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MGMT 1030 (Business History): Final Exam - Summaries for Readings in CourseKit

Course Code
MGMT 1030
Andrew Thomson
Study Guide

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1) Outline of James Fulcher’s “What is Capitalism?”
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
oEast India Company used as the example, with the first Company voyage
in 1601
oHighly unstable trade in Indian spices with voyages either ending in
disaster or returning with a fortune in cargo
oEIC granted a monopoly by the British monarchy in return for customs
oThis 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
2)Industrial Capitalism
oM’Connel and Kennedy cotton firm used as the example
oCotton industry was keenly competitive and relied on wage labour
oExploitative conditions and rigid, monotonous working conditions
oBut industrial capitalism also regularized the working routine of workers
and created the concept of leisure
3)Financial Capitalism
oNick Leeson used as the example, with this single individual using
unethical methods and modern technology to bankrupt the Barings
Brothers bank
oFinancial capitalism the ultimate form of capitalism and relies on global
integration of stock markets
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

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2) Outline of McCraw and Tedlow, “Henry Ford, Alfred Sloan, and the
Three Phases of Marketing”
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
o1)Fragmentation—274 small car companies in 1909 producing high-
priced, unreliable products
o2)Unification—one major company (Ford) perfects high-volume
production processes and builds low-priced cars available across the
o3)Segmentation—General 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
oFarming and mechanical background
oPerfected assembly line production methods and treated his workers well
oAutocratic, inflexible managerial style
oHeld controversial social views
Alfred Sloan and his managerial strategies propelled GM past Ford
oHighly educated with an urban background
oPerfected the M-Form managerial strategy that made company
administration transparent and effective
oDiversified 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
oPoor designs and terrible fuel efficiency of US cars
o1973 oil shock made fuel-efficient Japanese imports highly sought after
Ultimately, McCraw and Tedlow highlight the importance that personalities and
management styles have on the success and failure of business entities

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3) Outline of Bernstein, “Toyoda Automatic Looms and Toyota
Bernstein looks at the remarkable success of the Toyoda family in the textile
machinery and automobile sectors that allowed Japan to experience two economic
miracles and catch up and surpass other established industrial nations
Sakichi Toyoda was the patriarch of the Toyoda textile machinery business
oPatented looms beginning in 1891 and formed a series of companies—
some unsuccessful—with the assistance of outside finance from
conglomerates such as Mitsui
oToyoda perfected the automatic loom and formed the Toyoda Automatic
Loom Works in 1926, with production of the G-type loom starting in 1927
oG-type loom marketed internationally after an agreement with Britain’s
Platt Brothers in 1929
oAutomatic looms, combined with such factors as the integration of women
into the workforce and specialized trading companies, allowed Japan to
overtake Britain as the largest exporters of cotton goods by the 1930s
Kiichiro Toyoda, Sakichi’s son, developed a separate automobile venture within
the family textile operation beginning in 1930 and produced the A1 prototype in
oBrand name ‘Toyota’ created for marketing reasons and the Toyota Motor
Company (TMC) was incorporated in 1937
oToyota and Nissan enjoyed a captive market after the 1936 Automobile
Industry Law only licensed domestic Japanese carmakers
oWorld War II stimulated demand for Toyota trucks for the military and
allowed TMC to develop efficient sub-contractor relationships
Despite problems with labour unions and product development after 1945, Toyota
developed into the largest Japanese carmaker by the end of the 1960s
oTMC was not destroyed during the war and not targeted for break-up by
Allied occupying forces
o40% tax imposed on imports kept US carmakers out of Japan’s market
oToyota production system perfected the efficient just-in-time method of
automobile manufacturing
oCorolla model appeared in 1966 and became the world’s bestselling car
Series of oil shocks in the 1970s and inefficient US carmakers allowed Toyota to
enter the US market on a significant scale and Japan become the world’s largest
automobile manufacturing nation by 1980
oToyota expanded its presence in the US market by building auto assembly
plants in California and Kentucky
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