MGMT 1030 Lecture Notes - Lecture 12: Electrical Engineering, Brian Mulroney, Richard Branson

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First Industrial Revolution Second Industrial Revolution Third Industrial Revolution
Britain -1760s to 1840s
-Agricultural Improvements
- Increased productivity due to
changing from ‘2-crop system’
to ‘3-crop system’
- 2 prices provoked
experimentation with new
root crops and animal
breeding practices
- Canal improvements (1760)
- Road improvements (turnpike
trusts  tolls on the road
allowed for collaboration
between business owners to
facilitate between the
-Banking & Finance Changes
- Bank of England (1694)
- Credit became available for
businesses to expand
-Changes in Economic Thought
- Adam Smith (‘the invisible
hand’  self-regulating
businesses/ market economy)
-Formation of Companies
- Family-owned and operated
- Unlimited liability (high risk)
-Technical Breakthroughs
- Cotton spinning
improvements (Spinning
-1840s to 1940s
- Railways were more efficient and
cheap to run
- Created demand for resources/jobs
- Faster and easier access
- Shipping revolutionized international
- Increase in # of automobiles
-Iron and Steel
- Bessemer steel process increased
- Slow improvements in
- Textile equipment designs
- Emerged electrical engineering
-Financial Improvements
- Legal principle of limited liability for
companies (1856)
- Size of firms increased (lower risk)
-Role of Government
- Free trade (competition)
-Industrial Difficulties (1914-1945)
- Great Depression
- Decline in exports
- Balance of Payments (-)
- Efforts to Solve Interwar Problems
- Protective tariffs (little trade)
- Protectionist philosophy (‘buy
- Mercantile system to free trade
-1940s to Present
-Pillars of Welfare State Established
- Beveridge advocated ‘cradle to grave’
social safety net and nationalization of
- Government needed to promote social
safety during times of industrial change
-Britain has lagged behind relative to
other nations but remains an
important economic power
- Continued loss of imperial markets
- Major player in petroleum, automobile
and pharmaceutical industries
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- Steam engine
America -1790s to 1850s
-Agricultural Improvements &
The National Economy
- Southern cotton
- Less labour was needed
because of cotton gin
- Westward migration/slavery
b/c of soil exhaustion,
improved tech & gov’t sold at
low prices
- Roads, canals, railroads
- Erie Canal (1825) linked the
Great Lakes
- Trade Policy divided the US
-Growth of Industry
- Textile manufacturing
(domestic system – work from
- Technological advances
(reaper, rubber, telegraph)
- Diverse population
- Entrepreneurial society
- Irish, German, Chinese
-Role of Government
- Rebelled against British gov`t
- Didn`t play a major role in
industrialization  they just
put money towards it
- Ad hoc intervention (purpose)
- Protectionism
-1860s to 1940s
-Railroad Development
- 1st trans-continental railway (1869)
- Corruption of government financing
-Technological Advances
- Increase in patents during the 1890s
- Telephone, light bulb, etc
-Business Structures and Finance
- Decentralized banking system
- Anti-Trust Act (1890)
-The Role of Entrepreneurs
- Rockefeller  vertical integration of
Standard Oil
- Carnegie  philanthropist
- Morgan  steel corporation
-International Trade
- WW1 left less infrastructure damage
in US than Euro countries
- Increased exports
- ‘Roaring Twenties’
-The Great Depression & New Deal
- UE increased and Income declined
- Keynes influenced Roosevelt
(predominant private sector, but
large role from government)
- Funded public projects
- Tennessee Valley Authority
(infrastructure building)
- Pension system
- Labour movement (NLRA)
-The Second World War
- US was financier and supplier of
Allied war efforts
-1950s to Present
-Long Period of Postwar Economic
- Real GNP and exports increased, low UE
- OPEC Oil Crisis (1970s)  decline
- Oil production was cut
- Development of roads, air trans system
- Telecommunications (internet 1990s)
- Greater autonomy
- Fewer regulations
- Separation of management from
- More access to information
- Better efficiency with training
-Increase in Gov`t Share of Economy
- Increased gov`t spending
- Increased gov’t employment
-Issues of Concern for the Modern
American Economy
- Increased National Debt
- Trade Deficit (-)
- Importing more than exporting
- Income distribution
- Rich are getting richer, poor are getting
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- Few business regulations
- Against labour unions
- Stimulated economy
Japan -1600s to 1867
-Feudal System
- Was in place like Britain
- Closed country policy (1639)
- Imperialism (afraid of Western
countries taking over)
- Hurt them internally,
economically and militarily
- Limited trade
- Commercial and
entrepreneurial activity but no
industrial sector
-1867 to 1945
-General Outlook of Japan`s Leaders
- “enrich the country, strength the
military” (catch up with the West)
-Economic Development Policies
- Strong gov’t role
- Increased imports and exports
- Primary industrial rush (1890-1914)
- Railways, silk output
- Emigration due to low wages and
limited # of jobs
- Also suffered a GD
- Markets were lost during tariff wars
- Economy controlled by
conglomerates  family-owned
companies with horizontal links
across industries
- US companies focused on 1 product,
whereas Japan diversified (Vertical
Integration vs. Horizontal)
- Helped the country strengthen
industrial development, instead of
creating competition through open
-Territorial Expansion of Japanese
- Wars gave Japan a lot of stature with
rest of the world
- Allies of Britain during WW1
(allowed for the rise of militaristic
- They wanted access to resources in
-1945 to Present
-Phase I (1945-1970): Catching Up
- Fair market rules (1947)
- Anti-monopoly
- Encouraged independent farming
- Labour unions legalized
- Compulsory education extended
- Fixed exchange rates helped Japan sell
their products
- Almost half of Japanese exports were to
countries fighting in Korean War
- Affluent period in World Economy
(countries were expanding; created a
market for Japanese markets)
- Fewer skilled workers in mass
productions – industrial unions
- `life-time employment’  to attract
skilled workers/human capital
- Craft-workers unions  can’t hired ‘off
the street’ (plumbers, butchers, etc)
- Enterprise Unions  less militant
- Difference b/w NA and Japan  seniority
rights; Japan based mainly on age, not
- Increased annual growth in 50s and 60s
-Phase II (1970-1990): Bubble Economy
- Mature economy of the 1970s was able
to weather the shocks in 73 and 79
- More stable economy in the 70s
- Lots of infrastructure
- Declining growth from Catch-Up Period
- Economic problems in the 80s (firms
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