Three simple steps to determine optimum plant capacity

Plant investment decisions are frequently crowded with folk-lore, even though basic economics may provide a ready guide to optimum capacity.Increasing emphasis on corporate accountability is producing the need to accept a more numerate approach to business decision taking while the overall scope for off-the-cuff decisions is rapidly diminishing. One important area of business decision taking concerns plant investment and in this paper an approximation routine is outlined for determining by economic analysis the optimum plant size for new ventures. Attention is also drawn to the importance of organization structure for investment planning.     

Strategic planning in an age of uncertainty

Strategic planning and decision making in the face of uncertainty have always presented a serious challenge to top management, but the present scale of uncertainty is unprecedented. Decision makers used to be able to rely on the past to predict the trends of the future. Now they are increasingly being forced to make important decisions that depend upon highly uncertain external factors for which the past offers little guidance. In all areas of business and government, there is a vital need to understand and implement procedures that enable decision makers to deal more effectively with uncertainty for planning and allocating their organizations' resources.Because of differences in their social, political and economic environments, European and Japanese managers are today affected by many acute areas of uncertainty— such as industrial democracy, floating exchange rates, changing social and political values, growing environmental awareness, government regulation, technological change, pollution control regulation, energy cost, and raw material availability—earlier than their counterparts in the U.S.A. These uncertainties affect not only private sector manufacturing industries, but also financial and service industries as well as nationalized industries and government organizations.This article shows how ineffective methods of dealing with uncertainty can lead to serious mistakes with costly consequences. The cost of overconfidence and people's natural but futile tendency to ignore or to try to eliminate uncertainty is illustrated by the crises seen recently in the world steel and shipbuilding industries. The article then demonstrates how decision analysis procedures that focus directly on the major decision points in the strategic plan enable executives not only to include uncertainty directly in their strategic planning, but also to increase their understanding of the decision process and their ability to communicate the results to others.     

Strategic planning for social and political change

Formalized planning is currently applied to planning for operations and capital investment, planning for products and markets, and occasionally for manpower. However, there is little evidence that companies are producing formal plans and programmes to deal with social and political change. Unfortunately, public opinion is moving against business, action groups inside and outside companies are challenging the authority of management, and public officials and politicians are already framing new laws and regulations. Unless managers begin to get more involved in the framing of these controls they are likely to find laws enacted and enforced by people who have little knowledge or sympathy with business. In this article the author points up the necessity to assess the social and political challenge to their business, and formulate and implement social and political strategies and plans aimed at ensuring the survival and prosperity of their organisations.     

Formal strategy in public hospitals

This paper suggests that the difficulties associated with the application of formal strategic planning in public professional service organizations may have been underestimated in much of the literature. A survey of written strategic plans produced by Canadian hospitals showed that these plans were often heavily oriented towards expansion, ambiguous and rather loosely integrated, leading to questions concerning their realism and utility as a basis for strategic decisions. This phenomenon seems symptomatic of the complex (and often highly political) decision making environment faced by hospital administrators (and by managers of other professional service organizations such as universities and social service agencies). It is concluded that the benefits of formal planning may be different and less tangible for these organizations than for private business.     

A strategic perspective for make or buy decisions

Make or buy decisions have typically been relegated to purchasing departments. While this is not totally unjustified, top management must consider the strategic implications. In essence, operative decisions are made here which influence the strategic thrust of the organization. Make or buy decisions have substantial strategic implications in the entire planning process. They can affect a firm's competitive advantage, and alter the types of alternatives considered in the planning process.

It is argued that strategic considerations should outweigh technical and conventional approaches to make or buy decisions. Top management needs to put these decisions back on their strategic agenda.     

The Quality of Stakeholder-Based Decisions

The increased use of stakeholder processes in environmental decision making has raised concerns about the quality of decisions these processes produce. Some claim that stakeholders make inadequate use of scientific information and analysis and are all too ready to sacrifice technical quality for political expediency. This article looks to the case study record to examine the quality of the decisions from stakeholder-based processes. The data for the analysis come from a "case survey," in which researchers coded information from 239 published case studies of stakeholder involvement in environmental decision making. These cases reflect a diversity of planning, management, and implementation activities carried out by environmental and natural resource agencies at many levels of government. Overall, the case-study record suggests that there should be little concern that stakeholder processes are resulting in low-quality decisions. The majority of cases contain evidence of stakeholders improving decisions over the status quo; adding new information, ideas, and analysis; and having adequate access to technical and scientific resources. Indeed, data suggest that it is the more intensive stakeholder processes--precisely those that have aroused recent concern--that are more likely to result in higher-quality decisions.     

Effect of economic planning on business decisions

The fact that the United States has not faced an economic perplexity of current dimensions since the depression days hardly needs any emphasis. The current economic slowdown is significant because no recovery measures which may be applied to cure the economy are in sight. Since the Great Depression, especially after World War II, Keynes' economic theories have successfully been applied in the U.S., as also in other countries of the Free World, to put the economy back on path to recovery. Unfortunately, Keynesian measures do not seem to cope with the current economic woes. Apparently, new ways need to be sought and employed to get the economy back on track. Among many new ideas that have been advanced to restore economic growth, one is national economic planning by which the Government would play an active role in setting goals for the economy and devising means to reach them.The purpose of this paper is to report the findings of a study that the author undertook to probe the opinions of chief executive officers of the largest U.S. corporations on the whole idea of national economic planning in the United States. This study is based on interviews with 23 chief executives officers (CEOs) in different industries. Table 1 shows the background of these CEOs. Specifically, the author refers to such questions as: What positive and negative attitudes do the chief executive officers maintain toward national economic planning; what difficulties do they think will have to be surmounted to accomplish national economic planning in the U.S.; what influence may national economic planning have on various business decisions; and how may national economic planning affect corporate strategy?     

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.     

Identifying the business value of superior environmental performance: Current deliberations from the aspen institute

The growing connection between the environment and economic growth has created many challenges for business. In response, a set of recent dialogues, convened by the Aspen Institute, focused on the business opportunities inherent in environmental leadership. The conclusion? In a nutshell, businesses that integrate their environmental planning with their strategic business planning can improve their corporate performance and gain a competitive edge. Investors and analysts who understand these connections will be better positioned to identify companies with superior stock appreciation in the newly emerging sustainability-driven marketplace of the 21st century.     

The role of human and social board capital in driving CSR reporting

The objective of this paper is to analyze the effect of the professional, technical and relational background (human and social capital) of outside directors on promoting firm CSR disclosure. Following the Hillman et al. (2000) taxonomy of board members, we classify outside directors as business experts, support specialists and community influential, and examine whether business and technical expertise or political ties in the boardroom affect CSR disclosure.This study confirms that not all outside directors are equally effective in improving CSR disclosure and that only certain kinds of outside directors, those classified as support specialists, help promote it. On the other hand, our findings also show that directors with previous experience as politicians affect CSR disclosure negatively, probably due to their interests in safeguarding their reputation within the company, in avoiding public scrutiny and in protecting their political connections. In addition, our set of analysis with interaction effects reveals that powerful CEOs have the incentive to promote CSR-related strategies and to convince business experts and support specialist directors to enhance profitable sustainability strategies and transparency in CSR disclosure. Nevertheless, the powerful CEO effect is not enough to compensate the negative role of political directors on CSR reporting. Therefore, this paper supports the theories in favor of analyzing the multiple configurations of corporate governance mechanisms by adopting a holistic approach, and the need to combine these configurations in order to analyze their impact on CSR behavior.     

The business environment in the 1980s

Dr. Harold Linstone, the editor of ‘Technological Forecasting and Social Change’ holds that too often the future is too much discounted. This seems particularly true in the case of business corporations, which tend to pay lip service to long-range planning—especially when prospective studies point to threats rather than to opportunities.The author believes that truly long-range planning will rarely be operative until business corporations muster the political will to jointly write a scenario of their (interlinked) future, and to act accordingly. Illustratively and speculatively, such a scenario might read as follows:     

1998 Annual Meeting Plenary Session: Assessing and Managing Risks in a Democratic Society

The theme of one of the plenary sessions held at the 1998 annual meeting of the Society for Risk Analysis, 'Assessing and Managing Risks in a Democratic Society,' was chosen to reflect the current debate about the best ways to integrate social, political, economic, and technical issues into fair risk management decisions. In the papers presented here, the three plenary speakers provide their perspectives on how environmental risk management decision making is—or should be—informed by democratic processes.
John D. Graham Making Sense of Risk
Robert F. Kennedy, Jr. Risk, Democracy, and the Environment
Jason Shogren Markets to Master Health and Environmental Risk
Audience Questions and Answers     

Making strategic planning work in local government.

Since decisions are made through the political process in local government, planners are being advised to modify their style of planning. Planners acknowledge the need to modify the practice of planning, but reforms are introduced within the framework of the comprehensive plan which continues to serve as the principal planning instrument. This results in internal conflicts within the planning process. In this paper a proposal is made for a planning system which is composed of a series of interacting building blocks. The planning process is molded to fit the management function and capability of those involved in the decision process. Plans are developed as management tools and the planning process accommodates the multiple centres which interact to produce a community's policies and strategies.     

Political connections,gender diversity and compensation policy

In this paper we analyze the influence of corporate governance, specifically political connections and gender diversity, on board and managers’ remuneration in savings banks in Spain. We also analyze whether financial experience moderates the relation between political experience and board compensation. To the best of our knowledge, the effects of having politicians on remuneration levels of financial firm have not been studied. Connections are important in hiring decisions and in generating business so it is interesting to explore whether they are important when it comes to compensation policies. We use a panel data and financial and corporate governance information from 44 savings banks for the period 2004–2009. Our results show that the previous political activity of the chairperson positively influences board remuneration. Our study provides the first evidence for a link between political connection and compensation policy, showing that, in addition to the standard firm-level factors, political and financial experience are material determinants of economic significance in compensation policies. Specifically, we show that financial expertise may substitute for governance mechanisms that are lacking in firms with weak governance environments (e.g. saving banks with high politicization).     

How NASA moved from R & D to operations

This paper investigates the initial planning process for the transition of an organization from a R & D environment to an Operations environment. Using a developed transition life cycle model, the paper demonstrates a four step analysis of the management of the transition. Further, the paper suggests the utilization of existing methods for achieving a smooth transformation under various levels of technical, political, cultural, managerial, and economic uncertainties. Finally, the paper lists possible courses of action and considerations for the transition once the initial planning stage is completed. The concepts herein were used to begin planning the change, from R & D to Operations, of the Space Shuttle Program at NASA.     

International security and the world economy

The recent increase in international tension associated with Iran and Afghanistan raises many questions about the longerterm health of the international economy. There is growing concern about potential conflicts affecting sources of key raw materials, serious problems in the international payments system and growing domestic priorities on defence production. Strategic political decisions rather than private business decisions are likely to affect the future course of the world economy. This is especially true because of the increasing political dependence of the industrial countries on developments abroad. The author examines the historical setting of inter-dependence, the current dilemmas created by it and the policy steps likely to dominate the next decade.     

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.     

Environmental leadership in business education: Where's the innovation and how should we support it?

General managers have the power to shape environmental performance through the strategic decisions they make about products, markets and investments. Yet, often times managers fail to fully recognize the link between improved environmental performance and business performance. Over the past ten years, many business schools have added environmental content to their classes and research to help future business leaders recognize and act on these links. Ironically, although business leaders articulate ambitious environmental goals, corporate recruiting demands have not kept pace with the growing supply of these graduates. The following recap of the World Resources Institute's recent study, Grey Pinstripes with Green Ties: MBA Programs Where the Environment Matters, helps identify information barriers firms encounter in seeking new managers with a combination of business training and technical competence.     

Successful entrepreneurship in Hong Kong

The business performance of Chinese firms throughout the world is generally regarded as outstanding. It is also generally accepted in the literature that entrepreneurial business firms play a significant role in economic development of countries at every level of industrialization. Even though entrepreneurship is a major influencing factor for economic growth and development, the interpretation of this factor is still debatable. This paper examines the following factors which might influence the emergence of entrepreneuship: (1) economic; (2) non-economic; and (3) psychological. It then relates these factors to Chinese culture in an attempt to explain the apparent outstanding entrepreneurial skills of the Chinese people. As for economic factors, in Hong Kong the free open market and voluntary exchange provide freedom for distribution of income which in turn allows business practitioners to retain profits and accumulate wealth. Non-economic factors in Hong Kong include is blocked upward mobility in political channels in the colonial environment. This causes the Chinese to use economic mobility as an alternative. Psychological factors include the viewpoint that Chinese are more concerned about a sense of personal or individual achievement, power and influence than other cultures. This causes the Hong Kong Chinese to shift their achievement drives to business success and this encourages entrepreneurship.