Chandler on Managerial Hierarchies Flashcards
What is the difference between financial capitalism and managerial capitalism?
Managerial capitalism has firms owned by families/managers who have the decision-making power in the firm and who maintain a long-term interest in its success. Financial capitalism, by contrast, arises when these owners cannot self-finance and so require capital from financiers. As a result, they have to relinquish decision-making power to the investors and so a conflict of interest arises when making decisions about the company.
When did big businesses begin to grow in America and why?
They began around the 1850s, principally as a result of the railroad, the telegraph, and the widespread availability of coal. Before then businesses had been large in number but very small and had tended to specialise in the production of one product.
What was America’s first big business?
The railroads. Trains could travel huge distances much more quickly than could horse and carriage or boat and so the coordination of the movement of traffic had to be centralised.
What is ‘stock-turn’?
How many times stock is turned over within a specific period of time – used as a measure of efficiency.
Name two manufacturing techniques that allowed for huge increases in the speed of mass production.
Large-batch and continuous-process.
What was vital for the success of the growth of the chemical companies in the UK?
Administrative coordination – they required close communication e.g. with salesmen, product designers, and manufacturing managers in order that the organisational aspect of the firm was run as smoothly as possible (as seen in All Our Working Lives).
What factors allowed large-scale enterprise to be effective?
When the products are made through capital-intensive/energy-consuming means, when products go to a large number of customers, and when marketing and distribution benefit from careful scheduling and coordination. Without these factors it was not profitable for managers to internalise the distribution functions of a manufacturing business and instead mass marketers continued to distribute and sell the consumer goods.
What did the New Jersey general-incorporation law of 1896 allow?
It permitted companies that were formed to hold stock in another to receive a charter simply by filling out a form and paying a small fee. This made it easy for companies to merge as ‘holding companies’ and so increase the scale of their operations. This led to a huge increase in the number of mergers in the US in the period 1896-1903.
What is the format of the multidivisional structure of large enterprises, common in the US?
Top office (oversees everything), general office (financial, advisory, treasurer, legal, PR, advertising, etc.), divisional offices, functional offices.
What is the difference between divisional and functional management?
In functional management each sector of the organisation completes and is responsible for a particular function e.g. in a train enterprise: the movement of trains, the flow of passengers, the maintenance of the locomotives, etc. whereas in divisional management each sector does all of those things but for different product lines. It requires more services but allows the organisation to grow much larger.
What is the professionalisation of the career of management?
During the first two decades of the 20th century, universities started bringing out courses in ‘business administration’, journals were published on management, associations were formed – there was paraphernalia that represented a growing community of professionals who called themselves ‘managers’ who could assist each other and discuss mutual problems.
What has happened to the size of firms in Europe since WW2?
Before WW2, Europe significantly lagged behind the US on the size and scale of their firms, but WW2 led to a huge increase in demand and consumption which prompted increasingly large firms to meet this growing demand which gave rise to the need for the multidivisional firm structure seen already in the US and managerial capitalism to become more prominent.
