: An Action Guide Essay, Research Paper

Book Review of Business Policy and Strategy: An Action Guide

Submitted in partial fulfilment 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 bind together the wide policies

and interrelatednesss that exist among the many functional countries which

undergraduate pupils typically study. The writers intend the text to

addendum the typical instance book and/or computing machine simulations used in learning

concern scheme ( nine ) . Situational analysis is presented, as is a construction

for developing scheme. Practicality and existent universe experience is combined

with educational theory to supply as complete a image as possible of scheme

in concern.

The writers have divided the text into 15 chapters with no farther

subdivisions. It is possible, nevertheless, to group the chapters into specific countries

of survey. For illustration, the first chapter, & # 8220 ; Business Failure & # 8212 ; Business

Success, & # 8221 ; examines why concerns fail, and provides the ground for go oning

with the balance of the text. The following two chapters focus on the & # 8220 ; field of

action, & # 8221 ; including the concern environment and the concern system. The 4th

and 5th chapters introduce strategic direction ( chapter 4 ) and the battle

non merely to last, but to thrive utilizing strategic direction ( chapter 5 ) .

Chapters Six through Nine reference specific functional countries ( selling,

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

Chapters 10 and 11 introduce the reader to the jobs of pull offing human

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

four chapters discuss the issues involved with analysing concern state of affairss.

Multinational concern analysis is the topic of chapter 12, while chapter 13

turns the reader & # 8217 ; s attending to how to carry on an industry survey. Chapters 14

and 15 focal point on how to analyse a instance and illustrations of instance analysis,

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

evaluate studies and a general index to subjects within the book. The writers make

good and frequent usage of charts, graphs, signifiers and other in writing techniques to

exemplify their points. Each chapter concludes with a selected bibliography

that the pupil may utilize for extra research. The book is printed wholly

in black ink ; the usage of colour for cardinal constructs would hold enhanced the book & # 8217 ; s

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

infinite for readers to do notes. Key constructs could besides hold been separated

from back uping text in a more clear mode. While each chapter has a sum-up,

they do non hold an debut or a listing of cardinal words of constructs that the

pupil should larn as a consequence of analyzing each chapter. Such AIDSs would do

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

examines why some concerns fail and why others win. The first sentence in

the book states precisely where the writers stand on the issue: & # 8220 ; Businesss fail

because directors fail & # 8221 ; ( 1 ) . The writers present a chart that illustrates how

concerns big and little can both have & # 8220 ; comparatively short successful life

spans & # 8221 ; ( 1 ) Reasons for the ultimate failure are presented in this chart, and the

writers go into greater item in the text. Basically, the writers find that

directors in concern are unable to find what action to take, or are unable

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

for these defects are many, but the writers find that directors may be

unable to distinguish between jobs and symptoms. To assist their readers

overcome this job and successfully pull off one or more concerns, Murdick,

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

chapters. One, they present the field of action in which directors must run.

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

order for houses to thrive. Three, they present a model for finding a

incorporate sense of way. Four, they give a brief history of policies and

jobs in the major functional countries of concern. Five, they give elaborate

instance and analysis tools to heighten the reader & # 8217 ; s ability to place complex

concern jobs. Chapter 1 concludes with a list of concern failures and

their causes of 1987, assisting the pupil to understand the importance of

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

the writers move to see the field of action, or the sphere in which concern

executives and concerns operate. Chapters 2 and 3 focal point on this field of

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

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

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

organisation: clients, stockholders, general populace, providers, rivals,

authoritiess and particular involvement groups ( 5 ) . It is of import that the concern

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

one of these groups may be powerful plenty to coerce a concern to shut, or to

support its operation even during general concern downswings. Because this

field of action is dynamic, it is up to the directors of single organisations

to find the proper degree of duty toward each of these groups of

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

calculating the concern environment is critical to the success of a concern. The

writers divide the environment into two distinguishable parts: remote and immediate.

The distant environment consists of such facets as: planetary economic sciences, political

factors, societal and demographic characteristics, engineering and physical resources.

The immediate environment comprises such countries as: clients and chances,

rivals, the labour pool, providers, creditors and authorities bureaus ( 7 ) .

To those concern directors who are of the sentiment that they can non calculate the

hereafter because they have jobs in the present, the writers counter that by

being mindful of what the hereafter may keep, the directors can minimise their

jobs in the present. This chapter concludes with a treatment of

chances and menaces. Murdick, Moor and Eckhouse suggest that chances,

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

intent of analysis. Immediate chances include new applications of

bing merchandises, new procedures in fabrication, and new and improved client

service ( 8 ) . Threats that pose immediate jobs may besides present highly

delicate environmental state of affairss. Avoiding environmental menaces requires long-

term planning and expectancy of possible jobs. Environmental menaces may

include rivals, alterations in client demand, statute law, rising prices,

recession and technological discoveries. In add-on to chances and

menaces, which help directors achieve long-run and short-run concern success,

directors must besides be cognizant of restraints. Constraints may necessitate careful and

thoughtful analysis in order to recognize their full deductions. Legal

restraints are frequently obvious, but political restraints may be cloudy. Some

restraints to growing are identified by Murdick, Moor and Eckhouse as deficiency of

natural resources, worsening productiveness and deteriorating transit

systems ( 13 ) . In chapter 3, the writers turn their attending to the concern

system, which is the 2nd field of action. Here, they suggest that the

historically popular attack of analyzing functional countries individually without

understanding their interrelatednesss proved short-sighted and the beginning of

many concern jobs, and some dramatic failures. The treatment of the

concern system begins with the designation of general direction. General

directors are identified as persons & # 8220 ; responsible for a concern system & # 8221 ; ( 15 ) .

It is the general director who is responsible for net income and loss and for long-

term endurance. It is up to the general director to equilibrate conflicting

aims of subsystems, differing value systems of internal and external

influences, opposing positions of precedences and accent and conflicting proposals

for standards in all countries. The general director develops the construct of the

endeavor, guides the development of a set of visions, ends, values and

policies, and conducts the strategic direction undertakings of reclamation and growing ( 16 ) .

Murdick, Moor and Eckhouse suggest that organisation provides the

construction of the concern system. Some organisational facets are dictated by

jurisprudence ; exclusive proprietaries, partnerships, limited partnerships, corporations and

joint-ventures are illustrations of these. While these are the legal signifiers of

organisation a concern may hold, the jurisprudence does non order which signifier is

appropriate for a given concern. Determining the legal type of organisation

requires careful analysis. As concerns change and schemes are modified,

directors must be willing to set about alterations in the legal organisation, every bit good,

in order to keep the most competitory and advantageous organizational

construction. Murdick, Moor and Eckhouse place little houses as those that are

guided by a individual person, or by two spouses. Enforcing the tight, formal

construction of medium and big companies on little companies can be decease for the

smaller house, harmonizing to the writers ( 18 ) . Alternatively, little companies work best

with loose organisational constructions that allow for maximal creativeness. While

directors of little houses that are turning into moderate-sized houses are good

advised to avoid engaging directors from other moderate-sized houses, and alternatively,

seek to learn the persons who are already associated with the company the

accomplishments they will necessitate in the now-larger organisation. In all instances, the end is

to maintain the owner-manager occupied in the countries in which the company benefits

the most from his expertness. This may intend deputing some duties in

order to let the owner-manager clip to concentrate on strategic planning. Turning

their attending to moderate-sized houses, Murdick, Moor and Eckhouse foremost

acknowledge that there are no distinct regulations for distinguishing between medium

and big companies, except through analyzing assets, gross revenues, equity and figure

of employees. They suggest that moderate-sized houses can be differentiated from

some companies in that moderate-sized companies require a functional director for

each functional country. Small companies may hold one director for several

functional countries. Full-time specializers, such as attorneies or financial officer, may besides

be found in moderate-sized houses, but non in little 1s. Medium-sized companies

are best served by & # 8220 ; level & # 8221 ; organisational charts ; that is, few hierarchal

degrees, with functional directors describing straight to the president. Murdick,

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

crossing over duties ( 22-23 ) .

Large companies normally have complex organisational constructions that may

hold any one of several hundred signifiers. Large companies are characterized by

& # 8220 ; staff & # 8221 ; and & # 8220 ; line & # 8221 ; forces, with staff forces supplying support services to

line forces, who are responsible for the company & # 8217 ; s merchandises or services.

There are increased beds of direction in big companies when compared to

medium and little houses, and there are frequently subdivisions or subordinates that

are grouped under one big parent organisation. Organizations may follow one of

the six & # 8220 ; pure & # 8221 ; signifiers identified by the writers: people, merchandise, geographic country,

procedure, map or stage of activity ( 33 ) . Large companies are likely to

combine several of these signifiers. Organizational policies ( as opposed to forces

and staffing policies ) , place information such as the rules to be

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

organisational constituents, guidelines for place rubrics, functional

descriptions of constituents and spans of direction. The writers end this chapter

with a treatment of determination jobs. Such jobs are identified as

state of affairss that require action based on executive determination to prosecute a given

class of action ( 41 ) Chapter 4 officially introduces and explores a construct that

has been cardinal in the text so far, but which the writers have non defined

until now: strategic direction. Murdick, Moor and Eckhouse place seven major

undertakings that form the strategic direction procedure: preparation of the doctrine

of direction, corporate intent and ends ; environmental analysis and prognosis,

internal analysis of strengths and failings ; preparation of scheme ;

rating of scheme ; execution of scheme ; and, strategic control ( 45 ) .

The doctrine of direction is concerned with what the house strives to

achieve in the long-run, non with immediate aims. Environmental analysis

and prognosis and internal analysis have already been discussed in old

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

most complex undertakings a house undertakes. The writers define scheme as

1 ) a statement of strategic aims of the organisation, 2 ) classs of action

to be taken in traveling the organisation from its present place to a place

defined by its chief strategic aims, and 3 ) policies and criterions of

behavior pursued for one long-range rhythm of the organisation ( 46 ) .

When companies do non understand strategic direction, there is a noteworthy displacement

among assorted tactical schemes. Such companies lack processs for

developing schemes and programs, and may be transporting subordinates or merchandises

that are no longer money-makers. Companies missing strategic direction are

probably to endure a loss of market portion and a deteriorating capital place.

Top directors may strongly differ about the way the house is taking, or

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

strategic program for the organisation, including strategic ends and the ways

those ends will be reached ( 46-48 ) .

Murdick, Moor and Eckhouse place a four-step procedure to assist

formulate strategic waies for concern. One, top direction must settle on

the personality of the company through unfastened and blunt treatments. Two,

analysis of the state of affairs outside the company must be undertaken to see what

chances and menace

s might be realized or overcome. Three, internal

analysis is necessary to find resource and capableness. Four, the internal

capablenesss must be matched to the external chances ( 49 ) . Murdick, Moor

and Eckhouse besides move to strategic planning and execution, and suggest

that planning is, in fact, the beginning of execution. Strategic programs

involve composing down what is to be done, when, how, and by whom. Such programs

greatly enhance execution by go forthing few variables subject to opportunity. The

writers end the chapter with a note of cautiousness. They find that the best-made

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

expeditiously may non be running harmonizing to their strategic program. Entire company

control is necessary to long-run endurance. They suggest that long-run programs

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

that will maintain these countries on path with the strategic vision of top direction

( 61 ) . The writers include three appendices to this chapter, including cardinal amalgamation

and acquisition footings, a treatment of value-based planning and a treatment of

discounted hard currency flow rating.

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

endurance and prosperity among houses. While they admit that new houses have the

greatest hazard of failure, they besides point out that old, established houses ( such

as Packard Motors and Baldwin Locomotive ) can besides vanish from the concern

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

the writers look at little, medium and big houses. They besides point out that

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

entirely any one chapter. Get downing with little houses, Murdick, Moor and Eckhouse

suggest that the competitory border that defines a company & # 8217 ; s endurance be carefully

analyzed. Small houses need to concentrate on facts instead than intuitions and conjectures.

Owner-managers need to seek out qualified professional advice and take advantage

of it. Growth for its ain interest demands to be avoided, as does undercapitalization.

Lack of hard currency planning and managerial jobs besides plague little companies.

Medium and big companies are grouped together in the balance of

chapter 5 to analyze why they win and neglect. Here, the writers find that

successful houses have written aims and policies that cover all facets of

a company & # 8217 ; s operations, including its internal and external environment ( 92 ) .

Companies in this size class that fail about ever have no incorporate sense of

way ( 94 ) . Failing companies may endure insufficiency in one or more cardinal

functional countries, or have people jobs that can non be overcome. These

companies may non hold good controls, or may seek to implement excessively many controls

at one clip. Finally, medium and big companies that fail to run with an

& # 8220 ; international & # 8221 ; outlook may good happen themselves confronting hard times ( 100 ) .

Chapter 6 begins a four-part subdivision on functional countries with a treatment of

selling. Here, Murdick, Moor and Eckhouse suggest that successful houses are

characterized by everyone in the company being marketing-oriented ( 103 ) . They

besides find that it is non plenty for a company to understand the scientific discipline of

selling ; a company and its selling staff must be able to understand the art,

every bit good. Murdick, Moor and Eckhouse take a philosophical instead than mechanical

attack to selling in order to supply the reader with a better base of

understanding that can be applied in the existent universe. The writers foremost present

the thought of a & # 8220 ; marketing construct, & # 8221 ; which they define as a doctrine that ushers

the attitude and behaviour of each employee in the organisation ( 104 ) . Specific

features of the selling construct include handling the client as all-

of import, nailing a mark market, deriving a competitory border, and concentrating

on net incomes ( 105-106 ) .

Murdick, Moor and Eckhouse besides attempt to place the features

of good sellers. They find that good sellers are those who can place the

cardinal factors associated with their concern, anticipate how those factors will

behave in the hereafter, and who can make outstanding schemes based on these

factors. Good sellers satisfy a big figure of clients at a high degree of

net income over a long period of clip ( at least ten old ages ) . Good sellers

acknowledge that selling is both an art and a scientific discipline, and they make the best

usage of scientific information in order to heighten the art. When analyzing the

marketing place of a company, it is necessary to analyse the selling

doctrine, policies, scheme and operations. Basically, it is necessary

to set up that a company is following its selling construct. Broad selling

policies must be established. The selling scheme of the company must be

good defined within these wide policies. Finally, selling operations must be

carried out efficaciously and expeditiously ( 109 ) . Strategic selling policies are

developed by top directors working from top degree selling policies. Murdick,

Moor and Eckhouse place seven countries that may be covered by these strategic

selling policies: morality and public service, merchandises, markets, net incomes,

personal merchandising, client dealingss and publicity ( 111 )

The writers so turn their attending to selling policy and happen that

there are three policy options within selling: expand gross revenues into new categories

of clients ; increase incursion in bing market sections ; avoid selling

inventions, but work to keep present market portion with merchandise design and

fabrication inventions. Murdick, Moor and Eckhouse are besides careful to

discuss programs and tactics for maintaining with the selling construct and scheme.

In proposing ways to analyse the selling of an organisation, the writers

suggest that companies strive to set up and keep a competitory border.

Marketing research is of premier importance in order that the company base its

way on as much quantitative information as possible. Ad and

gross revenues publicity policies must be considered in visible radiation of the company & # 8217 ; s clients,

industry and other environmental factors. Personal merchandising must be taken into

history. Distribution and pricing schemes must be reviewed and modified on a

regular footing in order to maintain the company runing at maximal efficiency. The

writers conclude this chapter with a sum-up of the selling mix every bit good as a

sum-up of the booby traps that may be diagnostic of companies sing

selling trouble.

Chapter 7, which focuses on the functional country of accounting and

finance, is the longest chapter in the book ; it is about twice every bit long as any

other chapter. This illustrates the importance that the writers place on

accounting and finance, and besides the trepidation they believe most readers have

when it comes to these topics. The writers concentrate on the basic facets

of finance and accounting that can be learned rapidly and that will convey the

greatest benefit when taking a strategic attack to concern. Three appendices

provide review stuff for those readers who feel they are missing in some country.

The appendices cover concern arithmetic, break-even analysis and definitions

of accounting footings. Having recognized that there is vacillation and a general

deficiency of comfort among concern when confronted with accounting and finance,

Murdick, Moor and Eckhouse discuss why it is of import to understand fiscal

analysis. Chief among these grounds is the thought that fiscal analysis is the

most direct manner to indicate out that a company may be sing trouble.

Fiscal analysis can be used to set up that there is a job, though it

may non ever set up what the root cause of the job is. Despite the fact

that the writers consider fiscal analysis to be cardinal in understanding

companies, they are besides careful to indicate out the restrictions of this type of

analysis. For illustration, there can be a inclination to utilize fiscal analysis to

focal point on the past, instead than expecting what the historical figures may

indicate about the hereafter. There is besides an built-in danger in anticipating yesteryear

tendencies to accurately predict hereafter tendencies.

Technological alterations, alterations in consumer demand and other

environmental factors that are outside the kingdom of fiscal analysis can be

overlooked if there is excessively much accent on historical fiscal public presentation.

High engineering companies or those in quickly spread outing industries may hold

fiscal figures that are excessively uneven to supply an accurate image of how the

company is really executing. There is besides the possibility that figures may

non ( whether deliberately or non ) , accurately reflect the true place of the

company. Finally, the writers suggest that fiscal analysis is an art that is

mastered by all excessively few people for it to be considered the ultimate analysis

tool.

Having presented this instead drawn-out treatment of the restrictions of

fiscal analysis, the writers so counter with an every bit drawn-out treatment

of the advantages of utilizing fiscal analysis. Foremost among these is the thought

that trends do be and fiscal analysis is one of the most effectual methods

for descrying them. Fiscal analysis can besides foreground symptoms of jobs

( although non the implicit in cause, needfully ) . Companies seeking

outside capital to inculcate into the concern find that possible investors

see fiscal analysis key to their decision-making procedure ; inside

directors would make good to maintain a fiscal image of the company in head to

prevent unpleasant surprises. Since fiscal analysis is quantitative, it can

aid indicate up where jobs exist, instead than where directors may believe they

exist. Finally, and possibly most significantly, the writers suggest that weighing

different, sole classs of action quantitatively provides extra tools

to directors to do strategic determinations.

The writers so provide information on how readers can obtain fiscal

information. General beginnings, such as Moody & # 8217 ; s and Standard & A ; Poor & # 8217 ; s are

discussed as are ratio studies. Ratios are of peculiar importance to the

writers ; they devote four pages of a chart to calculating ratios and a drawn-out

treatment of their proper usage. Murdick, Moor and Eckhouse favour comparing

public presentation across sections within a individual organisation, and across

companies within a individual industry in order to get at the most accurate

comparing. They note that when executing industry comparings, it is

of import to compare like industries, and like companies within the industries.

Choosing the incorrect class can render the value of the ratio comparing nothing.

At this point, the writers shift their focal point from finance to accounting,

and discourse how accounting can assist decision-makers. Murdick, Moor and Eckhouse

suggest that fiscal accounting should reply five basic inquiries. One, how

is the company making overall? Two, when measuring surrogate programs, which is

most attractive? Three, what is traveling incorrect? Where? How can it be fixed?

Four, how can activities be coordinated? Five, is the company operating as

efficaciously as it can in its environment ( 144-145 ) ? Expecting that readers

are funny as to how to get down their analysis, the writers suggest that they

Begin by taking fiscal information from the most recent ten old ages. Any

tendencies that exist over this period are likely to prevail, harmonizing to the

writers, because tendencies by and large do prevail excluding unanticipated fortunes.

The writers suggest that the reader see four inquiries when analyzing the

net income and loss statement. One, what is the gross revenues tendency? Two, what is the

tendency of cost of goods sold as a per centum of gross revenues? Three, what & # 8217 ; s the tendency

of operating disbursals as a per centum of gross revenues? Four, what is the tendency in

net incomes? If the tendency in gross revenues is up, but the tendency in net incomes is down, the

company is really likely already in serious problem ( 147 ) . Returning briefly to

ratio analysis at this point, the writers identify four cardinal countries to analyze:

profitableness, liquidness, purchase and turnover. They besides stress the

importance of sing any other pertinent inquiries that must be considered

for the specific company and industry.

Murdick, Moor and Eckhouse see break-even analysis to be of import

when: make up one’s minding whether to increase gross revenues or advertisement disbursals to increase

volume ; weighing the comparative virtues of diminishing monetary values to increasing volume ;

finding the advisability of borrowing for capital betterments to increase

capacity ; and when measuring office mechanization. The first measure in break-even

analysis, harmonizing to Murdick, Moor and Eckhouse, is spliting costs into fixed

( changeless ) and variable. Murdick, Moor and Eckhouse give several illustrations of

stock list rating and the consequence that altering rating methods may hold when

sing a company & # 8217 ; s fiscal place. This treatment reminds the reader

that the rating method or altering rating may ensue in a company

exaggerating or minimizing its existent place. The reader is so introduced

to the financess flow construct that establishes how many financess are needed for

undertakings and the possible beginnings of those financess. The writers so discourse

budgets, which they consider to be of premier importance when measuring a

company & # 8217 ; s managerial performance.. Budgets assist in planning, but besides indicate

how the house has performed in the yesteryear. They indicate how good the company

expects to make, and how good the company has predicted their past public presentation.

They can besides be used to descry troubles and job countries in the present, as

good as countries that became jobs in the yesteryear.

Having presented a wealth of information to the reader on finance and

accounting, the writers end the chapter with a drawn-out chart designed to assist

the reader utilize his or her freshly acquired accomplishments. They besides emphasize that it is

through repeated and frequent analysis that the reader is likely to better his

or her fiscal analysis accomplishments, and the tools presented in the three

appendices to this chapter are designed to help in that betterment. Chapter 8

is concerned with the functional country of production. The writers begin this

chapter by saying that the constructs they are seting Forth with respect to

production apply every bit to concerns that produce touchable goods every bit good as

that provide service. Production, they suggest, is the & # 8220 ; procedure of change overing

any design of merchandise or service into the existent merchandise or service, & # 8221 ; ( 177 ) .