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Final

COMM 210 Study Guide - Final Guide: Stock Market, Research And Development, Competitive AdvantagePremium

2 pages125 viewsFall 2015

Department
Commerce
Course Code
COMM 210
Professor
Karim Boulos
Study Guide
Final

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Alfred Chandler: The Enduring Logic of Industrial Success
The Concepts:
- Logic of Managerial Enterprise: The dynamic growth and competition that drives modern
industrial capitalism
- Economies of scale: Large plants can produce products at a much lower cost than small ones
because the cost per unit drops as the volume of output rises
- Economies of scope: Large plants can use many of the same raw and semi-finished materials
and intermediate production processes to make a variety of different products
- Management hierarchy:
- lower and middle managers: coordinate products though production and distribution
- top managers: coordinate and monitor current operations and to plan and
Allocate resources for future activities
- First movers & challengers: companies that quickly dominated their industries by making large
investments and gaining competitive advantage. (high market share)
- created national and international marketing distribution organizations
- recruited teams of managers
- They engaged in systematic R&D to improve their products and processes, they
differentiated as well. They captured markets and others may not want to compete.
- Research & development: to improve products and processes. Innovation and strategy is more
important than price.
- Related & unrelated diversification:
- Unrelated diversification: when managers acquire businesses in which they
have few if any organizational capabilities to give them a competitive edge
(ignore logic of managerial enterprise)
- Related Diversification: Expanding in your field of knowledge
This leads to…
- Separation of top vs middle managers:
- Top managers have little knowledge of or experience with the technological processes and
markets of the new acquisitions
- Overload in decision making at the corporate office
- Stock market pressures: loose profits and market share if:
- Entrepreneurial enterprises fail to become managerial enterprises
- Managerial enterprises fail to maintain their competitive capabilities
- Shortterm thinking: making a quick buck and trying to gain competitive edge through
unrelated diversification
CHANDLER’S MAIN CLAIMS:
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