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History of the industrial revolution and its impart
Industrial revolution
Industrial revolution as a modern history
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Industrialization through the late 1800 took the nation by storm, with increases to industry, manufacturing, transportation and banking. These advancements transformed the American way of life and led to establishing the United States as a global commerce player. Many people can clearly see the physical transformation that occurred, but miss the effects that this industrialization had on the business structure. As corporations continued to grow in size, to match the demand, fundamental changes in their structure and the day to day operations were forced to change with it. The concepts of vertical and horizontal integration are two concepts that were implemented to continue the profitability of these corporations. Both of these concepts …show more content…
added benefits to the corporation, but not always for the consumer or employees. Vertical integration is a business concept that integrates all aspects of production from the raw source to the final product. This concept was embraced by a Chicago cattleman named Gustavus Swift, who sought to improve profits within his meat packing industry (Henretta, Edwards, and Self 512). Swift knew that the current processes used within slaughter houses were ineffective and resulted in large quantities of waste. He went about managing the shipments into his Chicago slaughter houses and set into practice a new slaughter technique. The waste material was then utilized to produce fertilizer, glue and other products, within a new company which was established by Swift (Swift & Company). The next problem that Swift set about solving was how to keep the meat fresh during shipment. Swift knew that it was easier to consolidate the slaughter operations into one location and then ship only the dressed meat, but due to the time in transport, the meat would spoil.
In 1878 Swift contracted Andrew Chase to design a refrigerated car to ship the meat (Swift & Company). This was a success and opened all parts of the country to distribution, with Swift owning the refrigerator cars, it allowed him to keep costs down (Swift & Company). As the range of his operation grew, Swift established processing plants in Fort Worth, St Louis, St Paul, St Joseph and Omaha and managed the deliveries to the consumer (Swift & Company). All of this fell under his sole company, allowing him direct oversight from the farmer’s field to the end user. Although seemingly beneficial to the consumer, Swift’s use of predatory pricing eliminated any competition to his growing empire (Henretta et al. …show more content…
512). As Swift’s operation grew across the country, competition with other companies began to grow. Through the use predatory pricing, he was able to undercut the costs in a particular area to drive out competition, while offsetting his losses from other parts of his company. When the competing companies were forced out, the prices would return to normal. These actions resulted in a monopoly and allowed for sole control of a particular product and its pricing. By 1900, five companies controlled 90% of meat distributed within the country (Henretta et al. 512). John D. Rockefeller, owner of Standard Oil embraced this concept, but would take it one step further. Rockefeller’s use of vertical integration allowed him to control the costs of all aspects of the oil industry; from the drilling, the equipment used, the transportation and the refineries (Henretta et al.
514). Through predatory pricing he was able to force out any competitor to him and force a merger with them, absorbing their assets into his ever growing corporation, known as horizontal integrations. By 1880, Rockefeller’s Standard Oil controlled 95% of all the refining capabilities in the United States (Henretta et al. 514). With the growing size of his corporation, a newly termed Trust was created, establishing a board to oversee the operations of the far reaching corporation. These Trusts extended control over the entirety of the corporation, throughout the country and were seen as a threat to the government due to their size, influence and power that they were yielding (Henretta et al. 514). Reformers began to step in and attempt to federally regulate these
trusts. The Sherman Anti-Trust Act of 1890 was the governments first attempt to restrict or control these trusts, by limiting business monopolies. Although 5 years later, the Supreme Court ruled that a trust or monopoly in itself is not illegal, but certain business tactics used to maintain them were (Society). This led to the breakup, in 1911, of 33 of Standard Oil’s subsidiaries and redistribution of their stock holdings, due to the tactic of predatory pricing used to eliminate competition and force them into mergers (Hodak). The Sherman act has continued to be used to this day, focusing on everything from business practices, intra-state commerce and labor unions. With the industrial revolution, great gains were made in the country to increase production and to quality and availability of products. With these increases, came the evolution of big business and the tactics of vertical and horizontal integration. On its face, these practices were beneficial to business to contain costs and better aid the consumer, if used properly. As businesses began to increase their sphere of influence, predatory pricing targeted competition within the marketplace. These predatory practices targeted and eliminated small businesses and either drove them out or absorbed them into the greater corporation. This began to be a threat and Congress enacted the Sherman Anti-Trust Act of 1890 in the hope of controlling monopolies and regulating intra-state trade. Although vaguely written and with portions struck down by the Supreme Court, it was used in some capacity to dissolve many of these monopolies.
The Gilded Age refers to a period in which things were fraudulent and deceitful; the surface was clinquant while underneath that lustrous coat laid corruption. During the Gilded Age companies recruited to corrupt methods to further increase profits, leading to an increase in power, rapid economic prosperity, and domination of industries, leading to monopolistic corporations. As a result, antitrust laws to regulate business began to emerge in the late 19th and early 20th century known as the Progressive Era. Among these companies was Standard Oil, which was founded in 1870 by John D. Rockefeller; in 1880, Standard Oil was responsible for refining 90 percent of America’s oil and between 1880-1910, dominating the oil industry (Marshall). The lack of intervention from the government and regulations impeding monopolistic practices allowed Standard Oil to
None of the competition knew what the rates were for the rebates or the rates that Rockefeller was paying the railroad. This made it hard for the competition to keep up with the Standard Oil Company. The consequences led to many oil companies being secretly bought out by Rockefeller. All in all, 25 companies surrendered to Rockefeller's relentless expansion, which was 20% of the oil industry in America.... ...
The year 1906 brought about a new era in governmental legislation that helped to shape the way privately owned producers of consumable goods would conduct themselves in the future. President Theodore Roosevelt, a man known for his tenaciousness when tackling the issues of the people, pursued these legislative changes, refusing to back down to the lobbyists who stood in his way. One such industry brought to its knees was the meat packing industry, a thriving group of companies that supplied not only the United States but also the markets in Europe with processed foods.
One of the Gilded Age’s most prominent well-known philanthropist’s, John D. Rockefeller, had a lasting effect in the United States. He was America’s first ever billionaire. Rockefeller entered the oil business by first investing on an oil refinery in Cleveland, Ohio in 1863. He established his own oil company named “Standard Oil”, which controlled nearly 90 percent of America’s oil refineries by the 1880’s. At first, Rockefeller borrowed money from some of his buddy’s to buy out some stocks and take control of his first refinery in Ohio. He then formed the “Standard Oil Company” along with his brother William Rockefeller and other groups of men, John D. Rockefeller was the largest shareholder of the company. Standard oil was a monopoly in the oil industry for buying other refineries who were competition to Standard oil in order to distribute and market there oil around the globe. Standard oil even went as far as making their own oil barrels and employed scientists to develop other uses for kerosene and petroleum products. John D. Rockefeller was viewed as a target of “muckraking” by journalists, who viewed him as a monopoly giant setting up a monopolistic company in America which helped build his vast oil empire. Critics accused Rockefeller of engaging unethical practices such as competitive pricing when it came to products and negotiating with railroads to eliminate his competitors. The United States Supreme Court wou...
However, the reason Rockefeller controlled 90% is because of a company that basically appeared from nowhere and had some actual competition for Standard Oil and actually surprised Rockefeller. The company was known as the Tidewater Pipe-line Company, it started by building a pipeline from north Pennsylvania to Williamsport. Rockefeller tried to acquire the company but in the end it ended up as Standard only competition with Tidewater controlling 10% of the oil refining market. This was however of not a large concern to Standard as they were developing products besides oil from Vaseline to candy.
Rockefeller was an industrialist and philanthropist who made his fortune by founding the Standard Oil Company in 1870. Attempting to monopolize the industry and squeeze out the middle man, Rockefeller slowly gained almost complete control of the oil industry. He formed the powerful Standard Oil Trust in 1882, which united all of his companies and secured 95% of oil production in the United States for himself. Rockefeller was an industrialist who stamped out all of his competition with his trust, eventually leading to Congress intervention.
Rockefeller was America’s first billionaire, and he was the true epitome of capitalism. Rockefeller was your typical rags-to-riches businessman, and at the turn of the twentieth century, while everyone else in the working class was earning ten dollars max every week, Rockefeller was earning millions. There has been much discussion as to whether Rockefeller’s success was due to being a “robber baron”, or as a “captain of industry”. By definition, a robber baron was an industrialist who exploited others in order to achieve personal wealth, however, Rockefeller’s effect on the economy and the lives of American citizens has been one of much impact, and deserves recognition. He introduced un-seen techniques that greatly modified the oil industry. During the mid-nineteenth century, there was a high demand for kerosene. In the refining process from transforming crude oil to kerosene, many wastes were produced. While others deemed the waste useless, Rockefeller turned it into income by selling them. He turned those wastes into objects that would be useful elsewhere, and in return, he amassed a large amount of wealth. He sold so much “waste” that railroad companies were desperate to be a part of his company. However, Rockefeller demanded rebates, or discounted rates, from the railroad companies, when they asked to be involved with his business. By doing so, Rockefeller was able to lower the price of oil to his customers, and pay low wages to his workers. Using these methods,
The Meaning of Vertical and Horizontal Integration Horizontal integration is where an organisation owns two or more companies, on the same level of the buying chain. An example of this is the First Choice Group; they own First Choice Travel Agency and First Choice Hypermarket, both of which are on the same level of the buying chain. The advantage of horizontal integration is that it can increase the company’s market share. Another good example of this type of integration is when EasyJet purchased the airline Go from British Airways. Now EasyJet and Go both operate under the company name of EasyJet.
During the nineteenth and twentieth century monopolizing corporations reigned over territories, natural resources, and material goods. They dominated banks, railroads, factories, mills, steel, and politics. With companies and industrial giants like Andrew Carnegies’ Steel Company, John D. Rockefeller’s Standard Oil Company and J.P. Morgan in which he reigned over banks and financing. Carnegie and Rockefeller both used vertical integration meaning they owned everything from the natural resources (mines/oil rigs), transportation of those goods (railroads), making of those goods (factories/mills), and the selling of those goods (stores). This ultimately led to monopolizing of corporations. Although provided vast amount of jobs and goods, also provided ba...
...o chance of competing with Standard Oil due to all the tactics they employed to keep their prices low. This ravished small town families and had a similar effect as to what Wal-Mart does to family run shops nowadays. Numerous families living in small town America lost their income because of Standard Oil and forced hardship upon many.
The four companies shown above have very different business models. Inditex owned much of the production and most of its stores. Inditex is thus a vertically integrated company. This made Inditex gain a competitive advantage, which is quick response to the market requirements. On the other hand, The Gap and H&M have a different business model. They owned most of the stores, but outsourced all the production. Benetton had a third business model. It invested heavily in the production, but licensees ran its stores.
In the horizontal integration, the company product range is from a wide clientele. That is they sell product either clothing or luxurious foods from different manufacturers. These give them the edge since the products they offer a variety for the customers to choose from, and hence they can shop less than one roof (Cole, 1997). In the vertical integration strategy, the firm will deal substantial with products from a single supplier and M&S gets the exclusive rights to deal with the product and its supply to the market. This is necessary when the company aim is to serve an identified target market which is exclusive and has the potential to sustain and grow the company substantively. These employ a tar...
During the industrial revolution organizations focused mostly on manufacturing. Firms were successful because there was little choice in alternatives, thus consumers were willing to buy what was available. John Rockefeller’s Standard Oil Company was one of the corporate giants of the time among a few others. Like HBC, Standard Oil Company operated as a monopoly, “In 1882, these various companies were combined into the Standard Oil Trust, which would
Horizontal integration is a plan where a company manages its production units in different countries to manufacture identical products. The soft drink company is the best example for horizontal integration of MNE’s.
Vertical integration is where a company becomes their own supplier or distributor through acquisition. Seprod uses the strategy by their acquisition of Belvedere Estate in 2006 so as to expand its dairy farm pastures to increase their supply of milk output from the dairy farming. They also use vertical integration in their subsidiary Industrial Sales Limited. This is done by making them the main distributer and marketer of their