Pick an invention we talked about last week, and describe how it has an impact on your life today.
The Rise of Big Business
Identify ways in which American businesses grew and developed into giant corporations
Before 1860 ◦ Proprietorships ◦ Partnerships Industrial Revolution changed that ◦ Machines made products faster Cost money Created new business organizations
A business chartered by the state and owned by shareholding investors Stockholders get dividends A portion of the profits
1. Selling stock can increase capital ◦ Used to expand business and production Economies of scale- the more units of a product a company makes, the less it costs to make each unit 2. Limited liability ◦ Lose only as much money as invested ◦ Encourages people to invest 3. Not affected by death of owner ◦ Their stock is bought up by someone else ◦ Banks are more likely to lend money to corporations because of stability
John D. Rockefeller ◦ Part of partnership to refine oil Looked at steps from well to market ◦ Well refiners transportation firms other businesses consumers Rockefeller wanted total control ◦ Vertical integration- steps involved in turning a raw material into a finished product
Started SOC in 1870 ◦ Sold 10,000 shares of stock for $1 million used to buy refineries in Cleveland area along with barrel making business Took risks ◦ Built pipeline= no railroad ◦ Bought Pennsylvania drilling companies Risks allowed Rockefeller to sell oil cheap and run everyone else out of business ◦ Monopoly by 1900
United States Steel Corporation ◦ 1901 First corporation with stock totaling $1 billion Unhappy with how steel was made for Brooklyn Bridge Studied what went into producing steel, and calculated most efficient way Produced steel, sold it at lower prices, and bought out other steel companies ◦ Horizontal integration- process of expanding in one area of production
Also purchased iron mines and railroads First ton of steel cost $56 to make ◦ Cut to $11.50 by 1900 Retired in 1901 and sold company to J.P. Morgan ◦ Spent rest of life donating over $350 million to charities and helping establish libraries and schools
Dr. John Harvey Kellogg ◦ Superintendent of Battle Creek Sanitarium in Michigan ◦ Believed many bodily ills were due to improper diet and looked for way to fix it 1877 came up with Granola ◦ Wheat, oatmeal, and cornmeal Complaints about taste 1895 better tasting cereal called Granose
C.W. Post ◦ Grape Nuts advertised as remedy to malaria and loose teeth Kellogg and his brother, W.K. Kellogg came up with Corn Flakes and began Kellogg Company in 1906 ◦ Many brands on the market by 1911 Post Toasties
Kellogg said don’t buy his brand because there wasn’t enough to go around ◦ People bought more Promotions- gimmicks to increase sales ◦ Trinkets in boxes ◦ Games on boxes
Originally invented in 1830 by Barthelemy Thimonnier ◦ Redone in 1846 by Elias Howe ◦ Over 200 firms tried and failed Isaac Merritt Singer, 1851 ◦ Straight needle instead of curved Patent wars- legal battles over who owned various patents Lost and had to pay Howe royalty for each machine produced
To make money, Singer sold machines to manufacturers and for home use After originally using commission agents, Singer began is own stores ◦ Installment plan- consumers can buy a machine and pay a small sum of money over several months World’s leading producer of sewing machines ◦ largest factory in the world built in New Jersey ◦ Scotland Made advancements for resales
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Look up a businessperson or a corporation/business and write down the steps they took to make their fortune. ◦ Steve Jobs ◦ Bill Gates ◦ Warren Buffett ◦ McDonald’s ◦ Sam Walton ◦ Disney ◦ Verizon, AT&T, Sprint ◦ GAP