Modern Business in Comparative Perspective Essay - 11

Modern Business in Comparative Perspective - Essay Example The managerial enterprise concept has been evolved from the â€Å"Theory of Firms† as proposed by Chandler. The theory of firms is linked with various managerial concepts as used in the organisations. The theory is developed with respect to large firms to explain the reason behind success. The Chandler’s model comprises of economic components that explains the causes behind the existence of large managerial enterprises. In order to develop long-term success it is essential to expand organisational capabilities with respect to professional skills. According to the â€Å"Visible hand† concept developed by Chandler the large firms exists because of increased investment in managerial hierarchy of the organisation. Such investments results into productivity gain that in turn results success for the organisation (Bucheli & et. al., 2010). It has been further stated in the theory that managers of an organisation face difficulties in predicting the market demand. The the ory also analyses the natures of investment made by the firms. According to the concept proposed by Chandler the firms should invest in production facilities to exploit the economies of scale. Apart from the need for technological development, it also focussed for the success of the large firms in the long run. A further investment in marketing and distribution of product is essential to raise the volume of sales with respect to the production capacity of the firms. The higher authority of the organisation takes the investment decisions for greater effectiveness.