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Faced with the threat of recession, as the nation was in 1979 and 1980, it is wise to consider the contingencies. If you are producing the kind of product or serving the kinds of market that are immune to a national economic slowdown, so much the better. Suppose, however, that your product or market is vulnerable, as will often be true. How badly can you expect to get hurt? What actions can you take to minimize the damage?

Most businessmen believe there is a very strong relationship between high market share and increased profitability. Indeed, this connection is supported by findings from the 3‐year‐old PIMS (Profit Impact of Market Strategy) project, a study of the determinants of profitability in the modern corporation. In a recent MSI Working Paper, Professors Robert D. Buzzell (Harvard Business School) and Bradley T. Gale (University of Massachusetts), and Dr. Ralph G. M. Sultan (Royal Bank of Canada) analyze the PIMS data to show that market share is a major determinant of business profitability. (In an earlier MSI Working Paper, “PIMS: A Breakthrough in Strategic Planning,” PIMS researchers Drs. Sidney Schoeffler, Robert Buzzell, and Donald Heany reported the major study findings and described the PIMS project's objectives, design, and background.)

Strategy is how to win. Strategy is the course of action, the use of resources, the timing, the structure that tends to lead to success in any competitive situation. Winning in business is important, as important as life or death. Death in business is losing customers, losing market position, losing profits and return on equity, skipped dividends, even bankruptcy.

Market share statistics indicate that success breeds success. To learn to take full advantage of your share, see “Do's and Don'ts,” page 34.

In the wake of unprecedented numbers of company failures, many businesses are now scrambling to elude a similar fate. The author offers a program for rescuing today's troubled companies.

One hundred and ninety of the world's largest and most diversified companies have added a new capability to their arsenal of planning tools. They have tapped into a new and unique collection of strategic experiences of product‐line businesses now maintained by The Strategic Planning Institute (SPI). Member companies use information derived from this data base as one additional input to:

We all constantly witness breathtaking turns in the fortunes of business enterprises, both large and small. Virtually every issue of the Wall growth suddenly halts or whose stock price abruptly collapses. Readers of these stories usually look for complex reasons to explain the dramatic differences between the victor and the vanquished. But the cause of success or failure is seldom complicated.

Shareholder‐value proponents claim a new, economically sound way to maximize profits, create wealth, measure performance, and reward executives. That invalid claim is dangerous. Stocks of shareholder‐value firms appreciated barely 15 percent as much as another, time‐tested strategic‐management system. Shareholder‐value strategies are easily countered. Shareholder value mis‐allocates resources, revives old fallacies, and debases the reputation of economics as a useful business discipline.

This study examined the relationship between 130 firm's business investment strategy and their firm performance, as measured by return on investment (ROI) and earnngs per share (EPS). ROI was used as the accounting performance measure and EPS was used as the market‐based performance measure. Results indicate that the accounting performance measure (ROI) may be more appropriate for firms pursuing share‐increasing and turnaround business investment strategies. Whereas both accounting (ROI) and market‐based (EPS) measures may be more appropriate for firms pursuing less risky profit‐oriented business investment strategies.

Paths out of profit trouble are long and poorly marked. Because conventional turnaround remedies may get one deeper into the forest, the author offers some radical solutions.