Download SWBAT peer examine their essays for content and

SWBAT peer examine their essays for
content and grammar
SWBAT identify how the concept of a
corporation works.
Agenda
Underline, Star, Highlight
Finish Industry Notes
One Word Summary
The Corporation
Why is stock considered by many a
good financial opportunity?
Limited Liability- Risk only the amount of
the investment
What would companies want to sell
stock?
Permits company owners to gather great
amounts of cash and undertake huge
projects to advance their company
An Example
In the mid 1990’s Gillette spent more than
$750 million in manufacturing capital and
research and development
An additional $300 million was put into
marketing
After its announcement Gillette was expected
to earn $1.45 a share and $1.73 in 1999, up
from the previous year’s $1.24
The First Corporations
In the Steel Industry, the central
figure was Andrew Carnegie
How did he dominate the steel
industry?
Cut costs and prices by striking
deals with the RR’s
This enabled him to sell his steel
for a cheaper price
Soon began to buy out rivals who
could no longer compete
More Carnegie
With partner Henry Clay Frick,
Carnegie began to purchase
businesses associated with the
production of steel
Examples being: Iron mines,
ovens, mills, shipping and rail
lines!!
Carnegie Sells!
In 1901 the Carnegie sold his
company to J.P. Morgan for
$450 million
Morgan merged Carnegie’s
company with others to create
United States Steel
Became a $1.4 billion dollar
enterprise
Controlled 2/3 of the nation’s
steel production
New Approaches To Management
Division of Responsibility
Hierarchy of Control
Cost-accounting Procedures
Creation of a new breed of
business executives – the
middle manager
Mergers
A merger is a
transaction that results
in the transfer of
ownership and control
of a corporation.
3 Types of Mergers
Economists distinguish between three
types of mergers:
1. Horizontal
2. Vertical
3. Conglomerate
Horizontal mergers
A horizontal merger results in the consolidation of
firms that are direct rivals—that is, sell substitutable
products within overlapping geographic markets.
Examples: Boeing-McDonnell Douglas; Staples-Office
Depot(unconsummated); Chase Manhattan-Chemical Bank;
Southern Pacific RR-Sante Fe RR; Pabst-Blatz; LTVRepublic Steel; Konishiroku Photo-Minolta.
Vertical Mergers
The merger of firms that have actual or
potential buyer-seller relationships
Examples: Time Warner-TBS; Disney-ABC Capitol
Cities; Cleveland Cliffs Iron-Detroit Steel; Brown ShoeKinney, Ford-Bendix.
Conglomerate mergers
Consolidated firms may sell related products,
share marketing and distribution channels and
perhaps production processes; or they may be
wholly unrelated.
•Product extension conglomerate mergers involve firms that
sell non-competing products use related marketing channels
of production processes.
Examples: Cardinal Healthcare-Allegiance; AOL-Time
Warner; Phillip Morris-Kraft; Citicorp-Travelers Insurance;
Pepsico-Pizza Hut; Proctor & Gamble-Clorox.
Definitions
Vertical Integration – taking over all the
different business on which a company
relies for its primary function (Mine to
Market)
Horizontal Integration – combining a
number of firms engaged in the same
enterprise into a single corporation
John Rockefeller
By 1870 Rockefeller
formed the Standard
Oil Company
Which method?
Horizontal
What are your scruples?
I choose Business
Ethics