Comm 210 notes

Topics: Management, Strategic management, Higher Power Pages: 6 (2409 words) Published: October 29, 2014

• Economies of scale: Cost per unit drops as the volume of output increases (geographical expansion) • Economies of scope: Use same raw and semi finished materials and intermediate production processes to make a variety of different products (move into related markets) • Functional divisions

• First movers: 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

• Management hierarchy:
- lower and middle managers: coordinate products though production and distribution - top managers: coordinate and monitor current operations and to plan and Allocate resources for future activities

• Research & development: to improve products and processes. Innovation and strategy is more important than price. • Diversification, related & unrelated:
- Unrelated diversification: when managers acquire businesses in which they have few if any organizational capabilities to give them a competitive edge (ignore logic of managerial enterprise)

This leads to:
• Separation of top vs middle managers:
- Top managers have little knowledge of or experience with the technological processes and markets of the new acquisitions - Overload in decision making at the corporate office
• Stock market pressures: loose profits and market share if: - Entrepreneurial enterprises fail to become managerial enterprises - Managerial enterprises fail to maintain their competitive capabilities • Short‐term thinking: making a quick buck and trying to gain competitive edge through unrelated diversification Chandler’s major claims

• Logic of Managerial Enterprise: Successful firms capitalize on economies of scale & scope, create management structures and invest in research & development • Once a firm loses the opportunity to be a first mover, it is difficult to regain competitive advantage

Chandler’s secondary claims
• Growth through unrelated diversification is a poor business strategy • Business ownership patterns have diminished the likelihood of many firms’ long‐term success

Larry Greiner
“Evolution & Revolution”
A theory of organizational life cycles, with a focus on growth Greiner’s 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 next Concept list
• Evolution & Revolution: 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. - Stages of revolution: Practices become outdated; companies that do not change will fold of cease to grow. Solution for one crisis becomes a major problem in the next. - Growth rate of the industry: Speed of stages are related to the speed of the growth of the industry. • Evolutionary and Revolutionary phases:

1. Creativity: Birth stage of organization. Frequent, informal communication, long work hours and modest salaries as well as promise of ownership benefits, decisions and motivations are highly sensitive to market feedback. - “Crisis of Leadership”: Informal communication becomes infeasible, additional functions must be implemented. Need a strong business manager. 2. Direction:...
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