October 11, 2011Skip Line, date, copy questions, answer

OPENER #4

What were some of the negative effects of the railroads?

Why were railroad reforms unsuccessful?

Big Business & Labor

Objectives

Identify management & business strategies that contributed to the success of business tycoons.

Explain Social Darwinism & its effects on society.

Monopoly When one company

has complete control over an industry.

Control production, quality, wages, and prices.

Eliminated a company’s competition, allowing it to increase profits.▪ Oligopolies are when a

few companies control the industry.

Vertical Integration

a. The process by which a company owns all parts of its supply chain.

b. Gave a company total power over the quality and cost of its product; helped to create a monopoly.

Horizontal Integration

a.The process in which a company buys out, or merges with, its competitors.

b.Gave a company control over its competition; helped to create a monopoly.

Social Darwinism Economic theory based on

Darwin’s theory of evolution. -free competition would ensure

success or failure in business.▪ If everyone has equal opportunity

then the smartest and hardest working will make the most money.

Glorified big business; discouraged government interference.▪ The problem is that equality

doesn’t exist. Rich kids get better opportunities than poor kids.

▪ Little Jocko’s can’t compete with McDonalds.

Holding Company A corporation that

does nothing but buy the stock of other companies.▪ These companies

don’t actually make anything, they just own other companies and makes money off of them.

Helped to create monopolies

Trust A combination of

companies owned by one group of people (board of trustees).

When all the companies in an industry are owned by the same people.

Helped to create monopolies

“Robber Barons”

Term used to describe the ultra-rich tycoons. Implied that they used

unfair and illegal means to get rich.

Turned public opinion against them and their businesses.

Encouraged government regulation of big business

Free trade vs Big Business Open markets will

regulate themselves through competition.▪ If McDonald’s charges

too much or makes bad food you’ll go to Burgerking.

▪ If Burgerking doesn’t pay enough employees will go to McDonalds.

Monopolies & Trusts eliminate competition so that there is no regulation.

The Government needs to protect its people. The gov. must step

in to set regulations or create fair trade.▪ Minimum wage,

workers protections, fair prices, etc.

Sherman Anti-Trust Act

1890 – law passed to break up Standard Oil Trust.

Made trusts (and monopolies) illegal.

Made it possible (though not easy) to prosecute companies.