Chapter 1 The Evolution Of The Modern Firm

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Chapter 1The Evolution Of The Modern Firm
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The Word In 1840

• Doing Business in 1840
• Johns Decision
• What did impact Johns Decisions?
• Information
• Johns risk attitude and ability
• (personal role selection)

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The Determinants of Industrial Scale and Structure
Risk and information ? Output uncertainty ?
1.The willing to invest by their own
resource 2.Banks willing to finance business
expansion ? Small firms
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• Conditions in Business in 1840
• Life Without a Modern Infrastructure
• Transportations
• railroad (case 1. The Emergence of Chicago)
• waterway
• Communications
• post
• telegraph
• Finance
• Production Technology
• unstandardized
• small firms
• Government
• public infrastructure

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Case 1

• The Emergence of Chicago
• Figure 1.1

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Summary

• Infrastructure
• ?
• Extended demand and technology development
• ?
• High speed and high volume production and
  distribution
• ?
• Change organization and coordination
• ?
• Transaction costs down

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The Word In 1910

• Doing Business in 1910
• Integration
• ?
• Large firms
• ?
• Professional managers
• ?
• Organizational hierarchy

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• Business Condition in1910
• A Modern Infrastructure
• Production Technology
• Vertical integration ? Scale economic
• Horizontal integration ? scope economic
• Transportation
• Infrastructure ? throughput ? production
  capacity expansion
• Communications
• M-form firms ? division and professional
  managers ? coordination and control problems ?
  (1)overexpansion (2)bureaucracy
• Finance
• Government
• Professional manager demand ? education
  market ? MBA/university

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Case 2

• Responding to the business environment The case
  of American whaling
• No advantage from revolutionizing technology
• Demand and competition
• Risk
• No scale economic for production distribution

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The World Today

• Doing Business Today
• Market niche strategy
• Diversity Distribution channel, skill, and
  acquire ? Antitrust
• SBU
• Matrix Structure ? coordination
• Function outsourcing
• The Infrastructure Today
• Transportation
• Automobile and Air Way
• Better coordination
• Communication
• Fax and Internet
• Finance
• Cost and managerial accounting
• Activity-based accounting
• Production Technology
• CAD/CAM customizing, high quality, and low
  cost
• Government

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Case 3

• Evolution of the steel industry
• Early age vertical integration ? Competitive
  disadvantage Specific assets
• Modern age Heavy ? Light ?Competitive
  advantage Minimill advantage

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• Infrastructure in Emerging Markets

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Infrastructure in Emerging Markets
Case 4

• Economic gyrations and traffic gridlock
• in Thailand

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Summary

• Coordination ?
• Vertical integration ?

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Three Different World

• Consistent Principles, Changing Conditions,
• and Adaptive Strategies.
• Make 1910
• 1.Scale economic accessibility ? Firms were
  willing to invest
• 2.Poor infrastructure ? Coordination difficulty
  ? Hierarchy control

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• Buy
• 1.1840
• (1)No scale economic
• (2)Poor infrastructure ? Limited market size
• 2.Today
• Infrastructure ? coordination cost ? ?
  outsourcing function ?

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Case 5

• Infrastructure and emerging markets
• The Russian Privatization Program
• Goal conflict between manager and employees
• No incentive

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Example1.5

• Building national infrastructure
• The transcontinental railroad.

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Example1.6

• The risks of modernity The Halifax .

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Example1.7

• Parties, Scandals, and Directors
• Behaving Badly After the ball.

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Example1.8

• Blaming Wal-Market The Prequel.