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4 PART 1 • OVERVIEW OF STRATEGIC MANAGEMENT

When CEOs from the big three American automakers, Ford, General Motors (GM), and
Chrysler, showed up without a clear strategic plan to ask congressional leaders for bailout
monies, they were sent home with instructions to develop a clear strategic plan for the
future. Austan Goolsbee, one of President Obama’s top economic advisers, said, “Asking
for a bailout without a convincing business plan was crazy.” Goolsbee also said, “If the
three auto CEOs need a bridge, it’s got to be a bridge to somewhere, not a bridge to
1
nowhere.” This textbook gives the instructions on how to develop a clear strategic plan—
a bridge to somewhere rather than nowhere.
This chapter provides an overview of strategic management. It introduces a practical,
integrative model of the strategic-management process; it defines basic activities and terms
in strategic management.
This chapter also introduces the notion of boxed inserts. A boxed insert is provided in
each chapter to examine how some firms are doing really well competing in a global eco-
nomic recession. Some firms are strategically capitalizing on the harsh business climate
and prospering as their rivals weaken. These firms are showcased in this edition to reveal
how those companies achieved prosperity. Each boxed insert examines the strategies of
firms doing great amid the worst recession in almost 30 years, the biggest stock market
decline since 1937, high unemployment, record high and then record low oil prices, low
consumer confidence, low interest rates, bankruptcies, liquidations, unavailability of
credit, falling consumer demand for almost everything, and intense price competition as

Doing Great in a Weak Economy

MCDonald’s Corporation

hen most firms were struggling in 2008,
WMcDonald’s increased its revenues from $22.7
billion in 2007 to $23.5 billion in 2008. Headquartered
in Oak Brook, Illinois McDonald’s net income nearly
doubled during that time from $2.4 billion to
$4.3 billion—quite impressive. Fortune magazine in
2009 rated McDonald’s as their 16th “Most Admired
Company in the World” in terms of their management
and performance.
McDonald’s added 650 new outlets in 2009
when many restaurants struggled to keep their doors
open. McDonald’s low prices and expanded menu
items have attracted millions of new customers
away from sit-down chains and independent eateries.
Jim Skinner, CEO of McDonald’s, says, “We do so well every day in 2009, 2 million more than in 2008. Nearly
because our strategies have been so well planned 80 percent of McDonald’s are run by franchisees
out.” McDonald’s served about 60 million customers (or affiliates).