CHAPTER 13 Section 3:New Methods and Business Organizations Objectives: Identify the elements that made mass production possible. Explain why corporations emerged and how they affected the way business was conducted. Describe the pattern known as the business cycle. The Industrial Revolution

Israel and the Occupied Territories SECTION Bell Ringer: What is the chain of events in the business cycle? (create a Flow Map) New Methods and Business Organizations

SECTION 3 New Methods and Business Organizations THE BUSINESS CYCLE falling demand for goods DEPRESSIONPROSPERITY rising demand for goods

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Capitalism Economic system where individuals (not gov’ts) control the factors of production. Businesses and the means of production are privately owned and operated.

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Industrial Capitalism: produce and manufacture goods. Commercial Capitalism: Merchants bought & sold goods.

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Capitalist: investor in a business …became more involved in producing and manufacturing goods ----

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Division of Labor and Interchangeable Parts Divided into steps Hire unskilled labor for each step –DIVISION OF LABOR! Increased production Lowered costs MORE PROFIT

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Eli Whitney Used division of labor to make muskets Parts were all alike interchangeable parts Speedy production of inexpensive muskets Easily repaired!

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Mass Production Producing large numbers of identical items What do you need for Mass Production? Division of labor Use of interchangeable parts An assembly line

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations The Assembly Line Parts brought together to one location Carried from worker to worker Saved time and energy

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Henry Ford Used a conveyor belt Founded one of the largest industries in the world Model T would be assembled in 93 min. Other industries would mass produce items….

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Rise of the Corporation Sole proprietorship: one person owns & runs the business. Partnership: two or more people own and run a business.

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Rise of the Corporation Company that allows people to buy “shares of stock” Each share would receive a portion of the profits By late 1800s, some corporations were very large and powerful. J.P. Morgan – US Steel

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Monopoly When a corporation gains COMPLETE CONTROL over the production or sale of a good/service

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Cartel When corporations join together to control every stage of an industry. Example: German steel industry -coal & iron mines -steel mills -factories

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations business cycle Alternating periods of prosperity and decline depression

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations 19th-century political cartoon of Rockefeller, caricatured as "King of the World" sitting on a barrel of oil.

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations Any Questions? QUIZ TIME! Commercial Depression Individuals or corporations Monopoly Industrial prosperity One step Cartels Corporations Mass production

Israel and the Occupied Territories SECTION 3 New Methods and Business Organizations

SECTION 3 New Methods and Business Organizations THE BUSINESS CYCLE falling demand for goods large firm reduces orders for iron & lays off workers iron suppliers cut production & lay off workers employers pay less many workers competing for jobs workers buy less prices go up to cover the cost of production rising demand for goods new factory opens & hires many workers wages go up and people buy more production increases to meet demand more machines and workers needed factories increase orders for iron and hire more workers PROSPERITY DEPRESSION