Fighting for Profits

Keana BellKayla Britt

Faith AskewLuke 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-207101

59. 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.