Managerial Enterprise Theory Presented by Alfred Chandler Essay - 5

Managerial Enterprise Theory Presented by Alfred Chandler - Essay Example The report starts with a short description of the theories proposed by Chandler followed by a discussion of how the theories proposed by Chandler are applicable in the modern corporate setting. The relationship between the strategies proposed according to the theory and the structure of modern economies are identified and explained. Also, a section of the report includes drawing references from the national patterns of management enterprises so that a parallel can be drawn between the theory proposed by Chandler and the importance of these theories in the 20th century corporate and managerial enterprises. The advantages, as well as the shortcomings of the theories proposed by Chandler, are identified and analyzed in detail. The report is concluded by drawing suitable inferences from the analysis and by proposing suitable arguments in favor of the views as per the analysis. The theory postulated by Chandler deals with the functioning of managerial enterprises. As per the view of Chand ler, the managerial enterprises refer to the big scale industrial companies in which the crucial investment and operating decisions are taken in a hierarchical manner in which a number of salaried executives and managers propose the basic decision propositions and the final decisions are taken by a governing body which is the board of directors of the company. The key logic behind Chandler’s theory of managerial enterprise is that the necessary investments in the production, management, and distribution of the enterprise are made with the aim of achieving economies of scale and benefitting from the learning curve for organizations. The main strategic intent of investment decisions is based on creating a dominating presence of the enterprise within the industry in which it operates. In this context, the economies of scale refer to the benefit of a company that the cost of production per unit decreases as the production output volume of the enterprise increases.