Strategic planning for increased profit in the small business

This article examines the problems facing the owner-managers of small businesses, and details the investment required in strategic process development which would guarantee the critical 5 per cent difference to ensure the successful growth and adaptability of the company. Formal strategic planning needs to blend with team development to create the concept of ‘strategy-in-use’ and the development of effective management teamwork out of a planning process.     

Brief case: Shareholder dominance—Time to ask if the emperor has any clothes

The Corporate governance and short-termism debates are both linked to the role of shareholders in business. George Binney has been working on these issues and believes strongly that ‘creation of wealth for shareholders’ is an inappropriate purpose for many companies. He recognizes that companies must provide shareholders with a competitive return for the risks they take in the same way that a company must provide customers with competitive products. But he rejects the current vogue for making shareholder satisfaction the guiding purpose of business.     

Corporate planning and Corporate Collapse

In this article John Argenti describes what he found during a year's investigation into company failure that he undertook for a recently published book ‘Corporate Collapse’. At first it was difficult to see any pattern but certain conclusions gradually emerged as he discussed the causes and symptoms of failure with more and more people.

Many of the lessons are of particular significance for bankers, shareholders, accountants and others but John Argenti believes there are a number of extremely important lessons for corporate planners as well—especially as ‘defective response to change’ turns out to be one of the prime causes of failure in mature companies.     

Manpower planning at national and company level

Discussions of manpower planning take place in the context either of national plans or of company plans. From time to time the view has been expressed that the coverage and the time scale of these two types of planning are so different that there is nothing in common between them. This paper considers whether, in practice, ‘manpower’ is really so different from ‘personnel’. After all, the individuals regarding whom both plans are made are the same people; in both cases the planners are concerned with the posts they are to fill, with their salaries and with their mobility.     

EIS—A guide for executives

Although the use of executive information systems (EIS) is increasing, many senior executives have such mixed feelings about them that there is an ‘EIS paradox’. Information managers and software suppliers believe this is because senior executives are intimidated by information technology, but this does not hold up to scrunity. The EIS paradox occurs because of failure to explain coherently how EIS fit with other aspects of the organizational database and what EIS can and cannot do for a senior executive and his or her organization. This article is designed to close the ‘information gap’ about EIS specifically for senior executives. The change in terminology from ‘data processing’ to ‘information technology’ is symptomatic of a change in the way in which computers are used. Rather than being the mere province of the data professional, information technology as exemplified by EIS can be applied to tasks where judgement and selectivity are required. The crucial point about EIS is, however, that computing can complement and increase managerial qualities of imagination and intelligence but not replace them.     

European competitiveness: Bargaining between boom and gloom

The newly-renamed European Union is in crisis from economic weakness and political claustrophia. Ralf Boscheck argues that, in addition to a suggested ‘New Founding Contract’, broad-based development of the EU requires that priority is given to adjusting competitive specialization and to centralizing political power. The management of internal and external bargaining is critical. per cent, and 19 per cent respectively. EUROSTAT (1994).     

Value added distribution of parcels in Japan

Yamato Transport Corporation recently entered the parcels business and has been very successful, taking the largest share of the market, in competition with the Japanese Post Office. By the use of a computerized information system, the company provides a rapid high quality service. Yamoto offers a pick up and delivery service. It uses retail stores for receiving the parcels and every driver has a small ‘point of sale’ terminal. The company has built its transportation network systematically, one step at a time.     

Assessing the performance of a development bank

The performance of a development bank can be assessed on the basis of ‘financial function’ and ‘development function’ criteria. While the financial function measures its operational efficiency in terms of the profitability of its investment operations, the developmental function evaluates its allocational efficiency as reflected by its investment activities for the economic development of the country and the stimulation of the capital market. The objective of this paper is to appraise the performance of the Industrial Finance Corporation of India, in terms of its profitability. The profitability has been analysed with reference to its (i) operating earnings, (ii) cost of operations, (iii) gross and net profit margins on the loan portfolio and (iv) rate of return and capital appreciation on the securities portfolio. The paper concludes with suggested measures to improve its profitability in future.     

Developing realistic scenarios for the environment: Lessons from Brent Spar

Why did Shell—renowned for its scenario planning—find itself so badly adrift with the Brent Spar? And why, later in 1995, was it wrong-footed again in Nigeria? The answers reflect deep currents already clear to the company's scenario writers in the 1980s, but retaining their ability to surprise. The authors conclude that Shell's scenarios have been ‘individualist’, ‘hierarchist’ or some combination of the two; none have adopted an ‘egalitarian perspective’. They also suggest that the ‘Values Shift’ scenario—developed for European Partners for the Environment—may hold clues to future shifts in business strategy.     

R & D and corporate planning in government

David Peretz is in charge of the Economics Section of the Inter-Bank Research Organization, London. Before that he served as an administrative civil servant in the Ministry of Technology, being for some of that time attached to the Programmes Analysis Unit (PAU) at Harwell, and concerned with studies of the organization of government industrial R & D establishments.

This article is based on a paper submitted—in their personal capacities—by the author and James Robertson (Director of IBRO) to the Government in February 1972. This paper was in turn inspired by the Government's publication of Lord Rothschild's report on ‘The Organization and Management of Government R & D’.

Like other large organizations, governments are having to come to grips with the interaction between long range planning and R & D activities. Changes are called for both in the methods of choosing priorities for R & D projects and in the organization of the Government's own research resources. The implications of ‘corporate’ planning for Government science have yet to be fully recognized.     

The increasing power of store brands: Building loyalty and market share

An important evolution in the retailing industry is the growing success of store brands. Still, their level of penetration varies widely across countries and industries. We provide an operational measure to quantify the power of store brands along two dimensions: the intrinsic loyalty of their customer base, and their conquesting power to attract potential switchers. Based on their position along these two dimensions, we classify store and national brands as ‘Giants’, ‘Misers’, ‘Fighters’ or ‘Artisans’. We use the proposed operationalization to evaluate the absolute and relative strength of Albert Heijn, the leading Dutch store brand, in 19 product categories.     

The revolution in retailing: from market driven to market driving

The first image aroused by ‘retailing’ for many of us, especially those of us who are somewhat older, is that of the corner grocery store. Not so long ago retailing was, and it still is in some parts of the world, a fragmented, local, unsophisticated, traditional business run by vulnerable owner-operators. Yet, here we are talking about a revolution in retailing. Why? What has changed? Fundamentally retailers have grown up over the past 25 years into large, global, technology-intensive, powerful, fast-growth corporations managing their own brands. Several retailers have become the darlings of their stock markets. Hennes and Mauritz, the specialty clothing retailer, has been the top performer on the Stockholm Stock Exchange over the past 10 years. Royal Ahold in the Netherlands, Home Depot and Wal-Mart in the Unìted States, Carrefour in France and Marks and Spencer in the United Kingdom have generated spectacular returns for their stockholders. How have they done this? The leading retailers through consolidation, global expansion, technology push and innovative formats, among other approaches outlined in Figure 1, have been ‘market driving’ rather than ‘market driven.’ They have shaped consumer behavior, transformed the market place, and redefined the rules of engagement with their competitors and suppliers.     

Managing organizational change—A strategic approach

Developing the competence, commitment and capacity for change of people is a vital element in the creation and maintenance of competitive advantage and should be an integral part of the strategic equations and business plans of any firm. This theme, examples of ‘good’ practice, and strategies to implement a strategic approach to people have been explained and developed in a brief case ‘action pack’ produce by the authors of this article for the MSC and NEDO. Key factors identified in the development of the three ‘C’s are effective leadership, involvement and good employee communications, stress on performance management, appropriate reward systems and training and development.     

Long term planning for coal

The Interim Report of the Coal Industry Examination was published in June 1964, representing the result of Tripartite discussions between the Government, the National Coal Board and the unions. One of the principal conclusions of this report was that the government endorsed the Board's long-term ‘Plan for Coal’ as a broad strategy for the industry. It is perhaps appropriate, therefore, to review at the present time the kind of considerations which needed to be taken into account in drawing up a long-term ‘Plan for Coal’.     

Medicines in the 1990's: Experience with a Delphi forecast

‘Medicines in the 1990's’ created great public interest when it was published recently. It forecast, for example, that by 1990 it should be possible to replace almost all parts of the body, except the brain and spinal cord with transplants or prostheses. It also predicted that by 1990, the social use of medicines will have become accepted as legitimate. This article describes step by step, how the Delphi forecast was made and the effect which it has had.     

The planning function and input-output analysis

Long range planning has been defined as a decision-making process involving the commitment of resources—money, people, time, capital—today, the payback or return on which will not be realized until some future period. Since the heart of the planning process is the making of decisions about allocations in some systematic way, economic analysis, armed with its concepts of opportunity cost, indifference theory, marginal analysis, and investment theory, provides much of the theoretical framework for good long range planning models.

If planning is to be done in a scientific manner, there shouldexist common principles and study approaches, regardless of the nature of the organism being planned for. Thus planning for the individual, family, company, industry, association or state should vary according to the relevant information to be used in making decisions and the priorities of the objectives but not in the essential method by which decisions are arrived at. This is major theme of the paper.

As a result of more, than a decade of experience as a ‘planner’ for a number of diverse business and government groups, and through the process of articulating this planning experience as a teacher, I have developed a systematic approach to the planning process. The model has its own conceptual framework that includes, as information filters and display devices, unique adaptations of input-output notation. First in this article I will highlight some of the elements of the planning process, as I have constructed them. Then I will proceed to describe the specifications of the planning system, with particular emphasis on the use of input-output analysis.     

Market segmentation: an integrated framework

Contrary to the narrow, demand-oriented approach to market segmentation taken in much of the marketing and planning literature, this article illustrates a broader, integrated framework which includes both the demand and supply sides of the competitive equation. The author argues that starting with ‘product’ characteristics is both an easier and more actionable way of segmenting markets than the traditional marketing approach that typically begins with the customer or ‘people’ characteristics. This approach can be employed by a business to make decisions about entering a market segment, differentiating a brand from its competition, positioning it in the market and communicating its quality to the customers. Customers, too, generally rely on product characteristics to perceive and evaluate the quality claims made by different competitors. Thus, the article bridges an important gap between strategy formulation and strategy implementation: an area often neglected in the strategy literature. The proposed approach focuses not only on customer benefits or needs, but also on the resources necessary to satisfy them and demonstrates this with examples from Apple, Church & Dwight and many other companies. To show a practical application, the article presents a price-quality-benefit segmentation profile of the US toothpaste market which revealed three strategic groups.     

Energy and the environment—A Delphi forecast

The author is currently an Assistant Professor of Geography at the University of Manitoba, Winnipeg, Canada. In the long range forecasting project ‘Energy and the Environment’, discussed in this article (conducted in 1970|1971 at the Pennsylvania State University), the Delphi method was employed to evaluate potential breakthroughs in energy technologies and environmental protection, management and planning innovations during the next 50 years. The priorities for energy—environmental problems, the growth of the traditional energy technologies and the probabilities of environmental ‘episodes’ in the 1970's were additional topics in the Delphi study.     

The transformation of a railroad

William B. Johnson is a Chicago Railroad magnate who has created a reputation for making railways profitable. His own railway, Illinois Central Gulf, has roughly the same track mileage, freight loading and passenger figures as British Rail. The difference is that it runs on a tenth of the staff, and since 1966 has generated pre-tax profits of more than $200m. in 10 years a compound growth rate of 20 per cent a year and profits have averaged a 16 per cent rise each year. In this article, William Johnson explains how he developed his railway into a $1bn. conglomerate, IC Industries Inc.     

Do your planning processes meet the reality test?

Sophisticated planning systems and touted techniques have never been a guarantee of success to a business. We believe this is because there has been too much focus on the content of strategy rather than the underlying process, and because the process is often poorly matched to the nature of the problem. For strategic situations the issues are usually complex and unpredictable with many unknowns and a large human factor, typical of the problem category defined as ‘wicked’. This article identifies a set of seven fundamental process principles for dealing with such problems. The principles are a starting point in the effort to codify the ‘art’ of successful strategic planning. Several examples of the use of the principles in business contexts are provided.