(FORTUNE Magazine) – MANAGING/COVER STORY 52 WHY COMPANIES FAIL Every corporate disaster tells its own awful story. Yet most debacles are the result of the people at the top making one (or more) of six big mistakes -- from lacking a fundamental understanding of what their company is all about, to failures of vision, to complacency and bloat. Fortune provides a cautionary tale, replete with instructive examples, for managers who hope to keep their corporations clear of trouble. by Kenneth Labich

THE ECONOMY 71 THE BRIGHT OUTLOOK FOR HOUSING PRICES The painful slump on America's coasts is now over. Despite the gloomy forecasts, home ownership still pays. by Joseph Spiers

78 WHY OWNING IS STILL A BETTER DEAL THAN RENTING

86 WHAT SELLS A HOUSE

COMPETITION 92 THE DIGITAL FACTORY With speed and flexibility that leave the Japanese agog, U.S. manufacturers have come roaring back after years in eclipse. The secret? It's the software, stupid. by Gene Bylinsky

CITIES 112 THE WORLD'S BEST CITIES FOR BUSINESS Planning to increase your global presence? Fortune's annual rating goes international too, as it ranks cities as a platform to help you win on the world's expanding stage. by Bill Saporito

121 THE TOP TEN

124 THE REST OF THE MAJOR CITIES

MANAGING 145 WHY TO GO FOR STRETCH TARGETS Four U.S. industrial giants have junked business-as-usual incremental objectives to aim at outsize goals. The practice is painful, but, man, can it work! by Shawn Tully

INFORMATION TECHNOLOGY 161 HOW TO MAKE YOUR CHILD PC LITERATE | Don't count on your public -- or private -- school to teach your kids all they need to know about computers. You need to help, both at school and at home. by Stephanie Losee

POLITICS & POLICY 191 NEEDED: A NEW WAR ON THE DEFICIT Runaway middle-class entitlements and taxes that punish savings and investment are slowly bankrupting the U.S. Will Congress finally take up the challenge? by Ann Reilly Dowd

EXECUTIVE LIFE 203 MENOPAUSE AND THE WORKING BOOMER An entire generation is nearing a big change. Women are going to demand more on-the-job openness than what's available now. by Faye Rice

DEPARTMENTS 6 EDITOR'S DESK 8 INDEX 14 NEWS/TRENDS Bill Gates makes like J.P. Morgan, wine buys, trading trees for tampons in Russia, and more.

23 FORTUNE FORECAST The economy may be slowing, but job prospects remain bright.

by Vivian Brownstein

Economic Intelligence: Whether Detroit's gains will last, and the source of a great idea.

DEPARTMENTS 31 PERSONAL INVESTING When you should buy index funds instead of variable annuities.

by Antony J. Michels

Also: Reaping nature's bounty, managing money with your mouse, and Portfolio Talk with Bill Church of the Cowen Opportunity Fund.

49 LETTERS TO FORTUNE

257 PRODUCTS TO WATCH Spalding's golfing gear for women, a car-monitoring system that will keep track of Junior's driving habits, and more. by Ricardo Sookdeo

258 COMPANIES TO WATCH Daka International's food-service business and restaurant line are sizzling. by John Labate

Also: Atchison Casting and Rural/Metro.

260 BOOKS & IDEAS Showstopper! captures the energy -- and the madness -- of Microsoft's race to develop a critical new program. by Alan Deutschman

263 ON COMPANY TIME Technophobia is one of corporate America's dirtiest little secrets. Can't they make these machines easier to use? by Julie Connelly

266 ENTREPRENEURS A blue-eyed blonde from the South assured Joel Pinsky that his black leather handbag -- called a shlepper -- would sell in Peoria. by Susan Caminiti

269 HOW'S BUSINESS? Wolf Schmitt's formula for creating new products is to learn from Mother Nature and continually rub up against the customers. by Marshall Loeb

COVER: Thousands and thousands of companies go bust every year in the U.S. Photograph by Guy Aroch.

ABOVE: Scott Paper CEO Al Dunlap says a hard shakeup is the only way to get competitive juices flowing and keep a company from tanking. Since taking over in April, he has laid off about a third of the company's 30,000 hourly workers. Photograph by Richard Lee.

FORTUNE (ISSN 0015-8259). Published biweekly, with three issues in October, by Time Inc. Principal office: Time & Life Building, Rockefeller Center, New York, NY 10020-1393. Reginald K. Brack Jr., Chairman; Don Logan, President; Joseph A. Ripp, Treasurer; Harry M. Johnston, Secretary. Subscriptions: U.S., possessions: one year (27 issues) $52.95; Canada: one year (27 issues) $53.73. Second-class postage paid at New York, NY, and at additional mailing offices. Authorized as second-class mail by the Post Office Dept., Ottawa, Canada, and for payment of postage in cash. Member, Audit Bureau of Circulations. POSTMASTER: Send address changes to FORTUNE, P.O. Box 30604, Tampa, Fla. 33630-0604. Customer inquiries: FORTUNE, P.O. Box 60001, Tampa, Fla. 33660-0001. Phone: 1-800-621-8000. ) (c) 1993. Time Inc. All rights reserved. FORTUNE is a registered mark of Time Inc. For subscription queries, call Customer Service at 1-800-621-8000. Time Inc. GST R122781974.