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The driving force of modern marketing is the marketing concept--business succeeds by giving customers what they want. The social discontents and ethical issues associated with marketing arise from functional limitations on implementing the marketing concept, not from greed or deception. Developing a marketing program involves identifying three groups of consumers: 1) the market segment, 2) the program target, and 3) the program audience. To determine the effects of the marketing concept requires identifying the social payoffs and problems.

Many built-in problems and risks await the entrepreneur who is searching for capital. Being aware of the realities can help - realities like that raising money costs a lot. The process also drains managers' time and energy, which can make the business suffer. Delegating the capital search by hiring advisers to do the negotiating can also backfire if you don't choose the right adviser - one that will tailor the search to your needs.

Shareholder value analysis (SVA) applies the concept of discounted cash flow analysis to a wide range of business decisions. It is a better decision-making guide than conventional accounting analyses because it takes into account effects on the balance sheet and the time value of money. It also reflects cash flows over time. When used to guide decisions throughout a company, it ensures that the whole organization is focused on creating shareholder value rather than growth for growth's sake or earnings per share. Companies that want to use SVA must build the skills and create the incentives to institutionalize it. A case study provides an example of the use of SVA.

Business ethics is a challenge with three parts: 1) developing managers as moral individuals; 2) building an environment in which standards and values are central to the company's strategy, just as economic purpose is; and 3) formulating and implementing policies that support ethical performance--as well as safeguards to assure they are observed. The essence of management responsibility is to make decisions when there are no clear choices or absolute answers.

When conflict arises between the tenets of competitive analysis and those of financial analysis, it's not the theory at fault but the practice. Good project evaluation considers all relevant factors, including hard-to-quantify costs and benefits. It takes into account the consequences of not investing and also recognizes the value of opening up options. Finally, it doesn't undervalue projects by arbitrarily restructuring the time horizon or setting discount rates too high, and it considers separately investments that may be proposed together.

Senior management's expectations before launching a particular product program directly affects whether they see the product as performing well or poorly. Optimism and enthusiasm are essential for making any project work, but being realistic is important too. Therefore, program and brand managers should not overpromise their marketing plans to senior management. For their part, senior managers should ask marketing subordinates to make confidence levels explicit. To ensure this, management can link bonuses to the accuracy of marketing forecasts.

The publicly held corporation has outlived its usefulness in many sectors of the economy. New organizations are emerging. Takeovers, leveraged buyouts, and other going-private transactions are manifestations of the change. A central source of waste in the public corporation is the conflict between owners and managers over free cash flow. This conflict helps explain the prominent role of debt in the new organizations. The new organizations' resolution of the conflict explains how they can motivate people and manage resources more effectively than public corporations. McKinsey Award Winner.

Many proponents of just-in-time manufacturing see MRP II systems as a thing of the past, believing that true JIT leaves control of production to computerless systems such as kanban. Many MRP II advocates fear that computer automation is under attack and perceive kanban as a replay of older systems. Advanced manufacturing companies do best with hybrid systems, both kanban and MRP. Managers must ask basic questions of manufacturing strategy to get the best mix.

In 1982, the West German company Henkel relaunched Pattex, an internationally accepted but stagnating contact adhesive. The relaunch was successful and Henkel attempted to duplicate it with Pritt, its glue stick. The strategy failed. The experience illustrates two pitfalls of global marketing: insufficient use of research and poor follow-up. Other pitfalls include overstandardization, narrow vision, and inflexibility in implementation. A committee of managers from headquarters and subsidiaries should oversee the global marketing process.

Bellcore's four service centers were charging unrealistically high prices internally. The transfer pricing system was at fault. Its four service centers were people intensive, and overhead costs were allocated on the basis of total head count. Rental rates were a companywide average and did not distinguish open space from labs or computer rooms, which are more expensive to maintain. By making some simple adjustments, Bellcore made the system more accurate, allocating overhead according to the proportion of technical and administrative professionals in a department and rental rates according to the kind of building space.

Velcro USA received a complaint from a customer that it was inspecting quality into its products rather than manufacturing it in. Velcro was given 90 days to start putting its house in order. The company installed statistical process control for data feedback, drew up a quality manual, put its employees through a quality course, and set up a management steering committee. In the first year of the program, Velcro reduced waste by 50%; in the second year, by 45%.

Semco S/A is a manufacturing company in Brazil where workers make corporate decisions, set their own hours, and have access to monthly financial figures. The company's management philosophy is antihierarchical and perhaps unorthodox, but its profits are handsome. The company operates on the basis of three key principles: work force democracy, profit sharing, and free access to information. Democracy lets employees set their own working conditions; profit sharing rewards them for doing well; information tells them how they are doing.

In Women's Quest for Economic Equality, Victor R. Fuchs argues that women's continued economic inequality is a reflection of the conflict they experience between family and work. He is encouraged by the number of women investing in their careers, but alarmed by the country's low birthrate and the number of children whose futures are at risk. In the Second Shift, Arlie Hochschild finds that women do most of the "second shift" work of caring for children and home. She looks at how and why and suggests ways to improve hours at home for everyone. Both authors support public policies to help children and working families. They challenge readers to examine some prevailing norms.

Paul Ballisarian, owner of Ballisarian Beef, hired Mike Post in the 1960s when his children were too young to enter the business. Mike is an innovator whose contributions have resulted in more than half the business's profits. Now Mike wants half ownership of his part of the business. Paul's son, Gregory, would rather see Mike leave than give him part of the business, while Paul's daughter, Katherine, believes Mike should be made CEO. Five family business experts - John A. Welsh, formerly of Southern Methodist University's Caruth Institute of Owner-Managed Business and founder of Flow Laboratories; Joseph A. Baute, Markem Corp.; Charles E. "Gus" Whalen, Jr., Warren Featherbone Co.; Wendy C. Handler, Babson College; and Harry Levinson, The Levinson Institute - discuss the issues presented.

This article, originally printed in March-April 1972, analyzes the plight of middle managers--they have a boss's responsibility without a boss's authority; they function as specialists and generalists at the same time; and they must meet the conflicting demands of superiors, subordinates, and peers. Although middle management positions are increasingly common in divisionalized corporations, they are often misunderstood. The author looks at the job requirements from both top and middle management perspectives and includes a commentary outlining his perspective 17 years later.

This is an enhanced edition of HBR article 98301, originally published in May/June 1998. John F. Welch, Jr. believes that GE must operate with the flexibility and agility of a small company. In this interview he explains how he is building a revitalized "human engine" to match GE's "business engine." Welch champions a companywide drive to eliminate unproductive work and energize employees and leads a transformation of attitudes at all levels. The centerpiece of this process is "Work-Out"--an intense multiyear program through which representatives of GE's 14 businesses meet regularly to identify sources of frustration and inefficiency and to overhaul evaluation and reward systems.

U.S. manufacturers spend, on average, 56 cents of every sales dollar on purchased goods. They need fewer, smarter suppliers whom they can turn into production partners. At companies such as Xerox, Hewlett-Packard, and Ford buyers put together interfunctional teams of engineers, quality specialists, and purchasing agents to evaluate suppliers. When negotiating price, buyers need as much information as possible about production costs. However, they must not abuse this access by shaving suppliers' margins to the bone.

Manufacturers that thrive into the next generation will compete by bundling services with products. The factory will be the hub of their efforts to get and hold customers. Some companies are already exploiting their factories' service potentials. Upstream activities like marketing, design, and quality, are folding into downstream activities like sales, repair, and aftersales support.

To gain an edge in service marketing, first one must build a strategy. That strategy must limit itself operationally and in scope or one ends up with service too diffused and ineffective. Customers can be classified in many ways; two obvious ways are the cost and convenience of serving a particular group. Good service meets or exceeds customers' expectations. A service provider can do a lot to position itself so that it can manage these expectations.

The Salvation Army's effectiveness is characteristic of the best nonprofit organizations; in motivating knowledge workers and raising their productivity they are pioneers. In successful nonprofit enterprises amateurs are being replaced with unpaid staff members, many of whom are managers and professionals in their for-pay jobs. They volunteer because they believe in the mission; they stay because they are given responsibility for meaningful tasks, held accountable for their performance and rewarded with training and the chance to take on more demanding assignments.