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.     

Planning for technological innovation part I. Investment in technology

In the modern industrial age, investment can no longer be seen purely in terms of expenditure on hardware or ‘tangible’ investment; the knowledge content or ‘intangible’ investment is equally important. Of course, intangible investment was always a feature of the manufacturing business but in earlier times the additional effort was mostly supplied by the entrepreneur. The complexity of modern technology, the multidisciplinary skills required and the sheer speed of change have altered this; except possibly in the new venture companies. It follows that a full understanding of the effects of technological change on industry can only be obtained if all aspects of investment are identified and measured. It is then possible to determine how much of its resources any particular industry is allocating to its promotion of products for the future, and whether this has changed significantly over time.

This paper therefore is concerned with the totality of investment, its size, content and economic importance.     

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.     

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.     

Corporate planning—A systems view

This paper examines the, often disregarded, fact that the very inprecision of language often obscures basic underlying conceptual differences between corporate planning as expressed in theory and in practice. Few of the claims that confusions result both from a lack of explicit definitions and from the lack of differentiation between ‘theories of planning’ and ‘theories in planning’.

The purpose of this paper is to propose such a theory of corporate planning through discussion of the following topics: (1) Problems in concepts of corporate planning; (2) The concept of an approach of corporate planning; (3) Propositions that form the basis of a theory or model of planning, relying heavily on a systems framework; and (4) a proposed corporate planning system.     

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 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.     

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.     

The delusion of intrapreneurship

The purpose of this article is to provide some insight into the limitations in the concept of intrapreneurship, the definition of an ’intrapreneur‘ being an entrepreneur operating within a large comany rather than in his own business. The author believes that intrapreneurship is not a formula for successful innovation in large companies as a bureaucratic system cannot provide the rewards and the personal autonomy which the true entrepreneur requires.     

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.     

An information system for Just-In-Time

In recent years, U.S.'s worldwide industrial and economic leadership has been seriously challenged by many foreign countries. In order to counter the problem, many U.S. manufacturing companies have sought effective materials management systems such as MRP and the ‘Just-In-Time’ (JIT) system as used by many Japanese companies. Even through many practitioners and academicians have been studying the JIT concept and have recommended ways of adapting the concept to the U.S. manufacturing environment, not very many organizations are enjoying benefits of JIT system in full scale because of misunderstanding of information needs in JIT system. The objectives of this paper are (1) to identify information requirements of the materials management systems under JIT concept, (2) to compare them against the requirements under MRP system, and (3) to propose an integrated management information system to support materials management system in JIT environment. The goal of this paper is to facilitate more effective implementation of the JIT system, and stimulate further research on the subject matter.     

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.     

Japanese Supply Chain Relationships in Recession

The remarkable nature of Japan’s supply chain relationships has been identified as a significant factor in its industrial success, especially in the automotive and electronics sectors. Yet, Japanese companies do not recognise the term ‘supply chain management’. For four decades Japan’s industrial giants developed sourcing strategies based on highly-pressured, customer-dominated supply relationships in which sub-contractors enjoyed the benefits of the success of their customers at the expense of yielding their autonomy. In 1991, the Japanese economy plunged into deep recession and has yet to recover. Large corporations now appear vulnerable and almost all Japan’s banks are technically insolvent. This article explains the ways in which recession has affected the supply chain relationships in Japan and the domestic and international sourcing strategies that shape them. Japanese industrial customers are now putting increased pressure on their suppliers to provide technical solutions and to develop links with other customers for the first time. The sub-structures of the keiretsu appear to be giving way to open competition with ‘parent’ firms selling equity in subsidiaries. Profound changes appear to be underway in Japanese industrial sourcing strategies—suppliers can no longer rely on retaining business simply by obedience and hard work. Instead, they face an open, fiercely competitive environment—at home and abroad. In this new order, Japanese suppliers are developing new competitive technical and commercial capabilities, enabling their Japanese industrial customers to concentrate on real-time, market-driven configuration of products, without needing to hold stocks in their supply chains and distribution channels. Meanwhile, Japan is seeking to re-establish its position of leading player in East Asia.     

Lessons from the ‘made in Switzerland’ study: What makes a world-class manufacturer?

Many executives are currently striving to develop world-class manufacturing operations to ensure that they remain competitive in increasingly global markets. To do this, they are adopting a range of practices, from organisational changes such as empowerment and teamwork to the use of techniques such as pull production. Their goal is to substantially improve performance: faster cycle times, reduced manufacturing costs and greater customer satisfaction.The question of how far companies have moved towards world-class manufacturing is at the heart of the ‘Made in Switzerland’ project, a major benchmarking study of Swiss manufacturing practice and performance. The study was carried out in 1995 by IMD faculty and researchers working with consultants from IBM Switzerland. It is part of the internationally-based ‘Made in Europe’ project comprising similar studies in the UK, Germany, The Netherlands and Finland.The central hypothesis of the studies is that the adoption of best practice leads to high performance. The objective is to establish a benchmarking database for participating manufacturers around the world. The studies, which are highly structured, examine six areas of manufacturing practice and performance in detail and assess the relationship between them at individual plants. The areas covered in the study are quality, organisation and culture, concurrent engineering, logistics, lean production and manufacturing systems.Plants in each country are grouped according to their position on the practice and performance indices and then studied in order to pinpoint the issues and challenges facing the manufacturers within that group. Less than three per cent of the 800 plants currently on the ‘Made in Europe’ database are considered ‘world-class’. Yet for manufacturers striving to reach this level of performance, this small minority can provide some valuable insights for the way ahead.This article discusses many of the issues raised by the analysis described above, with particular reference to the ‘Made in Switzerland’ study. In the first section, it looks at the key lessons arising from the Swiss study and what insights these can provide for manufacturers, not only in the Swiss market, but across Europe. In the second section, it looks at how the study can be used for benchmarking and provides manufacturers with some general recommendations to help them focus their improvements and move closer to becoming world-class.     

Alternatives to merger—Joint ventures and other strategies

Mergers are plagued by organizational upheaval, enormous costs, ‘poison pills’, high turnover and a variety of other ills. Despite these problems, merger activity is increasing. Corporate executives pursue merger as a means to grow, improve profitability, reduce dependence on one industry, invest excess cash and improve the management of acquired companies. This article suggests alternative strategies that accomplish these objectives without the repercussions that accompany merger activity.     

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.     

Defining and Dimensionalising Diversity:: Evidence from Corporate Websites across Europe

The corporate ‘diversity statement’ is a new tool increasingly used by large companies to promote diversity management policies on their websites. Through an examination of these on-line texts, we identify how companies construct the meaning of ‘diversity’ through its dimensions. Few companies actually define diversity. However, dimensions of diversity cover a wide-ranging set of individual differences, not just gender and race but other visible and less visible differences that might lead to discrimination in the workplace. By comparing statements from 241 top companies in eight countries (Finland, France, Germany, Netherlands, Norway, Sweden, Switzerland and the UK), we reveal how the definition of ‘diversity’ and its dimensions as used on websites varies across Europe.     

Future of European human resource management: A contingent approach

The ability to cope with an increasingly open European Market, enhanced mobility between nation states and the threat of competition from the Far East will be highly prized organisational skills in the third millenium. Many commentators have argued that ‘Europeanisation’ (broadly defined) is an irreversible process and companies will have to cope proactively with this or perish. However, in this article we argue that many of these predictions are based on an uncritical acceptance of the ‘internationalisation’ thesis, and on subjective assessments of possible future trends — rather than on sound empirical research within strong theoretical frameworks. Accordingly, this article takes a critical look at some widely-held assumptions about internationalisation, Europeanisation and the (potential) development of European Human Resource Management (EHRM). It then goes on to suggest a framework of research which will be more able to capture future developments in EHRM and thereby facilitate more robust exchanges on strategic HRM with those companies operating in a European setting.     

Integrated logistics-call in the revolutionaries!

This paper argues that the ability of logistics to achieve its aim of efficient and effective interfunctional co-ordination is hindered by the particular paradigm to which it unwittingly adheres. We begin by defining and setting out the objectives of both ‘traditional’ and ‘non-traditional’ forms of logistics, and demonstrate that there is doubt about whether even the newer form can achieve proper interfunctional co-ordination or gain widespread acceptance in the practitioner community. In order to understand why, it is suggested that an analysis is required of the theoretical assumptions upon which contemporary logistics is based. Despite recent developments in logistics it may be that it is some unquestioned paradigm, upon which all logisticians hitherto have relied, which is preventing genuine progress being made. A paradigm analysis is conducted which reveals that both traditional and non-traditional logistics are ‘functionalist’ in nature. It is argued that the main problems faced by logistics derive from this. Logistics suffers from the failings of functionalist thinking and its ambitions will continue to be frustrated unless it is able to achieve an ‘epistemological break’ from functionalism. Logisticians must look towards other paradigms in order to progress. Logistics is in need of its own revolutionaries.     

Corporate environmental policy in Shell

In the last decade there has been a radical change in public attitudes to the environment—a change initiated by a young ‘green’ movement, which, years ago, was trying to make its real concern heard in both government and industry. Governments were seen to have little concern for the environment, and industry was typecast in the role of the dirty polluter. Most significantly, the three parties were seen as sitting in separate camps. Over the years, however, we in industry were forced to think our actions through towards their logical environmental conclusion. We were forced to develop an environmental appreciation which we did not have some time ago. In turn, the environmentalists and governments started to realize that industry is an essential player in society, and that balances can be struck which benefit both society and the environment. We have much to be grateful to these green pioneers for, even if we sometimes find that difficult to admit. This process resulted in industry, government and the ‘green’ movement learning to talk to each other. Dialogue, is most important if we are to ensure the continuation of a world fir for our children and grandchildren to grow up in. Dialogue ensures that the tide of change continues. In that process business should become part of the environmental solution, the provider of the resources needed to improve our world for the better rather than being portrayed as the problem.