ABSTRACT
A firm's profit policies and market assessments, as discussed in Chapter 8, are vital elements of a bigger process to which we must now turn, that of its overall budgeting and planning. It is convenient to concentrate for this purpose on large firms. The reader will recall that in Chapter 2 we glanced briefly at the ‘Galbraithian’ and ‘counter-Galbraithian’ theories of big business power. To a large extent, of course, this controversy hinges on how far large businesses are in fact able to control their environments, i.e. to plan. In Chapter 2 we also glanced at the related question of the internal allocation system of the large business and of its internal resource flows and dispositions, a matter of increasing economic interest in a world straddled by giant conglomerates and multinationals. In Chapter 7 we raised the question whether the large, diversified business can be controlled efficiently at every-increasing levels of size. Can it maintain efficiency over time, avoiding ossification and even decay? In order to achieve its objectives, whilst coordinating scores of thousands of employees, many hundreds of products and, perhaps, too, operations from New York to Milan, from Birmingham to Hong Kong, the large corporation has to employ all types of allocative instrument. But what mixture of internal financial pressures, hierarchical command and carefully cultivated internal goodwill can it use? What conflicts exist between these allocative principles in a giant business and are these conflicts resolvable?
