Strategy and the “business portfolio”

In this article the author goes on to develop the conclusion reached in his previous article which appeared in the December edition of Long Range Planning. These conclusions concerned the requirements for strategic success for an individual business, here they are developed into their implications for strategy development in the typical multibusiness company.It is argued that relative competitive position and growth are the two fundamental parameters which must be considered in determining the strategy that an individual business should follow when viewed within the context of the company's overall ‘business portfolio’. The likely patterns of business strategy which will lead to overall corporate success are discussed and contrasted with those which can lead to disaster.The key is that strategies should be made to differ widely from business to business, as a function of the growth and relative competitive position of each business and the company's overall resource position particularly with respect to cash. The ‘across the board’ defensive measures which many companies have adopted in recent years as their response to the pressures of inflation and recession are therefore argued to be singularly inappropriate for the long term. The ‘business portfolio’ concept provides a superior approach for developing the differentiated strategic business objectives which are necessary for any company to make the most of its opportunities.     

A commonsense approach to portfolio planning

For the diversified firm, business portfolio planning offers a way of determining its individual businesses' roles and developing a synergistic corporate strategy. In practice, however, the common tools of portfolio planning—the growth/share and market attractiveness/business position matrices—present problems in that often neither of the matrices is precisely suitable for a given individual business. This article makes use of modifications of the growth/share and market attractiveness/business position matrices in order to make them more operational. The authors believe that a step-by-step ‘shirt-sleeve’ approach to portfolio planning can make this type of analysis accessible and invaluable to a small diversified firm, as well as providing insights to larger corporations with formal planning departments.     

A Multi‐level Dialectical–Paradox Lens for Top Management Team Strategic Decision‐Making in a Corporate Venture

This paper aims to critique the process of corporate‐owned, high‐tech start‐up strategizing through an inductive, longitudinal, case study of ‘UK‐Research‐Tech’. Insights are given through the combined ‘dialectical–paradox’ concept, thereby focusing on where ‘dialectic’ and ‘paradox’ theorizing overlap. This linked iterative, ‘dialogical–dialectic’ research approach also reflects chief executive officer/top management team (CEO/TMT) start‐up dynamics over time. These foci fill important gaps that impede better understanding of dialectical, dialogical and paradoxical forces within strategic decision‐making. As an interpretative tool, they illuminate CEO/TMT strategizing and changing interrelationships affected by broader, volatile, techno‐economic contexts and parent‐company influences on ventures. In this case study, it was found that the CEO's relatively autocratic, parent‐framed approach combined with TMT members' contradictory reactions to create ‘dialectical–paradox’ oppositional forces, eventually only resolved through ‘eleventh hour’ business strategy changes to rescue the venture. This research contributes to more nuanced understandings of corporate‐constrained ventures during early business development from start‐up strategic decisions at parent‐company level to subsequent conditions of more independent dynamic equilibrium. The ‘dialectical–paradox’ conceptual lens contributes an innovative critique of processes affecting strategic decision‐making dynamics. Another important contribution is the empirically inspired conceptual model, developed for use both to guide subsequent case‐study research analyses and as a reflective tool for CEO/TMT strategic decision‐making, especially within corporate‐inspired start‐ups.     

Reforming the strategic planning process: Integration of social responsibility and business needs

In this article the author argues that one of the prime organizational imperatives for the development of a responsive, operational, ‘corporate social policy’ must be reform of the strategic planning process. Indeed he argues that this reform is the essential pre-requisite to making the true integration of social responsibility and business needs.     

Strategic Influences of Technological Innovation in Greece

This exploratory paper analyses the ‘importance’ and ‘awareness’ of a set of established ‘strategic’ influences of technological innovation in the context of a European newly‐industrialized country. The author interviewed 105 Greek manufacturing firms (mainly SMEs) and measured their perceived innovation rate as well as 17 ‘strategic’ factors regarding top‐management practices and characteristics. Using correlation and regression analysis the initial group of factors was reduced to a subset of five ‘major importance’ influences of innovation, namely: incorporation of technology plans in the business strategy, managerial attitude towards risk, perceived intensity of competition and rate of change of customer needs, and finally status of the CEO (owner‐CEOs were associated with higher innovation rate than appointed CEOs). The ‘statistical’ results are exploratory and have to be treated with caution, as they are highly dependent on the accuracy of the respondents' perception of their company's innovation rate and top‐management practices and characteristics. The ‘statistical’ results were then compared with the managers' perception on the important factors determining innovation (also measured during the interviews). Overall the perceptual analysis confirmed the significance of the statistically important variables, with the exception of a disagreement in the direction of association between the status of the CEO and the rate of innovation. In general, top‐management characteristics proved more important ‘strategic’ influences of innovation for the Greek SMEs than corporate practices. The study also indicated that the important influences of innovation were generally scarce in the Greek institutional context. The highly innovative companies were the ones to overcome country‐specific innovation barriers such as the low supply of technology, the low level of competition and the risk‐averse national culture.     

A framework for the strategic management of future tyre technology

Strategically managing technology faces one major problem: technology planners and managers who mistake ‘R & D management’ for ‘strategic technology management’. In globally competitive markets, survival and growth of tyre companies will increasingly depend upon the ability to manage technological resources strategically. This article proposes a process model which views the strategic management of technology as ‘techno-business management’, where technology and business strategy, planning and implementation can be facilitated by the use of portfolio frameworks and technology forecasting techniques in analysing and addressing the key strategic management areas of techno-business strategy development and strategy implementation.     

Developing a company's strategic management capability

Companies vary widely in their strategic management capabilities. Some still rely almost entirely on ‘fire-fighting’. Many others are slowly developing their capabilities but there are only a few which do give due attention to strategic issues and implement their decisions effectively. To be effective a corporate planner must assist this process of development of strategic ability and must adapt his role as the company's capability changes. In the most successful corporate planning units it is clear that this change in role is occuring, but is there not also a largely untapped market for consultants to assist companies in developing these capabilities?     

Corporate development— preferred strategies in U.K. companies

In this paper policies available for corporate development are examined and the suggestion is made that new business development remains an option that must be considered. The time span of the growth, the ‘quality’ of any growth and the extent of managerial commitment to ‘growth business’ are identified as important factors that should influence decisions on corporate development. Results of two surveys made by the authors of U.K. corporate experience with different NBD entry strategies for new business development are also discussed in the paper.     

Does market share lead to profitability?

For a number of years the findings of the well-known PIMS study have played a predominant role in strategic thinking which holds that the market share of a business enterprise is ‘the key to profitability’. One criticism raised against this proposition consist in showing, through empirical evidence, that the maxim ‘the bigger, the better’ does not always hold, without, however, going into any analysis of the relationships involved and without presenting a total model. As a result, even today it is still not clear when, how, and why market share is in some way related to return on investment. It is intended, in this article, to formulate a general model, which will describe and explain these relationships. This model may be helpful in formulating strategies.     

Towards 1992: A strategy for training

1992 is now 3 years away and much is now being spoken and written on the free market within Europe following the magic date. The need for businesses to think about a strategy for training to equip their staff to take advantage of the new opportunities is ever more important. Training has historically lived under the ‘stop-go’ policy. When business is good, we can afford training; when business is bad, training is the first to suffer. The author has tried to formulate a strategic approach to ensure people become conscious of the necessity of management involvement and commitment in training. The 1990s offer great potential to companies who direct activities to these opportunities, and those who meet the threat will be winners.     

考虑消费者环保意识与政府补贴的企业绿色技术创新决策研究

在绿色经济时代,绿色技术创新已经成为越来越多企业获取竞争优势的途径。本文基于消费者需求偏好,在不同的政府补贴情形下,构建了包含绿色产品与普通产品生产企业的双寡头竞争模型和斯塔克博格模型,分析了企业绿色技术创新驱动因素和行动时机。研究表明：消费者环保意识有助于提升绿色产品市场份额和企业利润,而绿色产品的单位成本增加会降低其市场份额和企业利润,且绿色产品的单位成本与普通产品企业的利润呈倒U型关系;政府对绿色产品的补贴,可以促进企业绿色技术创新。补贴消费者与补贴企业两种方式下产品的市场份额和社会总福利相同,考虑到补贴的执行成本,补贴消费者更优;绿色产品生产企业作为追随者时,绿色产品的市场占有率最高,社会总福利也最高,因此,后发行动策略是企业绿色技术创新的占优行动策略。     

A computerized financial planning model for a health maintenance organization

The time and resource costs needed to plan and start a prepaid medical program or health maintenance organization (HMO) are extensive. It can take up to 3 years to bring one on line and another 3 to 4 years to reach financial stability. Depending on the type of prepaid medical plan designed, the cost can reach $6 to $8 million before breakeven occurs. Because the financial stakes are so high, a systematic and sound business approach must be taken to find that one ‘best’ design that will survive in the market place. Thousands of hours are required to study all of the possible HMO design configurations. This paper describes how a corporation constructed a computerized financial planning model to simulate the financial behavior of a prepaid medical program with different organizational formats, operational policies and pricing and compensation schemes in varying market, economic and cost environments. Model development and application was a corporate affair. The computerized model provided a special design team with the capability to evaluate the economic impact of many different designs by asking ‘what if’ questions dealing with several key design and operating variables concerning different health benefit options, service utilization rates, staffing patterns, inflation rates and price and premium schedules. Thousands of hours of design time were saved and the corporation was able to find the ‘best’ possible design in a reasonable time and at a reasonable cost.     

U.S. firms' responses to regulation: Stonewalling and opportunism

While regulation may not always be to business's benefit, it is likely to mean than costly requirements, increases in paperwork, decreases in innovation and the loss of business power. In responding to regulation, managers have choices. They can allow ‘drift’ to occur and not choose a policy. They can ‘progressive’ and ‘lead the industry’, or ‘flight all the way’ and ‘do only what is required’. They can choose some combination of ‘reaction and defence’ and|or ‘accomodation and proaction’, or they can move from policy to policy depending on the issue, the competitive implications, the power of key participants and the other factors. Each of these responses has a unique array of advantages and disadvantages. To decide on a strategy, strategic analysis is needed. Such analysis requires: (1) attention to internal operating impacts; (2) concern for relative competitive impacts on an industry-wide basis; (3) concern for relative competitive impacts within an industry; and (4) assessment of regulatory alternatives in light of corporate goals. Attention to these concerns is necessary to refine, tailor and adjust a company's particular response to regulatory challenges.     

Strategic Integration and Devolvement of Human Resource Management in the UK Manufacturing Sector

This paper analyses the practices of ‘integration’ of HRM into the corporate strategy and ‘devolvement’ of responsibility for HRM to line managers in six British manufacturing industries. The findings are based on a questionnaire survey, in‐depth interviews and cognitive mapping methodologies. The results show that over 50% of the firms under study practise a high level of strategic integration. On the other hand, over 61% of the sample firms practise a low level of devolvement practices. Interestingly, both the practices of integration of HRM into the corporate strategy and devolvement of HRM to line managers are more determined by a number of organizational policies than traditional contingent variables. The adoption of the mixed methodology has been useful. The findings contribute to strategic HRM literature, and also have some key messages for policy‐makers in the field. The cognitive maps developed in the paper could be used to give feedback and training to managers.     

Strategic planning in a changing corporate environment

Strategic planning is about nothing, if it is not about attempting to achieve desirable futures. In the past this has often been seen as an excuse, or indeed a necessity, for fixed goals which are constantly timed. Such a state of planning has, fortunately, for a long time now been discredited and this paper concentrates upon the concepts of strategic planning within the changing corporate environment, an environment which therefore has to effect both the goals as well as the process of planning. Furthermore, the author concentrates upon the concept of a planning, allocating, and monitoring cycle of strategic planning which sets the strategic planning concept within a process cycle as well as within an effective allocative structure. The author considers this latter point an extremely important one since, as he says, ‘planning can become a very sterile and barren activity if it is not viewed integrally with acting and doing’. Finally, this paper concentrates on the important fact that planning must, within a dynamic environment, be an iterative and a learning process.     

Formal planning in major U.S. corporations

As the world about us changes, managers in all types of institutions try to cope in a variety of ways. In the early 1960s, many corporate managers realized they could not make sound decisions about future business activities in an expedient, reactive manner because their firms were growing very large and complex with new technologies, products, markets and competition to deal with. As a result, formal planning techniques which had been used in narrow functional applications were introduced on a much broader scale and formal long-range planning became popular. New corporate planning functions appeared in many companies, as well as new staff planning specialists and planning executives. The author conducted a field study on the design of these systems in the mid-1960s and he argues that they showed great promise for improved management.With this history in mind, we might ask why such subjects as ‘planning techniques’ and ‘problems of implementation’ are still topics of concern. It would seem that such techniques would be well known and established in most firms after 10–15 years. However, this is not the case, for during a second field study of corporate planning systems which was completed in 1976 the author found that many corporations, including some of the largest ones, had redesigned their planning systems in the early 1970s, essentially making a fresh start at formal long-range planning. (See Table 1).From his recent field study the author concludes that all corporations experience problems in implementing and using a formal planning system. The nature of these problems and some possible remedies are the subjects upon which this article focuses.     

Conflict of values— the central strategy problem

There is growing evidence that the central strategy question for business is no longer ‘what business are you in?’ but‘why are you in business?’ The traditional answers to this question—‘to make profits’, ‘to grow’ and ‘to give an adequate return to the shareholder’, are all being questioned. In their place others are being suggested—‘to provide satisfying jobs’, ‘to help solve social problems’, ‘to assist in urban and regional development’.In this article, Bernard Taylor suggests that the conflict between business goals and social goals has become the central strategy problem. Business enterprises like other organizations tend to develop their own distinctive sub-cultures with their own value systems which may differ markedly from the values accepted in society generally. The more effective the selection, training and reward systems, the more these business values will be reinforced.But this can lead to difficulties when society begins to reject business values in favour of other social goals; particularly at a time when the power and autonomy of management is being challenged and Corporate Planning is being transformed from an internal dialogue between managers at headquarters and managers in divisions into an open debate involving public servants, employees and self-appointed representatives of community interests.     

Business Groups as Hierarchical Clique Structures: A Conceptual and Methodological Discussion as it applies to the Mexican Experience

The hierarchically nested set of business groups that result from 110 Mexican firms sharing corporate directors (i.e. interlocking directors) is analysed using social network tools. It is argued that these groupings are one of the many dimensions that should be employed to understand the complex nature of ‘business groups’ broadly understood. The hypothesis that business groups are responses ‘to market failures that arise in the particular institutional contexts of emerging economies’ (Khanna and Rivkin, Strategic Management Journal, 22 (2001), p. 46) is tested using the groups constructed from data on interlocking directorates. The results show that as firms belong to more of the same sets of groups, their financial performance tends to be more similar, thus supporting the idea that ‘groups can make up for under‐developed institutions, thereby reducing transaction costs’ (Khanna and Yafeh, Journal of Economic Literature, 45 (2007), pp. 340–341).     

Mitigating the environmental and social footprint of brownfields: The case for a peripheral CSR approach

Industrial plant closures create a largely unexplored challenge for corporate social responsibility (CSR) strategy. Such plant closures lead to brownfield sites: economic assets and large pieces of land that often cannot be redeployed for alternative purposes, except by incurring significant costs. The direct effects of plant closures typically include a rise in unemployment and value chain disturbance (or dismantling), but brownfields are usually also associated with additional social effects and environmental pollution. Here, a proactive CSR strategy means reducing or mitigating the joint, negative social and environmental footprint of industrial plant closures beyond what is mandated by law (which has tended primarily to address direct effects). We assess the various strategies firms can pursue to mitigate negative, post-closure footprints and we distinguish between two alternative strategic options beyond the ‘legal obligations’ approach, namely the ‘core business related’ (core) CSR approach, and the ‘peripheral CSR’ approach. We explore the case of a plant closure by Bekaert S.A., a large, Belgian industrial firm, which adopted a peripheral CSR approach to manage and redevelop a brownfield site. In this context, we identify four enabling conditions for peripheral CSR to be implemented effectively.