Strategies then and Now Business Strategies Understanding Goal: What strategies did businesses use to decrease costs and increase profits? Strategies then and Now

Today we are going to talk about Corporations Monopolies Trusts Horizontal Integration Vertical Integration Anti-Trust Laws

What is a Corporation? 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 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.”