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By 1880, the American Bell Telephone Company
had devised a structural, legal, and financial scheme that
would give it control of the firms providing telephone service
in the United States. Crucial to this development was the
acquisition of Western Electric, the company's largest producer
of electrical apparatus -- and a company that had been controlled
since 1872 by Western Union, Bell's chief competitor.
In The Anatomy of a Business Strategy
George David Smith analyzes the remarkable history of the
acquisition of Western Electric. Following an intense struggle
between Bell and Western Union for control of the telephone,
the acquisition was nothing less than an organizational
innovation designed to solve technical and strategic problems
where other manufacturing arrangements had failed. Seen
in the broader context of the development of AT&T into
a modern, vertically integrated corporation, the acquisition's
unique history adds measurably to our knowledge of the historical
impact of vertical integration.
Business historians and managers alike will
find some salutary lessons. In rich detail, Smith demonstrates
that the path to successful strategy can be convoluted and
surprising. He distinguishes carefully between the motives
and outcomes of strategic planning, and he provides a timely
reminder that modern telecommunications began as a risky
entrepreneurial venture in an unregulated, competitive market.
"As the entrepreneurs who bought the telephone to market
and their successors who turned it into an essential and
ubiquitous commercial service, the Bell owners and managers
often found their best plans undermined by unforeseen difficulties,
their expectations overturned by unforeseen events, their
hopes actually exceeded by unforeseen opportunities."
It is their ability to cope with the unexpected -- to solve
problems as they arose and seize opportunities as they appeared
-- that makes this history of the early telephone business
particularly exciting and instructive.
George David Smith is president of the
Winthrop Group, Inc., a business consulting firm, and he
teaches administrative and business history at New York
University.
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