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From a strategic point of view, focusing on dividends is putting the cart before the horse. What directly affects the long‐term economic performance of a firm is how much of its cash it plows back into the business. Dividends should be a potential use for funds remaining after key reinvestment decisions are made, rather than the other way around.

Several years after he had installed an elaborate strategic planning system, the chairman of a diversified New York Stock Exchange company began wondering if it was worth the effort. When he took a closer look, he found that the plan's only real function was to serve as a model for preparing the next one a year later. So he scrapped the whole procedure, instructing each division manager to do whatever planning he felt was appropriate for his own unit.

The American business community has recognized the importance of strategy as a determinant of corporate success. Academics, consultants, and executives themselves have studied the subject in depth and have written extensively on it. Any corporation with pretensions of being well‐managed has installed a strategic planning procedure to improve its prospects of long‐term success.

In the history of most corporations, strategic change is a slow, evolutionary process. Strategic planning is useful primarily to facilitate a successful adjustment of operations and resources to a changing environment.

Beatrice Foods announces a $280 million write‐off and plans to divest about fifty businesses acquired in a diversification program.

In any corporate setting, the way certain key issues are handled will have a major influence on results over an extended period. Some such issues are specific to the individual situation. Others apply to almost any company. These include:

Alfred P. Sloan, in My Years With General Motors, describes how GM came up with the strategic concept that lifted it from a distant second to domination of the automobile industry for over half a century.

In a capitalistic society, the decisions about investing capital in productive resources are made primarily by private enterprise. The long‐term economic success of individual corporations and of the society as a whole are largely determined by the quality of such decisions. Therefore, dealing with questions about raising, investing, and managing capital is among the most important responsibilities of a board of directors.

Or not to grow? Can this be a serious question? Is there a company that does not embrace growth as a principal objective? The thesis of this column is that in many companies, whether or not to grow is a serious strategic question which needs to be addressed by corporate directors. Too often, growth is accepted as an objective automatically, whether or not it is in the shareholders' best interests.

More and more members of the business community agree that boards of directors have a responsibility for seeing that their companies have an effective strategy. But there is little agreement on what constitutes a corporate strategy, and even less on what characterizes an effective one.