This book will help managers overcome the exit barriers that hamper strategic flexibility. Based on innovative studies of 192 firms within Sixteen industries, the ideas presented here are applicable to almost any industry and any type of firm. Harrigan discusses the major strategic decisions facing executives today, including guerrilla strategies of underdog competitors, entry and exit barriers, the use of joint ventures to cope with the uncertainties created by erratic growth, and the management of change. She focuses on the shortcomings of vertical integration, developing a framework for better make-or-buy decisions. The effects of exit barriers on firms' strategic flexibility are detailed, and managerial tools to cope with high barriers and declining businesses are introduced.

Strategic Flexibility is organized to provide easy reference for managers seeking to find out what strategies have worked and why. This book offers practical, proven ways for managers to expand the flexibility and responsiveness of their companies to new competitive conditions.

Kathryn Harrigan...is an expert in declining industries.

Ernst & Whinney

Kathy Harrigan's thinking and presentation are real breakthroughs. So much of planning today is old wine in new bottles. I found the models she presents to be order of magnitude leaps in breaking down complex concepts into manageable, analyzable parts. Her presentations on the changing locus of competition and strategies for vertical integration...could clearly give companies in either embryonic or mature industries a real competitive edge.

Senior Vice President Human Resources and Planning Bethlehem Steel Corporation

Professor Harrigan has made a valuable contribution to increased understanding of how business firms can sharpen their strategic responses to competitive conditions. She has combined a scholar's rigorous approach to building useful conceptual models with practical advice for today's business managers. Thoughtful readers will want to test their understanding of complex issues with the data and findings contained in the book.

Professor Harrigan received the General Electric Award for Outstanding Research in Strategic Management, presented by the Business Policy and Planning Division of the National Academy of Management, for her research on declining businesses, and their Best Paper Award in 1983 for her research on vertical integration (or make-or-buy decisions). She also won an IBM Research Fellowship in Business Administration and a Division of Research Fellowship at Harvard Business School.

Professor Harrigan has started and sold four businesses. Her consulting experience includes work on competitive strategy and strategic management for both private and public organizations. She has acted as consultant to strategic consulting firms, as well. She is a founding member of the Strategic Management Society and appears each autumn on their international programs.

Professor Harrigan writes for and serves on the boards of editors of the Academy of Management Journal, the Strategic Management Journal, and the Journal of Business Strategy. She is an ad hoc reviewer for and frequent contributor to the Academy of Management Review. Her articles have also appeared in the Harvard Business Review, Long Range Planning, Boardroom Reports, Executive Woman, and the Proceedings of the National and Regional Meetings of the Academy of Management.

Figures

Tables

Acknowledgments

Foreword

Donald C. Hambrick

Part I Strategic Flexibility

What Is Strategic Flexibility?

A Comment on Scholarly Research in Strategic Management

1. Barriers to Entry Determine Competitive Strategies

Entry Barriers Defined

Mature Industries

Entry Barriers in Mature Industries

Enticements to Enter

Results of Tests of Entry-Barrier Heights

Interpreting Results

Appendix 1A: Entry Barriers Determine Competitive Strategies

2. Strategic Commitment

The Strategic Groups-Mobility Barriers Paradigm

Guerrilla Warfare and Underdog Competitors

Illustrations of the Framework

Empirical Tests for Strategic Groups

3. The Changing Locus of Competition

The International Product Cycle and the Diffusion of Innovation

Changes in the Logic of International Competition

Corporate Strategy and Organization Structure

Part II Intrafirm Business-Unit Relationships

4. Strategies for Vertical Integration

The Phenomenon of Vertical Integration

Definitions

A New Look at Vertical Integration

The Dimensions of Vertical Strategy

Vertical-Integration Strategy Alternatives

Forces Affecting the Choice of Vertical-Integration Strategies

Using Vertical Integration as a Strategic Weapon

5. Tests of the Vertical-Integration Framework

A New Concept of Vertical Integration

Tests of the Vertical-Integration Framework

Methodology

Models

Results

Interpreting the Results

Part III Strategic Exit (or Repositioning)

6. Strategies for Declining Businesses

Decline as a Strategy Problem

Factors behind Firms' Strategy Choices

Comparing Expected with Actual

Interpreting Results

Implications for Management

Conclusions

7. Measures of Strategic-Inflexibility Exit Barriers

Entry Barriers Become Exit Barriers

Estimates of Exit-Barrier Heights

Results

Interpreting Results

Theoretical Extension: Vertical Integration as an Exit Barrier

8. Managing Declining Businesses

Divestiture Is Clean, Repositioning Untidy

Industry Exit Barriers

Organizational Exit Barriers

Choosing a Manager

Heroics and Endgame

How to Communicate the Endgame Mission

Danger Signals in Planning Divestiture

Potential Buyers

Appendix

References

Index

About the Author