What Is Chandler'S Thesis

What Is Chandler'S Thesis-68
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).


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