C3L3

List and explain at least three (3) ways business leaders in the 1800s tried to eliminate competition.

Business leaders in the 1800s tried to eliminate competition by forming pools, trusts, monopolies, and through vertical and horizontal integration. Many companies organized pools to keep prices at a certain level, that is, they tried to keep prices from falling. Some companies formed trusts. A trust is a combination of firms or corporations formed by a legal agreement, especially to reduce competition. A monopoly is achieved when a company has total control of a type of industry. A company that is vertically integrated owns all parts of the industrial process. By doing so, these companies found it easier to control costs. Companies that are horizontally integrated have grown by buying its competitors. All of the aforementioned are ways companies or corporations have tried to control costs and eliminate competition.

What is economies of scale? How is it achieved?

A company or person achieves a monopoly by gaining total control of a type of industry. A monopoly can be achieved through vertical integration, horizontal integration, or the formation of trusts or holding companies. Smaller business found it rather difficult to compete against a company that had a monopoly. Often, these smaller businesses were forced out of the market and out of business.

What is a corporation, who owns it, and how does it raise capital?

A corporation is an organization that is authorized by law to carry on an activity but treated as though it were a single person. Stockholders own corporations through shares of ownership called stock. Selling stock allows a corporation to raise money while spreading out the financial risk. With the money raised from selling stock, corporations could invest in new technologies, hire large workforces, and purchase machines. This greatly increased their efficiency. They achieved economies of scale, in which the cost of manufacturing is decreased by producing goods quickly in large quantities. Examples of corporations today include Apple, Microsoft, McDonalds, Home Depot, Amazon, and Google.

Why do companies form pools? Implications for other businesses?

Companies formed pools or other arrangements to keep prices at a certain level, to keep prices from falling. Businesses who were not part of the pool often found it difficult to compete and eventually went out of business.

What caused the breakup of business pools?

Companies that formed pools had no legal protection and could not enforce their agreements in court. Pools generally did not last long, as one member inevitably cut prices to steal market share from the others.

What is the difference between department stores and chain stores?

Department stores are generally large buildings that offer many services and products. Chain stores are groups of retail outlets owned by the same company. In contrast to department stores, chain stores focus on low prices.

What is the difference between vertical and horizontal integration?

Vertical integration occurs when a company owns all parts of the industrial process. Horizontal integration occurs when a company grows by buying its competitors.

trust

a combination of firms or corporations formed by a legal agreement, especially to reduce competition

holding company

a company whose primary business is owning a controlling share of stock in other companies

corporation

an organization that is authorized by law to carry on an activity but treated as though it were a single person

economies of scale

the reduction in the cost of a good brought about especially by increased production at a given facility

economies of scale ( potential short answer)

the reduction in the cost of a good brought about especially by increased production at a given facility economies of scale was achieved by corporations who invested in new technologies, hired large workforces, and purchased new machines for mass production corporations who achieved economies of scale could produce more goods at a lower cost and could stay open in bad economic times by cutting prices to increase sales small businesses that could not compete with large corporations were forced out of business

monopoly

total control of a type of industry by one person or one company

monopoly (potential short answer)

total control of a type of industry by one person or one company a company can achieve a monopoly by way of forming pools, vertical integration, horizontal integration, forming a trust or by creating holding companies companies organized pools to keep prices at a certain level (they were trying to keep prices from falling) vertical integration occurs when a company owns all parts of the industrial process horizontal integration occurs when a company grows by buying its competitors a trust is a combination of firms or corporations, formed by a legal agreement, especially to reduce competition a holding company is a company whose primary business is owning a controlling share of stock in other companies Rockefeller's Standard Oil company controlled about 90% of the U.S oil refining industry, nearly a monopoly