Economics professors Andrew B. Bernard and Peter K. Schott, and J. Bradford Jensen of the Institute for International Economics, dispel the myth that all U.S. manufacturing is headed offshore.
For the past two decades, say economics professor Adam B. Jaffe and business professor Josh Lerner, U.S. patent laws have gummed up the gears of innovation.
Although companies are devoting significant resources to corporate social responsibility (CSR) initiatives, insights into the optimal formulation, implementation, and effectiveness estimation of CSR strategies are currently scarce. Takes an in-depth look at when, why, and how CSR works from a consumer's perspective. In contrast to the simple, monotonic relationships between CSR and consumer purchase behavior evident in marketplace polls, this article proposes a more complex, contingent model of consumer responses to CSR. Articulates both the internal outcomes (e.g., awareness, attitudes, attachment) and external outcomes (e.g., word of mouth, purchase, loyalty) of CSR initiatives for not just the company, but also the consumer and the CSR issue/cause. Delineates the key factors that are likely to moderate the extent to which the inputs lead to the internal outcomes and the internal outcomes lead to the external ones. This framework can help guide companies in formulating and implementing their CSR initiatives as well as measuring the effectiveness of these initiatives.
For global companies that implement their codes of conduct within long supply chains, managing responsibility is increasingly starting to resemble managing quality, which most companies have done for many years. Compares emerging systems of (total) responsibility management (TRM) to (total) quality management (TQM) systems. Managers can think systemically about managing responsibility in the emerging competitive and activist environment by making an analogy to quality management.
Cause marketing involves a "cause-linked" promotion of a commercial product, with some part of that product's revenues being donated to the nonprofit engaged in that cause. Traditionally, the needs of the for-profit firm have for the most part initiated and driven cause marketing, with less attention directed to the needs of the nonprofit organization or its role in creating value for the partnership. Offers a framework that considers the benefits and costs from both partners' perspectives, including monetary (first-order) as well as nonmonetary (second-order) considerations. Using this framework, the article proposes a decision process aimed at enhancing the value for both partners in the relationship.
Companies are increasingly seeing corporate social responsibility as a key to long-term success and are collaborating with nonprofit organizations in various ways to establish themselves as good corporate citizens. Delves into a promising form of company/nonprofit collaboration called social alliances--long-term, collaborative efforts between companies and nonprofits that are designed to achieve strategic objectives for both organizations. The characteristics, factors, and circumstances that enable or impede social alliances are examined through an investigation of 11 social alliances involving 26 organizations. Though social alliances may be fraught with problems, they can be designed, structured, nurtured, and maintained in a manner that enables both to contribute to solving pressing social problems and to fulfilling important strategic objectives for companies and nonprofits.
Analyzes the company's ultimate decision to sell Fair Trade coffee and subsequently work with other NGOs to ensure that small farmers receive a living wage, in an effort to live up to the standards Starbucks set for itself in the area of social responsibility. Provides a brief overview of the changing environment for corporations and NGOs. Discusses the battle between Global Exchange and Starbucks over Fair Trade, including factors that led to the confrontation between Global Exchange and Starbucks, Starbucks' alternatives in the face of Global Exchange's threat, Starbucks' decision, and ensuing events. Also presents collaboration as a growing and important alternative to confrontation in business-NGO relations and offers seven lessons managers can take away from Starbucks' experience.
Corporate social responsibility has major implications for pricing decisions in some markets. An extreme case is the pricing of life-saving drugs in developing countries; industry critics have pointed to price as an obstacle to treatment and a factor in the deaths of millions of AIDS victims. Examines socially responsible pricing in the form of differential pricing across markets, taking into account ability to pay and social welfare. An analysis of AIDS drug pricing between 1999 and 2003 suggests that, in fact, the high prices of AIDS drugs in developing countries suboptimized contribution earnings in those markets. In the 1990s, multinationals could have earned greater contribution in developing countries by reducing prices, while also saving thousands of lives. However, that could have jeopardized earnings in developed countries, and this, together with other factors, created barriers to socially responsible pricing. Neither multinationals nor developing country governments can alone create conditions for socially responsible pricing to prevail. Identifies the role of different players in addressing barriers to socially responsible pricing, including multinationals, governments, nongovernmental organizations, and multilateral institutions such as the World Trade Organization and the World Health Organization. Also offers lessons for managers in industries with characteristics similar to the drug industry, where socially responsible pricing also may be needed, if not demanded.
Misguided marketing strategies have destroyed more shareholder value than shoddy accounting or shady fiscal practices. Yet, marketing functions typically reside deep in the organization, far from the executive suite and boardroom, and they are often poorly aligned with corporate strategy. Boards of directors, it would seem, have compelling reasons to monitor their companies' marketing activities. The authors argue that boards lack a clear understanding of how their companies are meeting customer needs and how their marketing strategies drive (or often fail to drive) top-line growth. To help remedy that problem, they've devised a "marketing dashboard," a series of management reports that could give the board this critical knowledge. The dashboard has three parts, each of which the board should review regularly. The first part tracks the company's main business drivers--those business conditions that, when manipulated or otherwise changed, will directly and predictably affect the company's performance. The second part describes the specific innovations in a pipeline of growth ideas that will allow the company to reach its short- and long-term revenue goals. And the third part provides an overview of the company's marketing skill set so the board can determine not only if the company has enough marketing talent, but also if it has the right marketing talent. Unlike isolated measures of marketing performance that are often insufficient, irrelevant, or misleading, the dashboard allows the board to assess quickly and routinely the effectiveness of its company's marketing strategies. Armed with a clear understanding of marketing's role and performance, the board can expose inadequate marketing campaigns, direct management to address the problem, and monitor progress.
Annual spending on executive coaching in the United States is estimated at $1 billion. Yet, information about coaching's effectiveness is scarce and unreliable. No one has yet demonstrated conclusively what qualifies an executive coach or what makes one approach to executive coaching better than another. Barriers to entry are nonexistent--many executive coaches know little about business, and some know little about coaching. The coaching certifications offered by various self-appointed bodies are difficult to assess, and methods of measuring return on investment are questionable. But strategic coaching can provide critical help both to individuals and to organizations. In this article, Stratford Sherman, a senior vice-president of Executive Coaching Network, and Alyssa Freas, the founder and CEO, explore the popularity of executive coaching and investigate ways to make the most of the experience. They argue that coaching is inevitably a triangular relationship between the client, the "coachee," and the coach. Its purpose is to produce behavioral change and growth in the coachee for the economic benefit of the client. The best way to maximize the likelihood of good results is to qualify all the people involved. Even so, many triangular relationships continue to generate conflict among all three parties. At the most basic level, coaches serve as suppliers of candor, providing leaders with the objective feedback they need to nourish their growth. Coaching gets executives to slow down, gain awareness, and notice the effects of their words and actions. On a larger scale, the best coaching fosters cultural change for the benefit of the entire organization. It provides a disciplined way for businesses to deepen relationships with their most valued employees while also increasing their effectiveness.
Most companies don't worry about the behavior of their supply chain partners. Instead, they expect the supply chain to work efficiently without interference, as if guided by Adam Smith's famed invisible hand. In their study of more than 50 supply networks, V.G. Narayanan and Ananth Raman found that companies often looked out for their own interests and ignored those of their network partners. Consequently, supply chains performed poorly. Those results aren't shocking when you consider that supply chains extend across several functions and many companies, each with its own priorities and goals. Yet, all those functions and firms must pull in the same direction for a chain to deliver goods and services to consumers quickly and cost effectively. According to the authors, a supply chain works well only if the risks, costs, and rewards of doing business are distributed fairly across the network. In fact, misaligned incentives are often the cause of excess inventory, stock-outs, incorrect forecasts, inadequate sales efforts, and even poor customer service. The fates of all supply chain partners are interlinked: If the firms work together to serve consumers, they will all win. However, they can do that only if incentives are aligned. Companies must acknowledge that the problem of incentive misalignment exists and then determine its root cause and align or redesign incentives. They can improve alignment by, for instance, adopting revenue-sharing contracts, using technology to track previously hidden information, or working with intermediaries to build trust among network partners. It's also important to reassess incentives periodically, because even top-performing networks find that changes in technology or business conditions alter the alignment of incentives.
Would you send a half-empty truck across Europe or pay to airfreight coats to Japan twice a week? Would you move unsold items out of your shop after only two weeks? Would you run your factories just during the day shift? Is this any way to run an efficient supply chain? For Spanish clothier Zara it is. Not that any one of these tactics is especially effective in itself. Rather, they stem from a holistic approach to supply chain management that optimizes the entire chain instead of focusing on individual parts. In the process, Zara defies most of the current conventional wisdom about how supply chains should be run. Unlike so many of its peers, which rush to outsource, Zara keeps almost half of its production in-house. Far from pushing its factories to maximize output, the company focuses capital on building extra capacity. Rather than chase economies of scale, Zara manufactures and distributes products in small batches. Instead of outside partners, the company manages all design, warehousing, distribution, and logistics functions itself. The result is a superresponsive supply chain exquisitely tailored to Zara's business model. Zara can design, produce, and deliver a new garment to its 600-plus stores worldwide in a mere 15 days. So in Zara's shops, customers can always find new products--but in limited supply. Customers think, "This green shirt fits me, and there is one on the rack. If I don't buy it now, I'll lose my chance." That urgency translates into high profit margins and steady 20% yearly growth in a tough economic climate. Some of Zara's specific practices may be directly applicable only in industries where product life cycles are very short. But Zara's simple philosophy of reaping bottom-line profits through end-to-end control of the supply chain can be applied to any industry.
Disappointed by the high costs and elusive benefits, early adopters of customer relationship management systems came, in the post dot-com era, to view the technology as just another overhyped IT investment whose initial promise would never be fulfilled. But this year, something unexpected is happening. System sales are rising, and executives are reporting satisfaction with their CRM investments. What's changed? A wide range of companies are successfully taking a pragmatic, disciplined approach to CRM. Rather than use it to transform entire businesses, they've directed their investments toward solving clearly defined problems within their customer relationship cycle. The authors have distilled the experiences of these CRM leaders into four questions that all companies should ask themselves as they launch their own CRM initiatives: Is the problem strategic? Is the system focused on the pain point? Do we need perfect data? What's the right way to expand an initial implementation? The questions reflect a new realism about when and how to deploy CRM to its best advantage. Understanding that highly accurate and timely data are not required everywhere in their businesses, CRM leaders have tailored their real-time initiatives to those customer relationships that can be significantly enhanced by "perfect" information. After they've succeeded with their first targeted CRM project, they can use it as a springboard for solving additional problems. CRM, in other words, is coming to resemble any other valuable management tool, and the keys to successful implementation are also becoming familiar: strong executive and business unit leadership, careful strategic planning, clear performance measures, and a coordinated program that combines organizational and process changes with the application of new technology.
In the classroom, activity-based costing (ABC) looks like a great way to manage a company's limited resources. But executives who have tried to implement ABC in their organizations on any significant scale have often abandoned the attempt in the face of rising costs and employee irritation. They should try again, because a new approach sidesteps the difficulties associated with large-scale ABC implementation. In the revised model, managers estimate the resource demands imposed by each transaction, product, or customer, rather than rely on time-consuming and costly employee surveys. This method is simpler because it requires for each group of resources, estimates of only two parameters: how much it costs per time unit to supply resources to the business activities (the total overhead expenditure of a department divided by the total number of minutes of employee time available) and how much time it takes to carry out one unit of each kind of activity (as estimated or observed by the manager). This approach also overcomes a serious technical problem associated with employee surveys: when asked to estimate time spent on activities, employees invariably report percentages that add up to 100. Under the new system, managers take into account time that is idle or unused. Armed with the data, managers then construct time equations, a new feature that enables the model to reflect the complexity of real-world operations by showing how specific order, customer, and activity characteristics cause processing times to vary. This tool kit uses concrete examples to demonstrate how managers can obtain meaningful cost and profitability information quickly and inexpensively. Rather than endlessly updating and maintaining ABC data, they can now spend their time addressing the deficiencies the model reveals: inefficient processes, unprofitable products and customers, and excess capacity.