1. On a scratch piece of paper…
List what you think are the top 5 wealthiest corporations in America 5. Berkshire Hathaway ($162.5 billion) 4. Conoco-Philips ($169.6 billion) 3. Chevron ($233.9 billion) 2. Exxon Mobil ($449.9 billion) 1. Wal-Mart ($469 billion, $ billion profit)

2. Rise of Big Businesses

3. Industrialization + Laissez-Faire = Big Businesses
The economic climate of the late 1800’s and early 1900’s allowed for businesses to grow tremendously.
This led to the creation of businesses that became larger and more powerful than ever before

4. Corporations More companies become corporations
Owned by stockholders who buy shares, or “stocks”, of the company
Allows companies to raise large amounts of money
Corporations can produce goods cheaply and efficiently
Result: Corporations drive out small businesses
Sound familiar?

5. Andrew Carnegie Rags to riches life story
Started his own steel company (eventually became known as US Steel)
Retired with a net worth of $298 billion in today’s dollars
Gave away all of his money by the time he died
Carnegie foundations

6. Andrew Carnegie Started vertical integration for the steel industry
Buying all of the businesses you rely on for operation
Carnegie bought coal mines, limestone quarries, iron ore fields, railroad lines, etc
Why would he do this?
Reduced his company’s costs

7. Vertical Integration

8. Vertical Integration Practice
Let’s pick a company and apply vertical integration to its business strategy!

9. JD Rockefeller Owner of Standard Oil
Net worth in today’s dollars = $663.4 billion

10. JD Rockefeller J.D. Rockefeller used horizontal integration
Buying up many of the companies engaged in the same type of business (competition)
Why would he do this?
Less competition = everyone has to buy from you (higher profits)
Nearly created a monopoly
When a single company controls an entire market (IE. Market for oil)
Is this good or bad for consumers? Why?

11. Horizontal Integration

12. Horizontal Integration Practice
Let’s use the same company and apply horizontal integration!

13. Why does it matter?
Big corporations still have a tremendous amount of power and wealth today
Still driving out small businesses
Companies have mergers to get as close to a monopoly as they can get
Eliminates competition
Drives prices up for the things you buy

14. Quick Review
A company that is owned by share holders is called a ________________
What are the benefits of a corporation?
When a company buys up all of the companies it relies on to operate, this is called _________________ integration
When a company buys up all of the companies that are in the same type of business, this is called _______________ integration
When a single company controls an entire market, we call this a ________________
corporation
Raise large amounts of cash, cheap and efficient production
vertical
horizontal
monopoly