The Logic of Managerial Enterprise Notes

CHANDLER The logic of managerial enterprise Step 1: Investments ∙ Build larger, efficient production capacity to exploit economies of
- scale: big production to get smallest cost per unit
- scope: efficient use of common items
∙ Create extensive marketing and distribution channels
∙ Establish well-organized management teams Step 2: Implement a “Strategy of Leadership” ∙ Continuous research, improvement and innovation
∙ Systematically lower costs and improve quality
∙ Expand marketing and distribution (geographically and market-wise)
∙ Compete aggressively and never let up First movers
∙ Confidently seize opportunities through major commitments (FIRST)
∙ Constantly improve and aggressively compete (BEST)
∙ Manage logically and systematically (BEST)
∙ Maintain and nourish their competitive capabilities (RIGHT) Other concepts: ∙ Functional divisions
∙ Management hierarchy
∙ Research and development
∙ Related diversification
∙ Separation of top vs. middle management
∙ Stock market pressures
∙ Short-term thinking

GREINER Evolution 1: Creativity
∙ Product
∙ Dedication
∙ Target market
Revolution 1: Leadership
∙ Motivational issues
∙ Leader to manage employees
∙ Capital/accounting processes needed
Evolution 2: Direction
∙ Functional organization: separate manufacturing from marketing
∙ Accounting for inventory and purchasing
∙ Motivation by money
Revolution 2: Autonomy
∙ Lower level have constraints and cannot take initiative
∙ Top level don’t want to give up their responsibilities
∙ Moral and motivation decreases
Evolution 3: Delegation
∙ Responsiveness (delegate tasks)
∙ Profit centers and bonuses
∙ Acquire outside enterprises
Revolution