Marketing Intelligence & Planning

International Journal of Physical Distribution & Logistics Management

James Stock
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To cite this document:
James Stock, (1992),"International Journal of Physical Distribution & Logistics Management", Marketing Intelligence &
Planning, Vol. 10 Iss 7 pp. 12 - 15
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http://dx.doi.org/10.1108/EUM0000000001119
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James Stock, (1990),"International Journal of Physical Distribution and Logistics Management", Marketing Intelligence &
Planning, Vol. 8 Iss 5 pp. 17-18 http://dx.doi.org/10.1108/EUM0000000001081
Farooq Habib, Marko Bastl, Colin Pilbeam, (2015),"Strategic responses to power dominance in buyer-supplier relationships:
A weaker actors perspective", International Journal of Physical Distribution & Logistics Management, Vol. 45 Iss 1/2 pp.
182-203 http://dx.doi.org/10.1108/IJPDLM-05-2013-0138
Paul J Davis, (2015),"Implementing an employee career-development strategy: How to build commitment and retain
employees", Human Resource Management International Digest, Vol. 23 Iss 4 pp. 28-32 http://dx.doi.org/10.1108/
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 12 MARKETING PANORAMIC REVIEW IV

S
uccessful companies will always make dynamic assessment of these key questions in this
competitive advantage their primary goal. exceptionally well-written, insightful, and thought-
provoking book.

The central message of the book is that Americans must

recognize and accept the reality that the nature and rules
of the game have changed. They must play catch-up and
willingly adapt to the new game defined by the Europeans
and the Japanese. Only if they are able to make radical
International changes in their conventional thinking and skills of
competing, can Americans stay in and eventually win the
new economic game in the twenty-first century. The

Journal of author has done a superb job of getting this message

across through the book. Though the author's assessment
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of the issue is full of surprises, the message is clear and

striking.

Physical In the first two chapters, Lester Thurow sets the stage
for the book. Immediately after the Cold War and on the

Distribution & eve of European Community (EC) integration, a new

competitive game is just under way. However, the nature
of the game has changed from being a military contest
between communism and capitalism to economic

Logistics competition among the capitalistic countries, and from one

economic superpower's dominance to that of three roughly
equal economic superpowers, i.e. Japan, Europe, and
America. But because of their different histories and
Management present circumstances, the three superpowers have
strikingly different strategies which will profoundly alter
today's rules of competition. While the Americans
embrace individualistic capitalism and strive to maximize
profits, both the Japanese and Germans create
James Stock communitarian capitalism in which group goals are
pursued. Instead of maximizing profits, Japan has striven
for empire-building and strategic conquest. For Americans,
Marketing Intelligence & Planning, Vol. 10 No. 7, 1992, pp. 12-15
for the first time in more than a century, the USA will
MCB University Press Limited, 0263-4503 no longer be the largest economy in the world and will
have to play catch-up in the new game.

According to Lester Thurow, the era of win-win niche

competition in the old game will become an era of head-
to-head competition in which the best outcome is win-
lose. In head-to-head competition, the old strategic
advantages of nations (i.e. natural resources, capital,
Head to Head: The Coming Economic Battle technology, and skills) will have to be altered. Natural
among Japan, Europe, and America resources essentially drop out of the competitive equation;
possession of capital becomes less of an advantage; new
Lester C. Thurow, William Morrow and Company, Inc., New York,
product technology becomes secondary, while process
1992,337 pp. technology becomes primary; and the education and skills
What will be the characteristics of the new economic game of the workforce will become the dominant competitive
in the twenty-first century? Are the conventional rules of weapon. In the twenty-first century, it is a combination
competition going to change? What will be the new of man-made comparative advantage, with an emphasis
sustainable competitive advantages of nations? Who will on process technologies, and the ability to acquire and
set new rules for the game? Who will be the winner of manage brainpower (e.g. a workforce skilled from top to
the new game? What will be the USA's competitive bottom), which is going to provide the sustainable
position in the new game? And what should the USA do competitive advantage. Managed trading blocks and
to stay in and win the new game? The author, the Dean bilateral negotiations will replace the multilateral GATT
of MIT's Sloan School of Management, provides his negotiations as the new rules for the game.
 INTERNATIONAL JOURNAL OF PHYSICAL DISTRIBUTION & LOGISTICS MANAGEMENT 13
In chapters 3, 4, and 5, citing numerous striking statistics
and evidence, Thurow provides an in-depth assessment
of the strengths and weaknesses of each of the three
economic superpowers and their prospects of
scoring in the new game. According to Thurow, because
of its potential size, the integrated EC markets will allow
Europeans to write the trading rules for the twenty-first
century, which will have to be followed by all others
including the USA. As for the middle and eastern
European countries, some will join the First World, while
others will fall into the Third World.
Thurow attributes Japan's success to its producer
economics which are characterized by a goal of strategic
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conquest, an institution which pushes investment up and
consumption down, a long-term orientation supported by
business groups, investment in human skills, and national
strategies. While the momentum of Japan will probably
make her the largest economy, Thurow feels that Japan's
unique culture, in which other cultures are resisted, will
be unlikely to make Japan the "manager" of the new
economic system.
As for the USA, Thurow uses some surprising evidence
in an effort to send the message that the USA has to
change drastically in order to stay in and win the new
competitive game. The ' 'game analysis'' of the USA's
position in seven vital industries of the future reveals the
conditions of the industries, the lessons to be learned,
and the future prospects for success. These industries
include semiconductors and computers, commercial
aircraft, consumer electronics, materials, chemicals, motor
vehicles, and machine tools. Thurow contends that the
USA's success or failure in the new game will depend on
the extent to which it learns to play the new economic
games defined by the Europeans and the Japanese.
In chapter 6, Thurow discusses the difficulty for a country
trying to become rich, and the various routes via which
a country can become affluent. The prospects of various
regions of the world becoming rich in the next century
are also assessed. In chapter 7, a number of festering
problems which have affected, and will continue to affect,
the world economy are discussed. Global environment-
alism, structural trade imbalances, foreign exchange
stability, and the lack of a "manager" for the new
economic system, are among the problems discussed.
In chapter 8, Thurow predicts the most likely winner of
the twenty-first century by synthesizing the discussions
of previous chapters. While both Japan and the USA have
very good prospects for success, and there will be no clear
winners in the 1990s, the twenty-first century is likely to
belong to the House of Europe, which will be the writer
of the new rules. In chapter 9, the last chapter, Thurow
elaborates on how to make the USA the competitive leader
in the new game. Essentially, the author proposes that
Americans must accept and adapt to the new rules of the
game as defined by the Europeans and the Japanese, even
at the expense of short-term sacrifices, to stay in and
eventually win the new competitive game. Interesting
recommendations are made in areas such as savings and
investment, education and training, business groups, and
national strategies.
Like all other books which attempt to predict the future,
one major weakness of the book is that the data and
evidence used to substantiate the author's positions
appear anecdotal and that some predictions may appear
very radical. However, given that the major goal of the
book is to convey a message, to force people to confront
reality, and to motivate people to adapt to the new game,
this weakness does not seem to undermine the merits
of the book.
We strongly recommend this thought-provoking book to
anyone who is concerned about the future outcome of the
new economic game, who is interested in competing in
the new global economy, or who is researching the route
to success or formulating public policy.
Shaoming Zou and S. Tamer Cavusgil
Michigan State University, USA
Logistical Excellence: It's Not Business as Usual
Donald J. Bowersox, Patricia J. Daugherty, Cornelia L. Droge,
Richard N. Germain and Dale S. Rogers, Digital Equipment
Corporation, Burlington, MA, 1992
Many firms are utilizing logistics excellence to give them
a sustainable competitive advantage. However, logistics
management has changed significantly during the last few
decades, and "doing logistics the old way" no longer
works the way it once did. The decade of the 1990s calls
for managers to manage logistics operations in new and
innovative ways. As a result, logistics managers must
"grasp leadership of the change process" and successfully
implement the necessary changes within their firms.
A recently published book entitled Logistical Excellence:
It's Not Business as Usual, does an excellent job of
discussing this new environment and examining its
implications and ramifications for logistics executives and
logistics strategies. Based on empirical research, coupled
with the industry experiences of the authors and several
industry executives, the book presents the elements of
the new environment and the practical ways in which
managers must respond to the challenges, problems and
opportunities which face firms entering the twenty-first
century.
Managing logistics activities during the 1990s and beyond
will be affected by several significant factors, the most
important being speed, quality and structure. The issue
of speed results from the significant technological advances
 14 MARKETING PANORAMIC REVIEW IV
which have taken place during the 1980s and early 1990s.
All aspects of logistics will "speed up". The authors
identify three areas of logistics operations where speed
will have the most impact, namely, logistics processes,
information, and decision making.
Quality issues have become vital in recent years, as
evidenced by the widespread recognition of quality
excellence through such awards as the Malcolm Baldrige
National Quality Award and the Deming Award. During
the remainder of the 1990s and into the twenty-first
century, high product quality will be a prerequisite for
doing business, that is, it will merely be the price of
admission into the customer's set of options. Most
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competitors will be producing quality products. The firms
which will be winners will be those which are able to
deliver high levels of customer service in addition to high
product quality. With respect to logistics, quality will mean
zero defects, continuous improvement, and sustained
performance.
Structure refers to the organizational response to
technology, industry, and economic conditions. During the
1990s, organizational structures will evolve to meet the
increasing changes in these conditions. Especially
noteworthy, according to the authors, will be higher levels
of networking, outsourcing, and ethics.
The vehicle used by the authors to address the question
of how a firm should go about developing leading-edge
logistical competence is a mythical logistics manager
named "Charlie Change". The use of this fictitious
manager serves many purposes. As described by the
authors:
...each chapter is preceded by a dialogue that flows from
chapter to chapter. The dialogue presents the trials and
tribulations of a manager... who works through the process
of improving the logistical competency of his firm. The
dialogue tracks Charlie's efforts to become fully
knowledgeable about the need for, and the potential benefits
from, improved logistical performance. Subsequent
episodes... illustrate how Charlie takes ownership of the
commitment to change and tracks how he develops and
implements an improvement program... The chapter
content following each "Charlie Change" episode develops
the lessons to be learned in greater detail (Bowersox et al.,
1992, p. 12).
For some readers, the use of "Charlie" may be a bit
distracting. However, it does provide a varied method of
presenting a large amount of material in a fashion which
is sometimes humorous, sometimes entertaining, and
almost always informative. The majority of readers will
find this book to be worth the time taken to read it. One
can read it quickly as a novel and assimilate only the major
points; or, it can be read in detail, and savoured much like
a fine, vintage wine. To get the most out of this book,
readers do not have to have previously read the authors'
other book on this subject, Leading Edge Logistics:
Competitive Positioning for the 1990s. However, there is
much more detail presented in the first book, which
readers may find useful in supplementing the discussion
presented in this newest book.
The book has slightly fewer than 250 pages and is
organized into eight chapters and four appendices,
including: Chapter 1, The Setting; Chapter 2, Change Is
Everywhere; Chapter 3, Logistics: 1990s Style; Chapter
4, Assessment; Chapter 5, Moving the Mountain; Chapter
6, The Keys to Success; Chapter 7, Developing Strategic
Alliances; and Chapter 8, The Day after Success. Four
appendices follow the eight chapters: Appendix A,
Logistics-related Sources; Appendix B, Statistical Tools;
Appendix C, Statistical Analysis; and Appendix D,
Examples of Strategic Linkage.
The Link between Benchmarking and
Shareholder Value
Jeffrey A. Schmidt, Journal of Business Strategy, Vol. 13 No.
3, May/June 1992, pp. 7-13
Numerous articles as well as books have been written
during the past decade on various aspects of
benchmarking. Certainly, benchmarking is an important
activity of business enterprises and one in which the
majority of successful companies engage to some degree.
Benchmarking can take one of several forms, including
strategic, customer, and cost. Strategic benchmarking
examines how a firm creates long-term shareholder value.
Customer benchmarking considers the firm's performance
compared with customers' expectations. Cost
benchmarking compares the efficiency and effectiveness
of the firm's activities relative to other enterprises.
The author of this article examines each type of
benchmarking and makes the case that there is a linkage
between a firm's strategic performance and shareholder
value. The view espoused by the author is intuitively
appealing. He argues that by examining the spread or
difference between return on capital employed and the
cost of capital, a measure of corporate "success" can be
determined. The arguments presented are logical, but
unfortunately, no empirical evidence is presented to
support his position. Nonetheless, his view is correct and
all firms should consider developing such benchmarking
measures.
To "drive his point home", the author cites a very
interesting statistic. If a premier, or leading-edge, company
is defined as one which has earned more than the cost
of capital every year between 1970 and 1990, only 13 of
the Fortune 200 would qualify. The premier companies
 INTERNATIONAL JOURNAL OF PHYSICAL DISTRIBUTION & LOGISTICS MANAGEMENT 15
American Home Products, General Electric, Philip
Morris, Raytheon averaged a 20.7 per cent return on
equity (ROE) during the period compared with 12.7 per
cent for the full list of firms (p. 8). The characteristics
of the premier companies included decentralized
organizational structures and business processes, lean
corporate staffs, high levels of employee productivity, and
high management continuity.
When cost benchmarking, firms should examine the
operational, organizational, and process components of
premier companies. However, as rightly noted by the
author, differences between firms in such areas as scale
economies, operating environments, and customer service
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goals and objectives, need to be considered so that proper
comparisons can be made.
Customer benchmarking involves four steps, including:
(1) identify factors which influence customer
perceptions of value;
(2) assess corporate performance;
(3) analyse the performance of competitors and their
standing in the industry;
(4) close the gaps between current performance and
customers' expectations of performance.
Based on the notion that all gaps are bad, the author
argues that, when gaps exist, the firm should develop
strategies to close them.
As afinalpoint, the author provides a rather simplistic,
yet useful, five-step benchmarking study which should be
conducted by firms. The five steps (or rules as he calls
them) are as follows:
Rule 1 Research your company and discover
what the key factors of success are.
Rule 2 Establish the scope of, and basis for,
benchmarking (i.e. strategic, cost, customer).
Rule 3 Select the companies to benchmark.
Rule 4 Develop a plan for data collection and
data processing.
Rule 5 Develop findings and conclusions and
establish performance targets.
In sum, the article is worthwhile reading in that it provides
an approach for benchmarking which is often not utilized
by firms. It presents some useful rules for conducting a
benchmarking study and highlights the importance of
comparing customer expectations with company
performance. It is, after all, the customers of the firm
who ultimately determine its success or failure.