COMM 210Contemporary Business ThinkingWeek 2Building Successful Organizations

Objectives for todayDifferentiate between contestable and unproblematic claimsIdentify Chandlers claims & discuss their validityUnderstand and practice the uses of concept mapsConsider the Samsung case

Sharpen your analytical skillsCritical thinking = Analyzing the validity of arguments presented in a textIdentify the authors major conclusionsDescribe & evaluate supporting evidenceUncover assumptions & valuesDetermine soundness of causal logicDeconstruct use of persuasive language

CLAIMS

Identify the authors claimsA claim is the major conclusion of a piece of writing that the author is trying to persuade you to acceptExplicitly or implicitly statedLikely locationsVery beginning, title, near the endCue wordstherefore, thus, in summary, I believe that, clearly, in short ()

Identify the authors claimsUnproblematic claimsConsistent with our own experiences and observationsI like hiking; I-40 is congested from 2-5pmFacts independent of interpretationQuebec is larger than Nova ScotiaAgreement among experts or strongly supported general claims that are common senseYou cant be physically in two places at one timeTechnical or mathematical claims

Identify the authors claimsContestable claimsNot commonly accepted knowledgeExcellent in academic, poor in entrepreneurshipOften introduce new ideas that awaken curiosityUsage of LinkedIn helps find jobs soonerSometimes presented as if it were a factIn fact..; Obviously.Cannot stand on their own

Identify the authors claimsPresenting claimsIn an accurate and concise mannerConcept lists & concept mapsWriting effectivelyPresent main ideas with clarity and emphasisClaim near the beginning or endCue wordsMake your titles work for youMake claim memorable for your readers

Identify the authors claimsPractice with Exercise 2.1: #4 (p. 19)State the major claimIs it a contestable claim?

Samsung: The next big betReview the second paragraph of the Samsung article (The handsome payoffs.)Summarize the information in a claimIs this a debatable claim?

Business terms and popular expressionBoard of directorsBottom LineChief Executive OfficerEmotional intelligenceGlobalizationKnowledge workersOutsourcingR&DShareholdersVision

*More information & examples in Critical Thinking pg 92-101

Alfred Chandler (1918-2007) Credited with creating the field of business historyAccording to one of his students, Dr Chandler could "explain the sea to the fish who swim in it."

Two key conceptsEconomies of scale:Large plants can produce products at a much lower cost than small ones because the cost per unit drops as the volume of output rises

E.g., Rockefeller combined Standard Oil and 39 allied companies to form the standard Oil Trust

Two key conceptsEconomies of scope:Large plants can use many of the same raw and semi-finished materials and intermediate production processes to make a variety of different products

E. g., large German plans were producing more than 500 different dyes and pharmaceuticals at low unit costs

Chandlers major claimsBut for firms to benefit from these economies:Flow of materials must be kept constantNational (and international) marketing and distribution functions must be createdTeams of lower and middle managers need to be recruited

Chandlers secondary claimsOnce a firm loses the opportunity to be a first mover, it is difficult to regain competitive advantageFirst movers challengers have to:Build plants of comparable sizeCreate distribution and sales channels to capture marketsRecruit management teams Catch up with first movers who already invest in R&D to improve processes and productsE.g., IBM-first movers to commercialize computers

However, size is not all!

Chandlers secondary claimsGrowth through unrelated diversification is a poor corporate strategy

The Curvilinear Relationship between Diversification and Performance

Chandler: Concept listFirst movers Economies of scaleEconomies of scopeGeographical expansionMarketing and distribution channelsManagement hierarchy Research & developmentRelated diversification

Group exerciseA group of 4 to 6 studentsComplete your concept map of Chandlers ideasPut your names on it

FIRST MOVER INVESTMENTSRelated DiversificationChandlerstheory

Samsung: The next big betIs the Samsung case consistent with Chandlers ideas?First moversRelated diversificationEconomies of scaleR&DMake a claim about what Samsung should do to overcome the challenges ahead

Preparation for next weekReadings for next weekGreiners article about the organizational life cycle (On library website)Born Global, Business strategy review (On electronic reserve in Webster library)Global niche players, The Economist, Feb 2, 2013 (On electronic reserve in Webster library)Textbook (Dyer), Evidence (chapter 3)Team project guidelines posted on First ClassDont forget to check your mailbox and our class folder on FirstClassAnd dont forget to bring your texts to class!

Before you leaveTake a minute to write down (1 minute paper)Your nameWhat you answered/said in todays class todayWhat you learned todayTurn in Your individual 1 minute paperYour group concept map

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