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On November 1, 1994, P. Roy Vagelos retired after nearly 20 years at Merck. As head of the research labs from 1975 to 1985 and then as CEO, Vagelos turned Merck into a pharmaceutical powerhouse through a series of breakthrough drugs. More recently, Vagelos shocked this once conservative corner of the medical industry with Merck's acquisition of the prescription-benefits-management company (PBM) Medco Containment Services, which provides prescription drugs to HMOs and employees of large corporations. Merck's acquisition of Medco represents a $6.6 billion bet on where the future of the pharmaceutical industry lies. In today's managed-care environment, Vagelos argues, the company that best controls the information flow from doctor to patient to pharmacist to plan sponsor has the greatest chance of succeeding. Medco has information on 38 million patients, which allows Merck to learn a lot more about how its drugs are prescribed and used and, ultimately, how effective they are in fighting disease.

Risk, complexity, and uncertainty currently define the business environment of the 1990s. In this interview, Merck CFO Judy Lewent talks about her scientific approach to finance, one that is both long term in nature and eminently tied to Merck's overall strategy. At 44 years of age, Lewent ranks among the most powerful women in corporate America and is the only woman to hold the title of CFO at a major corporation.

Companies searching for a way to navigate the changes in Mexico would do well to study Vitro, Sociedad Anonima, an 84-year-old Mexican company with roughly $3 billion in sales and 44,000 employees. CEO Ernesto Martens-Rebolledo is transforming Vitro from a Mexican company to an international company, and from a complacent competitor to an aggressive one. As part of this transformation, Martens has made some controversial decisions. In 1989, he led the only hostile takeover of a U.S. company by a Mexican company when Vitro took over the Anchor Glass Container Corp. And in 1992, he laid off 3,000 workers - a first for a company that used to claim that it wasn't giving workers a job but a way of life. Through its proximity to the largest market in the world and its joint ventures with Ford, Corning, Samsonite, and Whirlpool, Vitro is well positioned to take advantage of the emerging North American market. But Vitro faces many challenges. For Martens, the most important and most difficult challenge is to convince people that they can no longer be complacent in the face of world competition.

Day after day, CFOs and investors alike make decisions based on the principles of modern financial theory. Developed in the decades after World War II, these theories began as isolated academic concepts. Today they shape our corporations. Now the thinking is changing. As a result of the increasing globalization of the markets and the increased technological firepower of its participants, there is both a pragmatic and philosophical attack being waged against both the efficient market hypothesis and the capital asset pricing model. As such, the benchmarks and yardsticks that used to matter to managers--such as the well-known measure of stock price volatility, beta, and the ubiquitous credit rating--are now in question. There are, however, only the sketchy outlines of the new philosophies and practices that might eventually become post-modern theory.

The boardmembers of Minute Publishing must decide the fate of the company's three-year-old national newspaper, America Today. They can either follow the advice of CEO Neil Harcum, who implores them to continue the paper's publication, or CFO Peter Rawson, who wants to shut down the presses. Both sides have convincing arguments. Harcum has a proven track record of making newspapers profitable. He argues that Minute "cannot allow the beancounters to set policy." Rawson, on the other hand, explains that America Today is losing $100 million a year and has broken Minute's 20-year string of earning gains. In making its decision, Minute's board will also be choosing a new CEO. Harcum is retiring at the end of the year and doesn't want Rawson to take his place.