Big Business 5.3

The Rise of Big Business  By 1900 Big Business started to dominate  Factories  Warehouses  Distribution Facilities  By 1900 Big Business started to dominate  Factories  Warehouses  Distribution Facilities

Corporations Organization owned by many people but treated as it were a person –Own Property –Pay Taxes –Make Contracts –Sue and be Sued Owners Stockholders –Allows corporation to raise money will spreading out risk

Corporation cont..  States start to pass incorporation laws  No charter  Invest into new technology  Hire larger workforces  Purchase many machines  ECONOMIES OF SCALE  Cost drop by producing more

Fixed vs Operating Costs  Small Businesses vs Big Businesses during recessions  Advantages to Big Business  More goods cheaper  Continue poor economic times  Negotiate rebates  Big Business killing small Business  Familiar????  Small Businesses vs Big Businesses during recessions  Advantages to Big Business  More goods cheaper  Continue poor economic times  Negotiate rebates  Big Business killing small Business  Familiar????

Consolidating Industry Vertical Integration Andrew Carnegie Steel Horizontal Integration John D. Rockefeller Standard Oil

New Business Org. Trusts –Person can manage another person’s property Trustee Holding Companies –Owns stock of other companies manages companies it owns Investment Banking –Buy large amounts of stock sell it to others

Selling the products Advertising companies Department stores Large selection one building Chain Stores Woolworth’s Mail Order catalogs Sears & Roebuck Advertising companies Department stores Large selection one building Chain Stores Woolworth’s Mail Order catalogs Sears & Roebuck