Bangladesh University of Professionals

Summarize
On

“The Visible Hand”

Submitted To:
Maj Gen (Retd) Alauddin M A Wadud
Professor
Faculty of Business Studies
Bangladesh University of Professionals

Submitted By: GROUP-06

TANVIR AHMED 2023031005

E. M. SAMIN ANJUM SADMAN 2023031007

MD. SAIFUL ISLAM KHAN 2023031037

TANVIR AHMED SIDDIQUE 2023031041

NISHAT TASNIM NISHI 2023031089

Date of Submission: 04th June 2021

Introduction
Historians were more impressed by the financiers who allocated funds for the different functions
of the business,but did not notice that the managers were the ones who carried out the basic
economic function. Alfred Chandler replaced Adam Smith's invisible hand of the market. The
market created the demand and supply of goods and the businesses grew bigger as they were run
by professional managers.

Alfred Chandler’s The Visible Hand contributes significant insights into the historic evolution of
the large-scale business enterprise and modern managerial capabilities. This has important
implications in understanding how key business functions that are located in smaller business
enterprises can be combined to form multiunit business enterprises, which, in turn, can be applied
to the defense industry in several ways. First, the historical perspectives in the book can help in
assessing whether key functions should be outsourced by the Pentagon or conducted internally.
Second, the historical lessons can assist in exploring whether defense companies should outsource
activities to smaller firms or whether they should internalize the activities and expand the size
and scope of their corporate structure.

The Shape of business changes

Alfred Chandler described in his writings (The visible Hand) about the revolutionary changes in
the American economy that took place between 1820s and 1940s. In the past, the core of American
business and economy was mainly agrarian, which changed over time to industrial and urban
economics. Modern business organizations are made up of many separate operating units run by a
hierarchy of salaried executives whereas in the conventional economic system, institutions such
as shops, factories or banks were ran by a single family or owner to produce a single product or
service in one location.
In the past if the manager of a bank or institution wanted to settle in another state, he had to try to
get a job in another bank or institution of that state but with the development of modern economic
system, there is an opportunity for the executives to be transferred to other branches of their
respective organizations. In the modern economic system, family-run small enterprises reduce
production or investment when they see a worsening demand for goods in the market. Large
management firms, on the other hand, do not want to reduce investment in unfavorable
environment as they have large shares and dominance in the market.
The Visible Hand was also a direct attack (signaled by the title) on Adam Smith’s primary notion
of a marketplace controlled by no one, but operating for the betterment of all. Professor Chandler
did not argue that Smith was wrong, but that he was outdated. A global mass market had emerged.
In this environment, large corporations had capabilities that smaller, upstart competitors could not
match; the visible hand of the large corporation had replaced the invisible hand of the market.

The managerial revolution:

➢ Managerial revolution is one of the most important reason for the success and spread of
modern business enterprise because its structures of management encouraged the
longevity.
➢ The traditional firms often affected at the death of owner. But the big firms do not depend
on the individuals. It is important that managers need to make good decisions for
company’s betterment and success. All the managers career depend on company's success.
➢ Managers are more likely than owner because they always play a long game and future
growth with short-term profit. There is a difference between large managerial enterprise
and small traditional firms. The difference is jobs are filling according to the talent and
work experience rather than family connections.
➢ Until world war one, all the firms were run by professional managers who were graduate
form reputated college and had a good working experiences as manager. The smaller firm
manager do not get the same level of management training that a big firm manager get for
this reason talents are easily drawn away from the old form of business.
➢ So it is important that the modern managerial corporation quickly push the firms to run
the business through experienced and wise family members or by the greed of a financier
Why it happened in the United States:

Although Britain’s industrial revolution had the great impact on the world, USA became able to
cross them within a short time because it focused on managerial side with upgraded technologies
while Britain focused more on technology. New ideas in production distribution, marketing and
management where quickly adopted along with technological innovations which made them grow
much quicker than other European countries. They managed to ensure higher productivity with
lower cost. They succeeded to convert their huge populations into skilled human resource which
helped to make them more profit. Their administrative coordination among the regions and
territories was so strong. Consequently, they were able to make a strong communication among
the regions and territories which helped their management system to grow more along with new
technologies like telegram. Finally, their strong legislation won the trust of the small businesses
ensuring their security.

Managers Rule

➢ Yet as enterprises grew, there was pressure to sustain themselves and not to give up any
market share to rival concerns.
➢ When management’s efforts were directed into defensive measures, it is easy to understand
how to result could be suboptimal for consumer and nation for instant.
➢ Chandler notes that there was plenty of public and government opposition to large scale
enterprise, which seemed to go against American values of freedom of opportunity for all.
➢ The new class of executives who seemed to have so much power over modern life, were
accountable only to their bosses and shareholders.
➢ Growing population and demand for goods and services the importance of “technology of
management” increased day by day.
➢ The size of relative affluence of US domestic market made the development of mass
production techniques almost a necessity, whereas in the smaller markets of Japan and
Europe were not forced to change so quickly.
➢ When they did employ managers, the family and their financiers retained control.
 ➢ After 2nd world war managerial capitalism became the default for any country wishing to
be economically powerful and everywhere

From Chandler notes we can conclude here through a line “ the paraphernalia of professionals
management has appeared-the associations, the journals, the training schools and the
consultants”

Final comments:
The modern businesses have grown so bid due to the stronger and bigger government. Even after
the economic shocks from the recession, government was expected to have full control and would
be able to bring back everything back to the normal situation. Our civilization is a managerial one
and not a capitalist civilization. It is very difficult to imagine that without the managers and their
acting within the regulatory environment to build such big enterprises.