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Joint ventures to produce a product have been in business for decades. Nowadays they're called “strategic alliances,” and they are likely to have information gathering as a major goal. We ask venture authority Kathryn Rudie Harrigan how a firm can boost its learning potential and yet protect its core secrets.

The factory was five years old and was already a strategic misfit. It had become ill‐suited for processing the raw materials the company could hope to buy. Although the factory operated efficiently enough, it could only process those particular grades of crude materials that were becoming increasingly scarce, hence expensive. Faced with insufficient long‐term supplies of the appropriate raw materials, the company's management recognized that the plant—indeed the entire business—was probably doomed to obsolescence within the next fifteen years, but it could not shut down the plant immediately. The company kept the obsolete factory operating while facing an uncomfortably near‐term horizon date and an unpleasant strategic choice regarding its future participation in this industry. While it deliberated, the company tried to avoid losing many of its key workers and valued managers who might leave if they knew that exit or abandonment were being contemplated.

The decision to make or buy product components or services must constantly be reevaluated as a firm's competitive position changes. But managers often fail to keep fine tuning these important relationships because they don't recognize the dangers of allowing their firm's vertical integration strategy to become obsolete.

In today's global business environment of scarce resources, rapid rates of technological change, and rising capital requirements, the important question is no longer, “Shall we form a joint venture?” Now the questions are, “Which coopera‐tive arrangements are most appropriate for our needs and expectations?” and “How do we manage these ventures most effectively?”

Vertical integration is often one of the first diversification strategies that firms consider. To choose the right strategy, companies must assess the four different types of possible integration and weigh the merits of each.

A small firm, like Key Pharmaceuticals, pioneers niche businesses by developing novel ways of delivering medicine to a patient's bloodstream—for example, nitroglycerine absorbed through adhesive pads on cardiac patients' chests. Key Pharmaceuticals is viewed as an ally by the large pharmaceutical firms as long as it stays out of their drug discovery businesses. • A small company refuses to abandon loyal customers when other firms stop producing products that face declining demand. For example, Beaunit makes cupramonium‐process rayon, which is needed by the small casket‐velvets market; enterprising electronic component distributors buy out inventories of obsolete vacuum tubes to supply a few good customers who don't want to retire their equipment before it wears out. Neither firm is challenged in its market niche because competitors don't consider the rewards worth the effort. • The “new company on the block” demonstrates its credibility by investing aggressively in a pioneering idea—as Archer‐Daniels‐Midland did with high fructose corn syrup in the maturing corn wet milling industry. The gamble succeeds because its larger rivals ignore its activities—perhaps because they don't consider the pioneer a threat; or because they believe that they can easily copy the pioneer's successes; or they're busy with more important battles in other markets.

How should your company respond to the complex competitive challenge of declining demand? The model described here can increase your prospects of success.

Who are your knowledge workers ? Do they know things that you don't?

For corporations seeking to boost market share or gain valuable assets, compelling turnaround opportunities seem to abound. In this paper the authors, who are veteran turnaround analysts, aim to share their experiences.

With so many distressed companies in need of turnaround talent and money, the paper presents lessons learned over the years by veteran specialists, which investors would be well advised to reflect on the before they leap into a thorny acquisition.

Within the middle group of stumbling companies are some genuine turnaround opportunities, despite the fact that they have been beaten down by the market and have performance problems that do not have obvious solutions.

Distressed companies fall into three categories: hopeless situations that no amount of time, money or effort can save; obvious winners that will revive as the current credit freeze thaws; and problematical situations that require a careful due diligence process to sort the lackluster survivors from those businesses that will best respond to skilled turnaround management. Only the last category offers compelling high returns that justify the resources committed.

The paper warns not to be seduced into trying to save a company that will limp along for years on life support systems or provide only negligible returns. Also to be brutally realistic about what the future could look like for a struggling firm and only put energy into potential winners and not into lackluster survivors.

A popular new strategy has appeared on the scene lately. It is called restructuring or, occasionally, redeployment. It may resemble the tried and true strategies of disinvestment and spin‐outs, but it attempts to be something much more far‐reaching; no less than the entire redirection of products, markets, and technologies of the restructuring firm. Seagrams, Bendix, Northwest Industries, Cities Service, Borden, American Can, GAF, and dozens more have pioneered and implemented restructuring on a radical scale in recent times. In all these instances, management has shed not just a doggy division but a whole line of endeavor—typically representing a third to a quarter of its asset base—with the intent of using the proceeds to plunge into entirely new activities.