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A hypothetical case illustrates managerial problems in a firm that has lost strategic control of technology and its competitive edge by becoming insulated from technological realities and by allowing important technological decisions to be made by lower-level management or technical people. The company redefines its focus and prescribes remedies in terms of R&D project selection, competitive product position, strategic performance, and a more disciplined approach to monitoring the progress of R&D projects.

Materials requirements planning (MRP) is a computer-based system of coordinating materials supply, demand, inventory, and production scheduling for manufacturing operations. In addition to the master production schedule 'drive file,' files are created for bill of materials, inventory status and the materials requirements planning package. The value of MRP depends on an operation's size and the efficiency of its current materials system. Its adaptability, however, promises new applications in other areas.

Executives who wish to avoid being caught off guard when speaking to the press or to the public need a sound attitude (one that is neither arrogant nor falsely humble) and they need thorough preparation. Ten specific guidelines to remember include: talk from the viewpoint of the public's interest, not the company's, speak in personal terms, avoid "off-the-record" statements, state the most important fact at the beginning, avoid arguing with the reporter or losing your cool, avoid repeating or denying questions containing offensive language, provide direct answers to a reporter's direct question, offer to find out the answer to a question if you do not know the answer, avoid "playing dumb," tell the truth, and do not exaggerate facts.

A research technique, called conjoint measurement, evaluates consumers' judgments to determine the nature of a product and the available market. This technique is especially useful when choosing between multiattribute products. Studies of various complex product choices illustrate how conjoint measurement indicates customer preference and the number of prospective orders. Conjoint measurement also shows consumers' evaluations of new product formulations; effective packaging, brand name, and promotional copy combinations; pricing and brand alternatives; verbalized descriptions of new products and services; and alternative service designs.

In a service organization, quality control of employee attitudes and performance is comparable to product quality control in manufacturing. The Marriott Corp. pursues an elaborate 'rescue' operation to keep good management people after recruitment and training. This rescue operation which provides employees with challenge, satisfaction and growth in their jobs, consists of eight programs including: Individual Development; Management Training; Manpower Planning; and Career Progression. Other programs include: annual Opinion Surveys; Fair Treatment; and Profit Sharing.

Test marketing has proper uses and serious limitations. It provides a measure of sales performance and the opportunity to identify and correct any weaknesses in the product or in the marketing plan. It is, however, costly and laborious. Four factors to weigh in determining the efficacy of test marketing are: the cost and risk of product failure against the profit and probability of success; the difference in scale of investment between a test and a national launch; the likelihood of being copied and preempted by the competition; and the costs in money and reputation of a product failure.

Overhead value analysis identifies structural cuts that will reduce overhead costs by 15% to 30%. Overhead value analysis requires delegating to every manager in the company, plus a small, high-level task force, the responsibility to cut overhead costs. The target should be a 40% reduction in costs. This program may have the undesirable side effects of hurting employee morale and of terminating a disproportionate share of minority employees. A company should apply the program when it has an acute short-term need to improve profits, or badly needs to gain a competitive edge by improving its economic structure.

A survey of 19 companies indicates that performance appraisal is still in use even though it is difficult to carry out. It is useful in identifying employee weaknesses, assessing management potential, justifying salaries, and forcing bosses to relate employee behavior to results. Systematic and behavioral barriers hinder successful performance appraisal. Four simple procedures can help performance appraisal work: keep it simple; keep it separate; keep it contained; and keep it participative.

Systems analysis may increase the productivity of a sales department by revealing the right combination of products, the right promotional methods, and the right locations. Sales managers implement the system by setting improvement objectives and then applying output and input variables to determine which control variables need changing. Five methods of measuring efficiency are: contribution to profit; return on assets; sales cost ratio; market share; and achievement of company marketing goals.

Evidence from an ongoing study of 57 companies to determine the profit impact of market strategies (PIMS) shows that one of the main indicators of business profitability is market share. By presenting evidence on the nature, importance, and implications of the connection between market share and profit performance, a group of business experts attempt to answer such questions as why market share is profitable; what the observed differences between low- and high-share businesses are; and what implications the profitability/market share links have for strategic planning.

A complex formal planning process adopted by a multibillion-dollar, diversified corporation headquartered in Europe involved a three-cycle system. The first cycle involved corporate executives and division managers and served two purposes: 1) to develop a tentative set of agreements between corporate and division managers about overall strategy and goals, and 2) to provide for more detailed planning in the next cycle. The second cycle, involving functional managers, served a dual purpose: it allowed tentative agreements to be reached on action programs to be implemented over the next few years, and it expanded the strategic focus of the business. The third cycle dealt with resource allocation decisions and budgeting at the functional level.

It is important for managers to realize that they cannot receive the benefits or cost reduction provided by a steep learning-curve projection and at the same time accomplish rapid rates of product innovation and improvement in product performance. Managers need to exercise care in choosing between the learning curve approach, which shows that manufacturing costs fall as volume rises, and the experience curve approach, which traces declines in the total costs of a product line over extended periods of time as a volume grows. When selecting a strategy, management investigates: the practical limit to volume/cost reduction, the pattern of changes in the organization which accompany progress along the learning curve, and the expected results when the practiced limits of cost reduction are reached.

New England Telephone has developed an "upward communications program" based on the theory that communications operate up-and-down like gravity; downward communications flow more quickly and efficiently than communications upward, which require special incentives to be effective. The upward communications program at New England Telephone started with "private lines" that permitted all employees to discuss anonymously any matter with any responsible official. The program may adapt to any business. It is a management tool, introduced gradually, and adapted to different individual and group needs. Methods for success of the program are outlined.

Effective administration depends upon three basic personal skills which, for analytical purposes, can be classified as technical, human, and conceptual. Technical skills include a proficiency in methods, processes, procedures, or techniques. Human skill is an ability to lead and work effectively in a group. Conceptual skill, critical for policy decision-making, involves the ability to see the organization as a whole, recognize how various functions interrelate, and understand how the organization is related to the industry, community, and nation. This three-skill approach emphasizes that good administrators can be developed.

Effective sales management achieves a balance among four key areas: defining the role of personal selling, deploying the sales force, managing the accounts, and understanding the selling costs. Because sales depend on the customer, management's overall concern should be managing the customer, not the sales force.

Regular use of the relaxation response counteracts the harmful effects of stress. Stress creates high blood pressure, or hypertension, through the documented "fight-or-flight" response of the hypothalamus. The relaxation response is an innate, integrated set of physiologic changes opposite to the fight-or-flight response. There are many techniques that elicit the relaxation response. Various investigations indicate that regular use of one of these can also reduce alcohol intake, drug abuse, and cigarette smoking. The business community has the opportunity to help itself and its employees by introducing these stress-reducing techniques into the workplace.

A case study examines the history of McDonald's compensation schemes for managers. The initial plans, managers complained, based compensation on sales volume, were too complicated, and used bonus payments based on supervisors' subjective evaluations which inaccurately recognized performance. McDonald's then developed four alternative plans. Four experts comment on the plans and outline various objectives: to be result-oriented, to produce extra effort, direct effort, provide compensation, encourage risk, place an emphasis on higher sales, avoid rapid upward mobility, and provide a comprehensible system which the managers find fair.

A cognitive style model provides some explanation of the processes affecting managers' assessment of their environment. Systematic thinkers tend to look for methods, make plans, define the quality of solutions in terms of method, discard alternatives quickly, conduct ordered searches for additional information and complete all steps of the analysis they have begun. Intuitive thinkers keep the overall problem continuously in mind, redefine the problem frequently, rely on hunches, consider a number of alternatives simultaneously and explore and abandon hunches quickly.

U.S. business considers the "productivity crisis" a competition problem. One solution to the problem is the use of the "focused" factory system to increase productivity. This type of plant concentrates on performing a couple of manufacturing tasks extremely well. Overhead costs are lower and quality higher than in the typical factory. Current high factory costs are a result of "professionalism" in the plant and product proliferation. A manufacturing focus can be achieved through explicitly outlining corporate strategy, translating this strategy into manufacturing functions, examining the product system carefully, and reorganizing the system to produce a "congruent" focus.

The profit impact of market strategies (PIMS) project is a study of 57 North American corporations representing 620 diverse businesses. The three factors in the PIMS profit model that substantially influence the return on investment (ROI) in a corporation are market share, investment intensity, and company factors. The market share of a corporation relates to its profitability; corporations with a large market share and a superior quality product average the highest return on investment. Investment intensity (the ratio of total investment to sales), also relates directly to profitability. A high ratio of investment to sales results in a low ROI. Company factors, such as size and diversity, also influence ROI.