Importance of Development for Management
Topic: While technology has been the focus of the industrial revolution which started in England and spread from there to the United States and elsewhere. Chandler argues that the modern business firm is more than technology. He argues that management is the key to modern business. Using these articles, explain why this added factor is necessary and why Chandler sees it in historical evidence of this time period. Technological advancement is very vital for the growth of industries and business as a whole.
It is through technological advancement that the time of doing business has considerably been reduced. For instance, the internet has made the world to be a global village thus people can do business with people they have never met at the click of the button. In so doing the advancement of technology comes along with volumes in terms of the products manufactured and the number of business activities taking place. To avoid a snarl up as a result of he volumes that come along with technological advancement there is need for a thorough and cautious management to be taken into account.
This necessitates the need of trained managers who will take care of the business activities in terms of supervision, accounting and coordinating these business activities. In this sense Chandlers views that management is the key to contemporary business is true. This can be shown by the number of administrative managers that are going for MBA program for the sole purpose of enhancing their managerial skills. Equally important is the demand that is manifested for the holders of MBA and their high payment.
This in essence shows that technology alone is not enough in prosperity of business in today’s world but management is vital for the growth of business. Body In the article ‘The Beginnings of Big Business in American Industry’ Chandler considers other factors and not only technology including administration that influenced the rise of huge companies. He endeavors to figure out what drove businesses to be run the way they are run. He equally sees the need to change the relationships within the working force to enable them to meet the demands of their customers.
This though in the early times, shows the necessity of good management and it is to this effect that Chandler uses this historical evidence to show the importance of management. Chandler also considers the change by looking at the innovations that were taken apart from the consolidation and centralization in the consumers’ goods industries which were well under way by 1893. In this sense he considers companies that have grown large through creation of a synchronized, countrywide marketing and distribution organization.
He uses this historic evidence to show that the need for a structured management was needed at the time so as to avoid poor distribution among many other problems. Management is necessary in enabling a business boom since without proper management the products cannot only be marketed but also target the right market. Chandler shows this by considering industries that made standard goods. The creation of marketing organizations enabled a large scale combination of a number of small companies.
The small companies in this case took the advantage of the expansion of railroads thus targeting to enlarge their markets but the end result was that they got themselves into competition with other companies which eventually led to overproduction. Consequently this would lead to price cuts which will work to the detrimental of the companies. In essence these events could have led to the slow progress of growth of industries but the management innovations that came as a reaction to this worked for the betterment of the industrial growth.
Chandler views the combinations that began to build large distributors and smaller purchasing departments as the pinnacle of the growth that manifested at the period. During the time the railroad was a major contributor to the expansion of industries since railroad opened new markets for the products manufactured in the industries. Chandler brings in the issue of diversification in the endeavor for the survival of an industry’s survival. Diversification according to him enables assurance of the maximum use of new departments and encourages technology as well as organizational change.
Thus by using advanced technology the volumes of products manufactured increased thus management of these products in terms of distribution called for diversification. In this sense Chandler shows that the success of the industries was pegged on the success of the management of the challenges that came along. Chandler focuses on the importance of the new generators of power and technology which seemed to be the paramount driving force for innovation from 1903 thus enabling the creation of new products and processes.
At this particular period, as chandler observes the changes that came along with these technological advancements that is; changes in the organization and marketing of the products were primarily responses to these technological advancements. Furthermore, the processes of purchasing, manufacturing and financing are considered within the same organizational structure and at this early point the issue of organizational management comes into focus. Chandler uses this historical phenomenon to show that the success of business does not only depend on technological advancement but also by the management.
Also in the distribution of the goods, the market ought to be an urban one and thus the city took the largest share of the agricultural and non-agricultural products. Urbanization came along as a result of technological advancement and thus this calls for the need of synchronized management. It was therefore essential for the rapid growth of the urban market for there to be a big business in American industry according to. It was therefore paramount for the completion of a nation-wide railroad network for such a market to be achieved, he argues further.
In chapter three of ‘The Railroads First Modern Business’ Chandler highlights the technological advancement that was seen in the 1840’s, that was advantaged by the perfection of the railroad transportation. Advancement of railroad having been comparably cheaper and faster saw to it business being done in a shorter duration apart from this the technological advancement in the railroad also gave the shippers a dependable transport system that ensured all-weather transportation of goods.
With all this in place Chandler examines the need for employment of managers to supervise the functional activities that came along with the enhance transportation of goods thus this shows that advanced technologies or technological advancement alone is not enough but management is equally important. According to chandler at this period of technological advancement the need for employment for a set of managers to supervise the activities and also appointment of administrative executives with a responsibility to monitor, evaluate coordinate the work of managers was necessitated by this advancement in technology.
He further assets that it meant the formulation of internal administrative procedures and accounting and statistical controls. What can be insinuated from Chandler’s assertion is that management is vital for the growth of companies even at this early age and time. In referring to these historical events Chandler aims at driving the point that expansion of a company depends on its effective management and the ability of the managers to consistently be innovative in their endeavor to face the challenges that come with change.
It is to this effect that chandler brings out the borderline between ownership and management in operation of a company. Furthermore Chandler shows that with construction of a new road the remaining challenge was that of management, thus the need for training the managerial staff with the relevant skills. Conclusion The historical evidence provided by Chandler depicts that management is indeed essential for the success of a business and it is through effective management that a business will thrive. This therefore calls for proper training for managers in the running of businesses.
Though management is the key to success of a business, it is equally important for the contemporary managers to be adept with technological skills so as to enhance production. Chandler argues that railroads were the first modern business enterprises which had to require a large number of managers. He therefore reflects the kind of organization structure that is denoted in today’s organizational structure by showing that the managers were answerable to top managers who were in turn answerable to the board of directors.
In essence Chandler brings into limelight the fact that through a well structured organizational management business is bound to thrive. For instance the innovation and success he discuses gives a case study of how the rail roads were successfully managed thus enabling the enhancement of technology and eventual business boom.
Works Cited Chandler, Alfred. The Beginnings of “Big Business” in American Industry. The Business History Review, Vol. 1 (Spring 1959), pp. 1-31 Chandler, Alfred. Chapter Three: Revolution in Transport and Communication.