This paper attempts to bridge the divide between rational/analytical and behavioural/political conceptions of strategic decision making. The linkages and interactions between these approaches to the making of strategic decisions are explored in the context of a specific decision arena—strategic energy management.
An attempt is made to integrate the zero based budgeting (ZBB) procedure into the firm's planning process. Previous studies have failed to provide an integrative framework for the application of ZBB which may account for some of the conflicting results obtained in previous ZBB programmes. Next, the results of an empirical assessment of the effectiveness of the ZBB integrative framework in service oriented organizational units are reported. Strong support is evident for the ZBB planning framework developed here using constituency oriented indicators of effectiveness.
The paper reports the major descriptive results of a study of corporate planning in 48 U.K. companies in the mid‐1970s. Introduction of corporate planning clearly quickened in the 1970s. The number of specialist corporate planners tended to be small and was correlated with company size. Responsibilities of planners varied between operating companies, divisions, and the corporate parent company. Corporate planners had widened the scope of their plans since the late 1960s, made fairly extensive use of written documents and procedures, and often used a high number of sophisticated techniques for forecasting and evaluation, but their use of documents and techniques was far from uncritical. The extent of planning varied between types of companies.
General managers of large industrial plants in Israel were asked to evaluate the effects of environmental dependencies on their freedom of action. It was found that most segments of the environment were perceived as homogeneous—affecting the firms' autonomy in similar ways. Different components of government, however, were perceived as having conflicting interests both within the segment and with other segments of the environment. When a segment of the environment is heterogeneous, it is possible that managers use a tradeoff strategy, in which pressures generated by one component of the environment can be used as a means to reduce pressure of the other components.
Five diagrams indicate how crises open up five different kinds of ‘opportunity space’. Expanded opportunity spaces involve, in effect, a relaxation of the ‘normal’ constraints around decision‐making in governmental systems. This perspective may allow for better prediction of crises, better choices during crises, and greater stability in solutions to crises.
The paper describes a quantitative investigation into the role of diversification in the failure of new foreign manufacturing activities based upon some of the results of the Harvard/CEI Comparative Multinational Enterprise Project. These results are related to the foreign subsidiaries of 69 of the largest continental European multinationals and show a considerable company‐to‐company spread in the rate of failure. Nearly half of this spread can be accounted for by the differing diversities of the companies when diversity is measured in relation to the marketing characteristics of the products manufactured and when the balance between the differing marketing categories is taken into account. The rate of foreign subsidiary expansion is also significant.
In many large diversified corporations there is a largely prevalent habit to consider divestment decisions as ‘top secret’: information concerning potential divestitures is restricted to top management and only a handful of senior managers are involved in the decision making process. The major assumption underlying such behaviour is the fear of failure; that is, top management is concerned about involving line—generally divisional—managers in the process of making up one's mind to divest (a time consuming process as will be seen later) and searching a potential acquirer, in the fear that such involvement might work in counteractive ways and perhaps cause the abortion of the project. As a result, information is most often withheld, decisions in progress are kept secret; an ‘underground’ strategy is developed. The purpose of this article is to show that the most successful divestments are precisely those where line management's co‐operation has been elicited at very early stages and to suggest that such a participative management mode is likely to produce better results. Our research, based on the study of 14 divestments in the US and Europe (see Appendix), thus shows that the division manager is a key person on the divestment chess‐board and accomplishes varied missions.
The relative importance of internal organizational activities versus environmental interaction as sources of influence on strategic decision making was explored in a field study in 15 organizations. Results indicate that environmental interaction is the primary factor in determining departmental influence on strategic decisions.
Corporations often find it difficult to carry out their strategies because they have executive compensation systems that measure and reward performance in a way that ignores or even frustrates strategic thinking, planning, and action. In particular, reward systems rarely emphasize the long run adequately, nor are they well coordinated with the methods and objectives of other management systems. This article describes three methods that can be used to match rewards with accomplishment of strategic goals: the weighted‐factor method which weights various performance measurements according to strategic objectives, the long‐term evaluation method, which ties compensation to goals achieved over a multiyear period, and the strategic funds deferral method which varies from the conventional financial accounting model for the measurement of performance. The article recommends that all three methods be combined into a single system in which the rewards for senior managers throughout the company are determined by the three methods in different proportions according to those factors that constitute successful performance in their positions.
Two distinct approaches to market analysis and definition have evolved. Those approaches which adopt a top‐down persepective, tend to specify markets in terms of competitive capabilities and resource transferability. The alternative bottom‐up perspective emphasizes customer requirements or usage patterns when defining markets. An integrated approach begins with a common model of the principal dimensions of a market. The second element is the recognition that different market definitions are needed for different strategic purposes. Next, the strategic planning framework which links business units and product‐market units should be compatible with these purposes and reflect a strategically relevant balance of cost and demand factors. A procedure for forming business units from groups of product‐markets is shown to be effective for achieving this balance.