During a product's evolution to maturity, corporate customers inevitably change from inexperienced generalists to experienced specialists. The benefits customers seek change as well. Anticipating the patterns of evolution in customer decision making is as vital to success as is the most technically sophisticated product development program.

Critics of American business claim that U.S. managers rely too heavily on a few financial techniques to weigh major investment decisions. Calculation of discounted cash flows, internal rates of return, and net present values, say critics, is inherently biased against long-term investments. But according to the authors, DCF procedures can work if management sets realistic hurdle rates and examines carefully its assumptions. Decision makers need to consider three critical issues: the effects of inflation, the different levels of uncertainty in different phases of a program, and management's own ability to mitigate risk.

Prompted by the success of Japanese products in the United States, American companies are seeking to upgrade quality and productivity by adopting quality circles--programs that allow employees to meet in groups to solve common work problems and to make suggestions to management. Although managers expect quality circles to create a more participative workplace, the groups must first progress through a series of growth stages, each containing key activities as well as threats to the programs' existence. Study of quality circles in different organizations indicates that resistance by middle management and staff, budget cuts, and participants' disillusionment usually precipitate their decline.

The different roles that manufacturing can play in a company's efforts to formulate and achieve its strategic objectives can be described in terms of a developmental continuum. At the lowest "internally neutral" stage, top managers regard production as a low-tech operation, incapable of influencing competitive success. Stage 2 companies seek an "externally neutral" parity with major competitors on the manufacturing dimension. This attitude is often found in America's smokestack industries. Stage 3 organizations, on the other hand, expect production to support and strengthen the company's competitive position, and manufacturing investments are screened for consistency with the business strategy. The fourth and most progressive stage arises when competitive strategy rests to a significant degree on a company's production capability.

Financial ratio analysis is used to evaluate the financial performance and condition of a business enterprise by measuring its progress towards financial goals. Its purpose is to provide information about the business entity for decision-making by both external and internal users. Terminology, definitions, and formulae (for vertical analyses, return on investment, investment utilization ratios, liquidity ratios, stability ratios, and growth ratios) are given in this technical note, and applied in a short exercise. This note would be suitable for a class in introductory finance.

This note discusses the mechanics of preparing a cash budget and the importance of optimizing a company's cash position. A detailed example of a cash budget is provided and examined.

The term "socialization" usually evokes a strong emotional response and is often misunderstood. While it does seem to go against our culturally-ingrained "individualism," a certain degree of carefully-thought-out socialization does make organizations work better--as evidenced by the success of strongly socialized firms. This article examines the "seven steps of socialization" and provides a method for rating a firm's corporate culture.

The taxpayer sold mining company stocks and was to be paid royalty as ore was extracted from the corporation's mine. Because the factual issues of whether ore would be extracted and, if so, how much and when were so indeterminate, the court held that the contract right to royalty payments could not be valued. There was no "realization." Recognition would be postponed until payments were actually received.

Mill manager Carl Adelman learns that a group of senior managers is soon to visit the Tiger Creek mill to learn more about the success of the newly implemented Expense Tracking System. The System had been installed on two paper machines to give workers real time cost data enabling them to optimize the papermaking process. Impressive savings resulted from the operating innovations made by the paper machine operators, and this has engaged corporate attention. However, the savings rate seems to have plateaued. Andelman must discover why before the VIP visit.

Mayers Tap, Inc. has a poorly designed cost accounting system and is in the process of redesigning it. This case provides background details for the rest of the Mayers Tap, Inc. series.

Mayers Tap, Inc. has decided to redesign its cost system. In this case, the budgeted costs have to be allocated to the machine level. The teaching objective is to demonstrate two-stage allocation and the sensitivity of cost data to allocation base selection.

Mayers Tap, Inc. has decided to redesign its cost system. In this case it uses three different cost center designs to determine how the new system should be designed. Students are asked to drop unprofitable products under the three scenarios and explain the effects on the income statements. The teaching objectives are to demonstrate to students that the selection of cost centers is critical to the generation of accurate standard costs.

The Wright Line division of Barry Wright sells accessories used to store, protect, and provide access to computer media such as cards, tapes, and diskettes. With the explosive growth in the business computer market and the pronounced trend toward decentralized use, the market for computer accessories has become considerably fragmented. Wright Line's direct sales force, therefore, is finding it impossible to identify and reach prospective customers. As a proposed solution, Wright Line's president has moved to organize the division sales operations into three units, a direct sales force, a telephone marketing staff, and a catalog sales group.

Gulf Oil was pressured into liquidation while under attack by Boone Pickens of Mesa Petroleum Co. Gulf management was unsure whether to sell out or take the firm private. A suitor, Standard Oil of California, tries to decide how much, if anything, to bid for the privilege of owning Gulf.

Describes the development and ongoing operation of the Business Conduct Committee of Dow Corning Corp. as an example of managing corporate values in a multinational enterprise.

Two strategies for resolving intergroup conflicts have been found: the interpersonal facilitator approach, which relies on a neutral person to serve as an intermediary between disputing parties so that they can find common ground, and the interface conflict-solving approach, which has disputants deal directly with each other under the direction of a neutral person who leads them through five steps to identify and resolve their differences. The interface conflict-solving approach usually relieves tension between warring parties better that the interpersonal facilitator approach.

A two-year study of top executives shows that they do not closely follow the classical rational model of first clarifying goals, assessing the situation, formulating options, estimating likelihoods of success, making their decision, and then taking action to implement it. Nor do they select one problem at a time to solve. Most successful senior managers have overriding concerns rather than precise goals and objectives, and they think more often about how to do things than what is being accomplished.

Shareholders, who are the most important constituency of the modern corporation because they bear its residual risk, benefit most directly from acquisitions because of the increase in the value of target company shares. Many current criticisms directed at takeover activity are wrong or based on faulty logic. Takeovers protect shareholders from mismanagement of a corporation as they allow alternative management teams to compete for the right to manage the corporation's assets. The takeover market provides a unique, powerful, and impersonal mechanism to accomplish the major restructuring and redeployment of assets continually required by changes in technology and consumer preferences.

The most profitable industrial companies are successful not because they have the lowest costs but because they outmaneuver their competitors on price. These companies analyze the way pricing works in their industries. With this information, these companies design pricing policies that result in extra earnings of millions of dollars. The normal frequency distribution curve that emerges from comparison of orders for a product to its price is called the price band. A series of steps to shift the price band is a pricing strategy.

Companies that link research and development (R&D) and marketing can effectively anticipate, analyze, and exploit market opportunities. The makeup of the marketing and R&D team depends on whether the product or application is in development or being sold. Top management must forge the linkage between marketing and R&D, so each group is concerned not only with market planning but also with offering directions for new research and applications.