Kalman J. Cohen

Strategy: Formulation, Implementation, and Monitoring

The study of corporate strategy within graduate schools of business has been under way for many years. With the growing complexity of the world and with the increased size of business firms, the need for planning and the development of a corporate strategy has become recognized in the business firm. While many areas of management have been subjected to scientific analysis, the strategy area continues to be characterized by a commonsensical, judgmental approach. This paper is an attempt to impose structure upon the various problems inherent in the process of formulating, implementing, and monitoring corporate strategy in modern business firms. We begin by identifying the relevant considerations in the strategic planning process and then discussing the manner in which formal models can prove useful to executives in dealing with various subproblems. The paucity of valid, normative propositions in the corporate strategy literature indicates the need for a more scientific approach to this important field. The nine major steps that constitute the strategic planning process are as follows: (1) formulation of goals; (2) analysis of the environment; (3) assigning quantitative values to the goals; (4) the microprocess of strategy formulation; (5) the gap analysis; (6) strategic search; (7) selecting the portfolio of strategic alternatives; (8) implementation of the strategic program; (9) measurement, feedback, and control. This paper will review these nine steps and present selected ideas that demonstrate how the strategic planning process could be improved through use of analytical procedures. The nine steps should not be viewed as a once-and-for-all process of strategic planning, but, rather, as a continuous, ongoing process.2 The whole procedure is a dynamic

Computer Models in Dynamic Economics

Introduction, 112. — Theory construction (model building), 113. — General characteristics of computer models, 115. — Comparison of computer models with operations research simulations and econometric models, 117. — Methodological problems of computer models, 119. — Review of the literature, 121. — Future of computer models, 126.

Effects of Regulation, Branching, and Mergers on Banking Structure and Performance: Reply

In the course of a recent article in this Journal,l Kalman J. Cohen and Samuel Richardson Reid suggest that bankers and bank regulators share an aversion to competition in banking. In their view this anticompetitive bias is manifested in a widespread pro-merger attitude among legislators and regulatory agencies without any clear-cut demonstrable evidence to support this position. The assumed benefits of bank mergers seem to be almost universally accepted as a fact of economic life (p. 238). Although some bank merger proposals are motivated at least partly by a desire to limit competition, it should be noted that many bank mergers enhance competition or otherwise benefit the public interest,2 and that most Federal regulators do not hold such categorical pro-merger views as Cohen and Reid impute to them. Cohen and Reid claim that for those who believe in the preservation and promotion of banking alternatives, the future is indeed bleak unless there is legislative and regulatory agency recognition of the problem (p. 231). It will be argued in this Comment that as a result of legal developments and current regulatory attitudes the situation is not nearly so bleak as Cohen and Reid suggest. Prior to pas-

A Partial Utility Approach to the Theory of the Firm

In his masterly survey of the marginalism controversy twenty years after its outbreak, Machlup refers to the implications which the separation of ownership from control entails for the goals for the firm. Apart from profit, he cites an empirically derived list of corporate preferences accompanied by appropriate weights as a potential maximandum. Machlup goes on to state: A third attitude would be to select two or three of the most important managerial objectives of a type that can be reduced to quantitative analysis and to combine them in a single manageable objective function [15, 5-6]. The author expects that such objective functions are likely to prove superior to the maximization of monetary profit where vigorous competition is absent and barriers to entry are effective [15, 18-19]. Considerable theoretical work has been done, both before Machlups survey and since, on such managerial variables as output and gross sales receipts [5; 2; 3; 21; 7; 8; 19; 22; 10; 11; 12; 13; 24] because these are important in the short run and tractable by the standard tools of marginal analysis. This activity was complemented by empirical studies [18; 20; 14; 9; 23] and some light was cast upon the impact on the firm of input utilization constraints [1; 26]. We feel, however, that a satisfactory attempt to define a broader framework in terms of marginal analysis and systematically pursue some of the resultant implica-

Two Approaches to Computer Simulation

Discusses the two approaches to computer simulation. Description of the general concept of simulation; Importance of electronic computers in simulation study.

Theory of the Firm: Resource Allocation in a Market Economy.

Presenting a comprehensive account of the elementary theory of exchange, this new text focuses on exchange systems, rather than on the theory of the individual consumer. Dr. Newmans text represents a return to the classical tradition of Jevons, Edgeworth and Walras, although it includes a simplified account of the most recent contributions of the mathematical economists. This book can be viewed as an introduction to the wider study of general systems of allocation, including production. The text is nearly self-contained both economically and mathematically. However, two or three years of training in economic theory and a solid background of high school mathematics will facilitate student comprehension. January 1965, 201 pp., 59 diagrams,

Inter-Temporal Portfolio Analysis Based on Simulation of Joint Returns

7.95