Page 14 - (DK) The Business Book

12 INTRODUCTION

rom the time that goods of scale—that production costs fall increasingly international—
and services began to be as more items are produced. Money environment businesses needed
F traded in early civilizations, gave rise to the concept of “value different, and more rigorous,
people have been thinking about added”—selling an item for more processes and structures. The
business. The emergence of than it cost to produce. Even when geographic scope and ever-growing
specialized producers and the use barter was the norm, producers still size of these evolving businesses
of money as a means of exchange knew it was advantageous to lower required new levels of coordination
were methods by which individuals costs and raise the value of goods. and communication—in short,
and societies could, in modern Today’s companies may use different businesses needed management.
terms, gain a “business edge.” The technologies and trade on a global
ancient Egyptians, the Mayans, the scale, but the essence of business Managing production
Greeks, and the Romans all knew has changed little in millennia. The initial focus of the new breed
that wealth creation through the of manager was on production.
mechanism of commerce was An era of change As manufacturing moved from
fundamental to the acquisition of However, the study of business as individual craftsmen to machinery,
power, and formed the base on an activity in its own right emerged and as ever-greater scale was
which civilization could prosper. relatively recently. The terms required, theorists such as Henri
The lessons of the early traders “manager” and “management” did Fayol examined ever-more-efficient
resonate even today. Specialism not appear in the English language ways of operating. The theories
revealed the benefits of economies until the late 16th century. In his of Scientific Management, chiefly
1977 text The Visible Hand, Dr. formulated by Frederick Taylor,
Alfred Chandler divided business suggested that there was “one best
history into two periods: pre-1850 way” to perform a task. Businesses
and post-1850. Before 1850 local, were organized by precise routines,
family-owned firms dominated the and the role of the worker was simply
The art of administration business environment. With to supervise and “feed” machinery,
is as old as the commerce operating on a relatively as though they were part of it. With
human race. small scale, little thought was given the advent of production lines
Edward D. Jones to the wider disciplines of business. in the early 1900s, business was
The growth of the railroads in characterized by standardization
US investment banker
the mid-1800s, followed by the and mass production.
(1893–1982)
Industrial Revolution, enabled While Henry Ford’s Model T car
businesses to grow beyond the is seen as a major accomplishment
immediate gaze of friends or family, of industrialization, Ford also
and outside the immediate locale. remarked “why is it every time I ask
To prosper in this new—and for a pair of hands, they come with