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University of Toronto Scarborough
Economics for Management Studies
Victor Yu

The Power of Principles A Historical PerspectiveThis chapter analyses the business environment in three different time periods 1840 1910 and the present It looks at the business infrastructure market conditions the size and scope of a firms activities and a firms response to changes This historical perspective shows that all successful businesses have used similar principles to adapt to widely varying business conditions in order to succeed Businesses in the period before 1840 were small and operated in localized markets The size of a business was restricted by the lack of production technology professional managers capital and largescale distribution networks The limited transportation and communication infrastructures made it risky for businesses to expand and restricted them to small local markets Owners ran their own businesses and depended on market specialists to match the products with the needs of the buyers There were forces in place however that would enable businesses to expand their economic activity over a larger geographic areaThe infrastructure for conducting business had expanded tremendously by 1910 New technologies permitted the higher volume of standardized production The expansion of the rail system permitted the reliable distribution of manufactured goods to a wider geographic area The telegraph enabled businesses to monitor and control suppliers distributors and factories Finally the growth of financial institutions allowed businesses to raise capital and transact on a gl
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