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The Company in its historical and Written mini project Group 1 Organizational Capabilities 1 Chandler uses his concept of the three-pronged investment when he explains the creation of organizational capabilities The three-pronged investment is also referred to as the investment in the three Ms manufacturing marketing management First of all a company has to make investments in production in order to grow large enough so that it can achieve cost advantages of scale and scope Secondly the company has to build an integrative hierarchy by investing in its marketing activities including purchasing distributing and RD Finally it is of utmost importance to a company to recruit and train a team of managers who run and coordinate the different departments and units of the company efficiently Chandler points out the importance of first mover advantages meaning that companies which first made the three-pronged investment became the industrys leaders In most cases the leading companies then dominated their industries for a long time even for decades Another opportunity to become one of the industrys leaders occurs directly after industry wide merger waves Chandler emphasizes that companies should react immediately to mergers or acquisitions by rationalizing centralizing their administration and by investing in the three Ms The ones that respond quickest create high entry barriers for potential competitors and establish themselves as leading firms The above mentioned theories apply to all capital intensive industries The structure of these industries became oligopolistic The next stage for companies that have successfully created their organizational capabilities is to expand them Chandler distinguishes four different ways of how a company can grow either through horizontal andor vertical integration through geographical expansion or through product diversification Horizontal integration means merging with or acquiring enterprises at the same level of the value chain This way of integrating is only successful if a centralized administration is quickly established and personnel and facilities are rationalized Vertical integration can
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