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Because of the growing number of domestic and international markets blocked by high entry barriers, companies need to master the art of favorably influencing parties other than target consumers. In addition to the four Ps of marketing strategy - product, price, place, and promotion - executives must add power and public relations. Megamarketing is the strategically coordinated application of economic, psychological, political, and public relations skills to gain the cooperation of a number of parties in order to enter and/or operate in a given market.

To improve distributor relations, manufacturers must start by understanding distributor needs. This is accomplished by monitoring distributors - getting into the field and talking with them. Field sales reps must also talk among themselves. Some companies conduct market research studies to zero in on distributor needs. Others establish distributor councils where distributors meet with manufacturing executives to talk about ways to improve distributor programs. Once manufacturers identify distributor needs, manufacturers must work to build partnerships with distributors.

Appointed general manager in 1980 of Westinghouse's newly created Synthetic Fuels Division (SFD), William Peace devoted most of his time to strategy at the expense of employee morale. Many employees did not support the division's new mission. Not until some of them vandalized cars belonging to two managers did Peace realize how abysmal morale really was. Several lessons emerged from the experience: managers must be alert for employee perceptions that don't match their own; frequent and open communication is essential to organizational effectiveness; and, finally, managers can build trust in organizations by disclosing their true feelings and taking risks on behalf of their employees. McKinsey Award Winner.

The matching principle says, "Don't finance long-term needs with short-term capital." Small businesses, however, rarely use strict matching. By not adhering to the matching principle, small businesses incur three risks. First, when loan-renewal time comes, interest rates can be higher. Second, a lender may decide to terminate the agreement. Last, a lender might begin to make operating "suggestions" that limit the company's autonomy if payments are not met in time. To deal with these risks, small businesses that use some amount of short-term capital to finance long-term requirements need to be flexible enough to eliminate the debt in a reasonable period of time without disturbing operations.

The publicity surrounding just-in-time production, or JIT, emphasizes the lower inventory costs and greater ROI attributable to the technique. More important, however, are the improvements in manufacturing that result from operating with low inventories. Since converting to JIT involves a big change in a company's culture and operations, many companies have resisted it. Successful conversion to JIT rests on management commitment and the involvement of the entire work force. Appointing a champion to set up a training program, make a conversion schedule, and form a conversion team will expedite the transition.

Over the long term the stock market responds rationally to the adoption of business strategies that change the level and quality of a company's future cash flows. The stock market usually processes available strategic information efficiently. It is at the business unit level that value is ultimately created or destroyed. To evaluate the performance of business units and the impact of strategic decisions on them, complement your own good judgment and creativity with the four steps described here.

In today's novel and rapidly changing business environment, managers constantly face new market realities and uncertainties. For more than a decade, forecasting techniques have theoretically helped them evaluate the varied factors they face. But much of the promise of these approaches has been unrealized. The forecaster's chart provides a method for evaluating techniques and for choosing a combination that yields the best results. The chart groups and profiles 20 common forecasting techniques and arrays them against 16 important evaluative dimensions.

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.

New product development has become fast paced and competitive. Managers need to realize that the traditional, sequential approach to developing new products will not work in the new arena. Instead, they must adopt a more flexible, holistic product development strategy where a development team works as a unit to reach a common goal.

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.

Marketing has long emphasized the importance of being close to the customer. A research project that explored long-term relationships between industrial customers and their suppliers led to questions about how realistic this goal is and revealed other issues regarding patterns of customer-vendor behavior. Discussed here are the concepts of relationship marketing and transaction marketing and how customers' purchasing behaviors call for one or the other approach. To build and maintain lasting customer ties, and to outperform competitors, marketers will profit from careful and explicit consideration of their customer relationships.

Research on 38 entrepreneurs from a wide range of industries reveals them as achievement oriented, liking to take responsibility for decisions, and disliking repetitious work. Entrepreneurs tend to be visionary, creative, and have high levels of energy. The industries and jobs they create stimulate the economy. But their strong personality traits can make them difficult people to work with. Difficult characteristics include: a need for control, a sense of distrust, desire for applause, and particular defenses.

When introducing a new technology to their company, implementation managers must bridge the gap between the designers and the users of the innovation, and make the transition as smooth as possible. This task is especially difficult when they are met with employee ambivalence and resistance. Moreover, those employees who enthusiastically accept the innovation may not be regarded as leaders in the company. Implementation managers, then, must learn to see themselves as internal marketers, guiding the innovation from the laboratory to the workplace and meeting both developer and user needs, while preparing the organization to receive the technology.

Decision scenarios structure the future into predetermined and uncertain elements and aim to transform the thinking of managers during times of change and uncertainty. In the aftermath of the 1973-74 oil shock and in the midst of a serious recession, for example, managers at Royal Dutch/Shell turned their attention to the short term. Planners responded to their concerns in 1975 by analyzing the predetermined elements of change and developing two medium-term scenarios. By presenting managers with alternative ways of seeing the world, decision scenarios enable them to anticipate and understand risk and to discover new strategic options.

Manufacturing companies are confronted today with an array of new systems to improve production efficiency. Chief among these are: materials requirements planning (MRP), kanban (the Japanese just-in-time system), Israel's optimized production technology (OPT), and the latest approach, flexible manufacturing systems (FMS). A rundown of each methodology explains strengths, weaknesses, and trade-offs to help managers choose a system to match their needs. Examples of applications of each system worldwide are included.

Entrepreneurs draw up business plans for new ventures to make marketing, pricing, financial, and other projections. More often than not, though, their estimates bear little relationship to reality. Planning for new enterprises differs fundamentally from planning for existing companies, given the inherent instability of start-ups. Entrepreneurs should summarize milestone events in a project's plan in order to learn about the enterprise's viability and make adjustments in strategy and goals as necessary. Examples of ten milestones a new product or service might experience are included.

In an effort to retain more corporate earnings, exercise more managerial control, and meet demands of local constituents, governments worldwide are seeking greater domestic ownership of foreign subsidiaries within their borders. A study of corporate responses to India's Foreign Exchange Regulation Act of 1973 (FERA) shows that multinational corporations facing forced equity dilutions have at least four strategic options available: strict compliance, exit, negotiation, and preemptive action. Certain practical considerations limit management's strategic options: the implications of setting a precedent, the corporation's decision-making structure, the level of bargaining power, the political climate, and management's own biases.

To reduce high manufacturing overhead, companies should look beyond their direct labor and materials costs to the costs of transactions. These transactions are the exchanges of materials and/or information that are necessary to move production along. They do not directly result in physical products but instead in a kind of "augmented product" that the customer buys--on-time delivery, quality, variety, and design improvement. Three approaches to managing the costs of these transactions are to analyze which transactions are necessary and improve the methods of carrying them out, to increase the stability of operations, and to rely on automation and systems integration.

The marketing mix concept is an essential part of marketing theory. It has endured because it is both effective and simple. Now there are several ways managers can add more strength to the concept while maintaining its simplicity. By applying such ideas as consistency, integration, and leverage, managers can see how a marketing program must fit the needs of the marketplace, the skills of the company, and the vagaries of the competition. To meet such disparate demands, the elements of the marketing mix must make the most effective use of company strengths, take aim at precisely defined segments, and protect the company from competitive threats.

Traditional forecasting techniques, which rest on the assumption that tomorrow's world will be much like today's, are inadequate in a fluid and turbulent business environment. When forecasts made by Royal Dutch/Shell in the late 1960s signaled major disruptions in the world oil market, company planners realized they needed a more realistic way to think about the future. Beginning in 1971, the company decided to develop a series of scenarios to explore the future business environment. By listening to planners' analysis, Shell's management was prepared for the 1973 oil crisis. The power of scenarios becomes evident when the world changes. McKinsey Award Winner.