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When portfolio planning was introduced in the late 1960s, its advocates believed it to be the key to most strategic planning problems. Now, interviews with CEOs, staff planners, and division line managers reveal that portfolio planning can improve business strategy, but only when it is used with other techniques for analyzing industries and competitors. It helps individual business units understand their competitive strengths, guides top management in identifying divestiture candidates, and promotes the efficient management of existing resources.

Strategic planning is not on the way out, contrary to what many of its critics say. If properly used, it becomes strategic management, whereby strategic thinking is a pervasive aspect of running a business and a way of integrating all other control systems. To use strategic planning effectively, companies must prepare line managers for the key role they play in planning, define their business units properly, move beyond general goals, make detailed action plans, fit the plans of all units together at the corporate review stage, and integrate strategic planning with controls like budgeting, information, compensation, and organization.

Analyzes the major home appliance industry in the U.S. in 1984 and gives a profile of the key competitors. May be used with Major Home Appliance Industry in 1988 and Maytag in 1984.

Even as the notion of strategic planning has come to dominate business education and practice in the United States, manufacturing companies in this country often miss goals and lag behind foreign competitors. Under certain circumstances, the problem lies with the logic shaping the strategic planning process: establish ends, develop ways to attain them, and assemble the necessary means. A reverse logic--means-way-ends--may be more appropriate in a changing environment. A company can develop broad capabilities (means) and match these with technological and market opportunities as they arise (ways). A shared vision of what the company can become rather than a set of directions or controls provides the guiding force for such an organization.

Corporate response to the threat of foreign competition is often misdirected and ill timed--in part because many executives don't fully understand what global competition is. Executives must anticipate competitive moves by starting from new strategic intentions rather than from old strategies. They must think and act in complex ways. They may slice the company in one way for distribution investments, in another for technology, and in still another for manufacturing. In addition, global competitors must develop varied criteria and analytical tools to justify these investments. Even when its manufacturing is not on a global scale, a company must be sensitive to the potential of global competitive interaction.

This is an MIT Sloan Management Review article. Shows how the value-added chain can be used to analyze sources of international strategic advantages. The author argues that it is essential to draw a distinction between competitive and comparative advantage. He looks at structural shifts in the world economy and argues that they reflect changes in comparative advantage. The impact of these changes leads to only a few choices for the firm facing import competition and possessing no competitive advantage. If the global advantages acquired by international participation are not sustained, competition reverts to domestic competition among firms with different national names.

Focuses on the industry's development and evolution in three principal watch producing countries: Switzerland, the United States, and Japan. Based in part on two earlier cases by F.T. Knickerbocker and H.E.R. Uyterhoeven.

In 1979, Philip Morris acquired the Seven-Up Co., the number three concentrate producer in the U.S. After four years of losses, Seven-Up had registered an operating profit in 1984. Industry analysts were debating the role that Seven-Up would play in Philip Morris's future.

Many managers see the experience curve as out of date, but experience curve strategies can improve competitive performance in some clearly defined situations. Successful use of the curve requires understanding why and how it works and when to apply it. Industry examples explain how products have different experience curve slopes, experience bases, and cost reduction sources. Managers should study three critical variables to discover both the opportunities and traps in putting the experience curve to work for their companies: industry structure, the relative position of key competitors, and government impact.

Describes the international oil tanker shipping industry both historically and in 1983. Designed to provide a vehicle for practicing industry analysis in a volatile commodity business, and for formulating strategy in such an environment. Also can be used to examine industry capacity overexpansion and vertical integration policies of oil companies who own some but not all of the ships they use to transport their oil.

A study of 40 successful companies with low market shares shows that long-run competitive success is feasible despite low-market-share position. Most of the profitable low-share companies in the study compete in stable environments that share certain characteristics. The competitive strategies of effective low-market-share companies also have much in common including: a strong focus tailored to differences in the market environment; a reputation for high quality; lower prices than competitors; and low total cost.

Some manufacturers hold and even increase profitability against international competitors because they change from a multidomestic strategy, which allows individual subsidiaries to compete independently in different domestic markets, to a global one, which pits the company's entire worldwide system of product and market position against the competition. Before forging a global strategy, a company that recognizes its business as potentially global should consider the following: what kind of strategic innovation might trigger global competition, what is the best position to establish among all competitors to defend the advantages of global strategy, and what kind of long-term resources will be required to establish the leading position? The examples of three companies (Caterpillar, L.M. Ericsson, and Honda) that successfully forged global strategies illustrate how companies can change the rules of international competition to their favor.

Describes the competitive situation facing Rockwell International, the market leader in the U.S. water meter industry. The industry is undergoing structural change, and competitor activity is intensifying. Rockwell must decide what, if any, actions are necessary to change its competitive posture. Whether or not to put a plastic case meter on the market is a particularly visible decision issue. Designed for use in the early part of Industry and Competitive Analysis, to facilitate the understanding of industry structural analysis and the concept of generic strategies.

Supplements the (A) case. Designed as an in-class handout.

Presents a discussion of corporate diversification. Covers historical background, the concept of strategy for a diversified company, and concepts of value creation.

Consistently high profits have led to complacency and resistance to change throughout the commercial banking industry. The banking industry faces a new era of deregulation, technological change, and new competition that extends across industry lines and geographic boundaries and within the industry itself. In the coming decade, profitability, and in some cases survival, will depend on bank management's attention to measurements of competition and performance in six distinct areas: innovation; cost accounting and pricing; management of interest risk; people management; marketing; and planning and strategy formulation.

Earnings per share, return on investment, return on equity, and other conventional accounting-oriented approaches for evaluating corporate strategy fail to answer basic questions regarding the creation of shareholder value. With discounted cash flow analysis as a basis, the recommended shareholder value approach uses readily available data to determine the value-creating prospects for alternative strategies at the business unit and corporate levels. A case example illustrates the sequential steps of the shareholder value approach.

A study of 64 U.S. manufacturing companies indicates that achieving the lowest delivered cost and/or highest differentiated position was the most successful corporate strategy in the 1970s. Inflationary pressures and foreign competition had a negative effect on the profitability and sales growth levels of eight basic manufacturing industries. Analysis of various companies within these eight industries reveals that some companies were still highly successful. These companies had clear, long-term objectives. They invested heavily in modern, automated production technologies and in marketing and distributing their products. Diversification was a less effective way of dealing with hostile market forces.

A four-phase model of multinational corporate planning proves useful for evaluating and improving corporate planning systems. Advances in explicit formulation of issues and alternatives, quality of preparatory staffwork, participation and guidance by top management, and effectiveness of implementation mark each phase.

Describes the rapidly growing disposable diaper industry in 1974, a period in which Procter and Gamble's industry leadership faced strong challenges from Kimberly Clark, Johnson and Johnson, and Union Carbide. The latter two firms were in the process of entry into the industry. Focuses on the decision to enter the business, the barriers to entry, and the optimal reaction of going firms, in this case Procter and Gamble, to deter or impede entry. Software for this note is available (9-388-504).