THE GROWTH OF BIG BUSINESS

1. THE GROWTH OF BIG BUSINESS

2. ANDREW CARNEGIE • “MONEY COULD MAKE MONEY” • MAKING WISE AND SOMETIMES RISKY INVESTMENTS WOULD SOON MAKE HIM ONE OF THE RICHEST AND MOST SUCCESFUL BUSINESSMEN IN THE WORLD.

3. ROBBER BARONS VS CAPTAINS OF INDUSTRY • ROBBERBARONS • IMPLIES THAT BUSINESS LEADERS BUILT THEIR FORTUNES BY STEALING FROM THE PUBLIC. • THEY DRAINED THE COUNTRY OF ITS NATURAL RESOURCES AND PERSUADED PUBLIC OFFICIALS TO INTERPRET LAWS IN THEIR FAVOR. • PAID WORKERS SMALL WAGES

4. CAPTAINS OF INDUSTRY • BUSINESS LEADERS SERVED THEIR NATION IN A POSITIVE WAY. • RAISED PRODUCTIVITY AND EXPANDED MARKETS. • CREATED NEW JOBS ENABLING MANY AMERICANS TO BUY NEW GOODS AND RAISE THE STANDARD OF LIVING.

5. JOHN D. ROCKEFELLER • FORMED STANDARD OIL COMPANY. • CARNEGIE’S GOSPEL OF WEALTH • “PEOPLE SHOULD BE FREE TO MAKE AS MUCH MONEY AS THEY CAN. AFTER THEY MAKE IT THEY SHOULD GIVE IT AWAY.” • EXPANDED STEEL BUSINESS

6. SOCIAL DARWINISM (PHILOSOPHY) • ARGUED THAT SOCIETY SHOULD INTERFERE WITH COMPETITION AS LITTLE AS POSSIBLE AND THEY OPPOSED GOVERNMENT INTERVENTION TO PROTECT WORKERS.

7. BUSINESS • HOW BIGGER BUSINESSES DIFFERED FROM EARLIER FORMS OF BUSINESS IN THE U.S. • LARGER POOLS OF CAPITAL (MONEY) • WIDER GEOGRAPHIC SPAN • BROADER RANGE OF OPERATIONS • REVISED FOLE OF OWNERSHIP • NEW METHODS OF MANAGEMENT

8. NEW MARKET STRUCTURES • OLIGOPOLY • MARKET STRUCTURE DOMINATED BY ONLY A FEW LARGE, PROFITABLE FIRMS. • EX) THOSE THAT PRODUCE BREAKFAST CEREALS, CARS, HOUSEHOLD APLLIANCES. • MONOPOLY • COMPLETE CONTROL OF A PRODUCT OR SERVICE. • CARTEL • A LOOSE ASSOCIATION OF BUSINESSES THAT MAKE THE SAME PRODUCT. MEMBERS OF THIS AGREED TO LIMIT THE SUPPLY OF THEIR PRODUCT AND THUS KEEP PRICES HIGH.

9. VERTICAL INTERGRATION • Andrew Carnegie introduced the idea of vertical integration. • This led other business people to use the system to promote better financial growth and efficiency in their companies and businesses. • Vertically integrated companies in a supply chain are united through a common owner. • Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need.

10. A current example is the oil industry, in which a single firm commonly owns the oil wells, refines the oil, and sells gasoline at roadside stations. • In horizontal integration, by contrast, a company attempts to control a single stage of production or a single industry completely, which lets it take advantage of economies of scale but results in reduced competition.

11. Horizontal consolidation is when a business owns all aspects that involve making their product. This is both good and bad. It is good because • If you are the owner wants something they do not have to wait for it. • It is bad because it is a lot of things to control with just one person. • Rockefeller, as an example, used horizontal consolidation in his standard oil company which had great business.

12. JOHN D. ROCKEFELLER • STANDARD OIL COMPANY OF OHIO • Established in 1870 as a corporation in Ohio, it was the largest oil refiner in the world and operated as a major company trust and was one of the world's first and largest multinational corporations. • As it grew and engaged in business strategies, tactics and practices that were lawful but drove many smaller businesses under, Standard Oil became widely criticized in the public eye, even as it made Rockefeller the richest man in modern history. • The company grew by increasing sales. • After purchasing competing firms, Rockefeller shut down those he believed to be inefficient and kept the others.