The industrial enterprise is a subspecies of the business enterprise.In addition to having a number of distinct operating units and being led by salaried managers (the two basic characteristics of business enterprises), it carries out modern production processes.Economies of scope came from producing many different end products with the same raw material and intermediate processes “The potential economies of scale and scope, as measured by rated capacity, are the physical characteristics of the production facilities.
The industrial enterprise is a subspecies of the business enterprise.
The firms competed for market share and profits often using price as a competitive weapon, but mostly by functional and strategic efficiency.
Once the industrial enterprise was established, it grew in four ways: defensively: The two latter strategies resulted in a modification in administrative structure; the multidivisional structure appeared.
The complexity of the decision-making med the American companies to pioneer the multidivisional organizational structure.
Great Britain: Personal Capitalism Key characteristics: Family-owned companies, where the owners prefer to take out profit as dividends and keep their day-to-day influence, leading to Britain coming in late in the second industrial revolution.
The owners were more interested in stable income than reinvestment in competitive advantage, taking out profit as dividends rather than making the “three-pronged investments”.
Stabilization in the market was achieved by cooperation between competitors.
Such economies depend on knowledge, skill, experience and teamwork–on the organizational human capabilities essential to exploit the potential of technological processes.” (p.
24) The reason for the sudden appearance of the large hierarchical organization needed to exploit the economies of scale and scope around the end of the nineteenth century stems from modern transportation and communication (telegraph, railroad, steamship, cable) that were reliable and fast enough to maintain throughput.
The industrial enterprises grew by adding new units – different in terms of geography, economic functions or products.
These units were added because they provided In production, increased output in the old, labor-intensive industries came mainly by an increase in size (adding more machines and people).