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Managerial Economics 2nd Edition by William Boyes
Edition 2ISBN: 978-0618988624Managerial Economics 2nd Edition by William Boyes
Edition 2ISBN: 978-0618988624 Exercise 5
The Problem with Size
Does corporate size necessarily confer an advantage in business? Wal-Mart is the largest corporate employer in the world. It has built its position in many markets by being operationally better than any other competitor. As it has grown larger, it has exploited its buying leverage with suppliers. On the other hand, its impact on communities, its treatment of employees, and its dealing with suppliers have all generated bad will for the company. Its top management has recently unveiled a number of actions and recommendations to make it appear to be a more responsible corporate citizen.
The CEO of British Petroleum (BP) decided that not only should the company maintain worldwide operations, but should be a model of good corporate citizenship. But BP ran into difficulties with size. An explosion at its Texas City refinery killed 15 people, and subsequent investigations found many safety lapses. Then came evidence of a big environmental problem in the company's Alaskan operations. The problems were attributed to the complexity of the organization.
Why would CEOs want to grow their firms?
Does corporate size necessarily confer an advantage in business? Wal-Mart is the largest corporate employer in the world. It has built its position in many markets by being operationally better than any other competitor. As it has grown larger, it has exploited its buying leverage with suppliers. On the other hand, its impact on communities, its treatment of employees, and its dealing with suppliers have all generated bad will for the company. Its top management has recently unveiled a number of actions and recommendations to make it appear to be a more responsible corporate citizen.
The CEO of British Petroleum (BP) decided that not only should the company maintain worldwide operations, but should be a model of good corporate citizenship. But BP ran into difficulties with size. An explosion at its Texas City refinery killed 15 people, and subsequent investigations found many safety lapses. Then came evidence of a big environmental problem in the company's Alaskan operations. The problems were attributed to the complexity of the organization.
Why would CEOs want to grow their firms?
Explanation
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Case summary:
The case deals about dete...
Managerial Economics 2nd Edition by William Boyes
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