Chandler mini-project
The Company in its historical and ....Chandler uses his concept of the three-pronged investment when he explains the creation of organizational capabilities. The three-pronged investment is also referred to as the investment in the three M's (manufacturing, marketing, management). First of all, a company has to make investments in production in order to grow large enough so that it can achieve cost advantages of scale and scope. Secondly, the company has to build an integrative hierarchy by investing in it's marketing activities, including purchasing, distributing and R&D. Finally, it is of utmost importance to a company to recruit and train a team of managers who run and coordinate the different departments and units of the company efficiently. Chandler points out the importance of first mover advantages, meaning that companies which first made the three-pronged investment became the industry's leaders. In most cases, the leading companies then dominated their industries for a long time, even for decades. Another opportunity to become one of the industry's leaders occurs directly after industry wide merger waves: Chandler emphasizes, that companies sho
A strong organization involves different units for each product line / market. By this Chandler means, that when a firm has made the investment in production and management / organization it is easy to use the advantages gained on this, to move into new markets - whether they are geographical or different products. The general managers are completely responsible for the performance and the profits of the division. In the hierarchy of the multiunit, multifunctional enterprise the managers of the operating units are controlled and observed by the managers of the functional departments, who themselves are controlled and observed by the top management, who then must get approval by the board of directors. Another way of product diversification can be the development of new types of products, which are introduced to new markets. The ones that respond quickest create high entry barriers for potential competitors and establish themselves as leading firms. Instead of a single person, or a small group making all decisions, the day-to-day decisions were made in different business units, and only larger strategical issues were brought to the top management. Top management consists of the corporate offices, which includes the board of directors, chief executive officer, executive committee and staff. If your firm does not have the organizational capabilities, then you will not be able to control the production, throughput and overall management of the firm - and hereby not achieve the economies of scale or scope. " This means the enterprise is broken up into divisions with their own general managers, staff and heads of functional activities. Multidivisional enterprises are usually in more markets and more international then multiunit, multifunctional enterprises. 24) One of the first companies to establish organizational capabilities was General Motors. Because most of the major decisions with a multiunit, multifunctional enterprise are made at the top level then the blame has to lay with them even though the mistakes might have occured later in the production process. Horizontal integration means merging with or acquiring enterprises at the same level of the value chain.
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Acceptance Essays
