Investment Appraisal and Measures of Performance in Italian Divisionalised Companies

The aim of this study was to describe and analyse the current practice and trends in the development of management control practice as regards divisional investments in large Italian firms, using a survey questionnaire method. Some comparison with top North-American and German international manufacturing units were also made.The findings of the study supported two theoretical propositions. In the identification stage, firms tend to decentralise the process of capital budgeting and the control mechanism ensuring the link between corporate strategic objectives and capital expenditure projects at divisional level is based on guidelines produced by headquarters. In the selection stage firms which perceive a high interface level with the corporate strategic objectives in divisional capital expenditure tend to use discounted cash flow techniques when choosing one or more investment projects. When an economic approach is used to provide a comprehensive measure of performance, the theoretical framework fails to predict the relationship between corporate control and performance evaluation system in divisionalised companies. Essentially, financial control combines non-financial measures, used to understand manufacturing operations, with traditional accounting measures, used to understand the effects of manufacturing activities on the level of operating cash flow and operating income, as a comprehensive measures of performance in the medium-term of divisional investments.     

Codes of ethics and firm size: A stakeholder approach to strategic planning

A firm's capital budgeting and strategic planning decisions have the potential to affect many groups of people called stakeholders. A stakeholder is any group or individual who can affect or is affected by the achievement of the firm's objectives. This study examines whether the presence of a code of ethics that specifically addresses capital budgeting/strategic planning decisions will significantly raise the awareness of social responsibility during the long-run planning process. This study also examines whether firm size is associated with the awareness of social responsibility during the long-run planning process. Support was found that a code of ethics that addresses long-range planning is associated with higher awareness during the planning process. Firm size was not found to be statistically different.     

The sophistication of capital budgeting in Malaysian companies

The sophistication of capital budgeting in 70 Malaysian companies is assessed in terms of a three-stage model of the capital budgeting process with reference to the following: the percentage of capital investments for which the techniques are used, explicit assessment of risk, the method of determining the cost of capital, the method of measuring cash flows, the formal profit contribution analysis, the extent of use of management science/operations research in capital budgeting, information systems support and the planning and control of capital expenditures. The assessment reveals a general tendency in the direction of increasing sophistication in the various phases of capital budgeting in Malaysian companies.     

Realizing Benefits from Enterprise Resource Planning: Does Strategic Focus Matter?

A key driver of the recent wave of enterprise resource planning (ERP) implementations was the assumption that the integration of business information would provide firms with a competitive advantage, yet concrete business benefits have been uneven across adopting firms. A possible explanation is that although the resource‐based view holds that competitive advantage is derived from inimitable resources, ERP software has become a commodity. Socio‐technical theory suggests that internal organizational resources based on a foundation of ERP technology may be the true drivers of ERP benefits. A firm's strategic configuration is posited to influence the portfolio of organizational competencies available to leverage the benefits of integrated business information, and a number of hypotheses are developed based on the notion that firms with different strategic objectives will realize different operational benefits from the adoption of ERP systems. Survey data from North American manufacturing firms that have implemented ERP systems demonstrate that ERP adopters seeking operational performance improvements are likely to realize these benefits. On the other hand, those seeking external market and supply chain performance improvements must first establish a foundation of internal operational performance improvements before customer satisfaction and supply chain benefits can be realized.     

面向中小企业战略计划的基于知识资本的SWOT模型

通过分析中小企业战略计划中的问题得出,在知识经济中,中小企业必须从知识资本的新视角制定战略计划。通过对中小企业的特点、SWOT分析理论、知识管理理论、知识资本缺口理论的研究,构建了以识别企业环境中的知识因素为目的,面向中小企业战略计划的基于知识资本的SWOT模型。然后详细说明模型在中小企业战略计划制订中的应用。最后,通过理论和案例证明了,模型相对于传统SWOT模型的优势。     

Of those who plan: A meta-analysis of the relationship between human capital and business planning

Business planning is a popular managerial practice, especially in the SME context. Yet, literature presents diverging perspectives regarding business planning and the role it fulfills for the individuals leading these organizations. To advance research, we focus on evidence regarding factors that determine whether and how individuals engage in business planning. Drawing on human capital concepts and the theory of planned behavior, we scrutinize how education and different prominent work experience types influence business planning behaviors. We use meta-analysis to aggregate data on 8095 observations leading SMEs from 31 independent data sets. We find critical differences in planning behaviors relating to human capital types, as well as to whether individuals engage in substantive planning processes or the specific preparation of a formal business plan. Implications of our findings for research on business planning are discussed.     

Future forecasting with LEAP

A rapidly changing business environment has caused numerous firms to adopt some form of environmental assessment as part of their strategic planning process. Extrapolative techniques and trend analysis are useful when forecasting for the short-term and in comparatively stable environments. Futuristic methodologies are appropriate in turbulent environments with long-term planning requirements. The Likelihood of Events Assessment Process (LEAP), a new method of forecasting developed by the author, is explained in detail using examples from a recent study which used top level life insurance executives to predict the relative likelihood of occurrence of planning dates for a set of events in the socio-political environment of business.     

ICT-based solution approach for collaborative delivery of customised products

Growing interest on business collaboration motivates today’s industries, especially small and medium enterprises (SMEs) to establish and manage dynamic and non-hierarchical business networks to respond to market opportunities with added business benefits. This business environment requires concurrent work and real-time information sharing between key business partners in order to design and develop customised products. The use of traditional communication media such as e-mail, phone and fax is not satisfactory to get real-time information and is time-consuming and most often ineffective. In such environments, an Information and Communication Technology (ICT)/Web-based technology supports real-time information sharing among networked SMEs for the collaborative design and manufacturing of customised products. This study proposes an innovative ICT platform supporting SMEs collaboration, through Web and the Internet of Things technologies, which follows the Net-Challenge conceptual approach and methodological guidelines for SMEs to form and operate virtual organisations for the collaborative development and delivery of customised products. The ICT Platform was assessed in three different industry domains, namely the textile and apparel, the footwear and the machine tools, respectively. This ICT solution promotes collaboration, with substantial advantages for SMEs including the reduction of costs and delivery time and improvement of the innovation potential.     

Improving control through effective performance measurement in SMEs

Research has demonstrated that the use of performance measures in SMEs (small to medium sized enterprises) is limited. Financial measures, which are required for examination by external stakeholders, are generally well developed. However, operational measures are typically ad hoc and lack formal structure. A structured approach to measuring perform ance in SMEs should improve strategic control. Current approaches, however, have proved inadequate for the specific requirements of the SME sector. A new process is presented for developing effective performance measurement in SMEs, which is tested through a case study. The aim of the process is to develop measures that drive operational performance towards the achievement of strategic objectives. The results of the case study demonstrate the potential of the process for improving strategic control and stimulating continuous improvement in SMEs.     

Knowledge retention in ERP implementations: the context of UK SMEs

Abstract

Knowledge retention (k-retention) is vital for various enterprise resource planning (ERP) implementations in small and medium-sized enterprises (SMEs), though it is a highly demanding and challenging task. The aim of this paper is to investigate different types of approaches to k-retention and factors influencing k-retention in SMEs. Our study adopts a grounded theory approach with cases based on 12 ERP implementations in UK SMEs. We analyze our data using thematic analysis. The findings reveal specific elements that support the k-retention of ERP package knowledge and business process knowledge. These elements are: k-retention tools, documentation, human capital and the understanding of k-retention challenges. In addition to insights from these aspects, our study reveals two additional factors (project management and organizational culture) that influence ERP package k-retention and business process k-retention. Based on these findings, we develop an ERP k-retention (EKR) framework that can be utilized by SMEs which are considering implementing ERP systems, to facilitate knowledge retention during implementation.     

A Study of the Role Played by Manufacturing Strategic Objectives and Capabilities in Understanding the Relationship between Porter's Generic Strategies and Business Performance

An appropriate alignment between business strategy, manufacturing strategic objectives and manufacturing capabilities reportedly influences business performance positively. However, few papers empirically analyse this proposition for the case of Porter's generic strategies of cost leadership and differentiation, and none jointly considers all four elements. This paper integrates strategies, capabilities and performance in a single model and proposes that both manufacturing competitive priorities and capabilities, articulated in terms of cost and flexibility, are essential for explaining the link between generic business strategies and business commercial and financial performance. Within this analytic framework, we test whether companies that emphasize one business strategy rather than another achieve a better alignment and superior performance. The analyses conducted with a sample of 148 Spanish manufacturers provide general support for these propositions and contribute to a deeper understanding of the role played by functional strategies in understanding the outcomes of business strategy.     

Performance measurement systems in SMEs: A review for a research agenda

In recent years, literature has identified the increasing complexity of small and medium-sized enterprises (SMEs) and highlighted their sensitivity to differences in managerial culture and management systems. Research has shown that performance measurement systems (PMSs) could play an important role in supporting managerial development in these companies. In this paper, the literature on performance measurement in manufacturing SMEs is reviewed and the diffusion, characteristics and determinants of performance measurement in SMEs are analysed. Shortcomings in the performance measurement systems are highlighted and the many factors that seem to constrain PMSs in manufacturing SMEs are defined, e.g. lack of financial and human resources, wrong perception of the benefits of PMS implementation, short-term strategic planning. Moreover, using dimensions defined according to the information found in the literature, two PMS models specifically developed for SMEs are compared with generic PMS models. The comparison points out an evolution in PMS models over time; in particular, the models developed in the last 20 years are more horizontal, process-oriented and focus on stakeholder needs. However, it is not clear whether these changes are due to the evolution of the generic models or an attempt to introduce models suited to the needs of SMEs. To clarify this matter and better to understand PMSs in SMEs, further theoretical and empirical studies are necessary. The main issues still requiring investigation are listed in a research agenda at the end of the paper.     

An integrated approach to evaluation and planning of best practices

This paper develops a new integrated evaluation and planning approach for implementing a given set of best practices in a prioritized and phased manner. The best practices are implemented for achieving lower-level business unit objectives and higher-level strategic goals of an organization. With a multiattribute decision making algorithm under the balanced scorecard (BSC) framework, a new evaluation model is developed to effectively measure the relationship between lower-level objectives and higher-level goals, and to give each best practice a relative priority value. A new adjustment method is also developed to address potential biases in the self-assessment process at the business unit level. The evaluation model enables the prioritization and implementation planning of best practices in terms of their importance and achievability from the viewpoints of the organization, four BSC strategic perspectives, individual business units, and the overall implementation planning zone. An empirical study is conducted to demonstrate the applicability and effectiveness of the integrated evaluation and planning approach.     

Designing communication support systems for strategic planning

While as a distinct and intermittent managerial activity planning is slowly dying, in a systematic and continuous context it is rapidly growing! More and more organizations are beginning to realize that planning entails ongoing learning and adaptation of people rather than one-shot, pseudo-scientific analysis of abstract problems. To facilitate this fundamental transformation in organizational thinking, new electronic management support systems are being created. These systems will facilitate collaborative problem exploration through improved managerial communication. In effect, they will actively assist managers to understand and manage the relationships between the strategic planning process and the other corporate processes such as budgeting, capital investment, performance evaluation and employee compensation.     

Understanding managers' preferences for internal markets versus business planning: A comparative study of German and U.S. managers

Internal markets and centralized business planning are alternative organizational designs for coordinating the economic activities within a firm. While some preliminary theory about when to use each exists in the literature, little is known about how managers understand and decide when to use one or the other. The study develops and tests in samples of German and U.S. managers a preliminary theory about factors that influence the preferences of managers for internal markets or planning as alternative modes of coordination. Managers' preferences are influenced by key constructs of internal markets and planning theory (the perceived limits of planning, speed and efficiency of markets, motivation potential of markets), but also by differences in their institutional contexts (national government and business context, company culture, and recent company experience with planning and internal markets). The study is the first to explore the substitutability of internal markets and planning within the strategic decision process of managers, closer to where it becomes reality.     

The components of strategic planning

What is the current level of strategic planning in the United States? What objectives are quantified in the strategic plans? What kinds of environmental factors are identified in the planning process? What areas are planned for? How often are the strategic plans reviewed? These are among the questions which were raised in a recent survey of 323 companies whose results are summarized in this paper. It is hoped that this study will permit practitioners to compare their planning with planning being performed in their industry.Suggested improvements in the stategic planning process include more frequent monitoring of performance against the plans, more comprehensive environmental surveillance, and greater emphasis on organizational structure plans. The strategic planning process was found to be constantly evolving and cyclical. The strategic planning activity expanded during adversity and contracted when business prospects were good.     

Effects of intellectual capital and university knowledge in indigenous innovation: evidence from Indian SMEs

Abstract

Intellectual capital and collaboration with universities are vital knowledge management practices for small- and medium-sized enterprises (SMEs) to innovate and improve the effectiveness of their operations. This study investigates empirically the impacts of intellectual capital and university knowledge on indigenous innovation and how business and institutional environments affect the relationships. The research model is tested using moderated regression analysis and data collected from 150 SMEs in India. The results show that intellectual capital and university knowledge improve indigenous innovation, both individually and interactively. The effect of intellectual capital in indigenous innovation is amplified by dysfunctional competition whereas the effect of university knowledge in indigenous innovation is attenuated by environmental uncertainty. In addition, we find that indigenous innovation is positively associated with business performance. The impact of indigenous innovation on business performance is enhanced by dysfunctional competition but reduced by environmental uncertainty.     

Corporate planning and management by objectives

Management by Objectives as described in literature has major shortcomings in not stressing that MbyO should start at the ‘top’, with a clear statement of the overall objectives of the business. MbyO assignments which are operated with middle management often have disappointing results, as the gap between their objectives and those at the higher levels becomes apparent. The practical difficulties of establishing overall objectives of the business is one reason, while another is that management consultants have sometimes operated corporate planning and MbyO as two separate assignments, or ‘techniques’, whereas they are two sides of the one coin. These articles detail how to establish overall objectives, which are then a firm basis for objectives throughout the business.     

Strategic Manufacturing Planning Systems and Their Linkage to Planning System Success

Academics and practitioners alike are focusing more attention on manufacturing strategy after having recognized the important role it plays in shaping the success of industrial firms. Even though research in this area has increased in the last decade, the focus of much of that work has been on the content rather than the process of the manufacturing strategy. Consequently, this study attempts to understand the important elements of the strategic manufacturing planning process and its effectiveness. Borrowing from the extant literature in the fields of strategic management and information systems, we propose a research model that relates strategic manufacturing planning system design to planning system success. Using structured questionnaires, empirical data is collected from over 200 manufacturing executives to test the model hypotheses. Planning process in manufacturing was found to be a bottom‐up approach from a corporate or business perspective, which differs from the top‐down planning process prevalent in strategic information systems planning process. Findings also indicate that greater planning system success in manufacturing is associated with a planning system that combines some “rational” elements (formality, comprehensiveness, control focus, longer horizon) with others that lend adaptability (wider participation and more intense interaction). But the strategic manufacturing planning system is more than just a collection of independent planning characteristics. Instead, it can be viewed as a gestalt planning system whereby planning characteristics move together in affecting overall planning system success.     

Implementation of S-DBR in four manufacturing SMEs: a research case study

Production planning and control systems (PPCs) are tools that have a major effect on the performance of manufacturing companies. An inappropriate determination of the applicability of PPCs could seriously jeopardise the ability to achieve competitive priorities. This mistake can be expensive for any company, but proper implementation is particularly critical for small and medium enterprises (SMEs), which are characterised by limited access to financial resources. Simplified Drum–Buffer–Rope (S-DBR) is a PPC control approach that is characterised by minimum detail in the planning stage and a primary emphasis on the control of execution. Therefore, this approach is a suitable choice for the highly variable context of SMEs. This study aims to explore the practical issues related to S-DBR implementation in four Ecuadorian SMEs through case study research. The case analysis within this study first identifies the choices made in the implementation process design within the four companies according to process and product characteristics. We then conduct a cross-case analysis to explore the effects of the S-DBR implementation process designs on a group of performance measures. Our research findings provide new insights into the S-DBR implementation process in the context of SMEs, and the effects of this approach on performance measures.