Chandler: Organizational Success
CLAIM: Sucessful firms capitalize on economies of scale and scope; they have a
functional management structure and invest in research and development and
grow from related diversification. This allows them to stay ahead of competition.
Economies of scale: Production rises and cost per unit drops (The
bigger, the better).
Economies of scope: same raw material, different products.
First movers: First to arrive with the product competitive advantage
Research & development: New ideas, innovation.
Related diversification: related industries.
- Poor corporate strategy
-Separation of top and middle managers.
-Smaller business Short-term thinking
Management hierarchy: separation of upper and lower level
Managerial enterprise: Making investments in management, production
and distribution in order to capitalize in economies of scale and scope.
Greiner: Evolution & Revolution as organizations grow
CLAIM: Organizational growth is done in 5 phases and by implementing the right
strategies and managerial structures, they can resolve the crisis and move on.
*Each phase begins with a period of evolution and has its moments of stability
and growth but eventually ends with a revolutionary period.
*Management practices that work well in one phase can bring crisis in another.
5 Key dimensions of organizational development:
1) Age: the life span of a company determines the number of organizational
practices that have been used.
2) Size: the more the number of employees and volume of sales, the more
the management is going to have to change its org. structure.
3) Stages of evolution: prolonged growth
4) Stages of revolution: turbulence and crisis between periods of evolution,
companies must abandon past practices and effect major org. changes to
manage the next stage of ev. growth.