TABLE 2.3 Experts’ Comments That Reveal Their Decision Criteria for Making Oversight Decisions
Expert Comments on a Strategic Plan From
General MotorsExpert Comments on an
Annual Report From Control DataPast
performance
- They’ve listed their own and the
three major competitors’ vehicle sales
growth, three-year average, the three-year
profi tability, and market share. Again it’s
just a listing of data with no insights.
My sense of a good strategic plan is that
what one begins with is this data.
5. They say they had a loss across the
board. These are good years. These
are very good years for the country.
Control Data, I would think, would
share in that.
Reasons for
performance
[This expert noted in the second
sentence that the plan lacks reasons
that explain the fi rm’s past fi nancial
performance.]- Well, at this point I still don’t
know what threw their earnings off.
Sometimes they make phenomenal
earnings, other times they don’t. And
other times they have phenomenal
losses. So is it just that their earnings
fl uctuate that much even though they
make that much revenue? Or is there
some sort of driver involved here
that’s causing this? Is it correlated with
something? I still don’t know that yet.
Financial
objectives
[This expert did not indicate whether
he noted the plan’s lack of fi nancial
objectives.]- If this were a presentation to the
board of directors, I would like to see
the pro forma statements, too. I’d like
to see what they expect income to be
over the next several years, and why
they think they’re going to get that.
This has just been a statement of the
history of the company for the last
three years. Nothing with respect
to the future. So again from a board
member’s point of view, that’s lacking.
Competitive
strategy
- I am reminded that the company said
it was going to move from a low cost to
a differentiated position [i.e., strategy].
And that really is the crux of the issue
for the company. - Now I realize that what is lacking
in the subsequent ten sections is any
focused discussion on precisely what
moving to a differentiated position
means.
23. Their strategy is to cut costs rather
than progress their technology. Nobody
wants to buy last year’s computer even
if it is a hundred dollars cheaper.
57. It doesn’t look like these people
are on the right track as far as I’m
concerned. Yes, I think they should
be concerned about cost, everybody
should be. But tell me more about
technology growth. How they plan to
position themselves in the future.
Action plan 22. I think this [chart of action plans] is
useful information because it’s probably
the important milestones in the next
three or four years within the company.
It would probably be useful to support
this kind of chart with a little bit more
discussion, since these are the actual plans
that have been chosen by management.
- I see nothing in here or very little
about developing technology. This
business is what strategists would call
a fast-cycle business. New technology
becomes obsolete very quickly. Cost
cutting won’t do much. They better
have good R&D going on. - Maybe cut the dividends.
Certainly don’t pay dividends and
special dividends especially. Instead,
go to the commercial credit paper
market or the credit market to raise
more cash.
(Continued)