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Long Range Planning

37/3 June 2004

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Charles Baden-Fuller Editorial

I am delighted to introduce four articles that deal with different aspects of executing strategic decisions. The first, by Susan Miller, David Wilson and David Hickson, tracks 55 strategic decisions over 20 years. Typically researchers, consultants and executives come to organisations and have to reconstruct history to make sense of the present. This article presents the rare opportunity to examine decisions over a long time period. It also examines decisions that went far beyond business as usual and extended activities often into the unknown. Helpful advice is here for both the executive and the academic.

Our second piece is by Christopher Ibbott and Robert O’Keefe, and tracks the Vodafone/Ericsson relationship. Making alliances work well is always a challenge, and it is an even greater challenge for large organisations that have different ways of working. This detailed case study explains what worked well for one major partnership using the internet particularly successfully.

Our third piece by Duncan Angwin, Philip Stern and Sarah Bradley deals with the topical question of CEO behaviour in the corporate takeover market. They point out that the role of the board and CEO as agent does not always sit easily with their role as steward; sometimes they are in opposition and some times they are in congruence. The authors examine the pressures on and the actions taken by Rick Haythornwaite, CEO of Blue Circle, in response to Lafarge’s takeover ambitions, to show how these ideas map out in practice. This is a must read for those interested in corporate control and takeover behaviour as well as those interested in boards.

Our last piece by Jay van Wyk, William Dahmer and Mary Custy examines Risk Management in South Africa. Their perspective is mainly that of the foreign investor. Currently, South Africa occupies a pivotal position in the continent, both economically and politically, and in the sense of being a leader of trends. This piece will help all those who are interested in FDI in this continent.

 

Christopher Ibbott & Robert O’Keefe Transforming the Vodafone/Ericsson Relationship R.Okeefe@surrey.ac.uk

The business world is a global one, we are often told, and the Internet will enable information exchange across national boundaries, globalise supply chain management and facilitate access to international markets. But how are such transformations handled in actuality?
This article tells how two major players in the mobile phone business successfully established a joint structure to govern their global relationship on a virtual basis. Based on the detailed understanding of one of the authors – the senior Vodafone manager involved in the transformation – the article details how this transformation proceeded via an improvised journey approach with no fixed destination or project plan, only a shared acceptance of asymmetric benefits. Showing how information sharing, communication, virtual teams, competence development, horizontal organisational relationships and control of product elements are managed via an inter-organisational information system now called the eRelationship, the authors concludes that, while evaluation remains unresolved to an extent, strong leadership on the improvisational journey, high levels of trust between partners, a positive relationship and shared or mutually respected motivation have provided the bases for success.


Susan J. Miller, David C. Wilson and David J. Hickson Beyond Planning: Strategies for Successfully Implementing Strategic Decisions David.Wilson@wbs.ac.uk


Which decisions turn out to have been the successful ones – and how were the successes achieved? This article demonstrates empirically that what managers do, and the kind of organization they lead, matter most.
The authors track 150 strategic decisions previously studied by them back to the 1980s and examine 55 decisions which turned out well to isolate relevant variables. They find that neither decision process nor type, sector or size of firm are correlated with success, while failure may be associated with decisions which are irreversible when things go wrong, are too big a leap in the dark, or take too little account of the firm’s social and political context. As far as success is concerned, they find that while managerial planning is no guarantee, organizational context is crucial, especially where the decision may lead the firm beyond ‘plan-ability’. Two major strands of organizational context variables may provide the background for success: either sound relevant experience or wholehearted readiness for change. They present illustrative case studies for each circumstance, as well as pointing to the importance of prioritising decisions, of ensuring their political acceptability, of avoiding unnecessarily organisational change, and of realising that each decision must be analysed on its merits: success in one decision does not guarantee success in the next.


Jay van Wyk, William Dahmer & Mary C. Custy Risk Management and the Business Environment in South Africa meerkat@nm.net

South Africa is one of the world’s 10 leading emerging markets, generating 45% of the continent’s GDP. The sweeping post-Apartheid political and economic transformation has led to increases in competitiveness, international trade and inward-bound investments and the establishment of a sophisticated business environment. However an emerging market is a ‘work in progress’, and still presents risks which heighten uncertainty and threaten investor confidence. This article outlines a risk management framework which the authors argue has potential application in other emerging markets.
Their framework consists of three inter-related elements: identification of risk-types (including political, economic, financial and operational risks - notably lack of transparency, law-enforcement problems, government intervention, volatile currency, regional contagion and the HIV/Aids pandemic), illustrations of risk impact on business operations (such as increases in uncertainty, government regulations and costs, redistribution of wealth and labour rigidities) and analysis of possible managerial risk-mitigation options, for example matching mode of entry with risk tolerance, superior intelligence about societal changes and effective lobbying to influence new laws and regulations, non-tolerance for corruption, selection of appropriate financial instruments and balancing value for shareholders with active support for black economic empowerment.


Duncan Angwin, Philip Stern and Sarah Bradley Agent or Steward: The Target CEO in a Hostile Takeover. Can a Condemned Agent be Redeemed? Duncan.Angwin@warwick.ac.uk

This article tells the story of how Blue Circle’s CEO beat off Lafarge’s hostile January 2000 take-over bid - the first all cash bid for a FTSE 100 company to fail for fifteen years – and then sold the company to the same bidder barely a year later. The authors examine the actions of the, until then, relatively obscure Rick Haythornthwaite from the perspectives of an agency and stewardship theories, concluding that as time and contexts move on, a CEO condemned as an example of agency problem may redeem himself through his actions as a successful steward for his company and its stakeholders. The article follows the development of the bid and the target company’s options for a successful defence, and for dealing with the resultant situation of having a major competitor owning virtually a third of its shares - a solution which led to its fêted CEO losing his job. Examining questions of remuneration and reputation, it reveals the relationship between the agency and stewardship theories to be more complex than one of simple opposition, and highlights the importance of boards understanding how CEOs manage differential stakeholder pressures over time.


This issue is available in full on-line at www.sciencedirect.com

 
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