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theories midterm.docx

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Concordia University
COMM 305

ChandlerMajor Claim Successful firms are the ones that first capitalize on economies of scale and scope create management structures and invest in research and development which allows them to stay ahead of the competitionSecond Claims Unrelated diversification leads to problems in the long run Business ownership patterns have diminished the likelihood of many firms long term successClaims important to invest be committed companies still ignore logic pursuing a wide mkt is key hard to stenter a mkt when theres already a 1 mover company succeed when it dvlps an economy of scale and scopeMajor ConceptsEconomies of scale Doing things on a greater scale makes things cheaperEconomies of scope Being able to make other things based on the knowledge and materials you haveFunctional divisions Example Sales Management AccountingManagement Hierarchy Levels of Management Bosses etcFirst Movers First to hire managers to grow move Once a firm loses the opportunity to be a first mover it is difficult to regain competitive advantageConfidently seize opportunities through major commitmentsConstantly improve and aggressively competeManage logically and systematicallyMaintain and nourish their competitive capabilitiesResearch and Development New technologies improving quality pricecostThe biggest companies are those whose founders and senior executives understood what is called the logic of managerial enterprise which is the dynamic of growth and competition that drives modern industrial capitalismManagerial enterprises build large and efficient pdct capacity compete aggressively and never let up expand mktg and distribution lower cost and improve qualityOrganization of managementDiversification When companies buy a wide variety of other businesses Chandler says not understanding the business will not allow you to build the business If you are going to diversify then do it in related businessesUnrelated diversification leads focusing on the financial statementsThis causes the smaller businesses to do shortterm thinkingFocusing on profits Shortterm thinking leads toSeparation of top VS Middle Managers Caused by unrelated diversificationThis separation occurs for two reasons First top managers often have little specific knowledge of or experience with the technological processes and markets of the divisions or subsidiaries they had acquired The second is simply that the large number of acquired businesses created an extraordinary overload in decision making at the corporate officeStock Market Pressures When companies focus on making investors happy Caused by unrelated diversificationShort term thinking In the long run short term thinking can be harmful to the companyShare prices and dividendsFirst three major investments to set the stage1 Build large efficient production capacity to exploit economies of scale and scopeScaleBIG to get costs per unit downScopeefficient use of common items2 Create extensive important marketing and distribution channels3 Establish wellorganized management teamsConcept maps logic of managerial enterprisesProduction mktg mgmtDo it First Do it Right and Do it Best
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