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New Methods and Business Organizations

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New Methods and Business Organizations
New Methods and
Business
Organizations
Mr. Love
Chapter 22 Section 3
Capitalism and Changing
Production methods
 The late 1800’s in western Europe and the US
were characterized by individual enterprise we
know as capitalism.
 Capitalism – an economic system in which
individuals or corporations, rather than
governments, control the factors of production.
 Commercial capitalism (pre IR) v Industrial cap
(post IR)
 CC – merchants bought and sold goods
 IC – became involved in producing and
manufacturing goods.
Division of labor and
interchangeable parts
 Factory owners divided the manufacturing
process into steps.
 Hired unskilled labor to do a simple job.
 Also used machines
 This greatly increased production and profits
for the owner.
 Eli Whitney used division of labor to make
muskets in the late 1700’s.
 His gun had interchangeable parts. Why
have this?
The Assembly Line
 The system of producing large number of
identical items is known as mass
production.
 Three things needed for mass
production:
 Division of labor, interchangeable parts and
the assembly line.
 Henry Ford used the assembly line in
America to produce a cheaper good.
Rise of the Corporation
 Before the IR, most businesses were very
small.
 During the 1800’s many businesses grew into
corporations.
 Businesses that were owned by stockholders.
 What are some advantages to corp v private
ownership?
 JP Morgan was a famous founder of US steel. A
multi-billion dollar corporation.
Rise of the Corporation
 The large corps caused many small
business to fail. Corps had to compete
with each other to sell their products.
 Sometimes corporations dominated an
entire industry. These were called
monopolies.
 What is good and bad about a
monopoly?
Rise of the Corporation
 By 1900 several giant corps in Germany
had combined to control every stage of
entire industries.
 EG) Steel – owned the mines, factories,
steel mills.
 These were known as cartels.
Business Cycles
 Industry began to heavily influence the
economies of each nation. No longer is it just
how much money a country has in its coffers.
 Every country has ups and downs in its
economy – a pattern called business cycles.
 The bottom of the down cycle is known as a
depression.
 How can certain industries affect other
industries?
 That’s ALL!
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