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Strategy P. 19

Page 45 of 46

  • How Hadco Became a Problem-Solving Supplier

    As original equipment manufacturers reevaluate whether to make or buy parts for their products under conditions of intense competition, small to medium-size manufacturers that specialize in producing well-defined types of products have a unique opportunity to become world-class competitors. The authors present a prescriptive approach for staying or becoming a successful parts supplier. They follow a printed circuit board manufacturer, Hadco Corporation, along the four different paths suggested by the strategic supplier typology they developed from a survey of 200 New Hampshire manufacturers.

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  • The Japanese Juggernaut Rolls On

    Are rebounding U.S. corporate profits causing managers to be complacent about the Japanese competitive challenge? Is the world market share of Japanese industry really shrinking? According to this author, it's too soon to count the Japanese out. Using company data, he has tracked changes in world market shares in various industries since the 1960s. The results of his survey suggest that the current U.S. response to the Japanese global challenge is inappropriate and that managers should reexamine their efforts to position their companies in world markets.

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  • A CEO Survey of U.S. Companies' Time Horizons and Hurdle Rates

    A survey of CEOs at Fortune 1,000 firms asked about their firms' hurdle rates and time horizons. Survey results suggest that most U.S. firms use hurdle rates that are higher than standard cost-of-capital analyses would suggest. The average discount rate applied to constant-dollar cash flows was 12.2 percent, distinctly higher than equity holders' average rates of return and much higher than the return on debt during the past half-century. At the time of the survey, the fall of 1990, U.S. CEOs believed that their firms had systematically shorter time horizons than their major competitors in Europe and (especially) Asia. U.S. CEOs also thought that government policy is a powerful agent affecting corporate planning horizons. They saw several policy reforms, including a cut in corporate tax rates, a permanent R&;D tax credit, a corporate tax deduction for dividend payments, and a credible commitment to a stable tax policy for the next decade, as policies that could lengthen planning horizons.

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  • An Empirical Study of Flexibility in Manufacturing

    Despite the popularity of flexible manufacturing systems, managers suffer from inadequate frameworks to help incorporate flexibility into their strategic planning. Through a study of thirty-one plants in the printed circuit board industry, the authors progress toward such a framework, define types of flexibility, and examine the relationships among them. Their findings have implications for technology, production management, human resource management, supplier relationships, and product development.

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  • Improving the Corporate Disclosure Process

    Is it time to reform the financial reporting regulations that were established in the early 1900s? Will new regulations improve the corporate disclosure process? The authors conducted a national survey of corporate managers, financial analysts, and portfolio managers to examine their options on disclosure regulation and how companies communicate with the capital markets. Their analysis indicates that, while all three groups think market functioning is imperfect, they do not see a need for increased financial reporting regulation. Rather, the authors' analysis suggests that companies can improve the processes of disclosure and communication by developing a strategy for corporate information disclosure, upgrading the role of the investor relations staff, and voluntarily reporting nonfinancial information. Such improvements would increase management credibility, analysts' understanding of the firm, investors' patience, and, potentially, share value.

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  • Successful Reengineering Demands IS/Business Partnerships

    Business reengineering holds great promise for companies by changing the way they do business and breaking down outdated assumptions and rules. But unless management gives information systems a prominent role in the reengineering project, the effort will be doomed to failure. The author traces a reengineering effort at Breezy Services Company, showing where management went wrong in ignoring IS's vital participation. He presents five steps toward better reengineering by assigning IS the tasks of project management and technical vision and leadership. Only by working together can business and IS managers ensure a successful reorganization of their company.

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  • Using Scenario Analysis to Manage the Strategic Risks of Reengineering

    Reengineering is a risky business, and the risks result both when companies try to do too little in their reengineering efforts and when they try to do enough. They may make the wrong or inadequate changes to systems or processes, or they may make radical changes that lead to political backlashes. To manage the risks of reengineering, according to the author, it is essential to anticipate a company's future environmental and operational uncertainties and to achieve consensus on the changes that need to be made. Scenario analysis provides a way to avoid the obstacles to "revisioning" -- overconfidence, intellectual arrogance, and anchoring in the present.

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  • Channel Partnerships Streamline Distribution

    Formerly adversarial relationships between retailers and their suppliers are giving way to cooperative partnerships in which both try to improve merchandise and information flow in the distribution channel system. By cooperating, retailers and suppliers can speed up the replenishment of inventories, improve customer service, reduce the need for markdowns, and cut the cost of bringing goods to the customer. The authors outline the key features of channel partnerships and discuss the reasons for their rapid formation during the 1990s. They describe the changes needed in traditional merchandising and distribution systems to gain the benefits of a partnership and the requirements for a successful channel partnership.

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  • Supplier Relations in Japan and the United States: Are They Converging?

    A follow-up survey to one published in the Summer 1991 issue of Sloan Management Review ("How Much Has Really Changed between U.S. Automakers and Their Suppliers?" by Susan Helper) shows that long-term, closely linked relationships have performance advantages for automakers and their suppliers in both the United States and Japan. Although such high-performance relationships with customers are still more prevalent in Japan than in the United States, the nature of supplier relations in the two countries is converging in some respects. The current survey includes more than 600 automotive suppliers in the United States and almost 500 suppliers in Japan.

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  • Scenario Planning: A Tool for Strategic Thinking

    How can companies combat the overconfidence and tunnel vision common to so much decision making?

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