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Three forces are changing the customary rules of distribution channel management: proliferating customers' needs, shifts in the balance of power in channels, and changing strategic priorities. Many firms are outsourcing the distribution function to third parties. Others, using IT, direct marketing, database marketing, and other variations contact customers directly, so the roles of the distributor or dealer are evolving. And some firms are simultaneously experimenting with a number of distribution options before committing to one system. A personal computer, for example, may be available by direct mail or through a computer superstore or a specialty store. Firms are also dealing through specialists rather than generalists, because specialists tend to be more focused and nimble than the manufacturer in a turbulent environment. The authors propose a strategic approach to planning for future channel configurations, control of the channel, and resource commitment. The channel must address customers' needs, ensure that the customer sees the value in the company's offering, be cost-efficient, and handle any new products and services that emerge. Anderson et al. suggest that a company first assess its current distribution channels, each channel's profitability, its market coverage, and the cost of each channel function. Next, a company should choose a channel arrangement based on sound design principles that recognize that the distribution strategy must contribute to the business's overall objectives.

Audit failures rarely result from the deliberate collusion. Instead, auditors may find it psychologically impossible to remain impartial and objective.

Making an explicit link between people’s personal needs and business goals can benefit both the company and its employees.

Electric utility companies will have to reinvent themselves to change from vertical to & #x201C;virtual” integration based on value networks segmented into six areas: generation, transmission, distribution, energy services, power markets, and IT products and services.

Are strategic takeovers more profitable than financial deals, which are usually hostile transactions?

Traditional accounting-based performance measurement systems are unsuited to current organizations in which the relationships with employees, customers, suppliers, and other stakeholders have changed, say these authors. Established measures lack the focus to evaluate intangibles such as service, innovation, employee relations, and flexibility. A stakeholder approach to performance measurement captures strategic planning issues, while the choices a company makes in strategic planning direct the design of the performance measurement system. Atkinson et al. define two groups of stakeholders: environmental (customers, owners, and the community) and process (employees and suppliers). The company exists to serve the objectives of the stakeholders, which become its primary objectives. What the company expects from and gives to each stakeholder group to achieve its primary objectives are its secondary objectives. The company must plan for and negotiate explicit and implicit contracts with stakeholders and evaluate whether the plan meets the expectations of all stakeholders. Employees design, implement, and manage processes to achieve the secondary objectives, expecting the primary objectives to result. Therefore, according to the authors, the company's performance measurement system must evaluate all processes based on their contribution to achieving secondary objectives. In their view, the system, which is the heart of a company's control system, must: 1. Help evaluate whether the company is getting expected contributions from employees and suppliers and returns from customers. 2. Help evaluate whether the company is giving each stakeholder group what it needs to continue to contribute. 3. Guide the design and implementation of processes that contribute to the secondary objectives. 4. Help evaluate the company's planning and implicit and explicit contracts with its stakeholders. Performance measurement has a coordinating role, in which it directs attention to the company's primary and secondary objectives. It has a monitoring role, in which it measures and reports performance in meeting stakeholder requirements. And it has a diagnostic role, in which it promotes understanding of how process performance affects organizational learning and performance. The authors examine the performance measurement system at the Bank of Montreal, whose objective was to maximize long-term return on investment for shareowners. The bank wanted its system to: 1. Focus decision makers on what drives success. 2. Help management understand and communicate to people outside and inside the bank what contributes to primary financial objectives. 3. Diagnose what drives current profitability. 4. Form a basis for performance management. The authors' model is a vital system that includes both financial and nonfinancial measures of performance to help an organization's members understand and evaluate the factors for success.

After nearly ten years of IT outsourcing, managers are beginning to look for other ways to manage IT investments. Three factors make rethinking the logic of managing IT resources important: (1) there is increasing use of a hybrid multimedia platform to link business processes with suppliers and buyers; (2) managers expect more business value from IT investments; (3) there are fundamental changes in the external market for IT products and services. Venkatraman introduces a framework, the value center, for managing IT resources. The center consists of four building blocks of value from IT resources to allow companies to balance the role of IT in today's operation with tomorrow's requirements. The cost center is the traditional way that companies have managed most IS activities. They allocate resources based on quantitative payback criteria, operate the infrastructure independent of business strategy, design the IS organization as a support unit reporting to finance, and assess it with cost-based indices. The second building block, the service center, is distinguished from a cost center in several ways. There is no presumed classification of activities into cost or service centers. A help desk may be a cost center activity or a service center activity, depending on whether the expected benefit relates to business strategy. A company can assess a help desk in terms of the degree of perceived contribution to specific business processes, rather than in terms of operating costs. The degree of service orientation further distinguishes the service center. The investment center, the third building block, has a strategic focus and tries to maximize business opportunity from IT resources. It focuses on scanning, selecting, evaluating, and transferring emerging technologies to the business. IT also licenses technology and does beta testing to create new future-oriented business capabilities. The final building block, the profit center, focuses on delivering IT products and services to the external marketplace. When a company intends to leverage its best-of-industry IT proficiency, it can go beyond licensing to create a new unit to market the expertise commercially and create new products and services. Not only a source of incremental revenue, the profit center provides valuable experience and market knowledge to IT managers. Venkatraman provides questions that business and IT managers can ask in reorienting their IT operations and managing from a value center perspective. Is the IT organization's purpose to repair current weaknesses or create new business capabilities? How much should we spend on IT to support the value center and how should we measure that allocation of resources? What should we outsource? How can we assess the value from IT resource deployment? Who has overall responsibility for the value center? The author proposes designing the IT organization as a solutions integrator to join the various components in delivering business solutions. Overall, companies need to find ways to approach managing IT resources that go well beyond outsourcing.

When a cigarette company lowered its price per pack, its sales exploded. Even after competitors retaliated by cutting prices, the market shares stayed the same. After a pharmaceutical company set its prices above the government-established reimbursement amount, it lost ten market share points. Three weeks later, management cut the price to the reimbursement level. The company never regained market share, despite the lowered price. The marketing effect in both these cases, says Simon, is hysteresis, a phenomenon in which a temporary change in one factor causes a permanent change in another. It can work positively, so that sales remain at a higher level despite competitors' responses. Or it can work negatively, so that the lost sales position is never recovered. From five case studies and a survey of executives, Simon determined that hysteresis not only occurs in marketing but has managerial implications. In each case -- West Cigarette, Sigma Pharmaceutical, Ehrmann Dessert, Southwest Airlines, and Wodka Gorbatschow -- he found evidence of permanent change in sales or market share that resulted from a temporary change in marketing stimuli. Factors such as public attention, press coverage, and, most importantly, price changes combined to create the hysteresis phenomenon. Simon reaches several conclusions: a strong shock in marketing stimuli or an unusual situation produces hysteresis; changes in several marketing instruments combine to cause hysteresis; price drives the phenomenon, while advertising alone is unlikely to generate it; an innovative use of a marketing variable may lead to hysteresis; and a delayed reaction by competitors may raise the probability that hysteresis will occur. Can managers control hysteresis in marketing? According to Simon, while companies cannot fully plan for it, they must be aware of the conditions that foster it. They can spot favorable conditions early and take an unusual innovative action to surprise the competition. Managers can also prevent a company from being a victim of hysteresis by monitoring the market so they can react quickly. The pharmaceutical company waited too long to lower its prices; after one month, negative hysteresis had already occurred.

Feedback from customers is vital to companies in their efforts to improve service. But companies must ensure that they have multiple perspectives from different customer groups. The authors advocate a listening system that uses many research approaches in combination to capture, organize, and disseminate information. Four in particular are essential: transactional surveys; customer complaint, comment, and inquiry capture; total market surveys; and employee surveys. The five elements of the service-quality information system are: 1. Measure service expectations. Companies frequently measure only customers' service perceptions, when they should be including their expectations about level of service, both what they desire and what they deem adequate. Expectations provide a frame of reference when considering customers' perception ratings. 2. Emphasize information quality. In evaluating information, companies should ask if it is relevant, precise, useful, in context, credible, understandable, and timely. 3. Capture customers' words. The system should include both quantitative and qualitative databases. Quantified data are more meaningful when combined with customers' verbatim comments and videotapes. 4. Link service performance to business results. What impact does service performance have on business results? Companies need to calculate lost revenue due to dissatisfied customers, measure customers' repurchases, and gauge the relationship between customer loyalty and propensity to switch. 5. Reach every employee. Companies should disseminate customer feedback to all employees. They are decision makers who affect the quality of service at all levels. Berry and Parasuraman suggest that managers need to make listening to customers a habit and find ways to personally hear customer feedback. Only then can they make decisions to improve service.

Creating a business-driven IT infrastructure requires that executives thoroughly understand their firm's strategic context. By formulating a series of business and IT maxims -- short simple statements of the business's positions -- they can identify the IT infrastructure service suited to their company. The authors' framework has four components: 1. Considering strategic context. What business demands, roles, and relationships are critical to infrastructure decisions? Keeping in mind the firm's strategic intent, business units may be able to coordinate and leverage some approaches across units, while keeping some autonomous and local. 2. Articulating business maxims. Using insight gained from examining the strategic context, both business and IT managers formulate business maxims and articulate agreed-on positions that they can readily understand and act on. The maxims should focus employees' attention on the firm's competitive stance, the extent of coordination across units, and the implications for information and IT management. 3. Identifying IT maxims. From the business maxims, executives identify IT maxims that describe how the firm must lead or follow in the deployment of IT in its industry, electronically process transactions, and share data across the firm and with other strategically allied companies. The maxims specify the role of IT and levels of investment relative to competitors, whether processing is tailored or standardized, and how different types of data are accessed, used, and standardized. 4. Clarifying a firm's view of IT infrastructure. A company should determine how it sees infrastructure from among four views: none, utility, dependent, and enabling. It can forgo synergies among units and not invest in infrastructure services. It can take a utility view and use the infrastructure primarily to reduce costs. With a dependent perspective, it can make investments primarily to respond to current strategies. With an enabling view, the company can overinvest in IT infrastructure to provide flexibility in responding to long-term goals. According to Broadbent and Weill, some companies may be prevented from developing clear maxims by two barriers -- expression and implementation. Managers may not understand the firm's strategic intent, executives may not have communicated strategy to operational managers, and the firm's culture may deter use of maxims. Organizational, political, cultural, and reward system issues, as well as a lack of IT leadership, may form implementation barriers.