Knowledge that Transforms

The involvement of government in the affairs of business has been increasing rapidly over the past two decades in most western economies. This paper examines the impact of a particular instrument designed by government in the U.K. to attempt to be involved with corporate planning at the level of the individual company. The paper reports the views, attitudes, and expectations of government and those of a number of the major companies which were politically and economically selected by government as being suitable candidates for planning agreements. Finally, the attitute of senior trade unionists were sought to complete a tripartite analysis consistent with that of other institutions created for indicative economic planning. The results do not appear favourable to this particular instrument nor would they augur well for others unless the basic climate of trust and understanding between the different parties dramatically improved.

Diversification Through Acquisition, Malcolm Salter and Wolf Weinhold, Free Press, New York, 1979. No. of pages: 330. Price: $24.95.

The microeconomic theory of the firm encompasses classical marginal analysis and modern operations research techniques. Yet, one finds a paucity of explicit application of microeconomics to corporate planning. In this paper we explore the reasons for the seeming void and develop an economic theory of corporate planning. Our main thesis is that received microeconomic theory focuses on answers, and answers stated in non‐operational terms. Nonetheless, economic theory asks questions of central importance to the strategic choices of the firm. These questions arise from economic theory and the fundamental notion of trade‐offs. We develop a microeconomic theory of strategic search for corporate planning. The theory is used to develop important questions and efficient search in lieu of chaotic and random search.

Given the multiple calls on top excutive time and the increasingly complex and disparate makeup of most large diversified companies today, top management involvement in the strategic planning process in too often limited to little more than the basic allocation of corporate resources among previously selected options. This situation, the author suggests, is for from ideal; it is time to reassess top management's role in and generally orchestrating the diverse human elements of the planning process so as to steer it on a course between advocacy and consensus toward the best possible strategy for the corporation as a whole.

PPB, MBO and ZBB have each been implemented in the U.S. Federal government, ostensibly as means for facilitating planning and control in agencies and programmes. The purpose of this paper is to evaluate the use of these techniques as management tools, political strategies and ritualistic symbols using concepts discussed in the organizational theory, planning and control, and policy science literatures. Two basic conclusions emerge from the evaluation. First, PPB, MBO and ZBB may inappropriately encourage the use of an analytical, computational decision strategy, and a cost/benefit method of performance assessment at a level within the organization and in environmental settings which call for an inspirational decision strategy and social test performance assessment. As a result, environmental variety may not be matched by an organizational response which is equally variable. Secondly, PPB, MBO and ZBB may have been used more as political strategies and ritualistic symbols for controlling and directing controversy by both the executive and legislative branches of the U.S. Federal government and less as management tools for improving decision making within the U.S. Federal bureaucracy. These management tools give the appearance of rationality in the formulation of public policy which is consistent with man's need for confidence building and conflict avoidance in running the affairs of state.

The main purpose of this paper is to set out a number of ideas on business policy and corporate strategy which underlie a larger research project. It arises in part from a University Seminar in Industrial Economics which for many years provided a forum for academics and businessmen to discuss the growth and organization of particular firms: in part from the upsurge of interest in teaching business policy: and in part from a growing preoccupation, especially among business historians, with the decision‐making processes within firms. These have wide implications for the understanding of the nature of entrepreneurship and strategy in the modern business corporation.