Question

Based on Chandler’s logic of managerial enterprise,I would like to get the explanation and brief example of

• Managerial Enterprise:
  • Large industrial concerns
  • operating and investment decisions are made by a hierarchy of salaried managers
  • managers governed by a board of directors

Answer 1

This term is very commonly used by the economists that the managerial enterprise refers to large industrial concerns in which operating and investment decisions are made by a hierarchy of salaried managers governed by a board of directors.

The three main points would be explained below with the relative example. Suppose you have to start your enterprise or organisation with a new business idea that has never been tried or introduced in the market. You are very keen and confident that the idea would strategically and effectively work.

1. Large industrial concerns: Now, before you'll start building your business it is very understandable that a market survey would be undertaken either the SWOT analysis, pestle analysis or whatsoever to understand the various industrial forces that are or could affect the working of your business. Thus, all the opportunities or the risks that could affect the working of your business and enterprise constitutes the industrial concerns. While establishing a new business, working in the business, the development or in any life cycle these industrial concerns could ompact your working of the business because they are constant and also dynamic at the same time.

2. Operating and investment decisions taken by salaries managers: After the dynamics of your industry is well versed, another task is to take the relevant decisions of how the funds would be received and thus those funds could be channelised for various actions. This constitutes our operational and investment activities of the organisation which talks about the funds procurement decisions and the operational and working decision. Now, these decisions would be taken by different levels of managers in the relative heirarchy by the scalar chain allocation and the resoective authority or responsibility designated to each one of them. Thus, all the relevant operational and investment decisions are taken by the salaried managers which are in a hierarchy in the enterprise.

3. Governed by the board of directors: At last, those salaried managers in the heirarchy would also havean upper governmental body to take care of them. Obviously, those managers would be overlooked by someone who would impart their wisdom and givem them the authority to taje relevant decisions. Thus, all the CEO and the board of directors who are constantly in relation with what is happening outside of the business environment would govern those managers accordingly. By looking the internal as well asthe external environment, the relevant policies and objectives of the firm would be framed and communicated to the managers who would take the necessary decisions in accordance with the achievement and fulfilment of those objectives and the policies for the growth of the organisation.