Purpose: To investigate where investment during a recession pays off and where it does not. Methods: Comparing analogous businesses in the unique PIMS database, we highlight three…
Abstract
Purpose: To investigate where investment during a recession pays off and where it does not. Methods: Comparing analogous businesses in the unique PIMS database, we highlight three measures to distinguish between successful and unsuccessful strategies. They are: average profitability during recession, defined as return on capital employed, change in profitability (ROCE) during first two years of recovery, and change in market share during first two years of recovery. Scope: 1,000 businesses were compared (drawn from 4,100 in the PIMS database). Results: PIMS’ evidence distinguishes between “good costs”, “bad costs” and “it depends costs”. “Good costs” are those that should be increased and intensified during recession. “Bad costs” are those that need to be pruned hard in recession. “It depends costs” are those where the right actions are dependent on the strategic position of an individual business at the time the recession begins. Conclusions and recommendations: “In a recession, dare to invest aggressively in marketing, innovation and customer quality”, is the clear message to be drawn from PIMS (Profit Impact of Market Strategy) research into which business strategies aid success during and after a market downturn lasting several years.
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There is no direct correlation between total information technology (IT) spend and business profitability ‐ an outrageous claim one might think. But this is the fact of the matter…
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There is no direct correlation between total information technology (IT) spend and business profitability ‐ an outrageous claim one might think. But this is the fact of the matter as proved in research we have carried out with Andersen Consulting. It does not mean that IT never improves business performance ‐ it means that how money is spent is more important than the amount. So what makes IT investments pay off and deliver long‐term value to a business?.
Keith Roberts, Sajeev Varki and Rod Brodie
Increasingly, firms are recognizing the value of establishing close relationships with their customers as a means of retaining existing customers. Also, firms are realizing that…
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Increasingly, firms are recognizing the value of establishing close relationships with their customers as a means of retaining existing customers. Also, firms are realizing that the intangible aspects of a relationship are not easily duplicated by competition, thus providing a sustainable competitive advantage to the firm. In this paper, we provide firms with a scale for measuring the quality of these intangible relationships between service firms and their customers. We then test this scale against the related, yet dissimilar scale for service quality to determine whether the relationship quality (RQ) scale adds any further explanation of behavioral intentions. Our results indicate that relationship quality is a distinct construct from service quality and that RQ is a better predictor of behavioral intentions than service quality.
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The Strategic Management Society attracted 450 participants to its annual conference in October in exotic, bustling Singapore to explore the theme, “Cultures and Competitive…
Communications regarding this column should be addressed to Mrs. Cheney, Peabody Library School, Nashville, Tenn. 37203. Mrs. Cheney does not sell the books listed here. They are…
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Communications regarding this column should be addressed to Mrs. Cheney, Peabody Library School, Nashville, Tenn. 37203. Mrs. Cheney does not sell the books listed here. They are available through normal trade sources. Mrs. Cheney, being a member of the editorial board of Pierian Press, will not review Pierian Press reference books in this column. Descriptions of Pierian Press reference books will be included elsewhere in this publication.
Some capital‐intensive manufacturing businesses pose particular problems to market planners because the profit margins are often highly cyclical as seller capacity utilisation…
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Some capital‐intensive manufacturing businesses pose particular problems to market planners because the profit margins are often highly cyclical as seller capacity utilisation changes through the four‐year business cycle and may also be heavily affected by new entrants on the seller side or the emergence of strong buyers. This article examines how margins are related to market structure for Strategic Business Units in the PIMS database. Having identified that margins are related to some descriptions of market structure, it explores how the margin behaviour of capital‐intensive businesses can be modelled as changes in the relative power of buyers and sellers as the capacity utilisation of the sellers changes.
Facility/facilities management’s (FM) continuing struggle with its search for a strategic identity is attested by publications of many leading authorities in the field. Some…
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Facility/facilities management’s (FM) continuing struggle with its search for a strategic identity is attested by publications of many leading authorities in the field. Some advocates of the alignment of strategic management with the real estate of facilities resource argue for new terms, for example infrastructure management or real estate asset management. This paper argues a different approach. FM is considered as a replicating memetic discourse; one that has traded the original strategic vision of the discipline’s founders for wider spread. To close the gap between strategic business alignment and operational management FM must learn to consider its performance with language and measures relevant to a particular business sector. While one can argue that core businesses should change the language in which they speak of FM, the blunt assertion is that most of the effort must be the other way. The alternative is that some other discourse will capture the strategic niche.
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Most observers expect Europe 1992 to enhance the performance ofEuropean businesses as they expand from a national to a continentalscope. But there is little direct evidence to…
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Most observers expect Europe 1992 to enhance the performance of European businesses as they expand from a national to a continental scope. But there is little direct evidence to date of the potential gain in profitability at the business level. Using the PIMS Program database of 89 European continental businesses and 253 European single‐country businesses, this study attempts to provide evidence in this direction. The author finds that, in contrast to North America, European continental businesses were much less profitable than national businesses over the period 1972‐1987. This performance gap indicates the potential gain from the unified European market. This article examines the evidence and suggests some of the possible causes.