In a formal strategic planning process, we distinguish three perspectives — corporate, business, and functional. These perspectives are different both in term of the nature of the decisions they address, as well as the organizational units and managers involved in formulating and implementing the corresponding action programs generated by the strategy formation process.
Described below is an approach to develop a formal corporate strategic planning process in a business firm. Three levels of planning are recognized: corporate, business, and functional. A methodology is presented suggesting the tasks that have to be performed at each level leading toward the formulation of strategies, programs, and budgets. Examples are offered to illustrate the applicability of this methodology.
This paper considers a firm that must issue common stock to raise cash to undertake a valuable investment opportunity. Management is assumed to know more about the firm's value than potential investors. Investors interpret the firm's actions rationally. An equilibrium model of the issue-invest decision is developed under these assumptions.The model shows that firms may refuse to issue stock, and therefore may pass up valuable investment opportunities.The model suggests explanations for several aspects of corporate financing behavior, including the tendency to rely on internal sources of funds, and to prefer debt to equity if external financing is required. Extensions and applications of the model are discussed.
In the third and final paper in a series of tutorials on strategic planning, the industry attractiveness-business strength matrix is presented with a detailed procedure for its application, variety of examples and a discussion of its strengths and weaknesses.
In the second of a series of three tutorials, the methodology and strategic implications of the portfolio business matrix are analyzed and illustrations given of the use of the growth-share matrix. Further refinements as well as warnings to prevent misleading conclusions are offered, and the new matrix advanced by BCG for the 1980's is outlined.
This is the first of three articles about some popular tools that have been widely used since the early 1970's to support strategic decision-making. The article below deals with the experience curve; subsequent articles will deal with the growth-share matrix and the industry attractiveness-business strength matrix. These tools have inspired a degree of controversy about their uses and limitations, issues that will be explored in this and the subsequent articles. This is the first of the tutorial articles we will be publishing in Interfaces. The objective of a tutorial article is to describe an important technique or an application area for Interfaces readers who are nonexperts in the field. Please write and let me know what area(s) you would like to see covered in tutorial articles (and who you would like to see write them) and what area(s) you would be prepared to cover in a tutorial of your own.
The purpose of this paper is to review the major concepts underlying the proper design of an organizational structure for a business firm. It provides a review of the various managerial processes to support decision making in an organization. It discusses the major organizational archetypes (functional, divisional, and matrix organizational forms); presents a brief historical overview of various organizational theories; and finally concludes with recommendations of steps to be undertaken in the design of an organizational structure.
This paper reports on a diagnostic study completed by a large firm in the consumer goods sector. This study is aimed at evaluating the production and distribution planning system, the quality of the forecasting system, and the existing levels of inventory. Aggregate models are presented to assess opportunities for improvements in those areas. A proposal for the design of a new production and distribution system, that follows a hierarchical approach, is reviewed. Recommendations for managerial actions are discussed.
