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Fighting for Profits. Keana Bell Kayla Britt Faith Askew Luke Davis. Corporations. Until the mid-nineteenth century, most businesses were run by one person or family. In a corporation, a number of people share the ownership of a business.
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Fighting for Profits Keana Bell Kayla Britt Faith Askew Luke Davis
Corporations • Until the mid-nineteenth century, most businesses were run by one person or family. • In a corporation, a number of people share the ownership of a business. • If an investor experience economic problems, the investor didn’t lose any more than what they originally had invested in the business.
Corporation cont. • A corporation has the same rights as an individual. It could buy and sell property, and it could sue courts. • Corporations work to maximize profits. • After 1870 corporations increased dramatically in America. • They decrease the cost of producing goods or services by paying workers the lowest possible wages. • Corporations also tried to increase profits by advertising their products.
J.P. Morgan and Cornelius Vanderbilt • J.P. Morgan was the head of corporations that supported research laboratories where inventors could experiment with products and methods that might bring corporations future profits. • Cornelius Vanderbilt was a self-made businessman in the railroad industry. He succeeded in getting his competitors to pay him to relocate because his low fares were driving them out of business.
John D. Rockefeller • 1839-1937 • At the age of 16, he landed his first real office job as an assistant bookkeeper. • An American industrialist and philanthropist (a person who seeks to promote welfare to others by donation of money for good causes). • Founder of the Standard Oil Company • Made deals with railroads to increase his profits.
Andrew Carnegie • 1835-1919 • At the age of 13, Carnegie worked in a factory earning $1.20 a week. (1848) • Found a job as a telegraph messenger the next year. (1849) • Worked at an railroad industry in 1853. While working there he begin making investments. • In 1889 he owned Carnegie Steel Corporation. • Sold his business in 1901 to spend his time on his philanthropic work.
Monopolies and Cartels • A monopoly is when an corporation tried to gain complete control of a product or service. • Many corporations tried to do this by buying out their competitors or driving them out of business. • A cartel is when an corporation tried to control the supply and price of certain goods or services. They are formed to produce higher profits.
Horizontal Integration • Horizontal Integration is a strategy to increase a market share by taking over a similar company. • An example of this is an oil company purchasing refineries from another oil company.
Vertical Integration • Vertical Integration is the act of expanding into new operations for the purpose of a decreasing a firm’s reliability on other firms in the process of production and distribution. • There are 3 ways to classify vertical integration. They are backward, forward, and balance.
Vertical Integration cont. • Backward is when a company tries to own an input product company. For an example a car company owning a company that makes tires. • Forward is when a business tries to control post production areas, namely the distribution network. For an example a mobile company opening its own mobile retail chain. • Balance is a mix of forward and backward. It is a strategy to take advantages of both worlds. It allows companies to reduce costs and charge higher prices to competitors.
Benefits of Horizontal and Vertical Integration • Horizontal Integration eliminates competitors from firms. • Vertical Integration allows firms to cut total costs by internalizing the value that other firms would otherwise take as profits.
Trust • Trust is a group of separate companies that are placed under the control of a single managing board in order to form a monopoly. • In a trust, companies assign their stock to a board of trustees, who combine them into a new organization. • The trustees run the organization, paying themselves dividends on profits.
Works Cited • http://bizdharma.com/blog/what-is-vertical-and-horizontal-integration/. Web. 31 Oct. 2012. • http://www.biography.com/people/john-d-rockefeller-20710159. Web. 31 Oct. 2012. • http://smallbusiness.hron.com/differences-between-vertical-horizontal-strategic-management-24460.html. Web. 31 Oct. 2012. • http://www.biography.com/people/andrew-carnegie-9238756. Web. 1 Nov. 2012.
