US History: Chapter 12 Lesson 3

What is a corporation?

A company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.

What are fixed costs in business?

A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

What is a holding company?

A holding company is a business entity—usually a corporation or limited liability company.

What encouraged the growth of the advertising industry?

The Creation of giant manufacturing companies in the United States pushed retailers to expand in size as well.

What is vertical integration of a company?

Vertical integration occurs when a company takes control over several of the production steps involved in the creation of a product or service. ... Controlling the distribution process is another common vertical integration strategy, meaning companies control the warehousing and delivery of their products.

How did large corporations achieve economies of scale?

Corporations were able to achieve economies of scale with the money that they raised from the sale of stock, corporations which could invest in new technologies, hire large work forces, and purchase many machines.

Who was Andrew Carnegie?

He was a Scottish-born American industrialist who led the enormous expansion of the American steel industry in the late 19th century. He was also one of the most important philanthropists of his era.

Who was John D. Rockefeller?

He was an American industrialist and philanthropist, founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust.

How is horizontal integration different from vertical integration?

Horizontal integration is when a business grows by acquiring a similar company in their industry at the same point of the supply chain. Vertical integration is when a business expands by acquiring another company that operates before or after them in the supply chain.

How did Standard Oil find a way around laws against monopolies in 1882?

Instead of buying a company outright, Standard Oil had stockholders of that company give their stock to Standard Oil trustees in exchanges for shares in the trust and its profits.

What new developments in retail sales occurred in the late nineteenth century?

Retailers began issuing mail-order catalogs in order to reach the millions of people who lived in rural areas.

Why do corporations issue stock?

Stocks are issued by companies to raise capital, paid-up or share, in order to grow the business or undertake new projects.

How were large corporations able to operate in poor economic times?

They're fixed costs were greater than their operating costs, meaning it made sense to operate even when sales were low due to a poor economy.