The Modern Industrial Enterprise

The Modern Industrial Enterprise

Many factors supported the emergence of the modern industrial enterprises. The influence of production, distribution, and management helped create the enterprises. Forces and historical events also supported the development. These influences worked together in their own way in shaping the national diamond into what it is today.

Forces and events of influence included transportation, communication, and the manufacturing of goods. These industrial activities helped the growth of the industrial economy. The engineering achievement of the railroad started a travel, trade and transportation revolution. The railroad could move more goods than ever before, faster than any man on horse, or ship, and very importantly maintain punctuality. Companies, previously small and local, could now expand to distant places and increase production as a result. Along with the railroad came the telegraph. With the telegraph, people and companies could exchange ideas and news almost immediately. These two influential factors linked the east to the west, creating a network, coast to coast, beginning the development of the national diamond. Manufacturing was also involved in the emergence of modern industrial enterprises because manufacturing firms made up the majority of country’s GDPs. The manufacturing industries were very in depth and thus branches into sub divisions that created more employment through networks.

Along with the factors were the entrepreneurs who took the risks. These people made the first investments into the determinants of the modern enterprise. They invested into larger facilities for expansion, into a marketing and distribution, and management of a company. The expansion of the facilities was to develop if possible economies of scale and the marketing investment was to keep the sales up to the new pace of production. The management included the training of employees and the monitoring of them, to prepare for the future. These entrepreneurs took hold of a market and gained a competitive advantage over any company coming into the market later. If the entrepreneur made a big enough investment on a plant large enough to develop the economies of scale and scope, along with the necessary investment in distribution and management, then they were termed a “first-mover.”

These first-movers played a significant role in the distribution determinant that supported the emergence of industrial enterprises. The enterprises grew by integrating forward in distribution and backward in purchasing. Integrating forward into distribution was the sale of a product upon completion; this spared of many storage and warehousing costs. The product would be sold to retailers and distributor facilities, or directly to a buyer as a wholesaler would do. With the use of the backward integration into purchasing, companies were able to buy directly from a supplier instead of going though a middleman. Contracts were worked out with suppliers and a steady flow of supplies entered the plant in a scheduled manner. This replaced commercial mediaries and set the companies closer to economies of scale.

The scope in production was the change in capital-labor ratios that lead to the efficient use of machine, technology, and general size of a plant. In labor-intense industries, more people or machines were used to increase production. But to improve the newer industries, companies improved the machines, reworked the process of production, and brought intermediary steps into a single unit. The investments made into production were about the most efficient use of the technologies of production, ones to cut cost and up production. These enterprises reached minimum efficient scale, on that produced a unit and the lowest possible cost. This technology was related to the optimum size that a plant should be. And the optimal