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.     

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.     

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.     

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.     

Customers drive corporations

This article discusses the dramatic growth of the ‘green’ movement and some of the inevitable effects on business as it becomes an integral element of consumer demand. Consumer pressure forces legislation and manufacturers need to foresee and prepare themselves for regulation. Companies need to establish a benchmark for future plans; identify the immediate opportunities and risks and plan for a broad range of long-term development.     

Government economic planning in the United Kingdom

The present system has its origins in the 1961. Plowden Report, which spawned both the Public Expenditure Survey and the Medium Term Assessment. The ramifications and requirements of the former provide the hard backbone of U.K. planning; formal indicative planning has not been attempted since the National Plan of 1965. Instead, the Medium Term Assessment provides a feasible range of scenarios for the next 5 years, circulated only within the Treasury but used as background for the main public expenditure and other economic policy decisions, for advice given to nationalized industries, and for information given to NEDO. However, the emphasis in Government relations with the private sector has shifted firmly away from indicative planning to the ‘bottom-up’ approach of the Industrial Strategy. This general framework appears likely to endure.     

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.     

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.     

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 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.     

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.     

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.     

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.     

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.     

Vertical integration in petrochemicals—2. Strategies and problems

In Part 1 of this series of three papers, the methods of measuring vertical integration and related concepts were discussed. Part 3 will describe the analysis of some 10 large chemical companies and the problems of developing and interpreting the data. In this Part 2, the conditions under which companies become vertically integrated are discussed. It is helpful to do this in two ways, looking first towards the suppliers, ‘upstream’ or backwards, and then towards the customers, ‘downstream’ or forwards. Some of the concepts have already been developed in the literature, others have arisen in debates with marketing colleagues over many years and it is not now possible to make detailed acknowledgments.     

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.     

Building an innovative organization

Morton L. Mandel, CEO of Cleveland-based Premier Industrial Corporation, with brothers Jack and Joe, started selling automotive fasteners out of garage 50 years ago. Today, Premier's sales are running at a record $650m clip. The market value of the Mandel brothers' publicly-traded Premier shares earns all three a place on Forbes' list of the 400 wealthiest Americans. The family still holds about 60 per cent of the stock. Mort Mandel believes that gives the company independence and the ability to concentrate on nuts and bolts rather than politics. Mandel's nuts and bolts approach to managing has created stunning success—after-tax margins twice the average of Premier's industry, return on assets of 24 per cent, return on investment above 30 per cent, earnings per share compounded in excess of 17 per cent for the past 5 years, shareholders' equity that has grown close to 10 per cent annually for 20 years, and debt of less than 3 per cent of net worth. Mandel says it's simple: Treat customers as though they have the ‘right’ to superior service. Behave ethically, professionally and personally. Do good. Invest in people. Execute, execute, execute. What he calls Management 101. We suspected it wasn't quite that simple, and we wanted to know how he created a company that repeatedly outperforms its industry and many others, how he sustains a culture that generates 5000 written profit improvement ideas a year from Premier's 5400 employees. So we asked him some questions about his views on management and leadership that produced refreshing insights into the power, purity and timeless applicability of ‘management basics’. This interview was conducted at Premier's unpretentious executive offices, located in the Midtown Corridor of Cleveland, Ohio, a privately-sponsored urban renewal project inspired by Mort Mandel, who practices his preachings about ‘doing good’.     

Computers and financial planning

This article discusses the principal application areas of models in the financial planning field together with the main reasons for adopting this approach. The various techniques available are compared with special emphasis on the now widespread ‘financial modelling systems’. Finally, an indication is given as to future developments.     

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.     

Buyer–Supplier Relationships: A Case Study of a Japanese and Western Alliance

With the increasing liberalisation of markets, new opportunities are emerging for smaller firms with unique products and services to establish strategic supply relationships with larger component buyers, sometimes across normal cultural divides. For many Western SMEs, developing a long-term relationship with a Japanese buyer has been critical for success in the market. However this involves the challenge of adapting to Japanese style buyer–supplier relations, especially in the monitoring area. This article reports the observations made in a field study of such a culturally sensitive relationship between a Japanese buyer and a Western supplier, especially in areas such as differing perceptions of product features and quality, business procedures, and rewards. Difficulties and solutions that arose in the relationship are logged, and the advantages of training at all staff levels, the potentially critical role of ‘link-pin’ and the value of formalised linking processes are examined as ways of achieving congruence between the expectations of the two sides.