From Chandlers argument, we can see that before 1840s organizations were small traditional family firms, owned and operated by an individual or at times by partners, usually consisting of a few employees who focused on a single task in one location. The activities of these enterprises were coordinated by the concept of the invisible hand of the market, where the market and price mechanism determined how the market functions. After technological development, like the railroads system, businesses were able to move their products in larger quantities at shorter periods. This Western Railroad business was the first to develop into modern multiunit enterprise, like the ones present in modern days.
Unlike the U form businesses, these M-form businesses have more than one operating unit, each containing their own mangers that have their own profit loss accountability, but at the same time, each unit has their own books and accounts so that they can easily act as an independent business. In comparison to the traditional firm they operate in different locations and offer a wide range of products and services.
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Chandler introduced different propositions to explain the rise of Multi unit companies. Firstly the modern business had administrative coordination; this allowed organizations to carry out several businesses within one organization. By establishing a routine to manage transactions between units, the transaction costs were lowered entitling them a greater market share. Secondly, due to the introduction of managerial hierarchy, managers allot everyone a particular field where they are supposed to work, resulting in improved performance. The third proposition was increased economic activity in the market, which led to technological development, leading to increased productivity with less human effort. This is considered to be one of the primary reasons for multi-unit corporations to taking over the market. The fourth proposition was the application of managerial hierarchy, which became a permanent source of power and continued growth. The fifth proposition was an increase in professional and technical approach of managers, this resulted in high-end yields. The sixth proposition was the rise of new capitalism in America because of the growth of corporation in terms of diversity and size. This lead to "managerial capitalism" where in the ownership of the entity was no longer based with one individual. The seventh proposition was the decision making process implemented by the managers, they were mostly long-term stable plans aimed at growth and survival. The propositions given by Chandler helped to explain the corporations status of: why it began, when it did, where it did an in the way it did.
Chandler's insights were modified by Hoskin and Macve (1990) in their view of modern management. They state that management was not invented by modern business, but instead modern business was invented by management, as management is a form "disciplinary power"  which was invented outside the world of business and without it, it's impossible to run the M-form business. Hoskin and Macve have gone beyond Chandler's work, by trying to explain what makes the management power more powerful than market force itself. They concluded that the power of numerical measures together with the idea of human accountability and performance measurements have created the calculable person, thus allowing managers to measure human performance. This in turn has replaced the markets of perfect competition with the oligopolies, which attained competitive advantage and dominates the market.
These aspects have led to the transactions between the units to be internalized and so becoming coordinated by salaried managers instead of just being influenced by the market mechanisms, thus with the rise of the M-form businesses, the need for Adam Smith's concept of the 'invisible hand' of the market was replaced with the "the visible hand of management"  , in a world characterized by imperfect competition and misallocation of resources (Hoskin and Macve, 1990).
Through time, there have been major innovations which greatly influenced management accounting to improve in terms of its systems. Innovations such as Total Quality Management (TQM), theory of constrains (TOC), Just-In-Time(JIT), enterprise resource planning(ERP) and etc.  Each approach is equally important but here we shall only consider TQM's influence on the management accounting systems in terms or production and purchasing . Total quality management is an approach, which has originated from Japan. Â TQM is a business philosophy - a way of doing business.
Always on Time
Marked to Standard
TQM has numerous elements, but implementing them can be expensive and may require many organisational changes. The key elements are customer involvement; they achieve this by involving the customers and finding out what they want and they try and deliver than in the most cost effective method. This means minimizing costs by removing the unnecessary costs. Another element is developing long term supplier relationships. The concept of TQM, looks beyond the company as to produce high production products requires quality this is achieved by maintain close relations with suppliers. Another element is empowering employees; to implement TQM a culture change is required in many Western businesses, as this system requires trust on employees to judge their own quality control. Quality circles are formed, where employees are allowed to talk discuss and solve problems amongst themselves. From the elements we see that TQM is production-based.
However, TQM is much more than this, as its philosophy followed by the entire company; hence all functions need to be involved in the approach and thinking for it to work. Just like with other functions, management accountants is affected by TQM being implemented. It is essential for Management account's to be involved in the implementation process itself so that they are able to perform their primary duty of providing management information. Otherwise, management accounts risk being pushed aside.
The performance measures applied by TQM are quite different in comparison to those applied by traditional U form businesses. Although, profit and return on investment remain of high importance, the actual quality of product must also be reported. The measurements maybe automated or taken by other staff members, but many companies still require the MA to present this information via management reports. This allows for better comparison across measures. The Management accountants express these measures of quality in quantitative form to make the data more understandable and unbiased.
Chandler defines Modern business enterprise on the basis of two specific characteristics. One it contains many distinct operating units which is managed by a hierarchy of salaried executives. If we compare this element with the impact of TQM on management, we can see that to achieve the TQM objective, they divide into various units to specifically identify the flaws and strengths within the organization. Secondly, Chandler says that each unit has their own individual set of books and accounts which may be audited separately from those of the large enterprise. In theory, each unit operate as an independent business enterprise. If we implement the concept of TQM there becomes a need for high capital investment and training at all levels, this can be very expensive. Due to the breakdown caused by modern businesses, this can be implemented to each individual part rather whole business at once and can help break down the cost.
In conclusion, we see can see organizations have greatly altered their structure from the 1840s until the present day, these changes have affected all the different units of businesses like productivity, ownership, management or measurement systems. When talking about the key features of the structure and the processes of the modern enterprise, I saw that multiunit enterprises are needed nowadays because unlike the traditional organizations it can compete in this ever-changing market dominated by oligopolies, through making changes in the areas that appear to have problems or replacing the inefficient staff. After considering the development of management account it is clearly seen that large-scale enterprises tend to change their structure and start operating the company via multidivisional approach. This approach ensures that line-and-staff roles provide high quality accounting information to avoid complexity within business which they run. Technological innovations such as Total Quality Management have helped companies to improve their quality of products, avoid waste and reduce costs of inventory - what is significantly important for any company trying to be company which seeks to survive the economic world of today, which is dominated by oligopolies. TQM's main emphasis is on designing and building-in quality, not on control after manufacturing and rework. Traditional cost accounting systems concentrated on the product. While the new cost accounting concept, known as activity-based costing, provides information on costs and processes; thus allowing it to be compatible with the needs of the modern day enterprises. In the end, we can see that technology and innovation has greatly helped transform the management of the 'modern business enterprise'
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