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 High Strategic Stakes    36
High Exit Barriers    36
Threat of Entry    37
Economies of Scale    38
Brand Identity and Product Differentiation     38
Capital Requirements    39
Switching Costs    39
Access to Distribution Channels     39
Cost Advantages Independent of Size     39
Government Policy    39
Pressure From Substitute Products    40
Bargaining Power of Buyers    40
Bargaining Power of Suppliers    41
Limitations of Porter’s Five Forces Model     42
Summary    43
Key Terms    43
Review Questions and Exercises    44
Practice Quiz    44
True or False?    44
Multiple Choice    45
Student Study Site    45
Notes    46
Strategy + Business Reading: Focus and Scale on the Internet     47

3. The External Environment: Political-Legal

and Economic Forces 53
Analysis of the External Environment     53
Political-Legal Forces    54
Global Considerations    60
Economic Forces    63
Gross Domestic Product    64
Inflation Rates    66
Interest Rates    66
Exchange Rates    66
Ecological Influences    67
Summary    69
Key Terms    69
Review Questions and Exercises    69
Practice Quiz    69
True or False?    69
Multiple Choice    70
Student Study Site    70
Notes    71
Strategy + Business Reading: Competing for the Global Middle Class     73

4. The External Environment: Social and Technological Forces 79

Social Forces    79
Case #1: Eating Habits    83
 Case #2: Automobiles    86
Global Concerns    88
Technological Forces    90
The Internet    92
Strategic Dimensions of the Internet     96
Movement Toward Information Symmetry     96
Internet as Distribution Channel     97
Speed    97
Interactivity    97
Potential for Cost Reductions and Cost Shifting     97
Forms of Electronic Commerce    98
Business-to-Business     98
Business-to-Consumer     98
Business-to-Government     99
Consumer-to-Consumer     99
Consumer-to-Business     99
Commoditization and Mass Customization    99
Environmental Scanning    100
Summary    102
Key Terms    102
Review Questions and Exercises    103
Practice Quiz    103
True or False?    103
Multiple Choice    103
Student Study Site    104
Notes    104
Strategy + Business Reading: The Rise of Generation C     108

5. The Organization: Ethics and Corporate

Social Responsibility 117
Organizational Direction: Mission, Goals, and Objectives     118
Goals and Stakeholders    118
The Agency Problem    120
Management Serves Its Own Interests     120
Management and Stockholders Share the Same Interests     122
Managerial Ethics    123
Perspectives on Ethics    126
Social Responsibility    129
Corporate Social Responsibility in Practical Terms     132
Sustainable Strategic Management    135
Takeovers    135
Outsourcing and Offshoring    136
Linking Managerial Ethics and Corporate Social Responsibility     139
Summary    140
Key Terms    140
Review Questions and Exercises    141
Practice Quiz    141
 True or False?    141
Multiple Choice    142
Student Study Site    143
Notes    143
Strategy + Business Reading: Values vs. Value     146

6. Corporate-Level Strategies 151

The Corporate Profile    151
Strategic Alternatives at the Corporate Level     153
Growth Strategies    153
Horizontal (Related) Integration    156
Horizontal (Related) Diversification    156
Conglomerate (Unrelated) Diversification    157
Vertical Integration    157
Strategic Alliances (Partnerships)    157
Stability Strategy    159
Retrenchment Strategies    161
Turnaround    161
Divestment    163
Liquidation    163
Boston Consulting Group Growth-Share Matrix     163
Global Corporate Strategy    166
Wal-Mart Abroad    168
Global Orientation Assessment    169
Summary    170
Key Terms    170
Review Questions and Exercises    172
Practice Quiz    172
True or False?    172
Multiple Choice    172
Student Study Site    173
Notes    173
Strategy + Business Reading: The Unique Advantage     176

7. Business Unit Strategies 183

Porter’s Generic Strategies    184
Low-Cost (Cost Leadership) Strategy (Without Focus)     185
Focus–Low-Cost Strategy    187
Differentiation Strategy (Without Focus)     188
Focus-Differentiation Strategy    190
Low-Cost–Differentiation Strategy     191
Focus–Low-Cost–Differentiation Strategy    195
Multiple Strategies    195
The Miles and Snow Strategy Framework     196
Business Size, Strategy, and Performance     197
Assessing Strategies    198
Global Concerns    199
Summary    202
 Key Terms    203
Review Questions and Exercises    204
Practice Quiz    204
True or False?    204
Multiple Choice    204
Student Study Site    205
Notes    205
Strategy + Business Reading: Growth Through Focus:
A Blueprint for Driving Profitable Expansion     208

8. Functional Strategies 219

Marketing    221
Pricing Strategies    221
Promotion Strategies    222
Product/Service Strategies    222
Place (Distribution) Strategies    224
Finance    225
Production    227
Quality Considerations    228
Research and Development    229
Purchasing    230
Human Resources    231
Human Capital and Knowledge Management     233
Knowledge and Competitive Advantage     234
Information Systems Management    234
Functional Strategies and Industry Life Cycle     235
Summary    236
Key Terms    236
Review Questions and Exercises    237
Practice Quiz    237
True or False?    237
Multiple Choice    238
Student Study Site    238
Notes    239
Strategy + Business Reading: The Power of the
Post-Recession Consumer     241

9. Strategy Formulation 247

Strengths and Weaknesses    247
Human Resources    248
Board of Directors    249
Top Management    249
Middle Management, Supervisors, and Employees     250
Organizational Resources    250
Physical Resources    251
Opportunities and Threats    254
SW/OT Matrix    255
 Issues in Strategy Formulation    260
Evaluating Strategic Change      260
Strategy, Corporate Social Responsibility, and Managerial Ethics     262
Effects on Organizational Resources     262
Anticipated Responses From Competitors and Customers     262
Summary    263
Key Terms    263
Review Questions and Exercises    264
Practice Quiz    264
True or False?    264
Multiple Choice    265
Student Study Site    266
Notes    266
Strategy + Business Reading: 10 Clues to Opportunity     267

10. Strategy Execution: Structure 271

Organizational Structure    271
Vertical Growth    273
Horizontal Growth    274
Structural Forms    275
Functional Structure    275
Product Divisional Structure    276
Geographic Divisional Structure    277
Matrix Structure    278
Assessing Organizational Structure    279
Corporate Involvement in Business Unit Operations     281
Corporate Restructuring    282
Summary    282
Key Terms    283
Review Questions and Exercises    283
Practice Quiz    284
True or False?    284
Multiple Choice    284
Student Study Site    285
Notes    285
Strategy + Business Reading:
Design for Frugal Growth     286

11. Strategy Execution: Strategic Change,

Culture, and Leadership 293
Organizational Culture and Strategy    295
Cultural Strength and Diversity     297
Shaping the Culture    298
Global Concerns    298
Strategic Leadership    299
Leadership Style    300
Executing Strategic Change    303
 Recognize the Need for Change     304
Create a Shared Vision     304
Institutionalize the Change    304
Summary    306
Key Terms    306
Review Questions and Exercises    307
Practice Quiz    307
True or False?    307
Multiple Choice    307
Student Study Site    308
Notes    308
Strategy + Business Reading: CEO Succession 2010:
The Four Types of CEOs     311

12. Strategic Control and Crisis Management 327

Step 1: The Focus of Strategic Control     328
Step 2: Strategic Control Standards (Benchmarks)     329
Published Information for Strategic Control     330
Product/Service Quality    330
Innovation    331
Market Share and Relative Market Share     331
Steps 3 Through 5: Exerting Strategic Control     332
Control Through the Formal and Informal Organizations     333
Crisis Management    334
Prominent Crises in Recent History     336
Crisis Planning    339
Trends in Strategic Management    341
Summary    342
Key Terms    342
Review Questions and Exercises    342
Practice Quiz    343
True or False?    343
Multiple Choice    343
Student Study Site    344
Notes    344
Strategy + Business Reading: How to Prevent Self-Inflicted Disasters     347
Appendix    353
Case Analysis    354
Real-Time Cases    361
Case 1: Allstate     361
Case 2: Amazon.com    362
Case 3: American Express    363
Case 4: Anheuser-Busch InBev    364
Case 5: AutoZone    366
Case 6: Avon    366
Case 7: Bank of America     368
 Case 8: Bed Bath & Beyond     369
Case 9: Stanley Black & Decker     370
Case 10: Cici’s Pizza    371
Case 11: Costco    372
Case 12: Dell    373
Case 13: Delta Air Lines     374
Case 14: Dollar Tree    375
Case 15: FedEx    376
Case 16: Ford    377
Case 17: Home Depot    378
Case 18: International Paper    379
Case 19: Jack in the Box     380
Case 20: Kroger    382
Case 21: Lands’ End    382
Case 22: Mattel    384
Case 23: Nike    385
Case 24: Papa John’s    386
Case 25: Pfizer    387
Case 26: Southwest Airlines    388
Case 27: Starbucks    389
Case 28: Walgreens    391
Case 29: Wal-Mart    392
Case 30: Yum! Brands    393

Traditional Cases     395

Case 1: Bob’s Supermarket: Competing With the Big Boys     395
Case 2: Costco: Maximum Employee Benefits or Maximum Shareholder
Return?    407
Case 3: Dollar General—Today’s Neighborhood Store     422
Case 4: Family Dollar Stores     448
Case 5: General Electric: Ecomagination as a CSR Initiative     476
Case 6: Kapai, New Zealand: Eat Your Greens!     484
Case 7: Kodak’s Challenge: Surviving the Disruptive “Winds of Change”     499
Case 8: Macy’s, Inc. 2010: Could Macy’s Bring Back the Magic?     518
Case 9: Netflix: Entering, Engaging, and Embracing Innovation in the Movie Rental
Industry    539
Case 10: Skoda Auto—2011    552
Case 11: Staples—Pantaloon Retail Limited Tie-Up: Going for Growth in India’s Modern
Retail Market    563
Case 12: Hitting the Brakes: Toyota in Crisis     593

Glossary    611
Index    621
Preface
Description of Text_____________________________
The challenge to lead an organization has never been more demanding. The impact of the
global financial crisis of 2008 has lingered well into the 2010s. Ethical crises have plagued a
number of well-known companies during this time as well. As a result, the stature of business
organizations—particularly large, corporate entities—has declined with consumers demanding
greater trust and responsiveness. Firms are expected to both generate satisfactory profits and
pursue elusive social objectives in an environment marked by increasing government regula-
tion. Managing organizations is complex, challenging, and fraught with uncertainty.
Executives and managers at all levels must think strategically and leverage firms resources so
effectively. This text draws from all functional areas of business and presents a cohesive strategic
management model from a top-level strategic perspective. It is most useful for students with back-
grounds in related fields such as management, marketing, finance, accounting, and economics.
Unlike many other books on strategic management, the text is organized sequentially
around the strategic management process. Readers begin with an assessment of the external
environment, including industry, political-legal, economic, social, and technological influences
on the organization. Within this context, they shift to internal considerations and evaluate the
appropriateness of such factors as the mission, ethics, and social responsibility. Armed with a
solid understanding of external and internal factors, they consider the content of various strate-
gies at the corporate, business, and functional levels and proceed to formulate the strategy for
the organization. Formal and informal influences on strategy execution are evaluated. The text
closes with strategic control and a discussion on crisis management, a topic of keen interest in
today’s fast-paced business world. The chapters are outlined as follows:

•• Foundation (Chapter 1)
•• External Environment (Chapters 2–4)
•• Internal Environment (Chapter 5)
•• Fundamentals of Strategy (Chapters 6–8)
•• Strategy Formulation (Chapter 9)
•• Strategy Execution (Chapter 10–11)
•• Strategic Control and Crisis Management (Chapter 12)
•• Case Studies

Global issues are addressed in the various chapters, not as a separate concern. These
include the nature of global competition and strategic issues like outsourcing and offshor-
ing. The influence of emerging markets such as the BRIC (Brazil, Russia, India, and China)
nations is addressed throughout the book. Global icons in the margins alert the reader to these
discussions.

xv
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xvi STRATEGIC MANAGEMENT

Numerous examples—many from the Wall Street Journal—are integrated in the chapters as
well. This process orientation is augmented with a strong chapter on ethics and social responsi-
bility before strategy content is addressed.

Key Features_________________________________
This book is also distinguished from its peers in that the strategic analysis of a firm (i.e., a case
analysis) is viewed as inseparable from the concepts presented in the chapters. As such, the
25 key questions that should be answered as part of a strategic analysis are presented in Case
Analysis boxes throughout the text alongside the relevant theory.
Strategy at Work boxes provide examples of concepts introduced in the text. They focus on
one or several firms and provide sufficient details to promote class discussion as well.
Strategy + Business Readings are included at the end of each chapter. These provide
advanced and detailed discussions of select topics in the chapters.
End of chapter features such as Key Terms, Review Questions and Exercises, Practice Quiz,
and Student Study Site provide students with the opportunity to apply concepts they have read
about in the chapter. These sections are especially helpful as students prepare for lectures and
exams.
Real-Time Cases are brief narratives of well-known firms. They can be used as a start-
ing point for team case projects—as updated information is readily available on the Internet.
Alternatively, they can be used as the basis for class discussion, particularly as it relates to ana-
lyzing cases.
Traditional Cases are full-length cases that feature small, private, and international enter-
prises. Although additional research is optional, these cases are self-contained. They can be
used for term projects or daily discussions, giving instructors a broader range of assignment
options.
The text is also very readable. It provides a comprehensive presentation of current
strategic management thinking in a clear and succinct format. This approach enables the
professor to cover the entire book in a typical capstone business course while retaining
valuable course time for case projects, simulations, discussion of real-time strategic issues,
and other activities.

What’s New in This Edition______________________

The fourth edition uses the same strategic management model presented in the previous edi-
tion though minor enhancements have been made. The integration of new concepts and the
enhancement of existing ones can be seen throughout the chapters, including a large number of
global strategy references and a chapter devoted entirely to ethics and social responsibility.
Specifically, key changes to the fourth edition include the following:

•• Coverage of ethics and social responsibility has been expanded and integrated with
other topics related to organizational direction in Chapter 5.
•• Coverage of the external environment has been expanded into two chapters. Chapter 3
explores political, legal, and economic forces while Chapter 4 discusses social and tech-
nological forces.
 Preface xvii

•• A large number of recent examples have been added. Many of these address the effects
of social, technological, and other external forces on firm performance. Others highlight
the success and failure of specific firms.
•• A new section on emerging trends in Chapter 12 integrates key topics in the text along
the themes of global competitiveness, the Internet, sustainability, strategic complexity,
and crisis management.
•• This edition features 11 new Traditional Cases. Real-Time Cases have been updated as well.
•• References have been completely updated, and a large number of new global references
have been added to this edition.

Ancillaries____________________________________
The password-protected Instructor Teaching Site at www.sagepub.com/parnell4e gives
instructors access to a full complement of resources to support and enhance their course. The
following assets are available on the site:

•• Test bank: This Word test bank offers a diverse set of test questions and answers for each
chapter of the book. Multiple-choice, true or false, short-answer, and essay questions for
every chapter help instructors assess students’ progress and understanding.
•• PowerPoint slides: Chapter-specific slide presentations offer assistance with lecture and
review preparation by highlighting essential content, features, and artwork from the book.
•• Sample syllabi: Two sample syllabi—for a semester and a quarter-length class—are pro-
vided to help professors structure their courses.
•• Discussion questions: Chapter-specific questions help launch discussion by prompting
students to engage with the material and by reinforcing important content.
•• SAGE journal articles: Links to full-text SAGE journal articles provide opportunity for fur-
ther study in key subject areas.
•• Web resources: These links to relevant websites direct both instructors and students to
additional resources for further research on important chapter topics.

The open-access Student Study Site—available at www.sagepub.com/parnell4e—is

designed to maximize student comprehension of the material and to promote critical thinking
and application. The following resources and study tools are available on the student portion of
the book’s website:

•• Answers to end-of-chapter quizzes: Full answers to each chapter quiz are provided on
the Student Study Site.
•• SAGE journal articles: Links to full-text SAGE journal articles provide opportunity for fur-
ther study in key subject areas.
•• Web resources: These links to relevant websites direct both instructors and students to
additional resources for further research on important chapter topics.
•• E-flashcards: These study tools reinforce students’ understanding of key terms and con-
cepts that have been outlined in the chapters.
•• Web quizzes: Flexible self-quizzes allow students to independently assess their progress
in learning course material.
xviii STRATEGIC MANAGEMENT

Acknowledgments_____________________________
SAGE and the author gratefully acknowledge the contributions of the following reviewers:
Kristin Backhaus, State University of New York at New Paltz; Thomas M. Box, Pittsburg State
University; Jacalyn M. Flom, The University of Toledo; John M. Guarino, Averett University;
Keith Harman, Oklahoma Baptist University; Maureen S. Heaphy, Ferris State University;
Mazhar Islam, Drexel University; Sonya B. Merrill, Towson University; David Olson, California
State University Bakersfield; Vasu Ramanujam, Case Western Reserve University; E. Kevin
Renshler, Florida Southern College; Peter Schneider, College of Saint Elizabeth; Jeffrey Slattery,
Regent University; David L. Sturges, The University of Texas-Pan American; James L. Whitney,
Champlain College; and Gregory F. Zerovnik, Touro University Worldwide.
 chapter 12    Strategic Control and Crisis Management xix

About the Author

Dr. John A. Parnell currently serves as the William Henry Belk Distinguished
Professor of Management at the University of North Carolina at Pembroke. He com-
pleted the BSBA, MBA, and MA Ed degree from East Carolina University, the EdD
degree from Campbell University, and the PhD degree from the University of Memphis.
His academic career includes a number of institutions, including service as professor
and head of the Department of Marketing & Management at Texas A&M University-
Commerce. He received the H. M. Lafferty Distinguished Faculty Award at Texas A&M-
Commerce in 2002, the Adolph Dial Award for Scholarly & Creative Activity at
UNC-Pembroke in 2005, and the Pope Center Spirit of Inquiry Award in 2011.
Dr. Parnell is a recognized authority in the field, having published more than 200 articles,
cases, proceedings, books, and book chapters in strategic management and related fields.
Recent work appears in leading journals such as Academy of Management Learning and
Education, Management Decision, and the British Journal of Management. He serves on a
number of academic journal editorial boards and consults with select firms in the area of stra-
tegic planning. He has also appeared frequently as a guest discussing issues related to business
and competitiveness on Sirius XM’s The Wilkow Majority.
Dr. Parnell has lectured at a number of institutions abroad, including Instituto Tecnologico
Y De Estudios Superiores De Monterrey-Campus Estado de Mexico (ITESM-CEM), Chung Yuan
Christian University in Taiwan, and China University of Geosciences in Beijing. He also served
as a Fulbright Scholar in Cairo, Egypt, in 1995.

xix
xx STRATEGIC MANAGEMENT

Chapter Outline

What Is Strategic Management?

Intended and Realized Strategies
Scientific and Artistic Perspectives on Strategic Management
Influence on Strategic Management
Corporate Governance and Boards of Directors
Strategic Decisions
The Global Imperative
Summary
Key Terms
Review Questions and Exercises
Practice Quiz
Student Study Site
Notes

xx xx
 chapter 1    Fundamentals of Strategic Management 1

chapter 1
Fundamentals of
Strategic Management

W hat do Circuit City, Washington Mutual, Saab, Blockbuster, and Borders have in
common? All of these recognized companies filed for bankruptcy during the past
several years. While the situation surrounding each firm is different, all of them failed to
meet various strategic challenges. Put another way, organizations typically do not succeed
or fail randomly. Some plan, prepare, and execute more effectively than others.
Today’s business world is global, Internet-driven, and obsessed with speed. The challenges
it creates for strategic managers are often complex, ambiguous, and unstructured. Add to this
the incessant allegations of top management wrongdoings, economic stagnation, and increas-
ing executive compensation, and it is easy to see why firm leaders are under great pressure to
respond to strategic problems quickly, decisively, and responsibly. Indeed, the need for effec-
tive strategic management has never been more pronounced. This text presents a framework
for addressing today’s strategic challenges.
This chapter introduces the notion of strategic management, highlights its importance, and
presents a five-step process for strategically analyzing an organization. The remaining chapters
expand on the various steps in the process with special emphasis on their application to ongo-
ing enterprises.

What Is Strategic Management?_________________

Organizations exist for a purpose. The mission is articulated in a broadly defined but enduring
statement of purpose that identifies the scope of an organization’s operations and its offerings to
affected groups and entities. Most organizations of a significant size or stature have developed a
formal mission statement, a concept discussed further in Chapter 5.
Strategy refers to top management’s plans to develop and sustain competitive
advantage—a state whereby a firm’s successful strategies cannot be easily duplicated by its

1 1
2 STRATEGIC MANAGEMENT

competitors1—so that the organization’s mission is fulfilled. 2 Following this definition, it

is assumed that an organization has a plan, its competitive advantage is understood, and its
members understand the reason for its existence. These assumptions may appear self-evident,
but many strategic problems can be traced to fundamental misunderstandings associated with
defining the strategy. Debates over the nature of the organization’s competitive advantage, its
mission, and whether or not a strategic plan is really needed can be widespread.3 As such, com-
ments such as “We’re too busy to focus on developing a strategy” or “I’m not exactly sure what
my company is really trying to accomplish” can be overheard in many organizations.
Strategic management is a broader term than strategy and is a process that includes top
management’s analysis of the environment in which the organization operates prior to formulat-
ing a strategy, as well as the plan for implementation and control of the strategy. The difference
between a strategy and the strategic management process is that the latter includes considering
what must be done before a strategy is formulated through assessing whether or not the success
of an implemented strategy was successful. The strategic management process can be sum-
marized in five steps, each of which is discussed in greater detail in subsequent chapters of the
book (see Figure 1.1):4
1. External Analysis: Analyze the opportunities and threats, or constraints, that exist
in the organization’s external environment, including industry and forces in the
external environment.
2. Internal Analysis: Analyze the organization’s strengths and weaknesses in its
internal environment. Consider the context of managerial ethics and corporate
social responsibility.
3. Strategy Formulation: Formulate strategies that build and sustain competitive
advantage by matching the organization’s strengths and weaknesses with the
environment’s opportunities and threats.
4. Strategy Execution: Implement the strategies that have been developed.
5. Strategic Control: Measure success and make corrections when the strategies are
not producing the desired outcomes.

The sequential order of the steps is logical. A thorough understanding of the organization
and its environment is essential if the appropriate strategy is to be developed, put into action,
and controlled. One could transpose the first two steps and analyze the internal environment
before the external environment—the logic being that comprehending the organization informs
the strategic assessment of factors outside of the firm. The external environment is analyzed
before the internal environment in Figure 1.1, however, because internal goals, resources, and
competencies are viewed in a relative fashion to some extent and are understood within the
context of the industry and the factors that drive it. This dilemma resembles the chicken and egg
argument; in a practical sense, external and internal analysis often occurs simultaneously.
A distinction between outside and inside perspectives on strategy is also relevant. Outsiders
analyzing a firm should apply a systematic approach that progresses through these steps in
order. Doing so develops a holistic understanding of the firm, its industry, and its strategic
challenges.
Inside organizations, strategies are being formulated, implemented, and controlled simulta-
neously while external and internal factors are continually reassessed. In addition, changes in
one stage of the strategic management process will inevitably affect other stages as well. After
a planned strategy is implemented, it often requires modification as conditions change. Hence,
because these steps are so tightly intertwined, insiders tend to treat all of the steps as a single
integrated, ongoing process.5
 chapter 1    Fundamentals of Strategic Management 3

Foundation
Chapter 1: Fundamentals of Strategic Management

Step 1: External Analysis

Chapter 2: Industry Competition
Chapter 3: The External Environment: Political-Legal and Economic Forces
Chapter 4: The External Environment: Social and Technological Forces

Step 2: Internal Analysis

Chapter 5: The Organization: Ethics and Corporate Social Responsibility

Step 3: Strategy Formulation

Chapter 6: Corporate-Level Strategies (also called Firm Strategies)
Chapter 7: Business Unit Strategies (also called Competitive Strategies)
Chapter 8: Functional Strategies (also called Tactics)
Chapter 9: Strategy Formulation

Step 4: Strategy Implementation

Chapter 10: Strategy Execution: Structure
Chapter 11: Strategy Execution: Strategic Change, Culture, and Leadership

Step 5: Strategic Control

Chapter 12: Strategic Control and Crisis Management

Figure 1.1  Organization of the Book.

Consider the strategic management process at a fast-food restaurant chain. At any given
time, top managers are likely assessing changes in consumer taste preferences and food prep-
aration, analyzing the activities of competitors, working to overcome firm weaknesses, con-
trolling remnants of a strategy implemented several years ago, implementing a strategy crafted
months earlier, and formulating strategic plans for the future. Although each of these activities
can be linked to a distinct stage in the strategic management process, they occur simultaneously.
An effective strategy is built on the foundation of the organization’s business model, the mech-
anism whereby the organization seeks to earn a profit by selling its goods or services. While all firms
seek to produce a product or service and sell it at a price higher than its production and overhead
costs, a business model is stated in greater detail. For example, a magazine publisher might adopt a
subscription model, an advertising model, or perhaps some combination of the two. Profits would
be generated primarily from readers under the subscription model but from advertisers under the
advertising model. As we can see, identifying a firm’s business model can become more complex
when intricate details are considered. Progressive firms often devise innovative business models
that extract revenue—and ultimately profits—from sources not identified by competitors.
4 STRATEGIC MANAGEMENT

Consider the razor and blades business model invented by Gillette. A company gives away
or deeply discounts a product—the razor—while planning to profit from future sales of required
replacement or complementary products—the blades. Cell phones are often given to customers
willing to sign a 2-year service contract. Computer printers are typically sold below production
cost, but customers must periodically replace the ink cartridges, which are high-margin items.
This model is not foolproof, however. In a competitive marketplace, customers may be able to
purchase the required complementary products at lower prices from rivals not under pressure
to recoup initial losses.
Successful business models can change over time. Since the early 2000s, a number of
authors have strayed from the traditional business model whereby book publishers offer con-
tracts and pay royalties of 10% to 15%. Leveraging advances in publishing software, social
media, and a strong online retail book market, they have opted for a self-publishing model.
Enterprising authors who publish their own work also shoulder the initial risk but can net as
much as a 70% return on e-book sales from companies such as Amazon.com. The total print
book and e-book output of self-publishers in the United States rose from about 50,000 titles in
2006 to over 125,000 in 2010.6
While a successful strategy is built on the firm’s business model, crafting one can be a chal-
lenge. Realistically, a number of factors are typically associated with successful strategies. Some
of these factors including the following:

1. The organization’s competitive environment is well understood, in detail.

2. Strengths and weaknesses are assessed in a thorough and realistic manner.
3. The strategy is consistent with the mission and goals of the organization.
4. Plans for putting the strategy into action are designed with specificity before it
is implemented.
5. Possible future changes in the proposed strategy—a process called strategic
control—are evaluated before the strategy is adopted.

Careful consideration of these factors reinforces the interrelatedness of the steps in the
strategic management process. Each factor is most closely associated with one of the five steps,
yet they fit together like pieces of a puzzle. The details associated with the success factors—and
others—will be discussed in greater detail in subsequent chapters.
While some of these success factors are associated with the competitive environment in
profit-seeking firms, strategic management is not limited to for-profit organizations. Top manag-
ers of any organization, regardless of profit or nonprofit status, must understand the organiza-
tion’s environment and its capabilities and develop strategies to assist the enterprise in attaining
its goals. Former Drexel University president Constantine Papadakis, for example, was widely
considered to be a leading strategic thinker among university top executives. The innovative
Greek immigrant promoted Drexel through aggressive marketing, while campaigning for an all-
digital library without books. In many respects, he managed the university in the same way that
other executives manage profit-seeking enterprises. His annual salary was close to $1,000,000 in
the years preceding his death in 2009, making him one of the highest paid university presidents
in the country.7

Intended and Realized Strategies

One of the most critical challenges facing organizations is the reality that strategies are not
always implemented as originally planned. Sometimes strategic decisions seem to evolve.
In this respect, strategy formulation can be seen as an iterative process where decision
 chapter 1    Fundamentals of Strategic Management 5

makers take actions, make sense of those actions afterward, and then decide how to
proceed.
Henry Mintzberg introduced two terms to help clarify the shift that often occurs between
the time a strategy is formulated and the time it is implemented. An intended strategy (i.e.,
what management originally planned) may be realized just as it was planned, in a modified
form, or even in an entirely different form. Occasionally, the strategy that management intends
is actually realized, but the intended strategy and the realized strategy—what management
actually implements—usually differ.8 Hence, the original strategy may be realized with desirable
or undesirable results, or it may be modified as changes in the firm or the environment become
known.
The gap between the intended and realized strategies usually results from unforeseen envi-
ronmental or organizational events, better information that was not available when the strat-
egy was formulated, or an improvement in top management’s ability to assess its environment.
Although it is important for managers to formulate responsible strategies based on a realistic and
thorough assessment of the firm and its environment, things invariably change along the way.
Hence, it is common for such a gap to exist, creating the need for constant strategic action if a
firm is to stay on course. Instead of resisting modest strategic changes when new information is
discovered, managers should search for new information and be willing to make such changes
when necessary. This activity is part of strategic control—the final step in the strategic manage-
ment process.

Scientific and Artistic Perspectives on

Strategic Management
There are two different perspectives on the approach that top executives should take to strate-
gic management. Most strategy scholars have endorsed a scientific perspective, whereby strategic
managers are encouraged to systematically assess the firm’s external environment and evaluate
the pros and cons of myriad alternatives before formulating strategy. The business environ-
ment is seen as largely objective, analyzable, and largely predictable. As such, strategic manag-
ers should follow a systematic process of environmental, competitive, and internal analysis and
build the organization’s strategy on this foundation.
According to this perspective, strategic managers should be trained, highly skilled analytical
thinkers capable of digesting a myriad of objective data and translating it into a desired direction
for the firm. Strategy scientists tend to minimize or reject altogether the role of imagination and
creativity in the strategy process and are not generally receptive to alternatives that emerge from
any process other than a comprehensive, analytical approach.
Others have a different view. According to the artistic perspective on strategy, the lack of
environmental predictability and the fast pace of change render elaborate strategy planning as
suspect at best. Instead, strategists should incorporate large doses of creativity and intuition in
order to design a comprehensive strategy for the firm.9 Henry Mintzberg’s notion of a crafts-
man—encompassing individual skill, dedication, and perfection through mastery of detail—
embodies the artistic model. The strategy artist senses the state of the organization, interprets
its subtleties, and seeks to mold its strategy like a potter molds clay. The artist visualizes the
outcomes associated with various alternatives and ultimately charts a course based on holistic
thinking, intuition, and imagination.10 Strategy artists may even view strategic planning exercises
as time poorly spent and may not be as likely as those in the science school to make the effort
necessary to maximize the value of a formal planning process.11
This text acknowledges the artistic perspective but emphasizes the science view. Creativity
and innovation are important and encouraged but are most likely to translate into organizational
success when they occur as part of a comprehensive, systematic approach to strategic manage-
ment. Nonetheless, the type of formal strategic planning proposed in this text is not without its
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Other documents randomly have
different content
Ninnilinda say, and what would the Arch-duchess of
Klopsteinhesseschloffengrozen say, when, after a direct invitation,
she found an old Fairy was to be substituted in her place?
The King was so nervous and frightened that he did not know what
to answer. He could only stammer out something about final
arrangements being as yet undetermined.
“Well, but, at any rate, I suppose you have settled the child’s name,”
continued the Lady Abracadabra, approaching the Council-table.
“Hoity toity! what is this?” she added, snatching up one of his
Majesty’s memoranda: “Conrad-Adalbert-Willibald-Lewis-Hildebrand-
Victor-Sigismund-Belvidere-Narcissus-Adonis Katzekopf? I never
heard such a string of silly, conceited names in my life. I shan’t allow
it, I can tell you that,” and she stamped on the floor till her diamond
buckles glanced like lightning. “If I am to have anything to do with
the child, I shall give him what name I think proper. Stay; I’ve
watched him for ten minutes, and can read his whole character, and
a more wilful little brat I never saw. You shall call him Eigenwillig.
There! that’s to be his name; Eigenwillig, and nothing else!”[1]

1. It is mentioned in the Chronicle of Carivaldus of Cologne, from

which this veracious tale has been extracted, that the word
“Eigenwillig,” in the ancient Teutonic tongue, bears the
meaning of Self-willed; a statement which is the more credible,
since it has a corresponding signification in the modern
language of Germany.
And then, not waiting for a reply, the Lady Abracadabra gathered her
yellow satin habiliments round her, threw out her arms, brought
them together above her head, sprung from the floor, shrunk up to
nothing in a moment, and darted through the keyhole of the
Council-chamber door.
 CHAPTER II.
The Hunting of the Heir.

“You parents all that children have,

And you that have got none,
If you would keep them safe abroad,
Pray keep them safe at home.”

Nursery Rhyme.

CHAPTER II
And Eigenwillig he was called. There was no help for it. Even Queen
Ninnilinda soon saw that. She flew into a violent passion, indeed,
and called her husband an old goose, and told him that if he had as
much sense in his whole body as a mite has in the tip of its tail, he
would have contrived to have got rid of the Lady Abracadabra
without affronting her.
“Shall I send her an excuse, my dear?” asked King Katzekopf meekly.
“Send her a fiddlestick!” cried the Queen indignantly, at the same
time kicking over her footstool, and upsetting a basin of caudle,
scalding hot, into her husband’s lap.—“How can you make such a
ridiculous proposition? What but mischief can come of offending
her? Will she not vent her spite on me, or the Arch-duchess? Or may
not she make the poor dear baby a victim? May she not dart through
the keyhole, and carry him off to Fairy-land, and substitute in his
place some frightful, wide mouthed, squinting, red haired
changeling, as much like your Majesty, and as little like me, as
possible? Oh it is too vexatious, and ridiculous, and shocking, and
foolish!”
And then Ninnilinda burst out a crying. But her Majesty’s tears and
rages were so frequent that they had lost their effect. Nobody
thought much about them; and besides, King Katzekopf was trying
to take out the stains of the caudle, which had sadly damaged the
appearance of the pea-green brocade that covered his knees.
So when her Majesty was tired of crying, she ceased: and, in the
course of the afternoon, wrote a note to her “dearest Lady
Abracadabra,” expressing the intensity of her satisfaction at the fact
that her sweet baby had secured the protection of such an amiable
and powerful patroness.
Then she sent for the Baroness Yellowlily, and told her that, as she
had reason to fear that a malicious old Fairy was disposed to do the
child a mischief, and, perhaps, carry him off altogether, she must
immediately anoint him all over with an unguent, made of three
black spiders, the gall of a brindled cat, the fat of a white hen, and
the blood of a screech owl; and that his cradle must be watched
night and day until after the christening. It was lucky for Queen
Ninnilinda that the Lady Abracadabra wished nothing but well to the
little prince, and knew nothing of these proceedings.
It is not necessary to fatigue the reader with the details of the fête,
which was given a few weeks after the events which have just been
recorded. There were firing of cannon, and ringing of bells, and
beating of drums, and blowing of trumpets. And there were long
processions of high officers of state, and nobles, and foreign
ambassadors, dressed in gorgeous robes, and glittering with gold
and jewels. And there was the arrival of the Fairy sponsor, in a coach
made of a single pearl, and drawn by a matchless pair of white
cockatrices from the mountains of Samarcand; and there was the
flight of birds of Paradise that accompanied her, each bearing round
its neck a chain of gold and diamonds, from which depended a
casket, containing some costly offering for the Hope of the House of
Katzekopf. And there was the Lady Abracadabra herself, no longer
stamping the floor with anger, and wearing that frightful,
unbecoming, ill-tempered dress of yellow and black, but arrayed in
the most delicate fabrics of the fairy-loom, and bearing upon her
shoulders a mantle of gossamer, spangled all over with dew-drops,
sparkling with the colours of a hundred rainbows. No look of age or
ill-nature had she. The refulgence of her veil had obliterated her
wrinkles, and as she passed along the gallery of the palace, side by
side with the Arch-duchess of Klopsteinhesseschloffengrozen, even
Queen Ninnilinda herself was forced to confess that she looked very
amiable, that her manners were exceedingly good, and that, on the
whole, she was a captivating person,—when she chose it.
When the child was to be named, the Queen gave a supplicatory
glance at her kinswoman, and gently whispered in an appealing
tone, “Have you really any objection to the charming name originally
proposed? Conrad-Adalbert-Willibald....”
But the Lady Abracadabra cut the catalogue short, with saying the
word “Eigenwillig” in so decided a tone, that the prince was named
Eigenwillig directly, and there was an end of the matter.
And then followed the royal banquet, and then a ball, and then the
town was illuminated, and at midnight the fête terminated with a
most magnificent display of fireworks.
Just, however, before the amusements of the evening were
concluded, the old Fairy called her niece and the King into the royal
closet, and thus addressed them: “Kinsmen mine,” said she, “I have
shown you this day that I bear a most hearty good-will both to you
and yours; and therefore if ye be wise,—which I think ye are not—
you will listen to what I now say to you. You have got a fair son: for
that you must thank Providence; and your son has got the fairest
gifts that were to be found in all Fairy-land: for them you must thank
me. But if, in spite of these gifts, your son turns out a wilful,
disagreeable, selfish monkey, for that you will have to thank
yourselves. Queen Ninnilinda, if ever I saw a mother that was likely
to spoil a child, you are that person. King Katzekopf, if ever I saw a
father who was likely to let his son lead him by the nose, you are
that man. But attend to what I say,” continued the Fairy, with a look
of great severity, “I don’t intend to have my godchild a selfish little
brat, who shall be a bad man, and a bad king, and a bad son, whom
everybody shall dislike, and whose faults shall be all attributed to his
having a Fairy godmother. No: I have named the child according to
his natural temper. I have called him Eigenwillig, because his
disposition is to be self-willed. And of this it is fit that you should be
reminded continually, even by his name, in order that you may
discipline his mind, and make him the reverse of what he is now
called. Poor child! he has everything around him to make him selfish.
Let it be the object of your life, to make him unselfish. This is my
injunction, and remember I have both the will and the power to
enforce it. I am his godmother, and I am a Fairy besides, so I have a
right to insist. And mark my words, I shall do my duty by the prince,
let who will neglect theirs. I shall watch over him night and day, and
shall be among you when least you expect me. If you manage him
properly, you may expect my help; if you show yourselves unfit for
the charge, I shall take the reins of discipline into my own hands;
and if you then resist me ... but I will not allow myself to imagine
that such infatuation and insanity were possible. Sweet niece, I must
take my leave. May I trouble your Majesty to open the window. Kiss
my godchild for me. Good night.”
As the Lady Abracadabra took her leave, there was a rustling of
wings in the air, the chariot of pearl, with its attendant cockatrices,
appeared on a level with the window: the Fairy sprung into her seat,
and, preceded by a cloud of lantern flies, each insect sparkling with
a different coloured flame, blue, or crimson, or violet, or green, and
followed by myriads of elves, each crowned with asteroids of
lambent light, she wended on her way to Fairy-land, her track
through the sky being marked by a long train of sparks, whose
dazzling brilliancy waxed fainter and fainter as she receded from
earth, till it mingled with, and became lost in the pallid hues of the
Milky Way.
It is needless to say that Queen Ninnilinda did not relish the parting
admonitions of her Fairy kinswoman. First, she (being a Queen) did
not like to submit to dictation; next, she persuaded herself that she
had a full right to do as she pleased, and to spoil her own child as
much as she liked; lastly, being rather timid, she felt very
uncomfortable at the notion of being watched by a Fairy, and still
more so at the possibility of incurring that Fairy’s vengeance. So, as
usual, she vented all her anger on her husband, and then went to
bed and sobbed herself to sleep. King Katzekopf was not easily
disturbed; and the chronicles of the kingdom assure us that he slept
as well as usual on the night after the fête; but upon awaking next
morning he felt the necessity of something being done, and
therefore called together once more his trusty councillors, who, after
much grave discussion, determined that the best method of securing
the further favour of the Lady Abracadabra would be, by
immediately appointing proper instructors for the royal infant.
Accordingly, a commission was issued to inquire who would be the
proper persons to undertake so responsible an office, and after a
year and a half of diligent investigation, it was decided that the three
cleverest women in the kingdom should be charged with the prince’s
education until such time as he should exchange his petticoats for
jacket and trousers. So the Lady Brigida was appointed to teach him
how to feed himself, and to instruct him in Belles Lettres, and the —
ologies: the Lady Rigida was to make him an adept in prudence and
etiquette: while the Lady Frigida was directed to enlighten his mind
on the science of political economy, and to teach him the art of
governing the country.
But alas! nobody thought of appointing a preceptress, who should
instruct him in the art of governing himself.
Meanwhile, Queen Ninnilinda, finding that her husband had become
highly popular in consequence of the pains he was taking to have his
heir properly educated, determined that she would do something
which should set her own character in a favourable light as a wise
and discreet mother. She, therefore, after much careful
consideration, drew up the following rules for the nursery, which
were immediately printed in an Extraordinary Gazette, and which
were received with so much applause, that almost all the ladies in
the kingdom adopted them immediately in their own families, and
have, in fact, been guided by them ever since, even though they
have not followed Queen Ninnilinda’s plan of having them framed
and glazed.

RULES FOR THE NURSERY.

1. The Prince Eigenwillig is never to be contradicted; for contradiction is

depressing to the spirits.
2. His Royal Highness is to have everything he cries for; else he will grow peevish
and discontented.
3. He is to be allowed to eat and drink when, what, and as much he pleases;
hunger being a call of nature, and whatever nature dictates is natural.
4. His Royal Highness is to be dissuaded from speaking to any one below the rank
of Baron; as it is highly desirable that he should acquire a proper pride.
5. It is to be impressed upon the Prince’s mind continually that he is an object of
the first consequence, and that his first duty is to take good care of himself.
Such being the plan laid down for Prince Eigenwillig’s education, it is
not to be wondered at that, by the time he was two years old, he
had a very fair notion of the drift of his mother’s rules, and that they
found great favour in his eyes; insomuch that at three, when the
Ladies Brigida, Frigida, and Rigida commenced the task of tuition, he
contrived to inspire them with the notion that their office, for the
present, at least, was likely to be a sinecure. He even resisted the
efforts which the Lady Brigida made to induce him to feed himself
with a fork and a spoon, and adhered upon principle to the use of
his fingers, lest, by yielding the point, he should seem to allow
himself to be contradicted.
At four years old the precocity of his talents had greatly developed
themselves. He had mingled mustard with the Lady Frigida’s
chocolate; he had pulled the chair from under his father, just as the
King was about to sit down, whereby his Majesty got a tumble, and
the Prince got his ears boxed; he had killed nurse Yellowlily’s
cockatoo by endeavouring to ascertain whether it was as fond of
stewed mushrooms as he was himself, and he had even gone the
length of singing in her presence, and of course in allusion to her
bereavement,
“Dame what made your ducks to die?
Ducks to die? ducks to die? ducks to die?
Eating o’ polly-wigs! Eating o’ polly-wigs.”

But if the truth must be told, the prince had acquired by this time
many worse habits than that of mischief. And these had their origin
in his being permitted to have his own way in everything. For,
indeed, it might be said, that this spoilt child was the person who
ruled the entire kingdom. The prince ruled his nurse, and his three
instructresses; they ruled the Queen; the Queen ruled the King; the
King ruled his Ministers; and the Ministers ruled the country.
O Lady Abracadabra, Lady Abracadabra, how could you allow things
to come to such a pass? You must have known right well that Queen
Ninnilinda was very silly; and that King Katzekopf was one of those
folks who are too indolent to exert themselves about anything which
is likely to be troublesome or unpleasant; and you must have been
quite sure that the nurses and governesses were all going the wrong
way to work; you must have foreseen that at the end of four years
of mismanagement the poor child would be a torment to himself and
to everybody else. Why did you not interfere?
This is a hard question to answer; but perhaps the Lady
Abracadabra’s object was to convince both parties of this fact by
actual experience, as being aware that in such experience lay the
best hope of a remedy.
A torment, however, the child was; there could be no mistake about
that. Though he had everything he asked for, nothing seemed to
satisfy him; if he was pleased one moment, he was peevish the
next: he grew daily more and more fractious, and ill-humoured, and
proud, and greedy, and self-willed, and obstinate. It is very shocking
to think of so young a child having even the seeds of such evil
tempers; but how could it be otherwise, when he was taught to
think only of himself, and when he was allowed to have his own way
in all things? Unhappy child! yet happy in this, that he was likely to
find out for himself that, in spite of having all he wished for, he was
unhappy! Unhappy parents! yet happy in this, that, if so disposed,
they might learn wisdom, from the obvious failure of their foolish
system of weak indulgence!
Prince Eigenwillig had nearly completed his fifth year, when, one day
that the Lady Rigida was endeavouring to explain to his Royal
Highness her cleverest theory on the subject of the Hyscos, or
Shepherd Kings (he, meanwhile, being intently absorbed in a game
of bilboquet), a Lord of the Bedchamber entered the apartment, and
announced that the Queen desired the Prince’s presence in her
boudoir.
“Ha!” exclaimed the little boy, with a start of pleasure and surprise,
as he entered the apartment, “what a beautiful creature you’ve got
in that cage. Whose is it? I should like to have it.”
“Well, my sweet pet,” replied his mother, “so you shall, if you wish
for it.”
“Of course I do,” said the Prince; “what a sleek gray coat! what
strange, orange-coloured eyes! what curious rings of black and white
fur on its tail! What is it?”
“It is a ring-tailed macauco, love,” answered the Queen, “your papa
has just made me a present of it. I don’t know how much money he
gave for it.”
“Well, mamma, it’s mine now; that’s one comfort,” observed the
Prince. “Let it out,” continued he, addressing the Lord of the
Bedchamber.
“I am afraid, sir,” replied Baron Puffendorf, “that it might do mischief.
I believe it isn’t tamed yet.”
“Oh, we’ll tame it, then,” replied the Prince; “call Lady Rigida; she’ll
tame it directly, I’m sure. Lady Rigida, here’s a monkey wants
taming; talk to it about the shepherd kings, will you?”
The Lady Rigida drew up with offended dignity.
“Ha! ha! my good Rigida,” said the Queen, laughing, “you mustn’t be
angry with these sallies of wit. What a clever child it is!”
“Is nobody going to open the door of the cage?” asked the boy
impatiently. “I want to see the creature loose.”
“Oh, my sweet child, leave it where it is. You’ll frighten me to death,
if you let it out,” cried the Queen in alarm.
The Prince immediately threw himself down on the floor, and began
to roar.
“Don’t cry, there’s a love,” said his wise mother, soothingly, “and the
Baron shall see if he can’t hold it while you look at it. Wrap your
handkerchief round your hand, Baron; it won’t bite, I’m sure.”
The Baron did as he was bid, and, in considerable trepidation,
opened the door of the cage, and made an effort to seize the
macauco. The animal immediately darted at his hand, bit it with all
its strength, and dashed out of the cage in an instant. “Sess! sess!
sess!” cried Prince Eigenwillig, springing up from the floor, and
clapping his hands. “Now for a chase! Sess! macauco! Hie at them!
Good monkey! Bite Rigida! Bite Puffendorf!”
Away ran the instructress, away ran the Lord of the Bedchamber,
and after them pursued the macauco round and round the room,
now biting at the Baron’s heels, and now at the Lady Rigida’s; while
the Queen ran screaming out of the apartment, and the author of all
the mischief stood in the midst, laughing with all his might. In
another moment, the agile monkey had scrambled up the Lady
Rigida’s back, and, having half strangled her in its attempts to tear
off her head-dress, took a flying leap to the top of a cabinet,
whence, having dashed down a most precious vase of rose-coloured
chrystal, it proceeded to tear the cap to tatters.
But Prince Eigenwillig was too highly delighted with the more active
freaks of the animal, and too much pleased at the opportunity of
terrifying and tormenting the Lady Rigida, to allow it to remain long
at the top of the cabinet. So snatching up a book which lay on a
table beside him, he threw it at the macauco for the purpose of
dislodging it.
And therein he succeeded, but at a cost which by no means entered
into his calculations, for the animal, irritated by the blow, now
turned on the naughty boy, and springing on his shoulders, laid hold
of one of his ears with his teeth.
It was now the Prince’s turn to scream, and the more he screamed
and struggled, the more the macauco bit him, and the child would
soon have fainted with fright and pain; but, just at the critical
moment, when he had fallen to the ground, the sound of many
voices was heard outside the door, which was immediately flung
open, and, together with a number of members of the household, in
rushed a great black mastiff, which immediately flew at the monkey,
who, thereupon, quitted its hold of the Prince’s ear, and retreated to
its cage.
The whole palace was by this time in confusion; messengers were
rushing in all directions for surgeons and physicians; and even King
Katzekopf, who had now grown so fat, that he never left his arm-
chair when he could help it, ran up-stairs, three steps at a time, to
know what was the matter.
“Ah!” exclaimed the Lord Chamberlain, as soon as he had recovered
sufficient presence of mind to shake his head. “Ah,” quoth he.
“Yea, forsooth!” replied the Chancellor, with the air of one who could
say a great deal if he chose.
The Arch-Treasurer of the Empire, who never spoke at all, if he could
help it, and who never allowed his countenance to indulge itself in
any particular expression, shrugged his shoulders slightly, but with
what particular intention no one ventured to imagine.
The old ladies of the household (including his grace the Keeper of
the Records) were, however, by no means so prudent or taciturn.
“I knew how it would be!” cried one.
“I always guessed as much,” rejoined another.
“I anticipated it from the first,” ejaculated the third.
“This comes of Fairy-godmothers,” groaned forth he of the Records.
“No doubt, it is some malicious prank of hers!” said Nurse Yellowlily,
with a shudder.
“I shouldn’t be surprised if henceforth the poor child were
possessed,” added the first speaker.
“Or squinting and blear-eyed,” continued the second.
“Or if his ears mortified, and turned into pigs’ feet!” sobbed out the
third.
“Oh, too true! too true!” exclaimed the Queen. “I see it all. Unhappy
mother that I am! All the poor child’s misfortunes, past, present, and
to come, are owing to my peevish, spiteful, malicious, capricious,
old, ugly witch of an aunt, Lady Abracadabra! Oh, that I had been
turned into a tadpole, and the Grand Duchess of
Klopsteinhesseschloffengrozen had been the only sponsor!”
It was a long while before anything like tranquillity was restored; but
when the King and the Queen had been assured by the medical
attendants that the Prince’s wound was by no means serious, and
the child himself had ceased screaming, and the macauco had been
hanged, the black mastiff began to attract attention.
“Whose dog is it?” asked one.
“Where did it come from?” said another.
But nobody could answer the question. At this moment the King
called the hound to him, for the purpose of patting it. The mastiff
approached, and laid its heavy fore-paws on the royal knee, and
looked very wisely at the King; and then his Majesty looked as wisely
as ever he could (how could he do less?) at the dog. But what was
the King’s amazement, when, all of a sudden, he perceived the tan
portion of the glossy hide changing into a yellow satin petticoat, and
the black part into a black velvet jacket; the canine features
resolving themselves into a human countenance; the fore-paws
becoming hands, and hind-paws a woman’s feet, enveloped in high-
heeled shoes fastened with diamond buckles?
It was even so. The Lady Abracadabra stood before him, not,
however, as when he last beheld her, all smiles and affability, but
stern, grave, and angry. Her eyes gleamed like coals of fire, her
wrinkles were deeper than ever, and gave her face a most harsh and
severe expression,—nay, her black jacket had acquired a most
ominous sort of intensity, and the yellow petticoat seemed shot with
a lurid flame-colour.
“So!” said she, “you have not only disobeyed all my injunctions,
neglected my advice, and thwarted all my benevolent intentions, but
now, when you are reaping the fruit of your misconduct, you have
audacity enough to charge me with being the cause of it!”
King Katzekopf declared that he had never suspected her ladyship of
anything but good will towards the prince; and had never attributed
to her agency the mishaps of a spoilt boy.
“Spoilt boy!” she exclaimed with indignation, “and how comes he to
be spoilt? Yes,” she continued with increasing vehemence, “who has
spoilt him? What is it that makes everybody dislike him? What makes
him a plague and a torment to himself and everybody else? Why is
he impatient, and greedy, and wilful, and ill-tempered, and selfish?
Is it not because Queen Ninnilinda encourages him in all these vices,
and because King Katzekopf, though he knows that everything is
going wrong, is too lazy and indolent to interfere and set them right?
You are neither of you fit to be trusted with your own child. You are
doing all you can to make him wicked and miserable, a bad man,
and a bad king.”
“I’m sure there’s not a child in the kingdom that has such pains
taken with him,” replied the Queen angrily. “He has instructors in all
the different branches of useful knowledge, and if he is a little
mischievous, or self-willed at times, are not all children so?”
“Niece, niece,” replied the Fairy, “you speak like a fool. What good is
there in knowledge, unless a right use be made of it? And how is he
likely to make a right use of it, if he be mischievous and self-willed?
And how can you expect him to be otherwise than mischievous and
self-willed, if you encourage, instead of checking, his propensities
that way?”
“I’m sure I cannot check his propensities,” retorted Ninnilinda in a
huff.
“I never thought you could,” said Lady Abracadabra quietly, “for you
have not yet learned to control your own temper.”
The Queen coloured and bit her lip.
“I wish, kinswoman,” said the King in a conciliating tone, “since you
thought the Prince was being so ill brought up, that you would have
told us so a little sooner?”
“And where would have been the good of that? You know very well
that you would not have listened to me. Nay, I don’t believe that you
will listen to me now. No, no, when I promised to befriend your
child, I ought to have taken the matter into my own hands at once,
and carried him off to Fairy-land, and superintended his education
there.”
When the Queen heard these words, she trembled from head to
foot, and threw herself on her knees before her aunt, exclaiming
—“Nay, Lady Abracadabra, anything but that! anything but that! I
know your power, but oh! as you are powerful, be merciful likewise,
and do not take my child from me!”
The Fairy saw that Queen Ninnilinda was now in a disposition to
submit to any conditions which might be imposed upon her, and
therefore she answered her kindly:
“I do not want to separate you from your child, if only you will do
your duty by him.”
“I will do anything you desire, aunt!”
“Teach him not to be selfish, then!” replied the Lady Abracadabra. “If
you really are in earnest, I will give you one more trial; but
remember it is the last.”
The Queen grew more frightened than ever, for she felt as if she
were a fly in a spider’s web; that the Lady Abracadabra was
spreading toils for her, and that the little Eigenwillig was already as
good as lost to her.
“But how can I teach him not to be selfish?” she asked at length.
“By making him consider others as much as himself; by teaching him
to bear contradiction, and to yield up his own wishes and
inclinations; and by letting him associate with his equals.”
“You forget he is a prince, Lady,” replied the Queen proudly.
“No, I do not,” answered the Fairy. “A prince may have his equals in
age, I suppose, if not in rank.”
“Ah! Lady Abracadabra!” cried King Katzekopf. “I believe you have hit
the right nail on the head. I’ve often wished the boy could have had
somebody to play with,—somebody who would set him a good
example, and would not flatter him, as these courtiers do.”
“Suppose I could find such a companion for him,” said the Fairy,
“would you befriend him, and treat him as you do your own child?”
“Gladly will I,” answered the King. The Queen could not bring herself
to say that she would do it gladly, but she submitted with as good a
grace as she could.
“Well then,” said the Lady Abracadabra, “upon those terms I will give
you a fresh trial. I know a fair, gentle boy, whose temper and
disposition the Prince will do well to imitate. His father, foolish man!
is anxious to get him a place at court,—little knowing what he
desires for him. Methinks it would be well that he should see the
experiment tried. It may be of benefit to both parties. So I shall set
about it at once.”
And thereupon the Lady Abracadabra gradually faded away, or at
any rate seemed to do so, till she wholly disappeared.
 CHAPTER III.
Another Heir Started.

“More swift than lightning can I flye

About this aery welkin soone,
And in a minute’s space descrye
Each thing that’s done below the moone.”

Ben Jonson.

CHAPTER III.
Many and many a mile from King Katzekopf’s Court,—in a valley
among those Giant Mountains, which separated his territories from
the neighbouring kingdoms, stood the Castle of Taubennest, in
which, at the date of our tale, dwelt Count Rudolf and his family.
And a happy family they were, all except the Count, who was a
discontented man. He had spent his youth in cities, and so the
country had no charms for him. He was ambitious, and a time-
server. He was never so happy as among great people, and he
longed to meddle with the intrigues of state, and to be talked of as
among the eminent men of the kingdom.
He was a very poor man when the Castle and its broad lands were
bequeathed him by a distant relation, and so he was glad enough to
take possession of them, even though he found the bequest coupled
with the condition that he should live on his domains continually.
Now if, on acquiring this property, the Count had set himself in
earnest to the discharge of the duties for which the possession of
that property rendered him responsible,—if he had turned his talents
to bettering the condition of his vassals, improving his estates, and
benefiting his neighbourhood generally, he would not only have
spent his days happily, but would, in all probability, have arrived at
the object of his desires, and acquired an illustrious name. But
instead of this, he spent his years in murmurs and repinings; now
railing at the blindness of Fortune, who had condemned one of his
genius for rising in the world to a sphere of inactivity, now
complaining that he was imprisoned for life amid the mountains.
What a sad thing it is, when people neglect their present duties, for
no wiser reason than because they choose to imagine that if their
duties were of some different kind, they could discharge them
better! Our trial in life consists in our being required to do our best
in whatever circumstances we are placed. If we were to choose
those circumstances for ourselves, there would be an end of the
trial, and the main object for which life is given us would be lost.
Happily for her children and dependents, the character of the
Countess Ermengarde was a complete contrast to that of her
husband. She was one of those people who seem only to find
happiness in doing good to those around them. Had her destiny
placed her in the midst of a court, she would have added to its
dignity and honour by the lustre of her example. But that example
was not lost because her days were spent in comparative seclusion.
The Castle of Taubennest was at a great distance from the
metropolis, but it did not rear its head in a solitary desert. And the
Countess, as she stood on the stone platform, which opened out of
her withdrawing room, and led to the garden below, and gazed at
the wide and fertile valley which lay stretched before her, could
count hamlet after hamlet, the inhabitants of which were tenants to
her husband, and over whom, therefore, she felt that it was in her
power to exercise an influence for good. But the Countess
Ermengarde had yet dearer ties, to whom she well knew that all her
care and tenderness were due. There were her two little girls,
Ediltrudis and Veronica, and her son, a boy of seven years old, the
gentle, yet noble-spirited Witikind. In educating these her treasures,
disciplining their youthful minds, and training them for the duties
and trials of active life, the greater part of her time was spent, and
so fully absorbed was she in this labour of love, that never an hour
hung heavy on her hands, and not days only, but months and years
seemed to glide on without her having a wish or a thought beyond
her children, and the vassals of her husband’s house.
“What a happy family should we be!” exclaimed the Count, as, in
spite of himself, he stood enjoying the evening breeze, and watching
his lovely children in their play, “What a happy family we should be,
my Ermengarde, if we were not condemned to wear out our
existence in this dull wilderness!”
“I would you were in any place that could bring you a greater
measure of enjoyment than you find here, my dearest Rudolf,”
replied the Countess, soothingly, “and yet, methinks, our lot might
have been cast in a less fair scene than this. What if the setting sun,
instead of throwing its rosy lustre on yonder mountain peaks, and
illumining with its declining rays those verdant meadows, through
which our glassy river flows, and the fields yellow with the ripening
corn, and the purple vineyards, and the deep umbrageous forest,
were to light up for us no more joyous scene than a desert of
interminable sand? What if, instead of looking forth, and seeing
nothing so far as eye can reach which does not call you master, we
were landless, houseless wanderers, without bread to eat, or a roof
to cover us, should we not have less to be thankful for, than is the
case now?”
“Doubtless,” answered the Count; but he made the reply impatiently,
and as if his wife were putting the matter before him in an unfair
point of view. Without being the least aware of it, he was unthankful
for all the blessings which he actually possessed, because a single
ingredient which he supposed necessary to fill up his cup of
happiness was wanting. So long as he had not that, all else went for
nothing. “Doubtless,” said the Count; “but, say what you will, this
place will never be any better than a wilderness in my eyes. Is it
possible to conceive a more monotonous life than I pass? nothing to
interest one, not a soul within twenty miles that one cares to speak
to!”
The Countess smiled. “Nay, nay, Rudolf,” she cried gaily, “you shall
not persuade me that the children and I do not make very agreeable
society!”
“The children! there again! what a distressing subject is that! Poor
things, they will not have common justice done them! They have not
a chance of getting on in the world.”
“For my part,” replied the Countess, “I don’t see what is the
necessity for their ‘getting on in the world.’ They will do very well as
they are.”
“How can you talk such nonsense as that, Ermengarde?” exclaimed
the Count in a tone of pique. “Why, what is to become of the girls,
when they grow up to womanhood?”
“Oh,” answered the Countess, “we need scarcely make that a cause
of anxiety at present. Years must elapse before they will be women,
and when they are grown up, I don’t know why they may not
become the wives of honest men, or why they may not find
happiness in a single life, if they prefer it.”
“Really, Ermengarde, you sometimes provoke one past all patience.
‘Wives of honest men,’ forsooth! I believe you would be satisfied if
you could see them making cheese on the next farm, or wedded to
the huntsman, or the woodreve. You forget,” added he proudly, “that
their birth entitles them to some splendid connexion, and less than a
splendid connexion shall never satisfy me.”
“Why, what is it that you covet for them?”
“That they should see something of courts and cities, instead of
being immured in this mountain-dungeon; that they should take that
place in the world to which their rank entitles them, and that they
should be followed by a host of admirers, and that their
cotemporaries should have cause to envy their good fortune. Yes,”
continued he, warming with his subject, and falling unconsciously
into one of those day-dreams in which he was continually indulging,
“I should like to waken and find myself at the court, with Ediltrudis
at my side, the admired of all beholders, princes and peers
struggling to obtain the honour of her hand, while I, with watchful
eyes, would be ascertaining which of her many suitors it would be
most prudent to encourage, and which to reject. Can you conceive
anything more interesting, more delightful to a parent’s feelings?”
“Yes, indeed, my Lord,” replied the Lady Ermengarde, “to me it
would afford more satisfaction, if I were permitted to see my child
growing up to maturity, unspotted by the world, and saved from
exposure to its poisonous breath, and from the temptation to yield
to its evil influences. I would rather see her innocent and happy
here, than the star and favourite of a court.”
Had Count Rudolf listened to this speech it would have probably
made him very angry, but he was too much occupied with his castles
in the air to attend to it.
“And then my pretty little Veronica,” he continued, “your career shall
be no less brilliant than your sister’s. Come hither,” said he, calling
the child, “and tell us what destiny you would choose. Would you not
like to be a Maid of Honour to the Queen, and to be glittering with
silks and jewels, and to live in a royal palace, and to spend your time
in all manner of pleasures?”
The little girl seemed puzzled, and did not answer immediately. After
a pause she said, “Must I leave Taubennest, if I were to be Maid of
Honour to the Queen?”
“Yes, my child, that must you, for where the King lives is many a
mile from Taubennest.”
“Nay, then, dear father, I would rather be where I am. I should like
to see the royal palace, and all the things you mention, but I should
prefer to live here. Ah! we never could be so happy as we are here,
could we, Witikind? We never could find such pretty walks as we
have here among the hills, nor play such merry games in a palace,
as now we do in the meadows by the river side. And besides, I dare
say I should not be allowed to take my kid with me, nor my birds,
nor perhaps,” added the child in a tone of dismay,—her eyes
brimming with tears as the thought occurred to her—“perhaps you,
and Ediltrudis, and nurse, and papa, and mamma might not be with
me. Oh, no, no; I would rather stay where I am; would not you,
Witikind?”
“Why, what folly!” exclaimed Count Rudolf, interposing. “Even you,
Veronica, must be old enough to know that a boy cannot pass
through life beside his nurse’s apron-string. Witikind must see the
world, and learn to be bold and manly.”
“Can I not be bold and manly, father, unless I see the world?” asked
the boy rather timidly.
“No, to be sure not!” answered the Count.
“Well then of course I must go,” replied Witikind with a sigh. “But I
never can be so happy elsewhere as I am here.”
“Pooh! you are but a child;” rejoined his father, “you don’t know
what real happiness is.”
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