Alfred D. Chandler's Strategy and Structure focuses on an examination of the operations and practices of four major firms. His major argument seems to hypothesize that the form of any business enterprise is determined by the nature of the tasks it performs. Managerial and administrative structure follow strategy. The word "strategy" for Chandler refers to objectives and policy options such as product diversification, vertical integration, mass-marketing, or territorial expansion. Chandler then shows how the resulting innovations in corporate strategy subsequently induced changes in business organizations (pp. 13-15).
Companies whose success brought them to prominence in the national market for their principal product followed the lead of the early railroads and communication companies, employing a functional organization to minimize costs. Eventually, however, the continued expansion of companies in geographic or product space made their functional departments to diverse for maximum effectiveness, and the multidivisional form was adopted.
His case studies appear to reveal that this multidivisional form evolved independently
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