Transcript Alfred Chandler

Alfred Chandler
1918-Present
Who On Earth Is This Guy?
 Educator
 Author
 Historian
Family History
 Father - Alfred DuPont Chandler
 Mother - Carol Ramsay
 Born 1918 - Guyencourt, Delaware
 1944 - Married Fay Martin
 Had Four Children
Education
 1940 - Graduated from Harvard College
 1940-1945 - Navy - Lt. Commander
 1947 - Masters from Harvard
 1952 - Ph.D. Harvard
 Bunch of Honorary Degrees
Educator
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1950-1951
1951-1964
1963-1971
1966-1970
1964-1971
 1971-1989
 1989-
Research Associate, MIT
Instructor - Professor, MIT
Professor, Johns Hopkins
Dept. Chair, Johns Hopkins
Director, Center for Study of
Recent American History
Straus Professor of Business
History, Harvard
Emeritus
Author
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1956, Henry Varnum Poor
1962, Strategy and Structure (Newcomen Award, 1964)
1965, The Railroads
1971, Pierre S. duPont (with Stephen Salsbury)
1978, The Visible Hand (Pulitzer & Bancroft Prizes)
1980, Managerial Hierarchies (with Richard Tedlow)
1985, The Coming of Managerial Capitalism
1988, The Essential Alfred Chandler
Historian
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Economic History Association (President 1971-1972)
Organization for American Historians
Society for the History of Technology
Historical Association
American Antiquarian Society
American Historians
Massachusetts Historical Society
American Academy of Arts and Sciences
American Philosophical Society
His Basis
 Business Week
 Historical Perspective
Strategy and Structure
 “Structure in big business enterprises
follows strategy”
 What is Strategy?
 What Drives Changes in Strategy?
 Multi-Purpose Divisional Structure
 Role of Business Leaders
 Key Impact on Large Industry
Perspective
The Visible Hand
 Adam Smith
 Business: Two Phases
 Modern Business Is
The Visible Hand
 Fundamental Changes
– Production
– Distribution
– Markets
 Integration
 Human Aspect
The Visible Hand - Progression
Founders
Ownership
(Diffused)
Middle
Managers
Top
Mgmt.
Middle
Managers
Business Development
 Second Industrial Revolution
 Old Industries Transformed
 New Industries Developed
 Economic Growth and Development
 International Expansion
 Capital-Intensive Markets
Organizational Capabilities
 First Movers
 Market Share Changes - Non-Econ!
 Theories of the Firm
– Neoclassical Theory
– Principal-agent Theory
– Transactions Cost Theory
– Evolutionary Theory
Organizational Capabilities
 International Competition
– Held Back by World Events
– Reality in 1960’s
 Core Competence
– Diversification
– Divestiture
Profit Growth
 Short-Term
 Long-Term
– Geographic
– Product
Criticisms
 Strategy and Structure
– Tom Peters
– Mintzberg
 The Visible Hand
– Nothing noted about newer techniques
– Nothing said of behavior sciences
– Importance of the human element
– Failure to provide evidence
– Evaluation of social costs and benefits
Summary
 Historian
 Studied Large Industrial Business History
 Conclusions:
– Structure Follows Strategy
– Decentralized, Multi-Purpose Divisional Structure is
Optimum
– The ‘Visible Hand’ of Management has Taken the
Place of Adam Smith’s ‘Invisible Hand’ of Market
Forces (Market Economy vs. Managerial Capitalism)
– Management has not basically changed since WWI
Summary
 Conclusions:
– Market Share Driven by Functional and Strategic
Competition, Not by Price Competition
– Firms (Physical and Human Assets) Are the Basic
Unit of Historical Economic Analysis
– Firms Should Stick to Their Core Competencies
– Long-Term Profit Growth is Gained from Expansion
into New Geographic or Product Markets