Corporate collapse

Practical Bnslness Models, by J. E. MULVARNEYand C. W. MANN, Heinemann, London (1976), 171 pp. a.90 (hardback). Messrs. Mulvamey & Mann have set out to produce an easily understood, jargon free, and practically orientated introduction to the use of models by management. By use of a simple yet lively style, heavy reference to interesting case studies but without mathematical treatment, and a careful avoidance of excessive detail whilst stressing the key aspects of each of the models dealt with, they have succeeded admirably. The reader of this book will gain a good understanding of the potential contribution of mathematical models to decision-making in the fields of marketing, longterm forecasting, and product planning. They should also gain a fairly good impression of the way in which professional model builders go about their work. Having said this, there are a number of qualifications which must be made, even at the risk of appearing churlish. The title, ‘Practical Business Models’, suggests a wider range of applications than is covered within the text. As suggested above, the orientation of the book is strongly towards marketing and product planning, although superl?cial accounts are given of a 6nancial evaluation model converting quarterly forecasts to projections of profit and cash flow and of the CPC Europe’s facility planning system. It is possible, of course, that this heavy emphasis on marketing and related aspects of corporate planning will be a plus factor as far as many readers are concerned, and it is certainly true that the industrial applications of business models have been more widely covered for many years by other introductory texts. Nonetheless the potential reader would be wise to note that he will be disappointed if he expects to tid production orientated applications within this particular work. By their own admission, in the preface, the authors have not produced an academic book. To quote verbatim, ‘the reader will 8nd no extensive bibliography, no list of references to the work of other authors, and very little mathematics’. They have, if anything, understated in their qualit%ation. There is no bibliography whatsoever, which in many respects is a shame even from the point of view of the manager to whom they have directed their work, for an extensive and in many cases fairly easily comprehensible literature exists to which they might well have pointed him. The complete omission of any reference to the works of other than their own consulting house not only deprives the reader of valuable additional information but creates an unfortunate impression that the book is largely a selling platform for the services of their own company. This impression is further strengthened by the regrettable omission to include an index. Admittedly production of indices is a long and tedious business. Nonetheless, given its considerable potential value to the reader, the expenditure of the extra time involved in this routine exercise would have been well just&d. Despite these shortcomings, this is still an entertaining and valuable book, which would be a most useful companion on a long train journey. Moreover many of the lessons drawn from the authors experience, for instance in the final chapter, accord well with the practical experience of many others of us. It is perhaps a pity, though, that in making their case they depict the operational researcher as a misty-eyed, long bearded, intellectually arrogant creator of large, unworkable models. There’s no doubt that some model builders, from whatever background, have fitted this description well from time to time. However the best operational research departments in British industry today are characterixed by exactly the opposite qualities and are strongly orientated towards producing a useful service to managers in the simplest and most cost effective way. It does no good whatever for us to undermine by derision a profession which is still making useful contributions to improved management and from which, anyway, the authors have derived their basic approach and disposition. Prrraa H. GRINYER City University London (274

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A Review of ‘Computer As&ted Plan&g Systems’, by J. B. BOULDEN, McGraw-Hill, London (1975), 286 pp. f9.05 (hardback). This book, by James Boulden the founder of On-line Decisions Incorporated, is a useful addition to literature on corporate financial models as tools in the corporate planning process. Addressed principally to managers, rather than to specialist model builders, the book is a useful introduction to many of the aspects of systems design. The book has three main sections. Part one deals with the general concepts. Part two is a series of seven case studies, including that of Van den Be&s and Jurgens from the U.K. and rat&g through strategic plarmmg, mergers and acquisitions, marketing, tinancial planning, operational planning, budgeting, and multi-national planning systems. The third part, on implementation and control of the use of the model, contains useful guidelines based on the experience of On-line Decisions. Although an excellent, well written introduction to the subject, the book is disappointing in a number of respects. Few of the ideas presented throughout it are, in any way, original. Some of the case studies, for instance those on the Poslatch Corporation, Van den Berghs and Jurgens Limited, Xerox and Wells Fargo. are already familiar. This is. naturally disappointing,si&e there is a good case for intro: duction of fundamentally new material. In addition, the author by very exclusion of the specialist from his intended readers, has implicitly accepted that there is little by way of technical contribution the book has to make to the experienced model builder. Perhaps the most valuable section of the book, for the general reader and also for the specialist, is the third part. James Boulden’s treatment of systems design, implementation, and management aspects displays experience and judgment. The lessons he conveys as to the causes of failure, in terms of use of excessively complex models and failure to communicate with management, for instance, are well made and amply supported by the experience of others who have worked in this field, too. The book is probably worth reading for those with an interest in the subject for this reason alone. Parka H. GIUNYER City University London

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Corporate Collapse, by John Argenti, McGraw-Hill, London (1976), 193 pp. El0.00 (hardback). This is a brave and readable examination of something that is a little different: the reasons behind company failure. The author claims that there have been few serious, comprehensive studies of this subject, and that many of the writings have been journalistic explorations of the really spectacular crashes. Argenti derives a master list of the causes and symptoms of failure. although this is only a uart of his thesis. ‘What is missing from such an inventory-and indeed from all previous work in this field-is the dynamics of failure, the sequencing of events. We need a story-line that binds together all these causes and symptoms into a working model. The inventory of causes and symptoms comes from a synthesis of published material, a few interviews with accountants, bankers, receivers and Scotland Yard’s fraud squad, tested against two of the best documented collapses (Rolls Royce and Penn Central). Much of the opinion of others is rejected on analysis, and conclusions reached about the most likely causes, although not all are present in every faihire situation. The ‘story-line’ is in fact a hypothesis that there am three growth/decline trajectories which failing companies follow: Type 1, which hardly gets off the ground and which leads to early failure; type 5 which is a young company following a path of uncontrolled growth, leadhrg to sudden collapse;

LONG RANGE PLANNING

and type 3, which is the steady and regular progressive decline of the mature company. Unfortunately, these curves will remain a hypothesis until they are proved or disproved by research. The book is interesting, and does a service in focusing on a facet of strategy which should concern all planners, yet which has been neglected. ‘Inspect any book, any article in a journal or a newspaper, and you will see such titles as “The New Management ; Purposeful Expansion” or “Managing for Results” or “Dynamic Growth”. YOU will not see “Symptoms of Failure” or “Causes of Collapse”. Indeed, you will not find the words insolvency or receiver or liquidation in the index of even such publications as guides to accountancy and iinance for managers.’ This book aids insight, but does little more than this, for it adds little that is new by way of either research or personal experience. A hypothesis may come out of the sort of analysis the book provides. A new theory cannot. For this reason, despite its readability, and the value of its analysis, I left the book with a faling of disappointment. D~vm E. HUSSEY Harbridge House Europe London

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The Corporation in Modem society; Models for Participation, by T. REMPNER, The Administrative StatI College, Henley (1976), 13 pp. f1.00 (softback). Into the prevailing public debate with this booklet the author casts his own views about ‘the current call for greater participation’. In doing so he provides a useful service to corporate ‘thinkers’ who have to construct a strategy through a complex and daunting maze of environmental constraints. To cover the ground ‘in a nutshell’ of 13 pages is an achievement in itself for which busy people may be thankful. For what the author does is not only to suggest the societal trends which have led to, what those ostensibly in authority may think is, a demand for a shift in power; he also attempts the more risky task of suggesting a strategy for turning these forces to advantage. He finishes with a ‘fun’ scenario which puts the subject into a historical perspective. Once you have accepted his assumption that the need for authority (derived from the appropriate sources) is the acceptable norm it is not diiiicult to go along with him when he says : ‘For all the apparent diffusion of power in the organixation, the need for management to be endowed with authority and to lead is as great as ever. One clear change is that managers would have to act in a much more overt political way uis-ci-aip the conflicting power groups. ‘-Not only would political skills have to be much greater, but managers would have to be able to articulate ideas much more persuasively.

DECEMBER, 1976

‘-Another new role for management (We must forgive him this plug!)

schools perhaps.’

So the ballpark we are in seems to be leadership; acceptable and inspiring leadership. Perhaps this is basically what participation is all about; the need for a change in style of leadership which takes account of the changing attitudes of the led. Some say the Unions have too much power. Did they take it or merely move into the vacuum left by those in authority who failed to anticipate, to plan (if they planned at all) for the intelligent use of the human resource? (My plug!) W. R. HANCOCK 20 Abbotswood Guildford

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BOOKS RECEIVED UK Ioternatioual Trade 1980-1985: A Business Research Report by the Natioual Ports Council, Wilton House, London (1976), 173 pp. f35.00 (softback). ReceioedJune 1976. (277) Manpower Planning Workbook, by B. 0. FETTUAN and G. TAVERNER, Gower Press, Epping (1976), 127 pp. f7.50 (hardback). Received June 1976. (278) ScStntary Audit Requirements in tbe Netherlands, 79 pp. a.95. (279) Practical Aspects of Deferred Tax Accounting, by I. P. A. STlTr, 193 pp. E5.95. (280) Sane Auditing Problems, 20 pp. El 50. (283) The Corporate Report: An Academic View, 100 pp. E2.00. (284) European Fiiial Reporting: No. 2 France, by J. BEENY, 290 pp. E6.00 (288) The foregoing five publications in 1976, all softbacks, are by the Institute of Chartered Accountants in England and Wales. Received June/July 1976. Managerial Planning, issued bi-monthly by The Planning Executives Institute, Ohio, May-June 1976,37 pp. (softback). Received June 1976). (281) Busiiess Logistics, edited by P. VAN BULITENEN,Nijhoff, The Hague (1976), 372 pp. Price to follow (softback). Receiued June 1976. (282) Iuflatiou and Busioess Policy, by D. E. HUSSEY,Longman, London (1976). 150 DD. f6.95 (hardback). Received Julv 1976. . I’ -. ’ (286) An J3xercisein the Delphi Technique: Public Libraries and Long Range Planning, Occasional Paper No. 2 by D. I(ENNINGTON and G. Pa~rr, Public Libraries Research Group, Brighton (1976). 81 pp. S4.20 (softback). Received July 1976. (287) Interoational Constrution Accounting, by R. H. NEO, Gower Press, Epping (1976). 277 pp. f12.50 (softback). Receiued July 1976. n (289)

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