The Growth of Large National Corporations
 in the 1800s:

      Small 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
    local businesses

      Large National 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 wages 
    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

      Advantages National Corporations have
      over local businesses

  1. Cheaper to mass-produce products, able to afford latest
    technology and build efficient factories.
  2. Because profits are made by the volume of sales they can
    charge lower prices.
  3. Economies of Scale: Cheaper to produce a larger number
    of products for a national market.
  4. Cheaper to transport and store their products; they get
    discounts based on the sheer size of the order.
  5. Easier to raise capital; because of their size can borrow
     money at cheaper interest rates.
  6. Competition for a national market forces Corporations to
    produce higher quality products at lower costs.
  7. Large Corporations can survive business downturns
     (recessions & depressions) much more easily.
  8. Large corporations profit from the success of their
     national reputation and known brands.
  9. Large corporations can use their domination of national
     markets to set prices and undermine free enterprise.
  10. Large corporations can use their economic power to get
    government subsidies and special tax breaks.

 

Examples of Corporations dominating National Industries

  • 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
    Airline Industry