Articles

Is it time to reform the financial reporting regulations that were established in the early 1900s? Will new regulations improve the corporate disclosure process? The authors conducted a national survey of corporate managers, financial analysts, and portfolio managers to examine their options on disclosure regulation and how companies communicate with the capital markets. Their analysis indicates that, while all three groups think market functioning is imperfect, they do not see a need for increased financial reporting regulation. Rather, the authors' analysis suggests that companies can improve the processes of disclosure and communication by developing a strategy for corporate information disclosure, upgrading the role of the investor relations staff, and voluntarily reporting nonfinancial information. Such improvements would increase management credibility, analysts' understanding of the firm, investors' patience, and, potentially, share value.

Marketing strategies are increasingly subject to public scrutiny and are being held to higher standards. Caveat emptor is no longer acceptable as a basis for justifying marketing practices. The author's "marketing ethics continuum" explains the shift in society's expectations of marketers and provides benchmarks against which marketers can evaluate their practices and perspectives. Today, consumers' interests are increasingly favored over producers'; consumers can make more informed choices, and less capable consumers are offered special protection. The author provides a practical framework - including the consumer sovereignty test - for marketers to apply to their decision making. The framework attempts to answer the question: What constitutes ethical marketing practice? The test examines consumer capability, information provision, and consumer choice.

Business reengineering holds great promise for companies by changing the way they do business and breaking down outdated assumptions and rules. But unless management gives information systems a prominent role in the reengineering project, the effort will be doomed to failure. The author traces a reengineering effort at Breezy Services Company, showing where management went wrong in ignoring IS's vital participation. He presents five steps toward better reengineering by assigning IS the tasks of project management and technical vision and leadership. Only by working together can business and IS managers ensure a successful reorganization of their company.

Reengineering is a risky business, and the risks result both when companies try to do too little in their reengineering efforts and when they try to do enough. They may make the wrong or inadequate changes to systems or processes, or they may make radical changes that lead to political backlashes. To manage the risks of reengineering, according to the author, it is essential to anticipate a company's future environmental and operational uncertainties and to achieve consensus on the changes that need to be made. Scenario analysis provides a way to avoid the obstacles to "revisioning" -- overconfidence, intellectual arrogance, and anchoring in the present.

In their decision-making activities, managers need to tread a fine line between ill-conceived, arbitrary decisions ("extinction by instinct") and an unhealthy obsession with number, analyses, and reports ("paralysis by analysis"). The author examines the over- and underuse of formal analysis and describes its underlying motives. She identifies three types of situations that lead to excessive analysis and three that lead to insufficient analysis. She concludes that, since the causes are frequently structural, simply exhorting managers to be more or less analytical is unlikely to solve the problem. Attention must be given to deeper structural and cultural issues. Moreover, because the obvious solution to one problem may drive the organization to the opposite one, rational yet efficient decision making is a complex balancing act that requires frequent diagnosis and realignment.

Formerly adversarial relationships between retailers and their suppliers are giving way to cooperative partnerships in which both try to improve merchandise and information flow in the distribution channel system. By cooperating, retailers and suppliers can speed up the replenishment of inventories, improve customer service, reduce the need for markdowns, and cut the cost of bringing goods to the customer. The authors outline the key features of channel partnerships and discuss the reasons for their rapid formation during the 1990s. They describe the changes needed in traditional merchandising and distribution systems to gain the benefits of a partnership and the requirements for a successful channel partnership.

Gray market goods are brand name products sold through unauthorized channels. Gray markets have recently become more threatening to multinational companies as a result of the increasing number of global products available and easily accessible price information about them. The authors present a framework to select the right approach to the gray market threat by coordinating price-setting decisions based on the subsidiary's local resources and the complexity of the product's market. Through examples from their sample of companies that have dealt with gray markets, they show how price coordination methods have been implemented.

A follow-up survey to one published in the Summer 1991 issue of Sloan Management Review ("How Much Has Really Changed between U.S. Automakers and Their Suppliers?" by Susan Helper) shows that long-term, closely linked relationships have performance advantages for automakers and their suppliers in both the United States and Japan. Although such high-performance relationships with customers are still more prevalent in Japan than in the United States, the nature of supplier relations in the two countries is converging in some respects. The current survey includes more than 600 automotive suppliers in the United States and almost 500 suppliers in Japan.