S T RAT E G I E S T H E N A N D N O W

BUSINESS STRATEGIES

Understanding Goal: What strategies did businesses use todecrease costs and increase profits?

TODAY WE ARE GOING TO TALK ABOUT

• Corporations• Monopolies• Trusts• Horizontal Integration• Vertical Integration• Anti-Trust Laws

• Group ownership of a company• Less individual Risk• Works well for risky

industries that might fail• If one person chooses

to leave the investment others can buy out their shares.

What is a Corporation?

WHAT IS A MONOPOLY?

• Complete control of products or services• Corporations reduce competition• When consumers have no other choice about

where to buy a product the corporation can increase the price.

HORIZONTAL INTEGRATION

• Turning many firms into one business in order to create a giant company with low production costs.• Advantages: Reduces competition

WHAT IS A TRUST?

• Ohio state law prevented one corporation from buying stock in another so that Rockefeller could not buy out his competitors. • Trusts were a way to get around this law.• Trusts: Smaller corporations allow larger

corporations to control (BUT NOT OWN) its stock “in trust.”

VERTICAL INTEGRATION

• Gaining control of the different phases of a products development.Advantages: it gives a company complete control over the phases of development.

GOVERNMENT REGULATION

• Sherman Antitrust Act (1890): Outlawed any trust that restrained trade and commerce among the states.• Sherman Antitrust Act was rarely enforced until

the early 1900s. In fact, it was used against labor unions who “held back trade.”