The Profit Impact of Market Strategies (PIMS) is a comprehensive, long-term study of the performance of strategic business units (SBUs) in thousands of companies in all major industries. The PIMS project began at General Electric in the mid-1960s. It was continued at Harvard University in the early 1970s, then was taken over by the Strategic Planning Institute (SPI) in 1975. Since then, SPI researchers and consultants have continued working on the development and application of PIMS data.
According to the SPI, the PIMS database is "a collection of statistically documented experiences drawn from thousands of businesses, designed to help understand what kinds of strategies (e.g. quality, pricing, vertical integration, innovation, advertising) work best in what kinds of business environments. The data constitute a key resource for such critical management tasks as evaluating business performance, analyzing new business opportunities, evaluating and reality testing new strategies, and screening business portfolios."
The main function of PIMS is to highlight the relationship between a business's key strategic decisions and its results. Analyzed correctly, the data can help managers gain a better understanding of their business environment, identify critical factors in improving the position of their company, and develop strategies that will enable them to create a sustainable advantage. PIMS principles are taught in business schools, and the data are widely used in academic research. As a result, PIMS has influenced business strategy in companies around the world.
THE PIMS DATABASE
The information comprising the PIMS database is drawn from member companies of SPI. These companies contribute profiles of their SBUs that include financial data as well as information on customers, markets, competitors, and operations. The SBUs in the database are separated into eight classifications: producers of consumer durables, consumer non-durables, capital goods, raw materials, components, or supplies; wholesale and retail distributors; and providers of services. Specific companies and industries are not identified. Each SBU profile includes financial data from the income statement and balance sheet, as well as information about quality, price, new products, market share, and competitive tactics. "It tracks the standard financial measures, plus many of the marketing and strategy variables thought to drive financial performance," Hiram and Schewe explained in The Portable MBA in Marketing.
From this database of SBU experiences and results, SPI researchers developed a set of strategic principles and a methodology for examining business problems and opportunities. Users of the data can look for statistical relationships and compare the experiences of similar businesses, but cannot access the individual SBU data files. For small business owners, PIMS provides an opportunity to obtain information about competitors, markets, market shares, prices, and financial performance. This information enables small business owners to see how their strategies might play out in the market by comparing the experiences of similar businesses profiled in the PIMS database.
For example, the owner of a business that is a high-quality producer in a declining market might analyze the PIMS data to find out how various strategic initiatives affected the performance of other high-quality producers in declining markets. However, the PIMS data cannot provide information about specific companies—such as levels of debt and equity—or about overall industries. "The way to use PIMS effectively is not to simply run with the general findings," according to the SPI website. "Rather, analyze the experience of comparables by 1) profiling the specific business situation and identifying the key issues, and then 2) accessing and analyzing the experience of a sample of PIMS businesses situationally comparable to this business."