GBH 5
18 flashcards · Other · by Daniel F.
capital stock after ww1
significant part of capital stock destroyed in Europe not in us
Firm structures
Functional Form ("U" form): Divided based on functions or departments (Finance, Marketing, Operations, HR, etc.) Clear hierarchy with centralized decision-making Strong communication within each department Typically smaller organizations or single-product companies Less complexity facilitating easier management Slower responsiveness to environmental changes due to layers of approval Multidivisional Form ("M" form): Composed of semi-independent product lines or business units Each division opera…
business trends in Europe
diversification and bigger firms more workers and more output Multidivisionalization, m form uk 70% of large companies by 1970 germany 6to50% 1950 to 1970
Superiority of the “M” form (Williamson, 1970; Chandler 1962
The general office is fully committed with the performance of the organization (and not its day-to-day operations) Rational and synergetic (the whole is greater than the sum of the parts)
International forces shape the business environment and M form (Djelic, 1998)
Eagerness of European elites to access to international (American-dominated) networks Forced deconcentration and decentralization (e.g. Germany) Imitation once a significant proportion of firms had adopted the "M"structure
M form in UK vs GER
UK: Unwillingness to delegate power and responsibility, adaptation slow GER: Managers wanted to delegate and dedicate to strategic concerns (as in the US),: Little independence in divisional management Low emphasis on marketing Little correlation between pay and performance
American Hegemony
productivity leader high income, strong demands to consume large economy Government stimulus during war was continued due to Cold War First-rate scientists came to U.S. Training programs for soldiers and in general Investment in secondary and tertiary education Consumer's paradise in postwar era Developed distribution channels Strong advertising beauty, hollywood, american ideals, mass market production
beauty industry
Origin 19th century rise cultural shift - personal cleanliness is normal economic reasons rising wages mass production marketing Urbanization and hygiene increased demand American dominance 50 percent marker share High income levels Homogeneous market Dominant discourse of ideal female beauty was Caucasian Developed retail network and advertising Barriers to american domincance EU was segmented, Asia was different highly volatile market restrictions on media advertising, less commercial program…
Conglomerate vs Concentric
Concentric: producing related products Conglomerate: producing unrelated products
rise and fall of conglomerates
causes of rise Economic factors Access to market power to squeeze out small competitors Enter in profiting sectors Firm resources may be good for other sectors Machine capacity, customer base, R&D (e.g. pharmaceuticals and cosmetics) Distribution channels Sociological factors Self-interested managers seek for prestige and power, not for shareholders' profits (Morck et al., 1990) Self-deluding managers overestimate their capacity to manage new businesses (Roll, 1986) Knowledge-related factors IC…
Zaibatsu - japans business structure before WWII
conglomerate of companies Diversified in various related sectors (finance, shipping, importing of machinery) owned and controlled by families hierarchical linked to state H form
Zaibatsu after WWII
dissolved by allies after occupation firms reestablished their relationships protection against foreign takeover
From the Zaibatsu to Keiretsu
family ownership no longer existed (i.e. broader equality, less concentration of power) mutual shareholding among member companies
Types of keiretsu
Horizontal groups 1990: 8 horizontal keiretsu accounted for 27.2 percent of national capital finance, commerce, textiles vertical groups manufacturing toyota
Horizontal keiretsu
goal - stability of decision making and structures inside the affiliated firms cross-shareholding isolated them from hostile takeovers and gave managers autonomy glue - bank of referece information regarding daily management Influence on investment decisions as principal lender Insolvent companies could act directly and change management, transfer employees, loans consequences Shareholder stabilization - no one company had too much control board members were chosen from inside workforce motivat…
vertical keiretzu
Head group usually manufacturing company hundreds of related suppliers connected by consolidated commercial relationships cross shareholdings consequences - no long-term agreements increase in cost was borne by suppers prices decreased based on implicit agreements QC is performed by suppliers JUTS IN TIME system allowed small stocks components were really good quality out of fear of loosing beneficial relationship alternative suppliers can be found fast adoption to market changes low level of f…
Toyota structure
buy rather than make 80% of final value bought network of connected supplyers fought to ascent hierarchy
Mitsui strucure