Horizontal v Vertical Top to bottom Whether robber
Horizontal v. Vertical
Top to bottom • Whether “robber baron” or “captain of industry, ” these people established large firms that controlled industries on a number of different levels.
Top to bottom • One way was an oligopoly, oligopoly in which a few, large, profitable firms controlled the entire industry, such as cars or breakfast cereals today.
Top to bottom • Others sought to eliminate competition altogether by creating a monopoly, monopoly in which one company would have complete control of a product or service, or a cartel, cartel in which business leaders would agree to limit production to keep prices higher.
Top to bottom • One of those entrepreneurs was Andrew Carnegie, Carnegie whose family had come to the United States from Scotland because the Industrial Revolution in England had cost his father his job.
Top to bottom • Believing that the Bessemer Process would make the steel more valuable than iron, he invested money in creating the first steel plants in the United States, placing them around Pittsburgh, PA
Top to bottom • As his company grew stronger and made more money, Carnegie understood that he could control not only the entire steel industry, but also all of the items necessary for production and distribution, from the mine to the store.
Top to bottom • This is called vertical integration, integration and happens when one company controls the many different businesses that make all phases of a product’s development.
rockefeller • John D. Rockefeller was an entrepreneur who brought a number of different business practices to the oil industry, starting the Standard Oil Company of America.
rockefeller • He undersold his competitors and then told them they had to sell to him or face bankruptcy, as well as hiring spies and informants.
rockefeller • Rockefeller knew that if he could control his competitors’ oil refineries, he could create one giant oil company.
rockefeller • This is called horizontal integration, integration and happens when one company brings together many firms in the same business.
rockefeller • Because some states had laws that prevented one company from owning the stock of another, he set up a trust, which placed Standard Oil and other companies allied with it under the control of a board of trustees, which Rockefeller controlled.
rockefeller • Trusts were a kind of monopoly, but because the companies never officially merged, no laws were broken.
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