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COMM 305
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COMM 210 Final ExamThe TheoristsAlfred Chandler The Enduring Logic of Industrial SuccessThe Concepts Logic of Managerial Enterprise The dynamic growth and competition that drives modern industrial capitalismEconomies 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 risesEconomies of scope Large plants can use many of the same raw and semifinished 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 andAllocate resources for future activities First moverschallengers 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 RD to improve their products and processes theydifferentiated as well They captured markets and others may not want to competeResearchdevelopment to improve products and processes Innovation and strategy is more important than priceRelatedunrelated diversificationUnrelated diversification when managers acquire businesses in which they have few if any organizational capabilities to give them a competitive edge ignore logic of managerial enterpriseRelated Diversification Expanding in your field of knowledgeThis leads to Separation of top vs middle managersTop managers have little knowledge of or experience with the technological processes and markets of the new acquisitionsOverload in decision making at the corporate office Stock market pressures loose profits and market share ifEntrepreneurial enterprises fail to become managerial enterprisesManagerial enterprises fail to maintain their competitive capabilities Shortterm thinking making a quick buck and trying to gain competitive edge through unrelated diversificationCHANDLERS MAIN CLAIMS Logic of Managerial Enterprise Successful firms capitalize on economies of scalescope create management structures and invest in researchdevelopment Once a firm loses the opportunity to be a first mover it is difficult to regainCompetitive advantageFor firms to benefit from economies of scale or scope Flow of materials must be kept constantNational and international marketing and distribution functions must be createdTeams of lower and middle managers need to be recruited CHANDLERS SECONDARY CLAIMSGrowth through unrelated diversification is a poor corporate strategy Business ownership patterns have diminished the likelihood of many firms longterm success In competitive battles Researchinnovation and strategy are more powerful weapons than price Side NotesContinuing growth Companies grew horizontally combining with competitors and vertically moving backward to control materials and forward to control outletsLarry Greiner Evolution and Revolution as Organizations GrowA theory of organizational life cycles with a focus on growthGreiners claims Organizational growth is characterized as a series of developmental phases Management practices that work well in one phase bring on a crisis in the nextConcept list EvolutionRevolution Phases begin with a period of evolution steady growth and stability and ends with a revolutionary period turmoil and change If the revolutionary period is resolved the company can move to next stage of evolution How organizations develop Age of the organization The same organizational practices are not maintained throughout a long life span Management problems and principles are routed in time Size of the organization Problems and solutions tend to change with increased employees and sales revenue Stages of evolution As organizations grow different evolutionary period emerge
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