Academic journal article Journal of Applied Management and Entrepreneurship

Tomorrow's Fortune 500 Companies: Critical Forces in Service and Manufacturing Firms

Academic journal article Journal of Applied Management and Entrepreneurship

Tomorrow's Fortune 500 Companies: Critical Forces in Service and Manufacturing Firms

Article excerpt

Executive Summary

Micro-cap corporations are fertile breeding ground for America's future Fortune 500 companies. This research tells a simple but compelling story for success; build and maintain an organization of high-quality motivated personnel in a positive environment throughout a firm that handles its customers with unquestioned integrity and responsiveness to their every need with a superior product. Unimportant factors included: a reputation for innovation, aggressive pricing, taking greater financial risks than others, product/service compatibility, deeper product range, and ease of use.

Comparing service and manufacturing firms produced similar findings. Honesty, integrity, and ethics were critical, regardless of the firm. Employees in both economic sectors were critical to success. Service firms used a compensation system that reinforces high performance by employees, while manufacturing firms focused more on superior entrepreneurial orientation that permeates the firm. The two economic sectors agreed on the following factors: aggressive pricing, willingness to take greater financial risks, and compatibility and easy of use of products were unimportant. Technical superiority was considered unimportant only for service firms, while manufacturers alone do not value superior negotiating skills in dealing with customers.

Introduction

In a global economic marketplace, America's smallest corporations, which have been termed "micro-caps" by the professional investment community, are playing a disproportionally large impact on the productivity of the economy and employment. Small may not always be beautiful, but it is seldom ugly. Micro-cap firms that are invested in or recommended by professional investors and financial researchers generally are those that have proven to possess a business model that is capable of generating above average financial returns.

Seldom, if ever, will executives disclose their future strategies. What they will discuss are the critical forces which they believe will influence their decision-making process. Strategies will be formulated based on the criteria which the decision-maker believes will have the greatest impact on the firm's performance. Because the resources of any organization is limited, it logically follows that strategies are themselves limited. Executives evaluate the landscape of their industry, including the anticipated behaviors of its competitors, and build upon their perception of the most critical factors that will influence their firm's success, to formulate and implement strategies. This is a continuous interactive process of actions, reactions (feedback), and revised actions. The dynamic aspect of strategy and decision making involves the continuous assessment of the firm's market position in relation to its desired position. In our competitive environment, the cycle is revolving at what seems to be an escalating pace.

This paper's goal is to capture what executives of micro-cap United States companies believe are the most critical factors affecting the success of their firm over the next five years. Executives of micro-cap companies were selected because these men and women are generally the least surveyed executives regarding critical business issues due to their size and the difficulty in identifying them. Micro-cap firms are those whose total capitalization is below $800 million. Most of the research reported in the literature is based upon studies of the traditionally largest corporations in our economy (Fortune 500 or 1000). Firms in this "micro-cap space" are certainly more numerous than the Fortune 1000. Yet, these firms may well become future Fortune 500 companies. The goal was to survey executives from the "better" firms in this segment. To accomplish this selection, the authors selected only firms that were currently the beneficiaries of professional equity investors. The logic being: these highly-qualified investors select, and invest in, firms which have been historically successful or are poised to grow dramatically. …

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