Business Models

1. Business Models STD 11.2.5 Objective: Compare corporate policies, formation of companies, and regulations

2. APK • What is the benefit to having complete control of a product? • Should companies be able to control prices of an item?

3. Importance • Although it was intended to break up monopolies, business leaders used the Sherman Antitrust Act to A. gather more stock in railroads and other utilities. B. limit labor union activities by claiming they interfered with trade. C. discourage international trade that threatened them. D. increase their horizontal integration.

4. Causes of Rapid Industrialization • Unskilled & semi-skilled labor in abundance. • Abundant capital. (money) • New, talented group of businessmen [entrepreneurs- people willing to take a risk] and advisors. • Market growing as US population increase • Government willing to help at all levels to stimulate economic growth. • Abundant natural resources. CFU: Why is there an abundance of labor? Who are Entrepreneurs? What was the government’s role in the economy?

5. Monopolies Isn’t that a game where you pass GO?

6. Monopolies • Companies control all business in an industry • Goal to eliminate the competition • Raise its own prices. $ X Competition

7. New Type of Business Entities • Pool Competitors team up to limit competition1887Interstate Commerce ActInterstate Commerce Commission created. Regulate Railroads by controlling prices • Trust John D. Rockefeller Company that controls all aspects of a business Standard Oil Co. CFU: Define Pool. Define Trust. Pair Share: What is the difference?

8. Standard Oil Co.

9. New types of Business:Horizontal Integration • Horizontal Integration John D. Rockefeller • Own one aspect of a process • IE: Microsoft, Fox, GAP, AT&T CFU: Define Horizontal Integration. Which titan of Industry is closely aligned with Horizontal Integration? Pair Share: Explain the benefits to Horizontal Integration.

10. New types of Business: Vertical Integration • Vertical Integration: • Gustavus Swift  Meat-packing • Andrew Carnegie  U. S. Steel • Own raw materials to finished product • Own advertising, transportation, mines, factories etc. • IE: Exxon Mobile, American Apparel, AT&T CFU: Define Vertical Integration. Which titan of Industry is closely aligned with Vertical Integration? Pair Share: Explain the benefits to Vertical Integration.

11. New Type of Business Entities

12. New types of Business: Conglomerate • Business that diversify in multiple industries • IE: Disney, General Electric, Viacom, Time Warner CFU: Define Conglomerate. Which titan of Industry is closely aligned with Conglomerate? Pair Share: Explain the benefits of Conglomerates.

13. Sherman Anti-Trust Act "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [. . . ]" • Meant to allow competition • No monopolies • Avoid cartels • Wal-Mart • Mom and Pop stores • Sanger CFU: Define Sherman Anti-trust Act. What was the main goal? Pair Share: Who would this regulation help the most?

14. The Gospel of Wealth:Religion in the Era of Industrialization • Wealth no longer looked upon as bad. • Viewed as a sign of God’s approval. • Christian duty to accumulate wealth. • Should not help the poor. CFU: Define Gospel of Wealth. What was the main goal of this philosophy? Pair Share: Do you believe that the poor would buy into the idea of the Gospel of Wealth? If you have money would you support this philosophy? Russell H. Conwell

15. “On Wealth” • The Anglo-Saxon race is superior. • “Gospel of Wealth” (1901). • Inequality is inevitable and good. • Wealthy should act as “trustees” for their “poorer brethren.” Andrew Carnegie Pair Share: What is Carnegie’s view of the Gospel of Wealth?

16. Importance • Although it was intended to break up monopolies, business leaders used the Sherman Antitrust Act to A. gather more stock in railroads and other utilities. B. limit labor union activities by claiming they interfered with trade. C. discourage international trade that threatened them. D. increase their horizontal integration.

17. Closure • In a capitalist system, A. the state controls economic activity. B. private citizens control economic activity. C. elected officials control economic activity. D. the dictator controls economic activity.

18. Closure • Companies in a trust agreement A. turn over company stock to a group of trustees. B. buy up all the products of their competitors. C. buy goods only from trusted partners. D. donate their profits to a group of trustees.

19. Closure • In a monopoly, a company has A. no choice except to sell its products as cheaply as possible. B. an agreement with the government to set prices fairly. C. trustees who make decisions by consulting with government. D. control over an industry by squeezing out small competitors.

20. Closure • Andrew Carnegie gained control of a large percentage of the steel industry by doing all of the following except A. buying out his suppliers. B. cutting the quality of his products. C. buying out his competitors. D. underselling his competitors

21. Closure • Although it was intended to break up monopolies, business leaders used the Sherman Antitrust Act to A. gather more stock in railroads and other utilities. B. limit labor union activities by claiming they interfered with trade. C. discourage international trade that threatened them. D. increase their horizontal integration.