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business history readings notes.doc

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Ryerson University
BUS 100
Louis Pike

Outline of James Fulchers What is Capitalism?, in Fulcher, Capitalism: A Very Short Introduction (Oxford, 2004), pp. 1-18 Fulcher defines capitalism as the investment of money or resources by individuals or business entities in the expectation of making a profit and examines three types of capitalism that have emerged over the past four centuries 1)Merchant Capitalism East India Company used as the example, with the first Company voyage in 1601 Traded internationally and manipulated the market, which made it difficult for competitors to enter the market They send ships to the east indies to trade gold for spices, and as the market became larger in demand, diversity of spices were in need. Highly unstable trade in Indian spices with voyages either ending in disaster or returning with a fortune in cargo You were at risk of being killed, also you would face the dangers of the weather which made it a risky voyage company since it wasnt 100% success rate. EIC granted a monopoly by the British monarchy in return for customs duties This was not free market capitalism, since the monopoly was the preserve of a select few and most of the English population was unaffected by the activities of merchant capitalists Not comparable to modern society because in modern capitalism you have the ability to create free trade and have numerous options The company was a monopoly because it had the power to control prices and set its own trends within the market. 2)Industrial Capitalism MConnel and Kennedy cotton firm used as the example Cotton industry was keenly competitive and relied on wage labour Was not a monopoly because if you had capital or cotton mills then you had the power to enter the market Children were essential because they offered employers cheap wages, and had the small hands needed to operate a textile company Exploitative conditions and rigid, monotonous working conditions But industrial capitalism also regularized the working routine of workers and created the concept of leisure Sports and tourism blossoms due to leisure and ability to spend money. 3)Financial Capitalism Nick Leeson used as the example, with this single individual using unethical methods and modern technology to bankrupt the Barings Brothers bank Financial capitalism the ultimate form of capitalism and relies on global integration of stock markets Computers become a breakthrough Fulcher concludes by emphasizing three major features of capitalism: 1)capital is money that is invested to make more money, with the whole economy becoming dependent on this investment; 2)capitalist production is based on wage labour, which promotes consumption increases throughout the economy; and 3)markets are essential in modern capitalism and consumption and production are divorced in capitalists systems Outline of McCraw and Tedlow, Henry Ford, Alfred Sloan, and the Three Phases of Marketing, in McCraw, ed., Creating Modern Capitalism (HUP, 1997), pp. 266-300 McCraw and Tedlow examine the progress of the automobile industry through three phases of marketing and examine how the Ford Motor Company and General Motors were able to dominate the last two phases US automobile market boomed for three reasons: 1)population growth; 2)consumer wealth; 3)product price declines Three phases of marketing in the automobile industry 1)Fragmentation274 small car companies in 1909 producing high- priced, unreliable products 2)Unificationone major company (Ford) perfects high-volume production processes and builds low-priced cars available across the country 3)SegmentationGeneral motors surpasses Ford by diversifying its product line and developing sophisticated managerial techniques Henry Ford emerged as one of the major figures in American history Born in Michigan Had two businesses before the ford company but unfortunately it failed. Farming and mechanical background Perfected assembly line production methods and treated his workers well Autocratic, inflexible managerial style Held controversial social views Alfred Sloan and his managerial strategies propelled GM past Ford Highly educated with an urban background Perfected the M-Form managerial strategy that made company administration transparent and effective Gives individuals credit for their work, so there is no where to hide, every individuals has been assigned to some part of the work so if you mess up its all on you Diversified product line catered to various socio-economic classes in American society Both Ford and General Motors experienced difficulties after the Second World War that eventually allowed foreign competitors like Japan and Germany to play a major role in the US car market Poor designs and terrible fuel efficiency of US cars
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