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).
