(FORTUNE Magazine) – MANAGING/Cover Story 66 WHY TOYOTA KEEPS GETTING BETTER AND BETTER Success never gets in the way of constant improvement. The company is simultaneously restructuring its management, refining its already elegant manufacturing processes, planning for the 21st century, and even becoming a fashion leader. Here's how the world's best automaker works harder than ever to avoid ''large-corporation disease.'' by Alex Taylor III

70 TOYOTAS VS. THE COMPETITION * A look at how six of the 13 vehicles Toyota sells in the U.S. compare with other makes.

CRIME 83 HOW DREXEL RIGGED A STOCK Mike Milken's court hearing brought out the seamy details of an April day when Wickes Cos. common needed a little help and Ivan Boesky's trader did ''a favor.'' by Carol J. Loomis

COMPETITION 95 TV'S TOUGHEST YEAR IS JUST A PREVIEW Hollywood economics, Washington regulations, and a vanishing audience make planning a nightmare for the broadcast networks. The feds may let up, but rival technologies won't. by Bill Saporito

106 WHY THE NETWORKS CAN'T STOP JUGGLING THEIR SCHEDULES

MONEY & MARKETS 117 WHO NEEDS THE STOCK EXCHANGE? We all do, because it is the central marketplace that sets the prices for investors. But America's No. 1 exchange is threatened with unplanned obsolescence. by William E. Sheeline

THE SOVIET UNION 127 THE NEW RUSSIAN REVOLUTION With Gorbachev still suffering the slows, the biggest Soviet republic is plotting swift passage to a market economy. That means confusion -- and opportunity -- for Westerners. by Paul Hofheinz

INNOVATION 138 PRODUCTS TO WATCH Alaska's premium vodka, Wilson's Hammer System tennis racket, and more. by Stephanie Losee

EXECUTIVE LIFE 141 SURVIVORS OF THE ROARING '80s Seven of the decade's highfliers tell how their lives changed once the days of easy riches ended. All believe opportunities still exist -- and they're betting on them. by Stratford P. Sherman

CORPORATE PERFORMANCE 155 BATMAN SHAKES BP TO BEDROCK That's what some people call British Petroleum's new chairman (and, yes, he has a Robin). The diabolical problems: falling oil production and a big bureaucracy. by Peter Nulty

165 THE WEE OUTFIT THAT DECKED IBM Big Blue led the world in automated teller machines until a single NCR plant in Scotland pushed it virtually out of the business. The tale holds lessons for every manager. by Geoffrey Colvin

172 CHEERS TO HEINEKEN You've drunk the beer. Now meet the world's most global brewer. by Brett Duval Fromson

174 COMPANIES TO WATCH Hannaford Brothers' supermarkets are thriving -- even in the hard-pressed Northeast. by Ret Autry

Also: OEA, Immucor, and Arctco.

POLITICS & POLICY/Special Report 179 GOVERNMENT: IT'S SIMPLY NOT WORKING As the budget battle shows, Washington cannot do what it is supposed to do. We can fix it by drawing on the principles of corporate restructuring. Some in government already are. by David Kirkpatrick

DEPARTMENTS 4 EDITOR'S DESK 8 INDEX 12 NEWS/TRENDS Traces of oil in third-quarter earnings, a new cure for medical-claim pain, how to create harmony at work, pushing used PCs, and more.

21 FORTUNE FORECAST Exports will keep growth going -- and are a key reason recession will not hit. by Joseph Spiers

27 PERSONAL INVESTING Ginnie Maes make a high-yielding alternative to Treasury bonds. by Karen Nickel

Also: Dreyfus Corp. selling at a steal, bargains after the selloff in high tech, and Portfolio Talk with Bryan Jacoboski of Paine Webber.

65 LETTERS TO FORTUNE

199 FORTUNE PEOPLE The man in the hot spot at Amoco, Hallmark's New Age guru, and more. by Mark M. Colodny

200 ON THE RISE

207 BOOKS & IDEAS A new book on the roots of the S&L mess is getting heavy play as a revelation of what really happened. Its explanation is wrong. by Robert E. Norton

214 FORTUNES PAST Two excerpts from earlier issues: William H. Whyte's view of how hard executives work, and the U.S.S.R.'s future as a great power.

219 KEEPING UP by Daniel Seligman

ABOVE: Toyota President Shoichiro Toyoda, photographed by Takeshi Yuzawa in the driver's seat of a Japanese-market Tercel.

COVER: Theo Westenberger (Sygma) shot this Lexus LS400 in California.