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Details the use of the computer simulation method in solving the cyclical majority problem in business economics. Voting process to estimate the preference pattern; Closed-form expression for the probability of a cyclical majority.

The article reports that the business economy is having profitless prosperity, because of highly competitive market and the disturbance due to the revision of the anti-trust law. It states that a large number of consumers are from low-income group, who earned 78.6 percent of the total national income and consumed 83 percent of the goods. Several charts depicting the expenditure budget of the consumers of the U.S. in 1929, and another on food, and housing expenditure, with savings and taxes.

The article presents the results of a survey of case studies concerning the influence of interest rates upon entrepreneurial decisions. To select the appropriate cases to be examined, the researchers separated each case by subject indexes and chose only the ones with indexes pertaining to interest rates. The author looks at how the data was appraised, and mentions several flaws relating to the compilation of the cases by Harvard Business School. He also suggests that surveying the teaching staff at Harvard Business School may provide some substance to back the case studies. Through these two surveys the researchers found that interest rates are not viewed as an important factor in decision making.

The article examines the validity of some typical generalizations regarding retailer stock-turn. Several common generalizations are examined and validated or disproven. Sales ratios such as sales to total assets, sales to fixed assets and sales to inventory show the relationship between the volume of business and the investment in merchandise, and should not be used to determine general business efficiency. The profit-determining factors that should be considered by business owners are volume, margin and expense.

The article discusses business economics and changes in business conditions in Germany. Until recently, German business economists acted also as political economists do in the U.S., concerning themselves with theoretical problems as well as more narrower business conditions, which in turn made for a different system for higher education in business in Germany. The author mentions some of the changes in business conditions including the increased size of the business unit caused by vertical integration and price fixing. Debates whether the future business of Germany should be regulated or free is also discussed along with certain problems stemming from these changes.

The article examines the development of commercial paper financing in the United States in order to consider some of the main factors for movements in the commercial-paper market from 1924 to 1931. Reductions in the demand of commercial banks for commercial paper are discussed, and details related to the decline of the supply of commercial paper are also presented. The effects of these decreases on commercial paper houses is analyzed, and the article concludes with the probable future for commercial paper houses.

The article examines the economic implications of the five-day work week. A brief historical overview of the shortening of working periods is presented. The logic behind the decision to reduce working periods is presented. The question of whether the reduction of working periods has kept pace with the mechanization of industry is addressed, and the practical experiences of the implementation of the five-day week are detailed. The industrial management goal of balancing production and consumption is also discussed.

This article focuses on the sugar cycle and sugar production in Cuba. The effects of several wars on the production of Cuban sugar are discussed, with specific consideration given to production rates after World War I. The article addresses whether the price of sugar affects consumption rates, and analyzes the relation between production and consumption that determines price. Cuban sugar production policies are examined, and the effects of the over-production on price and inventories are detailed. Statistics related to global production rates are presented.

The article explains why there is a need for an adequate survey of domestic building requirements. An overview of the current stagnation in residential construction and the importance of surveys and accurate data in helping stabilize construction and decrease costs is presented. The absence of accurate data and the lack of uniformity as to methods used are discussed. The article suggests a program for a proposed survey based supply and demand, improved production methods, financing, and competition.

The article examines the mathematical obstructions that make a budget and business forecast difficult in the field of installment finance. The need for accurate formulas applying to the certain cases of installment contracts, and involving any desired length of installment contract over any desired period of time, is essential to many forecasts involving installment finance. The article offers three simple solutions not only to demonstrate the feasibility of work of pure mathematical study, but also to emphasize its necessity. The results of the three methods of procedure are compared on the basis of efficiency.

The article discusses the function of reserves, or sinking funds, as they pertain to life insurance. The reserve refers to the present value of all future claims and is the amount sufficient to reinsure every risk at net tabular rates. As the insurance business increases in volume the reserves are expected to become proportionally larger. Analysts say the reserve is comparable to the liability of a savings bank to each of its depositors. Life-insurance companies do not create wealth. Their function is to collect and redistribute wealth in accordance with contracts drawn to meet certain conditions.

The article explores factors affecting the development of scientific management in England. The principles of scientific management expounded by economist and philosopher Frederick W. Taylor are discussed. A brief historical overview of the scientific management movement in English business is presented. Examples of the ineffective application of scientific management principles in several industries are detailed. The economic conditions in England leading to the eventual adoption of industrial management techniques are described.

The article discusses the system of command under scientific management in a business. Methods of scientific management can by divided into two parts: the transference of skill in all areas of industry, and standardization of manufacture combined with as much system control as is necessary to maintain those standards. The author describes both methods in detail and provides criticisms. Moreover, information on the functions of high command in a company is outlined, along with the dangers of an absolute power in a business. Lastly, the author adopts some methods from the military to illustrate a well defined method of scientific management.

Should a bonus system be based on companywide profits or division profits? How large should the bonus fund be? How can individual rewards best be apportioned over time? Particularly in decentralized companies, maintains this author, management's approach to these and other questions of incentive plan implementation often results in later developments that are injurious to the organization. After appraising the management decisions that are critical to the success of companywide bonus plans, he analyzes some especially thorny problems associated with division-based bonuses. In each case, he shows management how to structure bonus rewards that are both fair to executives and consistent with the short- and long-term interests of the organization. [ABSTRACT FROM PUBLISHER]

Now that the great acquisition movement of the 1960's has passed into history, some experts think that a significant movement toward divestiture has begun. Since every acquisition implies a divestiture, and vice versa, any "movement toward divestiture" would represent a change primarily in market emphasis and attitudes, rather than a change in the volume of acquisition/divestiture transactions. The author explains why he thinks this reversal in emphasis is likely to occur, and suggests that the rules by which the game is played, as well as just its name, are also going to change. He then characterizes the ways companies have approached divestiture in the past--as the "unpleasant underside" of acquisition, as it were--and goes on to describe the new character we can expect divestiture to assume in the coming years. Perhaps his most important conclusions are that companies will come to regard divestment as a useful and legitimate tool of corporate planning and strategy, and that they will approach it far more calmly, deliberately, and rationally than they have done heretofore. In analyzing the historical patterns of divestiture and projecting what the new emphasis on divestiture will mean, the author has drawn on his experience in a long-continuing research project on the nature of the divestment process, supported by the Harvard Business School's Division of Research. While working on this project, he has had the opportunity to study divestiture in some 18 companies. He concludes the article with recommendations as to how companies might begin to rationalize their approaches to divestment opportunities. [ABSTRACT FROM PUBLISHER]

The way marketers try to cope with excess demand or unwanted demand may affect the company's long-run objectives just as much as do marketing policies for normal times. What kinds of situations lead companies to cut back on their marketing efforts? How do methods of de-emphasis differ depending on the type of problem? This instructive and sometimes amusing analysis answers these and other questions that have never before been raised in HBR. It also suggests new directions for the study of marketing. [ABSTRACT FROM PUBLISHER]

Cash is not an asset but a liability, a wasted opportunity, unless it is earning money for its owner. C.I.T. Financial Corporation deals in vast sums of cash every day but usually ends the day with no cash in its banks above the compensating balances. In this article the Treasurer of C.I.T. tells how the company does it. Watching bank balances and concentrating on short-term loans are but part of the system. The key to it is the use of designated regional banks by field operations to speed money through the company's accounts and into immediate employment. The author describes the cash-use forecasting and record-keeping procedures and provides many tips that will be of help to corporate executives seeking to improve their management of cash. [ABSTRACT FROM PUBLISHER]

Where market demand exists, corporate enterprise is not slow to react. The real estate sector recently has been no exception. The different economics of this field, however, have spelled trouble for inexperienced companies and individual investors. The former discovered that their investments did not always immediately benefit per-share earnings, and so they have increasingly resorted to selling parts of their projects through packagers to individual investors. The latter, intent on gaining the inherent tax-shelter benefits, too often fail to analyze these syndications carefully before putting their money down. In this article, the authors describe the potential pitfalls in these investments. Changes in the rental market, in property tax levels, in the lease renewal rate, and in operating expenses--any of these variables can reduce the investors' return from a project or even throw it into insolvency, with serious tax implications for them. INSET: Appendix: project economics, start to finish. [ABSTRACT FROM PUBLISHER]

Companies often place too much blind faith in the maxim that "integration is a good thing," the author argues; they are quick to dismiss any notion of redeploying assets wherever it might mean a diminished level of integration. Thus, they forego the long- and short-term gains redeployment can bring to a business whose markets have shifted, say, or whose "integrated" position has been undermined by new industrial developments upstream or downstream. The author goes on to sketch a scheme for charting out the redeployment options available to a company and for evaluating each one before selecting or rejecting. [ABSTRACT FROM PUBLISHER]

The article offers guidelines for profit improvement from a company's physical distribution function, revealed through four factors found in the methods and practices of best-managed companies. These factors include control information, personnel competence, distribution economics, and the overall problem of distribution. Lessons that can be learned from the 26 companies the author profiled include knowing the distribution costs of one's own company, recognizing and understanding the company's distribution profit economics, applying the right techniques in handling distribution demands, and upgrading the skills and capacity of the company's distribution processes.

This article discusses the impact of economic sciences, management sciences, and computer technology on the investment decision-making process. A knowledge of systems concepts has particular usefulness in the treatment of the information flows associated with the process. Meanwhile, the concepts of management science can be brought to bear on the design of decision-making strategies. On the other hand, econometric methods are highly useful to the investment organization in its studies of security prices and their relationships to other economic variables.

The article discusses quantity discounting and the design of a discount schedule. The mathematical strategy in a discounting schedule reflects the costs of buyer and gains of the seller. The buyer's economic order quantity (EOQ), or optimum size order, is used to determine the break-even point for purchasing in quantity and for balancing losses in purchasing with a quantity discount. Topics include an example of how the quantity discount method is used in companies, the differences in quantity price structures, and the advantage of discounting in quantity purchasing.

The article focuses on long-range planning for research and development (R&D) programs. Five elements in an effective strategy for industrial research include: setting organizational goals as a guide to R&D which define the range and timing of the business' technological needs; considering the impact of R&D outcomes on the company's operations; and integrating R&D into the overall strategy for business operations. Topics are: key questions for determining a corporation's major goals; two purposes of economic forecasting; seven aspects of sociological planning; factors in technological forecasting; strategies such as grapevine programs; steps in project selection; biases in strategic planning; and considerations for nontechnical managers such as finance, production, and marketing.

The article comments on the behavior patterns of pigeons and suggests that they provide insight into employee behavior and incentive programs in the United States. Experiments with the pigeon show that the bird can be trained to perform a task with reinforcements such as small amounts of food or water. The five basic conditioning rewards or "pay" schedules for pigeons, which might also be applied in management to improve human workers' motivation--continuous reinforcement, variable ratio, fixed ratio, variable interval, and fixed interval--correspond to quick wage-payment systems, the use of piece-work rates, and randomization in industrial management.

The article offers information about the cost of employee fringe benefits for companies in the United States and reasons for implementing a planned package of benefits. To develop a logical plan, management should know the cost of each fringe item and why the company is offering it, as well as look for an optimal return on its investment costs. Statistics from the United States Chamber of Commerce show that fringe benefits can account for 60 percent of a payroll. An example of management's approach to collective bargaining with labor unions includes General Electric Company. Topics are the revocation of fringe benefits for economic and ethical reasons and the operations-research technique for determining the optimum combination of fringe benefits for an individual company.

The article examines the role of stock options in fostering effective management in the United States. The special tax provisions for options or restricted stock options encourage entrepreneurship and the development of inventions via monetary incentives. Stock options are in the public interest because they promote efficient and productive leadership in executives and help companies retain their best managers, which contributes to higher incomes and living standards among the employed, gains for stockholders, and a stronger economy in general. Topics include advice for implementing a stock option plan, the experience at Ford Motor Company, rules and regulations concerning options, and criticism against stock options.

The article discusses judgment in management decision making and investment decisions. The article argues that common business practices are out of step with the reality of the contemporary business environment. Current methods of management and decision-making analysis are dissected and criticized; ideas for improvement and additional action are presented. The article profiles a number of leaders in involved in improving industry practices in capital budgeting. The article concludes with a consideration of the administrative handling and control required in the investment appraisal process.

The massive application of new knowledge in corporate enterprise is basically changing the business environment. In so doing it is casting an imposing set of new demands on corporate management. Management practice and theory must face up to new problems, some of which are outlined in this feature. But the central problem, as ever before, lies in the managing of men--in this case, the men who provide and apply the new knowledge as employees. The author, Paul O. Gaddis, a Westinghouse Electric Corporation manager, is now completing a fellowship in advanced management studies at Massachusetts Institute of Technology under the joint sponsorship of the Alfred P. Sloan Foundation and Westinghouse. [ABSTRACT FROM PUBLISHER]

The article mentions financial, legal, and accounting aspects of corporate mergers and acquisitions (M&A) in the United States. Corporate objectives in M&A include financial stability, capacity expansion, product diversification, acquisition of personnel, market gains, and the need to invest excess capital. Topics are the factors contributing to an offer price, purpose of the acquisition committee, definition of "purchase" and "pooling of interests" as well as how the two business combinations can present accounting problems, filing requirements under Securities and Exchange Commission (SEC) legislation or regulation, and examples of M&A.

The article explains the concept of mathematical model building for decision making and an analytical approach to capital budgeting. The mathematical model is a management tool that is built on a potential market's demand pattern, production distribution planning and restrictions, estimation of costs as a function of production volume, and the corporate policies of constancy of employment, accounting methods, utilization of plant capacity, and priority of labor productivity or capital investment. Topics include applicability of the model manipulation concept and operations research.

The article questions the feasibility of price reductions for maintaining profits or reducing business losses in an oligopolistic industry when there is a decline in sales volume. Price reductions can stimulate sales in the short term for manufacturing industries in the United States. There is an inverse correlation between profits and the margin of profit at the point of departure. Unit profit in relation to cost or price can affect required elasticity. Topics include price elasticity of demand, cost elasticity, the ratio of fixed to variable costs, and price dynamics.

The article comments on executive ability and industrial management in the United States. Managers should not strive for perfection, but should have the traits of leaders and educators, as well as the knowledge and ability to build an organization. Characteristics that differentiate the executive from the scientist or artist include executives' need to take action after recording their observations and their responsibility to yield to consumers' preferences. The executive position is compared to those of social scientists such as the economist, psychologist, sociologist, and political scientist. Topics include managerial accounting, the labor movement, Judeo-Christian tradition, and social responsibility in business.

The article reports that market-share measurement can be effective in appraising managerial performance, expressing market targets, and forecasting sales. As a diagnostic tool and standard for comparison, changes in market share can direct attention to sources of mismanagement, as well as successful management. Two ways to measure market share are comparing company sales in relation to industry sales and surveying consumers' purchasing. Timing and stage of industry where sales are measured can distort the reliability of the market-share measurement. Topics include the rationale for not using a profit-share target as a measurement for management objectives, two approaches for setting market-share and profitability targets, and examples of mistaken targets.

Over the past few decades, many businessmen and business scholars have been asking one important question: What can we do to make business management a profession? Indeed, one of the most significant trends in business today is the increasing tendency to think about the processes of business--to look for principles, patterns, and relationships. And many now hail management science as the answer to the problem of revising business thinking to make it conform to the dynamic technological advances that have revolutionized our economy. Peter F. Drucker agrees that the promise is great--greater perhaps than most businessmen realize. But he also thinks that much has yet to be done to develop the full potentials of management science. [ABSTRACT FROM PUBLISHER]

The article discusses investment in automation projects and differences between special automatic equipment and standard equipment. Factors contributing to the development of an automatic-equipment acquisition plan are costs for special automatic equipment such as: Expenditures for production engineering; Inventory investment; Retooling or relocation of existing equipment; and Income taxes. The average primary service life of special equipment is expected to be shorter and the rate of return more uncertain than traditional equipment. Topics are product design obsolescence, salvage values, contingency allowances, probability calculations for investment, four procedures in analyzing investments, and examples of estimated expenditures for conventional and special automatic equipment.

The article explains distribution cost analysis and mentions management techniques that lower marketing costs and improve efficiency. Analysis of a company's distribution problem involves the calculation of fixed costs that are common to various types of sales promotion, separable fixed costs, and variable costs in each of the business segments. Mathematical and linear programing can determine from these costs the most profitable use of resources or marketing expenditures. Topics include the cost/volume relationship, steps in cost analysis, statistical decision, setting up a mathematical programing problem, and the limitations of linear programing. INSET: SOME SUGGESTIONS FOR COMPUTATIONS.

The article comments on trends in the United States that affect business values and managerial philosophy. Factors contributing to a decline in management authority are the influence of pressure groups and labor unions, impact of a global depression, rise of socialism, and a shortage of employees in the labor market. Industrial forces affecting public attitude toward big business are automation, employees' loss of fellowship in their work and dependence on companies for social security, and deskilling. Industries need to restructure jobs so that workers are involved in the whole job--such as planning and setting goals--and develop a sense of team spirit. Topics include industrial interrelationships that cause a shift in competition, profit motive, and the manager's role of coach.

One of the trickiest problems in decentralized operations is the evaluation of key divisions personnel. Many different measures are being used--success in the development of personnel, market position, product leadership, productivity--but the profitability of the enterprise is still the fundamental consideration for most companies. Thoughtful executives have run into considerable difficulty, however, when they have tried to work out a truly satisfactory definition and yardstick of profitability. [ABSTRACT FROM AUTHOR]

The purpose of this article is to do two things: (1) to suggest a more rational approach to capital budgeting, which is a perennial and imperfectly solved problem for business, and (2) to test the applicability of game theory to the kind of decisions which are involved in capital budgeting. In a sense, this is singling out a particular problem and a particular technique. However, the problem happens to be one of the most important and least clarified of the top-level issues faced by businessmen, just as the technique happens to be one of the most intriguing and least understood of the statistical devices which have recently been presented to businessmen as aids to top-level decision making. In combination, they offer an unusual opportunity to push progress ahead in an area where it is needed and at the same time put some realism into a methodology whose value may be overestimated at its present stage of development. [ABSTRACT FROM AUTHOR]