with inside bar frames and
inside cylinders, and was constructed for the Birmingham and Shrewsbury
Railway in 1849.
The special points noticeable in the construction of the engine in
question are the width of the framing, which was arranged horizontally
instead of vertically, and only two bearings to each axle. The axle-boxes of
the leading wheels were bolted to the frames, those of the other wheels
being welded to the frames, and the cylinders were also directly affixed to
the framing. An advantage claimed by the builders, as resulting from the
method of construction employed, was that the weight being placed entirely
within the wheels, such weight had a tendency to press down the axle
between the bearings, and so counteract the constant tendency arising from
the flanges of the wheels, when pressing against the edge of the rails,
especially in passing round curves.
The cylinders were 15in. diameter, the stroke being 20in. The driving
wheels were 5ft. 7in. diameter, the leading 4ft. 1in. and the trailing 3ft. 7in.
The boiler contained 172 brass tubes, 11ft. 6in. long and 2⅛in. external
diameter. The heating surface was: Tubes, 1,059 sq. ft.; fire-box, 80 sq. ft.;
total, 1,139 sq. ft. Grate area, 15 sq. ft.
No steam dome was provided, the main steam-pipe being of iron, with a
longitudinal opening ³/₁₆th inches wide along the top; this pipe extended to
the smoke-box, at which end of it the regulator valve was placed; the
actuating-rod passing through the main steam-pipe from end to end. Two
encased Salter safety valves were fixed on the fire-box. The wheel base of
the “Wrekin” was: leading to driving, 8ft. 1in.; driving to trailing, 6ft. 11in.
In 1849 the Vulcan Foundry Company supplied the Caledonian Railway
with an engine known as “No. 15.” In general appearance the locomotive
was very similar to Allan’s “Velocipede” engine on the London and North
Western Railway.
“No. 15” (Fig. 57) was a six-wheel engine, with inclined outside cylinders,
15in. diameter and 20in. stroke. The driving wheels were 6ft. diameter,
leading and trailing wheels 3ft. 6in. diameter. The boiler barrel was 9ft. 9in.
long and 3ft. 6¾4in. diameter, containing 158 brass tubes of 1¾in. external
diameter. Wheel base, L. to D., 6ft.; D. to T., 6ft. 6½in. The chimney was 6ft.
6in. high; on the centre of the boiler was a man-hole, surmounted by a
column safety valve of Salter’s pattern, the blowing-off steam pressure being
90lb. The steam dome was of brass, placed on the raised fire-box, and
surmounted with a second Salter’s safety valve. The driving and leading
wheels were provided with underhung springs, but the trailing wheels had
the springs over the axle-boxes. These latter springs were of elliptic shape,
and were provided with a screw device fixed on the foot-plate, by means of
which the weight was taken off the trailing wheels and thrown upon the
driving wheels.
In addition to the semi-circular brass name-plates (i.e., Caledonian
Railway) affixed to the splashers of the driving wheels, brass number-plates
of diamond shape (12in. long by 6in. diameter) were fixed on the buffer
beams of “No. 15.” The tender was supported on four wheels, 3ft. 6in.
diameter, and held 800 gallons of water.
Fig. 57.—CALEDONIAN RAILWAY ENGINE, “No. 15”
During June, 1849, “No. 15” made a number of trial trips between
Glasgow and Carlisle, with seven, eight, and nine coaches of an average
weight of five tons each, the weight of the engine and tender being 28 tons.
On the trips to Glasgow the Beattock Summit had, of course to be climbed.
This consists of 10 miles of stiff gradients, varying between 1 in 75, 80, and
88. The run of 13½ miles from Beattock to Elvanfoot, consisting of the 10
miles just described and of 3½ down at 1 in 100, was negotiated by “No. 15”
in 33 minutes, with a train of six coaches; with seven coaches the time was
41 minutes, and with a pilot and eleven coaches, 30 minutes, or at the rate
of 27 miles an hour. These were considered exceptionally good specimens
of hill-climbing performances 48 years back, but are, of course, entirely out
of comparison with modern Caledonian records over the same line with
much heavier trains.
Fig. 58.—“MAC’S MANGLE,” No. 227, L. & N.W.R.
McConnell, the locomotive superintendent of Wolverton, turned out

several remarkable locomotives for the London and North Western Railway,
and No. 227, or, as she was generally called, “Mac’s Mangle,” (Fig. 58), was
one of these peculiar specimens of McConnell’s design. The cylinders were
of large size, being 18in. diameter, with a 24in. stroke; they were outside, as
were also the axle bearings—a very uncommon combination. No. 227 was a
six-wheel “single” engine, the driving wheels being 6ft. 6in. diameter, and the
leading and trailing wheels 4ft. diameter. The fire-box was of the raised
pattern, and a Salter safety valve (encased) was fixed on it. A huge steam
dome was provided, located, originally, close to the smoke-box end of the
boiler barrel, but afterwards (in 1850) placed near the fire-box end, over the
driving wheels. The boiler-heating surface of “Mac’s Mangle” was 1,383 sq.
ft. No. 227 enjoyed but a short locomotive career, being built in April, 1849,
and “scrapped” in May, 1863. It is stated that in consequence of the extreme
width of this engine, caused by outside cylinders being employed in
conjunction with outside axle-boxes, it became necessary to set back the
platforms at some of the stations, so that the engine could clear these
erections without coming to grief.
Fig. 59.—“PRESIDENT,” ONE OF McCONNELL’S
“BLOOMERS,” L. & N.W.R AS ORIGINALLY
BUILT
In 1850 McConnell designed a very powerful class of passenger engines
for the L. and N. W. R. These are generally called the “Bloomers.”
“President” (Fig. 59) illustrates this favourite class of L. and N. W. R.
locomotive, when built. The cylinders were inside, 16in. diameter, with a
stroke of 22in. The driving wheels were 7ft. in diameter. The heating surface
was 1,152 sq. ft. These engines weighed 28¾ tons. (Fig. 60) is from a photo
of a “Bloomer” as rebuilt by Ramsbottom.
Fig. 60.—ONE OF McCONNELL’S “BLOOMERS” AS

REBUILT BY RAMSBOTTOM
CHAPTER X.
The locomotive exhibits of 1851—The “Hawthorn”—Wilson’s two-boiler engine, the
“Duplex”—Fairbairn’s tank engine—The S.E.R. “Folkestone” on Crampton’s system—
Sharp’s “single” engines for the S.E.R.—J. V. Gooch’s designs for the Eastern Counties
Railway—The “Ely,” Taff Vale Railway—Beattie’s “Hercules”—A much-vaunted
locomotive, McConnell’s “300” L. & N.W.R—London and Birmingham in two hours—The
chief features of “300”—Competitive trials with other engines—Coal v. coke—An earlier
“recessed” boiler—Dodd’s “Ysabel”—The first compound locomotive—Another Beattie
design—Pasey’s compressed air railway engine—Its trial trips on the Eastern Counties
Railway—The original (Great Northern engines Sturrock’s masterpiece, “No. 215,”
G.N.R.)—Pearson’s famous 9ft. “single” double-bogies, Bristol and Exeter Railway—
Rebuilt with 8ft. drivers, and a tender added by the G.W.R.—More old Furness Railway
engines—Neilson’s outside cylinder locomotives—A powerful goods engine on the
Maryport and Carlisle Railway—Gooch’s 7ft. coupled broad-gauge locomotives—His first
narrow-gauge engines.
The premier International Exhibition, which, as all the world well knows, was held
in Hyde Park, London, 1851, brought together quite a respectable collection of railway
appliances. The British exhibitors showed the following locomotives:—
London and North Western Railway’s “Cornwall” and “Liverpool.”
Great Western Railway’s “Lord of the Isles.”
Hawthorne’s express, “Hawthorn.”
Adams’ combined engine and carriage, “Ariel’s Girdle,”
built by Wilson and Co., Leeds.
England’s light locomotive, built by Fairbairn.
Fairbairn’s tank engine.
South Eastern Railway’s “Folkestone.”
E. B. Wilson and Co.’s double boiler tank engine.
Several of these have been described in an earlier chapter, whilst details of other
types (such as the “Lord of the Isles” type) have also been given, so that it is not
necessary to describe such designs again. We have, however, to give particulars of
Hawthorne’s express, Fairbairn’s tank, the “Folkestone,” and Wilson’s “double boiler”
tank engine. The dimensions of the first are: cylinders, 16in. diameter, 22in. stroke;
driving wheels, 6ft. 6in.; leading and trailing wheels, 3ft. 9in. diameter; heating surface
of fire-box, including water bridge, 110 sq. ft.; tubes, 865.4 sq. ft. The tubes were of
brass, of 2in. external diameter, and 158 in number.
The “Hawthorn” had inside cylinders and double sandwich frames, a raised fire-
box, with an enclosed safety valve, no dome, but a perforated steam-pipe for the
collection of the steam was provided. The engine was designed for running at 80 miles
an hour; the special features of the engine being double-compensating beams for
distributing the weight uniformly on all the wheels, equilibrium slide-valves, and an
improved expansion link suspended from the slide-valve rods. Instead of fitting a
spring to each wheel, two only were placed on each side of the engine between the
wheels. These springs were inverted, and sustained by central straps attached to the
framing. Their ends were connected by short links to the wrought-iron double-
compensating beams placed longitudinally on each side of the engine, inside and
beneath the framing.
The two inner contiguous ends of these beams were linked by a transverse pin to
an eye at the bottom of the axle-box of the driving axle, whilst the opposite ends of the
beams were respectively linked in a similar manner to eyes on the top of the leading
and trailing axle-boxes. The action of these beams was obvious. By them a direct and
simultaneous connection was given to all the axle bearings, and consequently a
uniform pressure was always maintained on all the wheels, irrespective of
irregularities on the permanent-way. The slide valves were placed on vertical faces in
a single steam chest, located between the two cylinders. One slide-valve had a plate
cast on its back, and the other had an open box cast on its back to receive a piston,
which had its upper end parallel with the valve face. This piston was fitted steam-tight
in the box, and its planed top bore against the face of the plate in working. By this
arrangement the slides were relieved from half of the steam pressure; and to assist a
free exhaust, a port was made in the back plate of one of the slides, so providing an
additional exit for the spent steam by means of the piston and the exhaust ports of the
opposite valve.
The expansion link was placed in such a position as to allow the bottom of the
boiler to be quite near the axle. The link, instead of being fixed to the ends of the
eccentric-rods, so as to rise and fall with them when the reversing lever was moved,
was suspended from its centre, by an eye, from the end of the slide-valve spindle.
This removed the weight of the link, etc., from off the reversing gear. The eccentric-
rods were jointed to the opposite ends of the link slide-block, to secure steadiness and
durability of the parts. It was claimed that this method of a fixed link-centre as fitted to
the “Hawthorn” ensured a more correct action of the valves.
Wilson and Co., of the Railway Foundry, Leeds, exhibited a curious tank engine at
the Exhibition of 1851, called the “Duplex,” in consequence of it being provided with
two boilers. The idea of the designer was to obtain sufficient steam from an engine of
light weight to haul a heavy train. The original drawings of this engine are still in the
possession of Mr. David Joy, who designed it; and at first it was proposed to build the
“Duplex” with three cylinders and six-coupled wheels, but afterwards fresh drawings
were prepared, and it was from these latter ones that the engine was built. The two
boilers were placed side by side, and these each measured 10ft. 6in. long by 1ft. 9in.
diameter, and together contained 136 tubes of 1¾in. diameter, the heating surface of
which was 694 sq. ft., that of the fire-box being 61 sq. ft., making a total of 755 sq. ft.
The cylinders were outside, their diameter being 12½in., and the stroke 18in. The
leading wheels were 3ft. 6in. diameter; the driving and trailing (coupled) 5ft. diameter.
Some other dimensions were:—Total length, 24ft. 3in.; breadth, 5ft. 3in.; height from
rail to top of chimney, 13ft. 6in.; weight, empty, only 16 tons, with fuel and water 19
tons 17 cwt. The capacity of tank was 520 gallons, sufficient for a journey of 25 miles;
coke bunker, 42 cubic feet, equal to 26 bushels, or 15 cwt. The “Duplex” was sold to a
Dutch railway after the Exhibition, and its further career is, therefore, unknown to
those interested in it.
Fairbairn’s tank locomotive was of the “well” type, supported on six wheels, the
driving pair being 5ft. diameter, and the L. and T. each 3ft. 6in. diameter. The cylinders
were inside, measuring 10in. by 15in. stroke. The boiler was 8ft. long by 3ft. diameter,
and contained 88 brass tubes of 2in. diameter. The heating surface amounted to 480
sq. ft. The internal fire-box was of copper, and measured 2ft. 5in. long, 3ft. wide, and
3ft. 5in. deep. The tank behind and under the foot-plate held 400 gallons of water. The
coke consumption of this little engine was only 10lb. per mile with trains of six
carriages, the weight in working order only 13 tons; and it may interest our readers to
know that this diminutive locomotive was described as “a fair specimen of the heavier
class of tank engine.
Fig. 61.-THE “FOLKESTONE,” A LOCOMOTIVE ON CRAMPTON’S

SYSTEM. BUILT FOR THE S.E.R., 1851
The engine calling for the greatest attention at the Exhibition of 1851 was the
“Folkestone” (Fig. 61), exhibited by the South Eastern Railway. This was an engine
built by R. Stephenson and Co., under one of Crampton’s patents, but the principal
feature in its design was an intermediate driving axle, connected by means of outside
cranks, and coupling-rods to the driving wheels, which were (under Crampton’s
patent) behind the fire-box, the axle extending across the foot-plate. It will be well,
perhaps, if we at this point reiterate the fact that the method of working locomotives by
means of an intermediate crank-shaft was not introduced by Crampton, it having been
used some years previously by W. B. Adams, not to mention some of the early
Stockton and Darlington Railway engines, where the same arrangement was
employed, but with vertical cylinders. Readers will, therefore, see it is incorrect to
describe locomotives with this system of machinery as “Crampton’s patent,” although it
is quite possible for a “Crampton patent” locomotive to be provided with an
intermediate driving shaft, as was the case with the “Folkestone.”
Eight engines of this type were built by Stephenson and Co. for the South Eastern
Railway, and were numbered 136 to 143, the first of which was named “Folkestone.”
These engines were supported by six wheels, a group of four being arranged close
together at the smoke-box end. Their diameter was 3ft. 6in. The driving wheels were
6ft. in diameter, the wheel base 16ft. These engines weighed 26¼ tons each, of which
only 10 tons were on the driving wheels, the remainder of the weight being supported
by the four leading wheels. The cylinders were inside, 15in. diameter, and the stroke
22in. The fire-box top was flush with the boiler barrel, the straight lines of which were
unrelieved by a dome, but an encased safety valve was fixed near the back of the fire-
box top. The boiler contained 184 tubes, of 2in. diameter and 11ft. in length.
The “Folkestone” ran its trial trip on Monday, March 31st, 1851, when Mr.
McGregor, the chairman of the South Eastern Railway, Mr. R. Stephenson, the builder
of the engine, Mr. Barlow, the South Eastern engineer, and Mr. Cudworth, the South
Eastern locomotive superintendent, were present. From London Bridge to Redhill no
great speed could be attained, as a Brighton train was in front; but beyond the latter
station, and with a train of nine carriages, the 19½ miles to Tonbridge were covered in
19½ minutes, a maximum speed of 75 miles an hour being attained. After a short stop,
the journey to Ashford was resumed, and that town was reached in 20½ minutes after
leaving Tonbridge. The times and distances were as follow:—Redhill to Tonbridge, 19
miles 47 chains, start to stop in 19½ minutes; Tonbridge to Ashford, 26 miles 45
chains, start to stop in 20½ minutes, or at the rate of 78 miles an hour; the whole 46
miles 12 chains being covered in 40 minutes, running time, or, including the stop at
Tonbridge, in 43 minutes. It must be remembered that the line between Redhill and
Ashford is, perhaps, the most level and straight in England for so long a distance.
These eight engines did not prove very successful in general working, and they
were afterwards rebuilt as four-coupled engines, an ordinary cranked axle with wheels
being provided in place of the intermediate driving shaft.
It will not be out of place if we here mention eight “single” engines built by Sharp
Bros. in 1851 for the South Eastern Railway, and numbered 144 to 151. The general
dimensions were similar to the Cramptons, except that the wheel base was only 15ft.,
and that the heating surface was 1,150 sq. ft. The admission of the steam to the
cylinders was controlled by a hand lever, with catch and notches, similar to and placed
by the side of the ordinary reversing lever. Six eccentrics were on the driving axle, two
of them working the pumps. The framing and springs of these engines were
afterwards perpetuated by Cudworth in his later and better known types of South
Eastern locomotives.
Fig. 62.—ONE OF J. V. GOOCH’S “SINGLE” TANK ENGINES,
EASTERN COUNTIES RAILWAY
The locomotives of the despised “Eastern Counties,” that were designed about
1850 by Mr. J. V. Gooch, will now be concisely described. They were of three kinds—
viz., “single” tanks, “single” express, and four-wheels-coupled tender engines. Of the
tanks, three sizes were constructed, chiefly at the “Hudson Town” (or Stratford Works).
The largest of these were provided with outside cylinders, 14in. diameter and 22in.
stroke, the boiler being 10ft. 6in. long, and containing 164 tubes of 1³/₁₆th in. diameter.
The leading and trailing wheels had outside bearings, the driving wheels being
provided with inside bearings only. A steam dome was placed over the raised fire-box,
and a screw-lever safety valve on the boiler barrel. The water was stored in two tanks,
fixed between the frames, one below the boiler and the other beneath the foot-plate.
These tank engines were known as the “250” class, and some of our readers may
recollect that when Peto, Brassey and Betts leased the London, Tilbury and Southend
Railway, engines of this design were used to work the traffic on that railway. We
understand it is now 20 years since the last of them (No. 08) reached the final bourne
of worn-out locomotives—the “scrap heap.”
The dimensions of the smallest class of these tanks (Fig. 62) were: Cylinders, 12in.
diameter, 22in. stroke; boiler, 10ft. long and 3ft. 2in. diameter, 127 tubes of 1⅞th in.
diameter; the total heating surface was 709 sq. ft.; grate area, 9.7 sq. ft. The driving
wheels were 6ft. 6in. diameter, and the L. and T. 3ft. 8in. The total weight of these
engines was 23 tons 19 cwt., of which 9 tons 14 cwt. was on the driving axle. The
wheel base was: L. to D., 6ft. 3in.; D. to T., 5ft. 9in.
J. V. Gooch’s four-coupled, or “Butterflies,” had leading wheels 3ft. 8in. diameter,
and driving and trailing (coupled) 5ft. 6in. Wheel base, L. to D., 6ft. 3in.; D. to T., 7ft.
9in. The cylinders were 15in. diameter, the stroke being 24in. The boilers of this class,
and also of the singles, next to be described, were of the same dimensions as those of
the “250” class of tanks.
The “single” expresses were provided with 6ft. 6in. driving wheels, and cylinders
15in. diameter and a 22in. stroke; in this class also the leading and trailing wheels
were 3ft. 8in. diameter. The wheel base was 14ft., the driving wheels being 6ft. 9in.
from the leading and 7ft. 3in. from the trailing wheels. Ten engines of this design were
constructed, some at Stratford, and others at the then recently opened Canada Works
of Brassey and Co. at Birkenhead. Their official numbers were from 274 to 283.
The “Ely” (Fig. 63) represents the type of 6-wheel passenger engine in use on the
Taff Vale Railway at this period. She was built in 1851 by Messrs. Kitson and
Company, from Taff Vale designs. She had 13in. cylinders, with 20in. stroke, and four-
wheels-coupled, of 5ft. 3in. diameter. She carried a pressure of 100lbs., she had a
four-wheel tender, carrying 900 gallons of water, and as the gross weight of the tender
was about 11 tons in working order, the gross weight of the engine and tender would
be 33 tons. The “Ely” could not take a train of three carriages, weighing only 21 tons,
up the Abercynon bank of 1 in 40 without the assistance of a “bank” engine.
In 1851 Mr. Beattie, the locomotive superintendent at Nine Elms, built for the
London and South Western Railway the four-wheels-coupled engine, “Hercules,” No.
48. The frames of this engine were of the “lattice” type, examples of which can be still
seen on some of the older Great Northern Railway tanks.
The diameter of wheels was: L., 3ft. 6in.; D. and T., 5ft. 6in.; tender, 3ft. 6in.; wheel
base, L. to D., 7ft. 1in.; D. to T., 6ft. 6in.; T. to leading tender, 7ft. 3½in.; the tender
wheel base being 10ft. 3in. equally divided.
Fig. 63.—“ELY,” A TAFF VALE RAILWAY ENGINE, BUILT IN 1851

The weight was distributed as follows:—Engine, L. axle, 8 tons 17 cwt.; D., 9 tons
17 cwt.; T., 9 tons 16 cwt.; tender, L., 4 tons 19 cwt.; M., 6 tons 19 cwt.; T., 7 tons 10
cwt. The cylinders were 15in. by 22in.; tractive force on rail, 7,500lb.; 1,800 gallons of
water could be carried in the tender tank. The “Hercules” had a flush top boiler, and a
raised fire-box surmounted by a large inverted, urn-shaped dome. This design of
locomotive was a favourite one on the London and South Western Railway for many
years, but the last engine of the kind has now been scrapped.
Having favoured the London and South Western Railway, to equalise matters, we
cannot do better than give a description of a locomotive belonging to its cousin-
german, the London and North Western Railway. The latter was indeed the more
famous, being no other than McConnell’s notorious “No. 300,” (Fig. 64) which, being
introduced with a vast amount of publicity, became a nine days’ wonder, then sank into
quiescent mediocrity, and after a brief locomotive career, was seen no more—a rather
different fate, be it observed, to that of the London and South Western Railway’s
“Hercules.”
It has been stated that only one drawing of this engine exists. This is incorrect; the
writer possesses a complete set of drawings relating to “No. 300,” together with the
whole of the specifications from which the engine was constructed. To reproduce this
specification in detail would give too technical a character to this narrative, and would
try the patience of even the most ardent locomotive enthusiast.
The directors of the London and North Western Railway in 1851 expressed their
determination to run their express trains from London to Birmingham in two hours, and
gave instructions to McConnell, the locomotive superintendent at Wolverton, to design
the necessary locomotives. The salient features of the design were: Inside cylinders,
18in. by 14in.; six wheels, with inside and outside frames; driving wheels, 7ft. 6in.
diameter; leading, 4ft. 6in.; and trailing, 4ft. diameter.
The boiler was 11ft. 9in. long and 4ft. 3¼in. external diameter. The tubes were of
brass, 303 in number, only 7ft. in length, and 1¾in. outside diameter. The crank axle
bearings were—outside, 7in. deep and 10in. in length, the inside ones being 7in. and
4¼in. respectively. The leading and training axles were hollow, the metal being 1½in.
thick, and the hollow centre 4½in. diameter, thus making the total diameter of the
straight axles 7½in. The slide-valves had an outside lap of 1¼in. The principal
innovations were: Coleman’s patent india-rubber springs, fitted below the driving axle
and above the leading and trailing axles, and also to the buffers. McDonnell’s patent
dished wrought-iron pistons, forged in one piece with the piston-rod, and encased with
continuous undulating flat metal packing. The steam-pipe was of flat section, and
passed through a superheating chest in the smoke-box; the steam was thus dried
during its journey from the dome to the cylinders. The great feature of the design was
the arrangement of the fire-box, with a mid-feather, a combustion chamber, hollow
stays for a free supply of air to the fire-box, and the cutting away of the bottom of the
fire-box to obtain clearance for the cranks and yet retain a low centre of gravity with
large driving wheels. Assertion to the contrary notwithstanding, it should be observed
that so much did McConnell insist upon a low centre of gravity that he specially
mentioned it in his patent specification of February 28th, 1852.
A more particular description of the fire-box, etc., is requisite. It extended into the
cylindrical portion of the boiler a distance of 4ft. 9in., so that the boiler tubes were only
7ft. long. The whole length of the fire-box was 10ft. 6in.; depth at front-plate 6ft. 5in., at
door-plate 6ft. 10in.; length on fire-bars 5ft. 10¼in., thus leaving 4ft. 7¾in. for the
portion over the axle and the combustion chamber. At its narrow part (directly at the
top of the recess above the driving axle) the fire-box was only 2ft. 3in. in height; height
at tube-plate 3ft. (beyond the cut away portion); width at tube-plate 3ft. 9in. It will be
noticed that Webb’s “Greater Britain” class of locomotives is designed with the long
fire-box and combustion chamber; but as Mr. Webb, unlike McConnell, does not object
to the high pitched boiler, the former does not recess the boiler barrel for the purpose
of obtaining a low centre. Webb also divides his tubes into two sets by having the
combustion chamber between them. McConnell’s combustion chamber was a
continuation of the fire-box. We must now describe the general appearance of this
engine.
Fig. 64.—McCONNELL’S “300,” LONDON AND NORTH WESTERN

RAILWAY
The cylinders were inclined upwards from the front, and the valve chests were
above them, below the smoke-box. Two Salter safety valves were provided, encased
within a sheet-brass covering of Stirling’s Great Northern pattern. The steam pressure
was 150lbs. The dome was also of brass, with a hemispherical top surmounting the
cylindrical lower part. The steam regulator was at the mouth of the steam-pipe, which
was placed at the top of the dome (inside, of course).
The heating surface was: Tubes, 980 sq. ft.; fire-box, 260 sq. ft. Wheel base, 16ft.
10in. Sufficient steam could be raised in 45 minutes after lighting the fire to move the
engine. Two of these engines were built about the same time—one (No. 300) by
Fairbairn and Co., Manchester, the other by E. B. Wilson and Co., Leeds. The orders
were given early in July, 1852, and the engines delivered the second week in
November, Wilson and Co. having occupied but eight weeks in the construction of the
one given to them.
Both engines were delivered at Wolverton on the same day, and on Thursday,
November 11th, 1852, Wilson’s engine was tried for the first time, when on her first
journey to Euston she attained a speed of 60 miles an hour.
It was soon found that “No. 300” and her sister engine were unable to cover the
111 miles—Euston to Birmingham—in two hours, as was confidently predicted, and
the failure to do so was—perhaps justly—attributed to the inferior condition of the
permanent-way. On March 8th, 1853, “No. 300” hauled a train of 34 carriages,
weighing 170 tons, from Birmingham to London in three hours eight minutes, including
five stoppages. A similar train drawn by the “Heron” and “Prince of Wales” took ten
minutes longer to perform the same journey. These two engines had cylinders 15in. by
20in., and 6ft. driving wheels. The results of this trial are thus tabulated:—
Coke. Average speed Maximum speed
Coke.
per mile. per hour. per hour.
No. 300 4,529 lb. 40.8 lb. 36.4 miles 54
“Heron” & “Prince of Wales” 4,851 lb. 43.7 lb. 34.5 miles 48
Upon the result of this run it was claimed that McConnell’s patent engines were
considerably superior to two of the ordinary London and North Western Railway
locomotives, and one of Stephenson’s “long boiler” abortions was altered by
McConnell, being fitted up with his patent combustion chamber, short tubes, and the
other innovations, as mentioned in our description of “No. 300.”
The “long boiler” originally had 1,013 sq. ft. of tube-heating surface; when altered,
the length of the tubes was reduced to 4¾ft., and some additional ones were fixed
diagonally across the combustion chamber. By this alteration the tube-heating surface
was reduced to 547 sq. ft., and the engine is stated to have drawn 170 tons at 60
miles an hour, and to have attained a speed of 70 miles an hour with light trains. From
the working of this locomotive the following table (by which a reduction of 23 per cent.
in the amount of fuel consumed was claimed for the altered engine) was prepared:—
Coke
Miles Average Coke Coke
per ton
run. load. consumed. per mile.
per mile.
Original 29,442 115 tons 1,715,952 lb. 58.28 lb. .564 lb.
Altered 12,060 144 tons 519,120 lb. 43.04 lb. .298 lb.
But D. K. Clark’s paper on “Locomotive Boilers,” read before the Institution of Civil
Engineers, soon placed a very different complexion upon the result of the trials
between the ordinary and patent engines, resulting in the “air-tubes” to the combustion
chamber being speedily abandoned. The attention of the directors of the London and
North Western Railway was called to the failure of these engines, with the result that
they ordered Messrs. Marshall and Wood to report on the two classes of engines—
viz., the ordinary London and North Western type and McConnell’s patent
locomotives. This report was ready in August, 1853, but for some reason its
publication was suppressed at the time, but the directors countermanded the
construction of other engines already ordered on McDonnell’s patent principle.
In the summer of 1854 Marshall and Wood conducted another set of experiments
for the directors of the London and North Western Railway, with the object of
determining the relative value of coke and coal as fuel for the locomotives.
The engines chosen were McConnell’s patent “No. 303” and the “Bloomer,” No.
293. Double trips were run between Rugby and London daily for six consecutive days,
coal being burnt on three days and coke on the three alternate days. The trains
chosen were the 12.55 p.m. up and 5.45 p.m. down.
It was found that 1lb. of coal evaporated 5.83lb. of water, and 1lb. of coke 8.65lb.
of water; but the monetary saving was 6s. 9d. per ton in favour of coal.
McConnell’s patent engines were again condemned. Marshall and Wood’s report
concluded as follows: “Although we consider the experiments we made with No. 303
engine satisfactory in point of smoke burning, we cannot resist the belief that the
consumption of coal is in excess of what it ought to be, and that there is room for
considerable improvement in this respect, by means which shall tend to utilise the
heat which is at present wasted.”
The whole report is of great interest to the technical reader; it is, however, too long
to reproduce in extenso.
It is abundantly evident that there is no great pecuniary gain from locomotive
designing, or we should be treated to great law-suits regarding the validity of the
patents, such as have recently been the case with pneumatic tyres and incandescent
gas-burners. We have already, upon more occasions than one, pointed out that certain
patented locomotive designs had previously been anticipated, although the later
patentees were probably unaware of the fact. We find this to have been the case with
McConnell’s “recessed” boiler locomotives just described, for on December 2nd, 1846,
W. Stubbs and J. J. Grylls, of Llanelly, enrolled a design of locomotive. The
specification in question not only mentioned the recessing of the boiler for the purpose
of allowing the use of a large driving wheel and yet retaining a low centre of gravity,
but it even anticipated McConnell’s combustion chamber between the fire-box and
tubes. An adaptation of Bodmer’s double piston motion was also specified by Stubbs
and Grylls. The two cylinders were placed below the boiler, four wheels being
connected by means of side-rods with the cross-heads of the two cylinders in such a
manner that from each cylinder two wheels were driven, by means of a cross-head,
and each cross-head, by means of two connecting-rods, rotating the wheels. Another
claim under this patent related to driving a locomotive by eccentrics fitted with
antifriction rollers as a substitute for the ordinary cranks.
Although in the “Evolution of the Steam Locomotive” it is only intended to describe
locomotives for British railways, it may not be out of place to mention an engine for a
foreign railway, for two reasons—first, because it was built by an English firm in
England, and, secondly, because it was tried on an English railway before exportation.
The “Ysabel” was constructed in 1853 by Dodds and Sons, of Rotherham, for the
“Railway of Isabella II. from Santander to Abar del Rey,” and was tried on the Lickey
incline of 1 in 37 for two miles, under the direction of Mr. Stalvies, the locomotive
superintendent at Broomsgrove. The “Ysabel” had four-coupled wheels 4ft. 6in.
diameter; cylinders, 14¼in. by 20in. stroke; 137 tubes, 1⅞in. diameter, and 11ft. 3in. in
length, and was fitted with Dodds’ patent wedge expansive motion, which required
only two eccentrics. For the purpose of easy transportation, the “Ysabel” was so
constructed that when disconnected no single portion weighed more than six tons; in
addition to the fittings necessary to secure the boiler, the only connections between it
and the frames, machinery, etc., were the steam-pipe and the two feed-pump
connections. When tried upon the Lickey bank this locomotive hauled six trucks
weighing 45 tons 12¾ cwt. up the two miles one furlong in 12 minutes 12 seconds,
and with a train weighing 29 tons 4¼ cwt. the incline was negotiated in seven minutes
five seconds.
The compound locomotive is not quite so modern an invention as is popularly
supposed, for, putting aside the suggestion emanating in 1850 from John Nicholson,
an Eastern Counties Railway engine-driver, whose plan of continuous expansion is
generally accepted as the foundation of the compound system, we find that in 1853 a
Mr. Edwards, of Birmingham, patented a “duplex” or in other words a compound
engine, the steam, after working in a high-pressure cylinder, being used over again in
a low-pressure one. The cylinders were so placed that the dead centre in one
occurred when the other piston was at its maximum power.
In 1853 Beattie constructed for the London and South Western Railway at Nine
Elms Works, the “Duke,” No. 123, a six-wheel “single” express engine; driving wheels,
6ft. 6in. diameter; L. and T. 3ft. 6in. diameter; cylinders, 16in. by 21in. stroke. The
weight was arranged in an extraordinary manner, 10 tons 9 cwt. being on the leading
axle, only 9 tons 9 cwt. on the driving axle, and 5 tons 11 cwt. on the trailing axle. The
wheel base was, L. to D., 6ft. 8½in.; D. to T., 7ft. 6in. The “Duke” had a raised fire-box,
surmounted by a large dome similar to that of the “Hercules,” whilst another dome was
located on the centre of the boiler barrel. The shape of this centre dome resembled a
soup-tureen turned upside down.
At this point we take the opportunity to briefly describe a railway locomotive which,
although not propelled by steam, deserves to be mentioned as an initial attempt at
railway haulage by means of compressed air.
The engine in question was constructed by Arthur Pasey, and was tried on the
Eastern Counties Railway in July, 1852. This machine was, in point of size and power,
nothing more than a model, the dimensions being: Cylinders, 2½in. diameter, 9in.
stroke; driving wheels, 4ft. diameter; weight, 1½ tons; air capacity of reservoirs, 39
cubic ft.
Fig. 65.—PASEY’S COMPRESSED AIR LOCOMOTIVE, TRIED ON

THE EASTERN COUNTIES RAILWAY IN 1852
By reference to the illustration (Fig. 65) it will be seen that this curious little
locomotive had the six wheels of 4ft. diameter within the frames, and the horizontal
cylinders outside the frames, and actuating the centre pair of wheels. Above the
frames was placed a cylindrical air reservoir, with egg shaped ends. This extended
from the buffer beam at one end of the vehicle to the leading axle, a distance of about
12ft. The remainder of the space, about 4ft., was occupied by the pressure-reducing
and other apparatus, and afforded a place of vantage for those in charge of the
machine. The reservoir was constructed to withstand a pressure of 200lb., but the
engine was only pressed to 165lb., and this at the time of the trial at Stratford was

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Solution Manual for Strategic

Management: Concepts and Cases:

Solution Manual for Strategic Management: Concepts and

Test Bank for Strategic Management: Concepts and Cases:

Test Bank for Strategic Management: Concepts and Cases:

Test Bank for Strategic Management: Concepts and Cases:

Test Bank for The Management of Strategy: Concepts,

Strategic Management Concepts and Cases Competitiveness

Test Bank for Strategic Management: Competitiveness and

Strategic Management Concepts and Cases Competitiveness

The strategic management process is influenced by the competitive landscape, or the

Define strategic competitiveness, strategy, competitive advantage,

In addition to describing the impact of globalization and technological change on the

Describe the competitive landscape and explain how

1-1 THE COMPETITIVE LANDSCAPE

The contemporary competitive landscape thus implies that traditional sources of

A term often used to describe the new realities of competition is hypercompetition, a

advantage, and battles to protect or to invade established product or geographic markets

1-1a The Global Economy

The emergence of this global economy results in a number of challenges and

Today, China is seen as an extremely competitive market in which local market-seeking

The March of Globalization

Global competition has increased performance standards in many dimensions, including

• The “liability of foreignness” (i.e., the risk of competing internationally)

• Global competition will continue to pressure companies to shorten product-

1-1b Technology and Technological Changes

• Increasing rate of technological change and diffusion

Technologic Diffusion and Disruptive Technologies

The Information Age

• There have been dramatic changes in information technology in recent years.

Increasing Knowledge Intensity

Use the industrial organization (I/O) model to explain how firms

1-2 THE I/O MODEL OF ABOVE-AVERAGE RETURNS

The I/O model is based on the following four assumptions:

1. Study the external environment—general, industry, and competitive—to determine the

• 20% of firm profitability can be explained by industry characteristics.

Use the resource-based model to explain how firms can earn

1-3 THE RESOURCE-BASED MODEL OF ABOVE-AVERAGE

The resource-based model of above-average returns is grounded in the uniqueness of a

• Resources are valuable when they support taking advantage of opportunities or

5 Describe vision and mission and discuss their value.

1-4 VISION AND MISSION

• Reflect a firm’s values and aspirations

• Our vision is to be the world’s best quick-service restaurant. (McDonald’s)

6 Define stakeholders and describe their ability to influence organizations.

1-5a Classification of Stakeholders

• Capital market stakeholders

Stakeholder Groups, Membership, and Primary Expectation or Demand

7 Describe the work of strategic leaders.

1-6 STRATEGIC LEADERS

1-6a The Work of Effective Strategic Leaders

8 Explain the strategic management process.

1-7 THE STRATEGIC MANAGEMENT PROCESS

• Deciding on business-level strategy, or how to compete in a given business (Chapter 4)

• Methods for governing to ensure satisfaction of stakeholder demands and attainment of

ANSWERS TO REVIEW QUESTIONS

1. What are strategic competitiveness, strategy, competitive advantage, above-average

Strategic competitiveness is achieved when a firm successfully formulates and

A competitive advantage is achieved when a firm’s current and potential competitors