Strategy

Despite the popularity of flexible manufacturing systems, managers suffer from inadequate frameworks to help incorporate flexibility into their strategic planning. Through a study of thirty-one plants in the printed circuit board industry, the authors progress toward such a framework, define types of flexibility, and examine the relationships among them. Their findings have implications for technology, production management, human resource management, supplier relationships, and product development.

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.

Business reengineering holds great promise for companies by changing the way they do business and breaking down outdated assumptions and rules.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.

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.

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.

How can companies combat the overconfidence and tunnel vision common to so much decision making?

How can a board of directors be strengthened so that it can more effectively evaluate a company's performance, assess its management, and act to change the course of a corporation? The authors suggest eleven steps to reform a board's character and fortify its monitoring function. Among them are composing a completely independent board, with no company employees except for the CEO; establishing a lead director; aligning management's and directors' compensation with shareholders' interests; and strengthening the audit committee.

When someone asks, "What is your bottom line?" few negotiators tell the truth. How much bluffing is ok?