This article throws light upon the top five methods used for reconciliation of differing optima of firm.
1. If the technical optimum is greater than the managerial optimum, the gap has to be covered by measures aiming at enhancing managerial efficiency. Or the firm has to split the productive organisation into different separate departments in order to take advantage of the higher technological potential.
If it is not technologically feasible to departmentalise, then, as Robinson points out, an attempt should be made to reduce the size of the technical unit to manageable proportions. If management difficulties hinder technological economies the firm should think of concentrating on limited specialised range of commodities and more firms may be set up to manufacture other models of commodities.
For example, large iron and steel units may be spilt into independent compact units, if management of giant steel factory is found unwieldy. Vertical disintegration is one of the effective remedies to reconcile the technical and managerial optima.
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The processes are separated into smaller industrial units whenever technical optimum is beyond the managerial optimum. Even large firms which want to be self-sufficient may have to go in for contract purchases of certain materials from outside firms specialising therein. All the firms, small or big, can operate on their own best scale if there are mutual deals between them.
2. If the managerial optimum is larger than the technical optimum, there should be multiplication of technical units. Advantages of large-scale management can be realised by establishing small technical units at different places.
Orders are distributed to individual plants at different places by the central management. Multiplicity of small technical units operating under central management will also be a safeguard against cyclical, seasonal variations in output and demand.
3. If the marketing optimum is larger than the technical optimum, the firm may go in for a line of different articles which can be sold together. It may sell the articles produced by other firms in addition to its own products.
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For example, a book publisher may sell not only his own publications but also the books published by the other firms, so that he can avail of marketing economies. An electrical motor manufacturer may sell not only his motors but other articles like fans, lamps, and other electrical appliances produced by outside firms.
4. If the marketing optimum is smaller than the technical optimum, then the firm can continue to operate on larger technical scale but can entrust the marketing responsibility to dealers, agents and merchant middlemen like wholesalers, sole distributors, etc.
5. If financial optimum is larger than the managerial optimum then independent units may be established with financial arrangements and employing qualified people conversant with problems of large concerns.