Chandler mentions that with the forming of the business enterprise modern in nature which produces many units from many locations there was change in the way market controls the economic activities and allocates the resources. It goes on to say the invisible hand of the market got replaced by the management hand which was visible. This means that the administrative coordination took over the market. This was due to fact that there administrative coordination of the salaried employees which led to the higher production at lesser costs and thus increasing the profit of the firm. It says that due to administrative coordination there was advantage to the firm who internalized the activities of many business units into single unit and thus there were synergies which led to saving of costs and higher productivity. There was a managerial hierarchy which was created due to this administrative coordination (Chandler, 1993).
Administrative coordination started making sense to the firm where their economic activities reached to such level where administrative coordination was more beneficial for them in terms of profits. It brought in new technology and also led to expansion of the markets. The hierarchy formed in the management was their main source of growth and power. Salaried employees careers took off and they became more professional. These professionals were the ones who controlled these hierarchies. Also training became more systematic and also formal in nature. There was separation of the group which managed the firm and people who owned the firm. Management started focusing on policies which will help the firm in the long run rather than the having high current profits. Lastly as the firms grew and started dominating the main sectors, they started altering the basic structure as well as the economy (Chandler, 1993).