Business Models

STD 11.2.5Objective:

Compare corporate policies, formation of companies, and regulations

APK

• What is the benefit to having complete control of a product?

• Should companies be able to control prices of an item?

Importance

• Although it was intended to break up monopolies, business leaders used the Sherman Antitrust Act to

A. gather more stock in railroads and other utilities.B. limit labor union activities by claiming they

interfered with trade.C. discourage international trade that threatened

them.D. increase their horizontal integration.

• Unskilled & semi-skilled labor in abundance.• Abundant capital. (money)• New, talented group of businessmen

[entrepreneurs- people willing to take a risk] and advisors.

• Market growing as US population increase• Government willing to help at all levels to stimulate

economic growth.• Abundant natural resources.

• Unskilled & semi-skilled labor in abundance.• Abundant capital. (money)• New, talented group of businessmen

[entrepreneurs- people willing to take a risk] and advisors.

• Market growing as US population increase• Government willing to help at all levels to stimulate

economic growth.• Abundant natural resources.

Causes of Rapid IndustrializationCauses of Rapid Industrialization

CFU:Why is there an abundance of labor?Who are Entrepreneurs?What was the government’s role in the economy?

Monopolies

Isn’t that a game where you pass GO?

• Monopolies – Companies control all business in an industry – Goal to eliminate the competition – Raise its own prices.

New Type of Business Entities

New Type of Business Entities

1. PoolCompetitors team up to limit competition

1887 Interstate Commerce Act Interstate Commerce Commission created.

Regulate Railroads by controlling prices

• Trust John D. RockefellerCompany that controls all aspects of a

businessStandard Oil Co.

1. PoolCompetitors team up to limit competition

1887 Interstate Commerce Act Interstate Commerce Commission created.

Regulate Railroads by controlling prices

• Trust John D. RockefellerCompany that controls all aspects of a

businessStandard Oil Co.

CFU:Define Pool.Define Trust.

Pair Share:What is the difference?

Standard Oil Co.Standard Oil Co.

New types of Business:Horizontal Integration

• Horizontal Integration John D. Rockefeller

• Own one aspect of a process

• IE: Microsoft, Fox, GAP, AT&T

CFU:Define Horizontal Integration.Which titan of Industry is closely aligned with Horizontal Integration?

Pair Share:Explain the benefits to Horizontal Integration.

New types of Business: Vertical Integration Vertical Integration:

o Gustavus Swift Meat-packingo Andrew Carnegie U. S. Steel

• Own raw materials to finished product

• Own advertising, transportation, mines, factories etc.

• IE: Exxon Mobile, American Apparel, AT&T

CFU:Define Vertical Integration.Which titan of Industry is closely aligned with Vertical Integration?

Pair Share:Explain the benefits to Vertical Integration.

New Type of Business Entities

New Type of Business Entities

New types of Business: Conglomerate

• Business that diversify in multiple industries

• IE: Disney, General Electric, Viacom, Time Warner

CFU:Define Conglomerate.Which titan of Industry is closely aligned with Conglomerate?

Pair Share:Explain the benefits of Conglomerates.

Sherman Anti-Trust Act

• Meant to allow competition – No monopolies– Avoid cartels

• Wal-Mart– Mom and Pop stores– Sanger

"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [. . . ]"

CFU:Define Sherman Anti-trust Act.What was the main goal?

Pair Share:Who would this regulation help the most?

CFU:Define Gospel of Wealth.What was the main goal of this philosophy?

Pair Share:Do you believe that the poor would buy into the idea of the Gospel of Wealth?If you have money would you support this philosophy?

The Gospel of Wealth:Religion in the Era of

Industrialization

The Gospel of Wealth:Religion in the Era of

Industrialization

Russell H. ConwellRussell H. Conwell

$ Wealth no longer looked upon as bad.

$ Viewed as a sign of God’s approval.

$ Christian duty to accumulate wealth.

$ Should not help the poor.

$ Wealth no longer looked upon as bad.

$ Viewed as a sign of God’s approval.

$ Christian duty to accumulate wealth.

$ Should not help the poor.

“On Wealth”“On Wealth”

Andrew CarnegieAndrew Carnegie

$ The Anglo-Saxon race is superior.

$ “Gospel of Wealth” (1901).

$ Inequality is inevitable and good.

$ Wealthy should act as “trustees” for their “poorer brethren.”

$ The Anglo-Saxon race is superior.

$ “Gospel of Wealth” (1901).

$ Inequality is inevitable and good.

$ Wealthy should act as “trustees” for their “poorer brethren.”

Pair Share:What is Carnegie’s view of the Gospel of Wealth?

Importance

• Although it was intended to break up monopolies, business leaders used the Sherman Antitrust Act to

A. gather more stock in railroads and other utilities.B. limit labor union activities by claiming they

interfered with trade.C. discourage international trade that threatened

them.D. increase their horizontal integration.

Closure

• In a capitalist system,A. the state controls economic activity.B. private citizens control economic activity.C. elected officials control economic activity.D. the dictator controls economic activity.

Closure

• Companies in a trust agreement A. turn over company stock to a group of

trustees.B. buy up all the products of their competitors.C. buy goods only from trusted partners.D. donate their profits to a group of trustees.

Closure

• In a monopoly, a company has A. no choice except to sell its products as cheaply

as possible.B. an agreement with the government to set

prices fairly.C. trustees who make decisions by consulting with

government.D. control over an industry by squeezing out small

competitors.

Closure

• Andrew Carnegie gained control of a large percentage of the steel industry by doing all of the following except

A. buying out his suppliers.B. cutting the quality of his products.C. buying out his competitors.D. underselling his competitors

Closure

• Although it was intended to break up monopolies, business leaders used the Sherman Antitrust Act to

A. gather more stock in railroads and other utilities.B. limit labor union activities by claiming they

interfered with trade.C. discourage international trade that threatened

them.D. increase their horizontal integration.