The Growth of Large National Corporations
in the 1800s:
local Businesses (for ex., The Boulder bookstore)
- Small Customer Base
- Small Inventories
- Borrow Capital from the local Bank
- Locally-owned and managed
- Little local competition allows business to
charge higher prices
- Being part of the community, they are often
forced to offer better wages and working conditions
- Can't afford to operate at a loss for very long;
they have very tight profit margins
- Profits are spent in the local community, helping
Corporations (for ex., Borders)
- Huge Customer Base
- Huge Inventories
- Borrow Capital from National Banks and the Stock Market
- Owned by Investors and run by corporate managers
- Competition for a National market forces them to charge
lower prices for their products
- Being national, they don't have to offer as high
or working conditions
- Can afford to operate at a loss for a couple of years in
order to win a large share of the national market
- Profits are channeled to Investors; this money is taken
out of the local economy, which hurts local businesses
National Corporations have
over local businesses
- Cheaper to mass-produce products, able to afford latest
technology and build efficient factories.
- Because profits are made by the volume of sales they can
charge lower prices.
- Economies of Scale: Cheaper to produce a larger
of products for a national market.
- Cheaper to transport and store their products; they get
discounts based on the sheer size of the order.
- Easier to raise capital; because of their size can borrow
money at cheaper interest rates.
- Competition for a national market forces Corporations to
produce higher quality products at lower costs.
- Large Corporations can survive business downturns
(recessions & depressions) much more easily.
- Large corporations profit from the success of their
national reputation and known brands.
- Large corporations can use their domination of national
markets to set prices and undermine free enterprise.
- Large corporations can use their economic power to get
government subsidies and special tax breaks.
Examples of Corporations dominating
- The Big three American Automobile corporations
dominating the American Auto Industry between
1945 and 1970s.
- Microsoft dominating Computer Operating Systems
- Pepsi and Coke dominating the Soft Drink Industry
- Global Oil Companies dominating the Oil Industry
- United, Delta, and Northwest dominating the