Articles

Managers must adopt training and recruiting policies that compensate for institutional barriers to HR investment.

While few of us can miss the evidence of company sponsorship at sports events like the Olympics or World Cup Soccer, how many can recognize which were the legitimate sponsors and which were competitors "ambushing" the effectiveness of the sponsor's message? Meenaghan traces the recent growth in corporate sponsorship of various sporting events as a marketing tool and elaborates on some of the complexities of gaining sponsorship rights. He reflects on some of the benefits that accrue to the sponsor, such as audience perceptions of patriotism, adventure, and quality. Those benefits may be diluted, however, by ambush marketers that associate with major events without securing rights. For example, in the 1984 Olympics, Fuji was the worldwide sponsor, but Kodak became a sponsor of the ABC television broadcasts and the official film of the U.S. track team, thereby directing attention away from Fuji. Other examples abound, as ambushers create confusion in consumers' minds about who the "official" sponsor really is. Meenaghan addresses the legality and ethics of ambushing. Frequently, ambushers do nothing illegal and do not use official logos or trademarks, but merely imply association with an event. Sponsors' only recourse may be to purchase all the rights to an event, including broadcast rights. Ethical issues are harder to define; does using an image of downhill skiing, for instance, imply sponsorship of the Winter Olympics? Meenaghan offers strategies for protecting against ambushers, particularly on the part of event owners. The International Olympic Committee's anti-ambush program protects all emblems, marks, and symbols and enjoins any city sponsoring the event to protect those symbols as well. In the end, awareness of the possibilities of ambushing is probably the sponsor's best protection.

The move from standardization to customization may not be toward pure customization, but what the authors call "customized standardization." Lampel and Mintzberg recount the development of standardized product design, sales, and delivery, starting in 1916. Management thinkers at the time warned against the proliferation of products and against efforts to satisfy customers' needs. Now that new technologies have created more possibilities for custom-tailored products, industries may have gone too far. No one wants to choose among eighty-seven varieties of steering wheels, for instance. The result, according to the authors, is a continuum of strategies, depending on which functions lean to standardization and which to customization. A manufacturing firm, for example, may standardize production but customize delivery or financing. The authors see five categories along their continuum. In pure standardization, there is a dominant design, such as Ford's black Model T, targeted to a broad group of customers. In segmented standardization, products are standardized within a narrow range of features, e.g., cereal brands. Customized standardization implies customized assembly but standardized fabrication, such as a hamburger chain that allows customers to specify preferred condiments. In tailored customization, a product prototype is adapted to a customer's wishes, as a suit is tailored to a customer, but customization does not enter the design process. In pure customization, however, customization reaches all the way to the design, as custom jewelry is made to customer specifications. The authors go on to classify certain industries along the continuum to show how companies adopt the five strategies in practice. Mass industries, like gasoline, tend to lean toward the pure standardization end of the continuum, while agent industries, such as health care, may combine standardized financial transactions with customized medical procedures. Lampel and Mintzberg point out that a dominant trend is toward the middle - customized standardization. They suggest that as firms settle midway between standardization and customization, we will all lose choice as we settle for a package of standardized components.

How can firms enhance their competitiveness through information technology? After studying IT management practices in various companies, the authors identify three assets that they see as most important to becoming and staying competitive. The human asset is an IT staff that consistently solves business problems and addresses business opportunities through information technology. IT professionals need up-to-date technical skills; an understanding of the business, which comes from client interaction; and the ability to solve problems. The technology asset -- sharable technical platforms and databases -- is essential to integrating systems and making IT applications cost effective. Firms must specify what kinds of data to share, how to store them, where to locate servers, and how to support applications and technologies. They must also establish standards that limit the range of technologies that the IT staff must support. The relationship asset implies the risk and responsibility for effectively applying IT that business and IT must share. Top management must be involved in establishing IT priorities and forming steering committees that set the tone for a cooperative IT-business relationship. Ross et al. discuss the interdependencies among the three assets, using many examples from their study. They suggest that IT and business executives should constantly assess the status of the IT assets in their firms by using the questionnaire provided. Next they should identify an action plan based on their position -- sinking, drifting, luffing, and cruising -- in relation to the competition. A firm's asset base needs to be carefully balanced; building and leveraging IT assets, according to the authors, is an organizationwide responsibility.

In an overview of the future role of the IT organization, the authors examine the business and technological changes that are effecting change in many IT units. There are four major process changes in the way firms operate -- reengineering operational processes, reengineering support processes, rethinking managerial information flows, and redesigning network processes -- that all have a major impact on the IT unit. A distributed computing environment, new development software methods, capabilities like the Internet and other networks, new entrants in the computer industry, and outsourcing are the technological changes affecting the IT organization. The authors cite eight imperatives in which IT organizations must excel in order to succeed: -- Achieve two-way strategic alignment. Management and IT must work together to ensure that their initiatives are aligned. -- Develop effective relationships with line management. Communication between IT and line personnel will ensure integration of business and technology capabilities. -- Deliver and implement new systems. Systems delivery will include not only development but also procurement and integration. -- Build and manage infrastructure. IT units must develop an architecture, establish standards, communicate the value of the infrastructure, and operate the increasingly complex infrastructure. -- Reskill the IT organization. New skills -- not just technical skills but business skills -- will be needed. -- Manage vendor partnerships. IT managers must be informed buyers and negotiators. -- Build high performance. The IT unit must meet increasingly demanding performance goals. -- Redesign and manage the federal IT organization. Firms must establish the placement of IT decision-making power and the distribution of managerial responsibilities. Rockart et al. also examine the new role of IT management in ensuring that all line managers understand the potential of IT and how to use it effectively and that business strategies are effectively implemented. Success is dependent on line managers' response in planning and implementing new IT-based processes.

When individual improvement methods such as TQM or concurrent engineering fail to achieve the desired results, managers can merge techniques to better their chances of success. Each method has a particular perspective, special language, analytical tools, and change tools. By understanding each element, a manager can choose among a plethora of methods and link one technique with others. Having several perspectives instead of just one can eliminate the possibility of focusing on one technique as a cure-all. Language or jargon may be identified with a particular group or function; for instance, operational managers will probably prefer just-in-time methods, because the terminology is familiar, while accountants prefer activity-based costing methods. Euske and Player offer a framework of "family trees" to help managers understand the commonality of different methods. In each tree, the methods are more closely related to each other than to methods in other trees. For example, in the process-based tree, business process reengineering, benchmarking, hoshin planning, process mapping, and story- boarding are all linked. Certain tools can be used in several different families. Flowcharts are used in activity-, process-, quality-, and time-based methods. By also understanding these relationships, managers can gain a more complete view of the improvement process. The authors use the example of customer-order handling to illustrate how one manager initially used process mapping to evaluate order processing. She eventually combined it with time compression management, activity-based costing, and a quality-based improvement method to leverage the results of her initial effort.

Executives, engineers, and operators often don't understand each other very well, and that lack of alignment can hinder learning.

Blaine attributes the U.S. trade deficit to the declining capacity of the United States to satisfy domestic demand for manufactured products with domestic production. Every year, more Americans buy more from other countries than foreigners purchase from the United States. U.S. companies have contributed to the problem by shifting their manufacturing to companies overseas. At the same time, foreign firms are exporting more goods to the United States. Thus, says Blaine, the bulk of trade occurs between foreign units of companies rather than between independent companies located in foreign countries. According to Blaine, in his study of extensive data from a multitude of sources, multinational corporations will have a greater role in shaping international trade flows than will nations themselves. This, in turn, diminishes the efficiency of traditional macroeconomic policies. And countries like the United States that rely on the exchange rate to give firms an incentive to increase exports are less successful than countries like Japan that develop policies to give firms an incentive to increase export activities. Thus, says Blaine, changes in the value of the dollar will have only minimal effect on the trade deficit. The only way to correct the trade imbalance, then, is for U.S. firms to increase domestic production and stop satisfying U.S. demand with products made abroad.

Does the strategy of linking market share to profits really work? This investigation argues that there is simply no causal relationship between market share and profits. In highly volatile industries, market-share-based strategies can be misleading. The authors provide evidence from two studies, one using the FTC Line of Business data and the other employing data on the performance of sixty-three companies in three countries. In the first case, companies that maintained stable operations were more profitable than those that maintained stable market shares. In the latter, Japanese companies in a wide variety of industries had more stable operations than comparable U.S. firms.

Widespread pricing mismanagement plagues service industries because too many services marketers ignore the special challenges of pricing intangible products. The authors discuss the implications of this kind of pricing in today's highly competitive conditions and offer a framework that reconciles the implications with customers' quest for value. Three distinct but related strategies for services pricing -- satisfaction-based pricing, relationship pricing, and efficiency pricing -- can help services marketers capture and communicate value through their pricing.