Review of Big Business  Vanderbilt = Railroads Vanderbilt University  Carnegie = Steel Libraries, Museums  Rockefeller = Oil  Morgan = Banking

Unfair Big Business Practices How Big Business treated employees. Low pay, bad working conditions What was ironic about how Vanderbilt, Carnegie, Rockefeller, and Morgan ran their businesses as opposed to what they ended up doing thie their money? They ruined other business, made them broke then donated money to charities.

Integration Vertical Horizontal l

How were corporations able to form monopolies? Example: McDonald’s

What ingredients are necessary to make a Big Mac? beef cheese lettuce tomato onion ketchup sauce bread sesame seeds pickles

How does McDonald’s get all of their ingredients? Do they own their own lettuce farms? Do they own their own cattle ranches? Do they own their own bakery? Do they own their own ketchup plant?

NO! They pay other companies to grow their produce, raise the cattle, bake the bread, and produce all of the other ingredients they need.

How much is a Big Mac? How much are fries? 1. The price McDonald’s charges is driven, in part, by what they have to pay these other companies… 2. … and in part by the need to attract customers who might, instead, go to the competition.

With what companies does McDonald’s compete for business?

How can McDonald’s attract customers who might go to the competition? 1) Make a better product 2) Lower the price

What can McDonald’s do to lower prices to attract more customers? 1) Use cheaper ingredients 2) Operate at a loss 3) Cut down on costs

If McDonald’s was going to cut down on costs without sacrificing quality of product or service, what could they do? Buy up all the other companies they deal with, giving McDonald’s control of the entire process of making and delivering hamburgers.

Buy up the cattle ranches Buy up the farms Buy up the bakeries Buy up the transport companies Result: Lower long-term costs

With lower costs, McDonald’s can lower their prices. If they lower prices enough, what will happen to the competition?

With no competition, what can McDonald’s do to prices?

With high prices, consumers lose. This is called a monopoly. One company has taken control of the entire fast food hamburger market. Companies like U.S. Steel and Standard Oil formed monopolies just like this. The government recognized the damage to consumers and outlawed monopolies.

Some monopolies, however, are legal. What are some examples? P,G & E Pacific Bell A,T & T Cable San Jose Water Company In other words, PUBLIC UTILITIES

Why would public utilities be legalized monopolies? If companies competed to sell us water, electricity, gas, or cable, each would have to have its own pipes and wires. That would be a nightmare.

So if monopolies are bad for consumers, aren’t they ALWAYS bad? To prevent the utility monopolies from having too much control, the government regulates them. The regulatory agency is called the Public Utilities Commission. So monopolies are either illegal or regulated.

Project – Invention Storyboard

Project- Inventions that Changed the World Inventions Who was the inventor or inventors? What did the new invention do? Why was the invention important? Sewing Machine Automatic dishwasher Gas-powered automobile Camera Airplane Directions: Open your book to pages Look at the timeline of American Inventions

Project –Create a Big Business NAME OF YOUR COMPANY ___________________________ NAME OF YOUR PRODUCT ___________________________ PRICE OF YOUR PRODUCT ___________________________ Describe how you will use each of these inventions to: - Make your product - Sell your product - Advertise your product - Ship your product  Sewing Machine  Camera  Telephone  Light bulb  Phonograph  Gas-powered automobile  Airplane

Industrialization Test REVIEW ____1. What is a robber baron? ____2. What are unfair business practices? ____3. In what industry did JP Morgan gain and control his riches? ____4. In what industry did Andrew Carnegie gain and control his riches? ____5. In what industry did John Rockefeller gain and control his riches? ____6. How did Rockefeller, Carnegie, and Morgan treat his employees and competition? ____7. What did Rockefeller, Carnegie, and Morgan do with a lot of their money later in life? ____8. What is ironic about the way Rockefeller, Carnegie, and Morgan each ran their businesses as opposed to what they ended up doing with their money? a. banking b. low pay, bad working conditions c. a negative term used to describe business men and bankers who have a monopoly and use unfair business practices d. steel working e. They took other businesses money, made them broke, then donated the money they took to charities f. donated a lot of it g. investing in oil h. lowering prices to get rid of competition and then raising the price once the competition is gone

Industrialization Test  Take the Post-Test