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A unifying framework for thinking about processes & #x2014;or sequences of tasks and activities & #x2014; that provides an integrated, dynamic picture of organizations and managerial behavior.

Are Japanese companies ending their practices of lifetime employment and seniority-based pay, as the popular press has reported? Data from published Japanese surveys offer insights into three key issues: Are Japanese employment practices changing? While changes are taking place, they are limited to seniority-based pay and promotion; lifetime employment remains intact in most large companies. The seniority system is gradually being replaced by a new job performance-based pay system that companies are using to raise white-collar productivity. Most companies plan to retain the lifetime employment system, the benefits of which outweigh the costs. Why are employment practices changing? In the 1980s and 1990s, internal and external factors placed pressure on large firms to change the seniority system. Internal factors include falling profit margins, decreases in white-collar productivity, an aging workforce, and changes in employee attitudes toward work and the seniority system. External factors include the maturing of the Japanese economy, a decline in large Japanese companies' international competitive position, and increasing internationalization of Japanese companies' operations. What are the implications of changes? Given the trends in Japanese employment practices, Western competitors should expect the following: a continuation of Japanese companies' market growth strategy with minor adjustments; innovative products and services as well as marketing and partnering strategies coming from Japanese companies; a resurgence in Japanese firms' competitiveness and productivity levels; increasing opportunities to enter into Japanese keiretsu networks as suppliers; and continued fierce competition in local Asian markets and lower prices from Japanese competitors in more mature product sectors as they move them increasingly to overseas production. The examples of Honda, Fujitsu, and Sony, three firms that revitalized themselves through use of performance-based pay systems, product innovation, and new partnering strategies rather than through layoffs of core employees, suggest that while change will be gradual, most large companies will eventually follow in the same direction.

The authors trace the development of Japanese subcontracting from just after World War I when the labor market in Japan divided into two areas: large firms, especially heavy industries, and the rest of the economy. During World War II, the demand for munitions, cheap labor, changes in infrastructure and technology, and politics led to the further development of subcontracting. After the war, government protections aided its continued growth, until a major transformation in the 1960s during Japan's high-growth economy. The modern form of Japanese subcontracting relies on distinct practices that have developed around the system of clustered control and joint problem solving: -- Target costing. Japanese manufacturers lower costs of new products at the design stage by first determining the sale price, decomposing the price into desired profit and costs, and then breaking down costs to evaluate and price every part. Throughout the process, suppliers provide input. -- Value analysis. In joint problem-solving with prime contractors and subcontractors, Japanese manufacturers decompose increasingly complex cost structures to identify cost-sensitive elements item by item. -- Bilateral design. Modularization, which leads to cost reductions and ease of design changes, results from suppliers' proposals. -- Subcontractor evaluation. The prime contractor continually evaluates subcontractors' performance on quality, price, delivery, engineering, management competence, and long-term viability. -- Purchasing agents' role. Purchasing agents are not mere negotiators but have the technical knowledge to evaluate subcontractors' competence and teach them new production systems. Nishiguchi and Brookfield address several prevalent theories for the evolution and growth of Japanese subcontracting: dualism, flexible specialization, transaction cost economics, and cultural specificity. In their view, no single theory can fully explain the growth of subcontracting. Instead, they posit, it is the product of interaction among market demand, politics, technology, and producer strategy.

Loyalty programs must enhance the overall value of the product or service and motivate buyers to make their next purchase.

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.

In a study of the predictors of success and failure in implementing technology, the author examines the introduction and use of profiling, an expert system intended to aid the insurance sales process at four insurance companies. Lutheran Brotherhood, National Mutual, Prudential, and Sun Alliance tried to get more than 5,000 field salespeople to implement Profiling. The study results indicate that in implementing a radically new technology, managers need to assemble "constellations" of actions, consider the political ramifications throughout the organization, manage the momentum of the project, and work to achieve economies of scale.

What lessons do IBM's failure in the 1980s and early 1990s and its apparent successful comeback have for other large corporations? In an extensive study of the company's history (only part of which is covered here), the author finds two factors that contributed to IBM's difficulties: it ignored its commitments to customers to provide effective, high-quality technology and service support, and it broke its implied promise to employees to provide job security. Large corporations will survive only if they can avoid some of the hazards that IBM has faced.

As original equipment manufacturers reevaluate whether to make or buy parts for their products under conditions of intense competition, small to medium-size manufacturers that specialize in producing well-defined types of products have a unique opportunity to become world-class competitors. The authors present a prescriptive approach for staying or becoming a successful parts supplier. They follow a printed circuit board manufacturer, Hadco Corporation, along the four different paths suggested by the strategic supplier typology they developed from a survey of 200 New Hampshire manufacturers.

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Are rebounding U.S. corporate profits causing managers to be complacent about the Japanese competitive challenge? Is the world market share of Japanese industry really shrinking? According to this author, it's too soon to count the Japanese out. Using company data, he has tracked changes in world market shares in various industries since the 1960s. The results of his survey suggest that the current U.S. response to the Japanese global challenge is inappropriate and that managers should reexamine their efforts to position their companies in world markets.