Masood Mortazavi's Weblog

Tuesday April 05, 2005

[ Business ] Fifty One Pages in Seven Years

I'm sure you agree that seven years should be enough to advance in a book to page 52.

Like many books that we buy and put aside on the shelves of our private libraries for a later read, a copy of the legendary Alfred D. Chandler, Jr.'s Strategy and Structure: Chapters in the History of the American Industrial Enterprise (1962) has been sitting on my bookshelves or in book boxes through three different moves in the past seven years. I still have my receipt for it, used as bookmark, indicating the purchase at Codys on Telegraph, Berkeley, California.

The first 51 pages is a discussion of the historical setting.
It meanders quickly through the last part of the 19th century, the development of modern transportation and its effects on modes of distributing goods and structuring businesses.
This is a time when the rise of consumerism paralleled the rise of the urban population, from 11% in 1840 to 28% in 1880, to 40% in 1990.
The vast increase in urban population led to American factories to expand and multiply their output, giving rise to the multidepartmental enterprises.

Chandler gives a wonderful short summary of the story of Gustavus Swift, a New England wholesale butcher who moved to Chicago in the mid-1870's and built a meat enterprise "that grew through vertical integration by the creation of a marketing organization." Swift was aware of the rising demand for fresh meat in the growing urban areas of the East Coast.

In 1878, shortly after his first experimental shipment of refrigerated meat, he formed a partnership with his younger brother, Edwin, to market fresh western meat in the eastern cities.
For the next decade, Swift struggled hard to put into effect his plans for building a nationwide distributing and marketing organization. . . . By advertising and other means, they had to break down the prejudice against eating meat killed more than a thousand miles away and many weeks earlier and to defeat the concerted efforts of local butchers, who had recently created the National Butchers Protective Association to prevent the sale of fresh western meat in the eastern urban markets. At the same time, Swift had to combat the boycotts that the railroads had placed on his refrigerator cars. . . .
Other packers quickly followed his example . . . Those companies which did not follow Swift's model were destined to remain small, local ones.

Swift's empire advanced and included many distribution centers and local branches and outlets administered by Swift's own salaried representatives.

In telling these stories, Chandler wants to describe the complex administrative issues large corporations came to deal with.

Now, after seven years, having learned something about transaction cost economics, I'm ready to take another look at Chandler's book, starting on page 52, where a discussion of the role of Du Pont in the restructuring of U.S. corporate organizations begins. Hopefully, it will take me far less than the seven years past to read the rest of the book!

Business, History, Organization, Meat, Distribution, Refrigeration, Economics.