Chandler's Model of Large-Scale, Integrated Managerial Enterprise on Long-Term Competitiveness of Leading Economies

2397 WordsMay 4, 201510 Pages
To what extent can Chandler’s model of large-scale, integrated managerial enterprise explain the long-term competitiveness of leading economies? Chandler`s model of large-scale enterprises is a way from and shift away from the ‘invisible hand’ model given by Adam Smith. Chandler`s model is an attempt to explain the developments in the second phase of industrial revolution where he tends to reason behind the enhancement of capital. In this context, he gave the concept of modern industrial enterprise, which according to him grew in three phases. That is, there were investments in the production facilities, mostly the ones with technological potential to produce economies of scale and the economies of scope,…show more content…
Various heads of these departments alongside a board and an assigned president then made decisions for the organization thereby adding a ‘visible hand’ to the affairs of the organization leading the enterprise in a set direction. Another point to be taken under consideration here is that an industrial enterprise, in addition to the functional units, also expanded in other ways. There were defensive expansion trends i.e. horizontal or vertical expansion, and the offensive ones, i.e. geographical and product diversification. Further evolution in the industrial enterprise led to performance monitoring measures i.e. inclusion of a long-term and innovative corporate strategy with middle and the top management being the sole decision makers. However, with labor intensive industries i.e. printing or textiles, they don`t offer a competitive advantage for the integrated enterprises (Chandler & Montgomery 1979: 71). Therefore, in these cases, mass retailers tend to dominate with large purchasing units while eliminating other intermediaries. In order to further explain the argument, the case of United States as stipulated via theoretical paradigms given by Chandler can be discussed. According to the theory, USA precludes to competitive managerial capitalism which implies that there is an oligopolistic competition

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