Two arguments against low trade barriers - that U.S. manufacturing is bound to lose out to places like Korea and Taiwan because they pay rock-bottom wages, and to Japan and other aggressive foreign competitors because they help favored industries with subsidies - don't stand up to the facts. The United States imports less from low-wage countries now than it did in 1960; protection levels haven't changed much since 1981, the year the United States last had a surplus in manufactured goods. What is at the bottom of our massive trade deficit? The huge gap between our production and our spending, fueled largely by the enormous federal budget deficit.
A study of the diversification records of 33 large U.S. companies from 1950 to 1986 shows that diversification--whether through acquisition, joint venture, or start-up--generally has not brought the competitive advantages or profitability expected. Portfolio management, restructuring, transferring skills, and sharing activities are four concepts of corporate strategy that companies most commonly use. Portfolio management no longer works very well in the United States because of its highly developed capital market. Restructuring is merely a stopgap measure that will not build shareholder value over the long term because it usually produces an unwieldy conglomerate. Companies have the best chance of being successful at diversification if they capitalize on the existing relationships between business units by having them transfer skills and share activities. McKinsey Award Winner.
Two stories illustrate the American way of thinking about entrepreneurship. The first is the story of the entrepreneurial hero--found in every story by Horatio Alger--who uses energy, effort, daring, and good luck to rise in the world. But the story has an unhappy ending. The second story holds more promise, focusing not on the individual but on the team, as in Tracy Kidder's description of how a group of engineers pooled their talents to design a new computer. The differences between these two versions are profound. The first celebrates the individual and the second celebrates the group--even the organization.
One key to a successful retail business is friendly, knowledgeable, motivated salespeople. But, even in some of America's best-known stores, one encounters indifferent clerks or must search for a clerk willing to take one's money. An effective technique - used for years by J.B. Robinson Jewelers - for teaching salespeople a natural and friendly sales manner is role playing. Employees like role playing. It's dramatic, and they retain more through these sessions than they would from manuals or lectures.
A mezzanine financing package may be the right thing for a small business that is having trouble finding long-term capital to finance its growth. Mezzanine loans are flexible. In most cases the lender provides from $500,000 to $5 million in subordinated debt over a five- to seven-year term at an interest rate costing no more, sometimes less, than senior debt. In exchange the borrower gives the investor warrants to purchase a small amount of the company's common stock--usually 5% to 15%--at a later stage. For lenders, mezzanine loans provide a higher total rate of return than most conventional loans because of the equity feature. For businesses, they provide affordable long-term debt without diluting the owners' equity.
Describes how close relationships with customers require close interfunctional and interdivisional coordination. Explains where the closest vendor/customer relationships arise and how they stress internal coordination. Also enumerates and briefly describes the way in which interfunctional coordination can be achieved.
An introduction to the formal analysis of strategic situations. Ideas of game trees, backwards induction, and dominated strategies are introduced. The methods of backwards induction to find optimal strategies is related to the method of successive eliminations of dominated strategies for games of perfect information.
Describes the changing environment faced by Motorola in the 1980s and the recognition by its CEO, Bob Galvin, that "change is needed." Also describes a major challenge set forth by Galvin to the organization to do something to prepare for the future. The challenge is somewhat ambiguous, however, and the reaction is mixed.
Describes the implementation of the "organization effectiveness" process which was designed to make major changes in two major divisions at Motorola. The reactions and actions of each division are described in some detail, as well as the initial results.
Describes the efforts of a vice president of purchasing to coordinate and centralize purchasing procedures in a multinational company. He encounters a lack of active cooperation. A rewritten version of an earlier case by G. Lombard.
Accompanies Donna Dubinsky (A), (B), (C), and (E) but offers a unique additional perspective, that of the "antagonist" in this case, Debi Coleman. Coleman, vice president of manufacturing at Apple, offers her observations on the distribution conflict at Apple and her concerns about the Macintosh Division.
Explains the need for functional integration and the four ways to obtain it. A bibliography is provided. The note is managerial rather than scholarly in tone.
Describes a program of value-analysis workshops undertaken by this company as part of its massive effort to regain the number one position in its industry. The value-analysis workshops are the second half of the company's two-part Quality Has Value process. The focus is on: 1) the general question of how to apply value analysis, an industrial-engineering based tool, to white-collar work, and 2) how to handle some very sensitive issues that came out of the value-analysis workshop for a particular department.
In recent years, Au Bon Pain (ABP), a chain of upscale French bakeries/sandwich cafes based in Boston, confronted a set of human resource problems endemic to the fast food industry (i.e., a labor shortage which made it difficult to attract and maintain quality crew personnel and management candidates, an inadequately trained management staff, and high turnover). To deal with the resulting "cycle of failure" while increasing individual initiative and performance at the unit level, ABP devised a new compensation-incentive system for its store managers--the Partner/Manager Program. Under this program, store managers would be paid a standard base salary plus a share of the incremental profits. The case asks students to evaluate the program by comparing it to ABP's existing compensation system, determining the different ways in which managers from two stores operating under an experimental run of the program achieved their results, and by considering the strategic implications of implementing the program in all of the company's stores.
Describes a dispute between the owners of the major league baseball teams and the players' union about the profitability of the baseball teams. The issue is important because of the ongoing collective bargaining negotiations. A consultant is brought in to decide whether a representative team, the Kansas City Zephyrs, is making or losing money. He has to settle a number of accounting disputes about roster depreciation, signing bonuses, deferred compensation, and stadium costs.
As coach, general manager, and now president of the Boston Celtics, Auerbach has followed his own management philosophy based on loyalty, pride, teamwork, and discipline. The lessons he discusses in this interview are applicable to managers everywhere. The manager of a sports franchise encounters the same problems as any manager running an organization. Unions, uncooperative owners, and the difficulties of keeping players disciplined and motivated all play a part in Red Auerbach's job.
Since 1977, British Petroleum (BP) has operated a post-project appraisal unit - a team of inside analysts and investigators who scrutinize projects several years after they have been completed to learn why they succeeded or misfired. The appraisal process has helped managers be more accurate in developing project proposals and more efficient in implementing them. At BP, every project generates a return on investment at least as high as that in the project's forecast.
The Hartford Steam Boiler Inspection and Insurance Co. (HSB) dominates the market segment in which it operates. Its success comes largely from the company's service delivery system, a joint product of HSB's marketing and operating managers. Vital to strategy implementation is involving the employees who deliver the service. Successful companies focus on shared values, control by peer groups, generous incentives, and--where possible--a close relationship with the customer. Using databases imaginatively permits many of these businesses to substitute information for assets that both enhance service effectiveness to existing customers and attract new ones.