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Book Review Of Business Policy And Strategy (стр. 1 из 2)

: An Action Guide Essay, Research Paper

Book Review of Business Policy and Strategy: An Action Guide

Submitted in partial fulfillment of B.S. in Business Administration

Century University, New Mexico

Grade = 95% {A}

Business Policy and Strategy: An Action Guide, by Robert Murdick, R.

Carl Moor and Richard H. Eckhouse, attempts to tie together the broad policies

and interrelationships that exist among the many functional areas which

undergraduate students typically study. The authors intend the text to

supplement the typical case book and/or computer simulations used in teaching

business strategy (ix). Situational analysis is presented, as is a structure

for developing strategy. Practicality and real world experience is combined

with educational theory to provide as complete a picture as possible of strategy

in business.

The authors have divided the text into 15 chapters with no further

subdivisions. It is possible, however, to group the chapters into specific areas

of study. For example, the first chapter, “Business Failure — Business

Success,” examines why businesses fail, and provides the reason for continuing

with the remainder of the text. The next two chapters focus on the “field of

action,” including the business environment and the business system. The fourth

and fifth chapters introduce strategic management (chapter 4) and the struggle

not only to survive, but to prosper using strategic management (chapter 5).

Chapters Six through Nine address specific functional areas (marketing,

accounting/finance, production, and engineering/research and development).

Chapters 10 and 11 introduce the reader to the problems of managing human

resources (chapter 10) and data processing resources (chapter 11). The last

four chapters discuss the issues involved with analyzing business situations.

Multinational business analysis is the subject of chapter 12, while chapter 13

turns the reader’s attention to how to conduct an industry study. Chapters 14

and 15 focus on how to analyze a case and illustrations of case analysis,

respectively. The text concludes with an appendix of symbols used by those who

evaluate reports and a general index to topics within the book. The authors make

good and frequent use of charts, graphs, forms and other graphic techniques to

illustrate their points. Each chapter concludes with a selected bibliography

that the student may use for additional research. The book is printed entirely

in black ink; the use of color for key concepts would have enhanced the book’s

value as a teaching text. Visually, the book is crowded without much white

space for readers to make notes. Key concepts could also have been separated

from supporting text in a more clear manner. While each chapter has a summary,

they do not have an introduction or a listing of key words of concepts that the

student should learn as a result of studying each chapter. Such aids would make

the book more valuable and enhance the learning experience of readers. Chapter 1

examines why some businesses fail and why others succeed. The first sentence in

the book states exactly where the authors stand on the issue: “Businesses fail

because managers fail” (1). The authors present a chart that illustrates how

businesses large and small can both have “relatively short successful life

spans” (1) Reasons for the ultimate failure are presented in this chart, and the

authors go into greater detail in the text. Fundamentally, the authors find that

managers in business are unable to determine what action to take, or are unable

to implement the necessary action once they have identified it. The reasons

for these shortcomings are many, but the authors find that managers may be

unable to differentiate between problems and symptoms. To help their readers

overcome this problem and successfully manage one or more businesses, Murdick,

Moor and Eckhouse identify five points that they address in the remaining 14

chapters. One, they present the field of action in which managers must operate.

Two, they describe common major problems that must be identified and solved in

order for firms to prosper. Three, they present a framework for determining a

unified sense of direction. Four, they give a brief account of policies and

problems in the major functional areas of business. Five, they give detailed

case and analysis tools to enhance the reader’s ability to identify complex

business problems. Chapter 1 concludes with a list of business failures and

their causes of 1987, helping the student to understand the importance of

strategic management in the success or failure of a company (4). In Chapter 2,

the authors move to consider the field of action, or the arena in which business

executives and businesses operate. Chapters 2 and 3 focus on this field of

action, with chapter 2 looking at the environment of the business system.

Murdick, Moor and Eckhouse suggest that a business has seven groups of

stakeholders, each of which provides some level of legitimacy to the

organization: customers, shareholders, general public, suppliers, competitors,

governments and special interest groups (5). It is important that the business

act in a manner that is morally responsible toward these groups. However, any

one of these groups may be powerful enough to force a business to close, or to

support its operation even during general business downturns. Because this

field of action is dynamic, it is up to the managers of individual organizations

to determine the proper level of responsibility toward each of these groups of

stakeholders. Murdick, Moor and Eckhouse also suggest that monitoring and

forecasting the business environment is vital to the success of a business. The

authors divide the environment into two distinct parts: remote and immediate.

The remote environment consists of such aspects as: global economics, political

factors, social and demographic features, technology and physical resources.

The immediate environment comprises such areas as: customers and prospects,

competitors, the labor pool, suppliers, creditors and government agencies (7).

To those business managers who are of the opinion that they cannot forecast the

future because they have problems in the present, the authors counter that by

being mindful of what the future may hold, the managers can minimize their

problems in the present. This chapter concludes with a discussion of

opportunities and threats. Murdick, Moor and Eckhouse suggest that opportunities,

like the environment itself, can be divided into immediate and long-term for the

purpose of analysis. Immediate opportunities include new applications of

existing products, new processes in manufacturing, and new and improved customer

service (8). Threats that pose immediate problems may also pose extremely

fragile environmental situations. Avoiding environmental threats requires long-

term planning and anticipation of potential problems. Environmental threats may

include competitors, changes in customer demand, legislation, inflation,

recession and technological breakthroughs. In addition to opportunities and

threats, which help managers attain long-term and short-term business success,

managers must also be aware of constraints. Constraints may require careful and

thoughtful analysis in order to realize their full implications. Legal

constraints are often obvious, but political constraints may be nebulous. Some

constraints to growth are identified by Murdick, Moor and Eckhouse as lack of

natural resources, declining productivity and deteriorating transportation

systems (13). In chapter 3, the authors turn their attention to the business

system, which is the second field of action. Here, they suggest that the

historically popular approach of studying functional areas separately without

understanding their interrelationships proved short-sighted and the source of

many business problems, and some spectacular failures. The discussion of the

business system begins with the identification of general management. General

managers are identified as individuals “responsible for a business system” (15).

It is the general manager who is responsible for profit and loss and for long-

term survival. It is up to the general manager to balance conflicting

objectives of subsystems, differing value systems of internal and external

influences, opposing views of priorities and emphasis and conflicting proposals

for criteria in all areas. The general manager develops the concept of the

enterprise, guides the development of a set of visions, goals, values and

policies, and conducts the strategic management tasks of renewal and growth (16).

Murdick, Moor and Eckhouse suggest that organization provides the

structure of the business system. Some organizational aspects are dictated by

law; sole proprietorships, partnerships, limited partnerships, corporations and

joint-ventures are examples of these. While these are the legal forms of

organization a business may have, the law does not dictate which form is

appropriate for a given business. Determining the legal type of organization

requires careful analysis. As businesses change and strategies are modified,

managers must be willing to undertake changes in the legal organization, as well,

in order to maintain the most competitive and advantageous organizational

structure. Murdick, Moor and Eckhouse identify small firms as those that are

guided by a single individual, or by two partners. Imposing the tight, formal

structure of medium and large companies on small companies can be death for the

smaller firm, according to the authors (18). Instead, small companies work best

with loose organizational structures that allow for maximum creativity. While

managers of small firms that are growing into medium-sized firms are well

advised to avoid hiring managers from other medium-sized firms, and instead,

seek to teach the individuals who are already associated with the company the

skills they will need in the now-larger organization. In all cases, the goal is

to keep the owner-manager occupied in the areas in which the company benefits

the most from his expertise. This may mean delegating some responsibilities in

order to allow the owner-manager time to focus on strategic planning. Turning

their attention to medium-sized firms, Murdick, Moor and Eckhouse first

acknowledge that there are no clear-cut rules for differentiating between medium

and large companies, except through examining assets, sales, equity and number

of employees. They suggest that medium-sized firms can be differentiated from

some companies in that medium-sized companies require a functional manager for

each functional area. Small companies may have one manager for several

functional areas. Full-time specialists, such as lawyers or treasurer, may also

be found in medium-sized firms, but not in small ones. Medium-sized companies

are best served by “flat” organizational charts; that is, few hierarchical

levels, with functional managers reporting directly to the president. Murdick,

Moor and Eckhouse recommend a span of management of at least six people without

crossover responsibilities (22-23).

Large companies usually have complex organizational structures that may

have any one of several hundred forms. Large companies are characterized by

“staff” and “line” personnel, with staff personnel providing support services to

line personnel, who are responsible for the company’s products or services.

There are increased layers of management in large companies when compared to

medium and small firms, and there are often subdivisions or subsidiaries that

are grouped under one large parent organization. Organizations may follow one of

the six “pure” forms identified by the authors: people, product, geographic area,

process, function or phase of activity (33). Large companies are likely to

combine several of these forms. Organizational policies (as opposed to personnel

and staffing policies), identify information such as the principles to be

followed in organizing the parts of the company, relationships among major

organizational components, guidelines for position titles, functional

descriptions of components and spans of management. The authors end this chapter

with a discussion of decision problems. Such problems are identified as

situations that require action based on executive decision to pursue a given

course of action (41) Chapter 4 formally introduces and explores a concept that

has been central in the text so far, but which the authors have not defined

until now: strategic management. Murdick, Moor and Eckhouse identify seven major

tasks that form the strategic management process: formulation of the philosophy

of management, corporate purpose and goals; environmental analysis and forecast,

internal analysis of strengths and weaknesses; formulation of strategy;

evaluation of strategy; implementation of strategy; and, strategic control (45).

The philosophy of management is concerned with what the firm strives to

achieve in the long-term, not with immediate objectives. Environmental analysis

and forecast and internal analysis have already been discussed in previous

chapters. Developing strategy is, along with implementing strategy, one of the

most complex tasks a firm undertakes. The authors define strategy as

1) a statement of strategic objectives of the organization, 2) courses of action

to be taken in moving the organization from its present position to a position

defined by its principal strategic objectives, and 3) policies and standards of

conduct pursued for one long-range cycle of the organization (46).

When companies do not understand strategic management, there is a notable shift

among various tactical strategies. Such companies lack procedures for

developing strategies and plans, and may be carrying subsidiaries or products

that are no longer money-makers. Companies lacking strategic management are

likely to suffer a loss of market share and a deteriorating capital position.

Top managers may strongly disagree about the direction the firm is taking, or

should be taking. Finally, there is likely to be no long-term, written

strategic plan for the organization, including strategic goals and the ways

those goals will be reached (46-48).

Murdick, Moor and Eckhouse identify a four-step process to help

formulate strategic directions for business. One, top management must settle on

the personality of the company through open and frank discussions. Two,

analysis of the situation outside the company must be undertaken to see what

opportunities and threats might be realized or overcome. Three, internal

analysis is necessary to determine resource and capability. Four, the internal

capabilities must be matched to the external opportunities (49). Murdick, Moor

and Eckhouse also move to strategic planning and implementation, and suggest

that planning is, in fact, the beginning of implementation. Strategic plans

involve writing down what is to be done, when, how, and by whom. Such plans

greatly enhance implementation by leaving few variables subject to chance. The

authors end the chapter with a note of caution. They find that the best-made

plans do no good unless they are implemented. Companies which may run

efficiently may not be running according to their strategic plan. Total company

control is necessary to long-term survival. They suggest that long-term plans

include identification of Key Performance Areas (KPAS) and the monitoring system

that will keep these areas on track with the strategic vision of top management

(61). The authors include three appendices to this chapter, including key merger

and acquisition terms, a discussion of value-based planning and a discussion of

discounted cash flow valuation.

In chapter 5, Murdick, Moor and Eckhouse take up the complex issue of

survival and prosperity among firms. While they admit that new firms have the

greatest risk of failure, they also point out that old, established firms (such

as Packard Motors and Baldwin Locomotive) can also disappear from the business

scene. In order to better understand why some firms survive while others fail,

the authors look at small, medium and large firms. They also point out that

there are many more causes for failure than can be covered in any one text, let

alone any one chapter. Beginning with small firms, Murdick, Moor and Eckhouse

suggest that the competitive edge that defines a company’s survival be carefully