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Long Range Planning

32/5 October 1999



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Charles Baden-Fuller Editorial

Bridging Finance and Strategy

O. Lint and E. Pennings Finance and Strategy: Time-to-Wait or Time-to-Market? lint@few.eur.nl

    Determining the optimal time to enter a market for technology-based products is paramount for the profitability and competitive position of an industrial company. Finance theory and strategic marketing theory seem to differ fundamentally in the answer to the question of how to determine the optimal timing of an investment. Finance theory focuses on the value of waiting to invest, whilst strategic marketing theory stresses early market entry in order to leapfrog competition and gain competitive advantage. We discuss both points of view and synthesise different approaches in order to develop an optimal timing framework for market entry for product innovations. Recent literature on investment under uncertainty, which suggests that a company should invest when the value of a project passes a certain threshold, forms the basis of our attempt to integrate finance and strategic marketing theory.

D. Angwin and I. Contardo Unleashing Cerberus: Don't Let Your MBO's Turn on Themselves Duncan.Angwin@warwick.ac.uk

    Management buyouts can be difficult to manage and do not lead to guaranteed riches. In the face of what appears to be an increasingly difficult market, we examine why MBOs may fail. During the summer of 1997, we collected the opinions of senior directors of lending banks, top venture capitalists and managing directors of MBOs. From their accounts of the MBO process, we conclude that MBOs may not achieve their promise as the process itself can be unstable. We observe that, without significant strategic renewal, three key stake holders in the MBO arena will pull apart. An analogy might be unleashing Cerberus: three powerful heads working together can indeed represent a formidable force, but should there be a struggle for supremacy between them, the common purpose is subverted.

R. I. Van Hoek, B. Vos and H. R. Commandeur Restructuring European Supply Chains by Implementing Postponement Strategies mvanhoek@few.eur.nl

    More demanding customer needs in terms of quality, variety, delivery (both fast and reliable), and competitive pricing challenge an increasing number of companies to restructure their supply chains. An appealing option is to delay, or postpone, the point of product differentiation, that is deferring the process in which products are transformed according to unique customer specifications. Advances in technology and the gradual removal of barriers to trade in Europe increasingly enable companies to apply postponement principles in their supply chain strategies. In this article, we provide an in-depth analysis of the experiences of four companies in managing the change process associated with implementing such strategies. Operating and organisational characteristics are identified to assess the attractiveness of postponement in their specific business settings. It was found that in particular, an organisations administrative heritage and the lack of an overall supply chain vision can be major bottlenecks in managing the change process. For a successful implementation of postponement, a company's management should establish the appropriate mix of standardisation and customisation in the supply chain. Differences in the internal organisation and the external demands for product specificity require different postponement strategies.

Supply Chain Management

V. Chiesa, R. Manzini and G. Noci Towards a Sustainable View of the Competitive System vittorio.chiesa@polimi.it

The international debate on sustainable development has traditionally focused on the importance of respecting community values and safeguarding the natural environment, privileging the social and ecological dimensions of sustainable development. In contrast, the financial, managerial and competitive implications have been rather neglected. Such a lack is, in our opinion, extremely critical since the pursuit of sustainable development requires firms to deploy significant financial resources and managerial effort. Assuming a business perspective on sustainable development, this article suggests a framework which may help firms and public institutions to identify the necessary competitive conditions for an effective evolution towards sustainable development, and to understand the major managerial implications of such evolution.

S. Birley and P. Frier Management Buyouts in the Public Sector s.birley@ic.ac.uk

    This article explores the particular issues associated with management buyouts from the public sector. As part of the general move towards making government departments more ‘market-orientated', some form of transformation process was adopted in an attempt to reorient existing management, staff and organisations systems to the commercial practices used in the private sector. The aim was to make the unit a viable commercial entity with a convincing (to investors) track record. In particular, attention was focused on ascertaining that marketing and finance were in place at the time the buyout was proposed. The article is illustrated by five case studies – Chessington Computer Services Ltd., The Laboratory of the Government Chemist Ltd., FM Contract Services Ltd., CentreWest London Buses Ltd., and London General Buses Ltd.

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