Growth by Vertical Integration: Food and Tobacco

The companies listed in Appendix A provide an objective and com- prehensive sample of big business in America. They are the corporate leaders in American industry in 1917 . By that time those enterprises were already producing over a quarter of the net manufacturing output in the United States.3 Their collective history reveals much

Growth by Vertical Integration: Oil and Rubber

In oil (group 29) and rubber (group 30) the story was much the same. The major difference resulted from the coming of a huge new market after 1900—that created by the automobile. The petroleum industry was particularly dynamic in the first two decades of the twentieth century.7 The new demand for gasoline appeared just

Growth by Vertical Integration: Chemicals, Paper, and Glass

The leading enterprises in the chemical, paper, and stone-clay-glass groups used large-batch and continuous- process methods of production similar to those of the oil and rubber companies. However, their markets differed. They manufactured primarily producer’s rather than consumer’s goods. Yet in nearly every case their producer’s goods went to a large number and wide

Growth by Vertical Integration: The Metal Fabricators

In all the groups reviewed so far the large enterprise coordinated the flow of goods from the suppliers of raw materials to the final customer. In all, the volume of the flow was high, and its scheduling from many suppliers to still more numerous consumers was complex. This was less true of the metal

Growth by Vertical Integration: The Machinery Makers

On the other hand, the makers of complex machines had, almost from the beginning, built extensive marketing orga- nizations and quickly became huge global enterprises. In fact, if the companies in electrical machinery (group 36) and transportation equip- ment (group 37) are added to those in machinery (group 35 ) , they total 58,

Growth by Vertical Integration: Primary Metals

The firms of this last industrial group differed from those in the other groups in which large enterprises clustered. Their manufac- turing establishments were the most costly in American industry. (Indeed, because the criterion for size in Appendix A was assets, the sample is biased in favor of such heavy industry. If sales or value

Growth by Vertical Integration: The Importance of the Market

Technology of production was certainly the critical determinant in the growth of the firm. Nine out of 10 large manufacturing companies listed in Appendix A used capital-intensive, energy-consuming processes. But the use of such production methods did not in itself bring size to a firm or concentration of production to an industry. Enterprises in

Growth by Vertical Integration: Integration and Concentration

In industries where administrative coordi- nation provided competitive advantages, integration brought concentra- tion. Even before 1900 a high degree of concentration could be found in many industries. Such industries became dominated by a few vertically integrated enterprises rather than by horizontal combinations of manu- facturing firms. The first to integrate continued to dominate. Only

Growth by Vertical Integration: The Rise of Multinational Enterprise

Many of the large integrated enterprises became the nation’s first multinationals. Again, the creation of a marketing organization was the critical determinant. The first enterprises to build extensive marketing networks abroad were also the first firms to own and operate their own plants and other productive facilities overseas.29 Table 10 lists the American firms

Growth by Vertical Integration: Integration and the Structure of the American Economy

By 1917 the large industrial enterprise, the most influential American economic institution abroad, had taken its place at the center of the nation’s economy at home. Whereas the country’s basic transportation and communication infrastructure had been shaped by the 1890s, its underlying industrial organization had been solidified by World War I. Table 11 shows

Integration Completed: Determinants of Size and Concentration

The basic institutional arrangements used in the production and distri- bution of goods in modern America had fully evolved by the 1920s. Salaried managers working in multiunit enterprises had replaced owners in single- unit firms in carrying out these processes in the key sectors of the economy. Where the processes of production were capital-intensive

The Entrepreneurial Enterprise

Many of the functions of the visible hand of management were first worked out in what I have termed the entrepreneurial enterprise. The entrepreneurs who created the first large industrial firms by building their own marketing or purchasing organizations had to hire a number of middle managers. Neither the entrepreneurs, their close associates, nor

American Tobacco: Managing Mass Production and Distribution of Packaged Products

Of the innovating entrepreneurs who created modern integrated indus- trial enterprises few were more successful than James Buchanan Duke of Durham, North Carolina. Duke’s swift rise to power in the cigarette trade was not based on his technological skills or his advertising talents. He leased his machines and hired the services of advertising agencies

Armour: Managing the Production and Distribution of Perishable Products

The experience of the first large integrated enterprises in the meatpacking industries differed from that of the American Tobacco Company in two significant ways. First, because the packers’ products were perishable, the flow from the purchasing of the cattle to the sale to the consumer had to be even more carefully coordinated and controlled.

Singer and McCormick: Making and Marketing Machinery

The histories of American Tobacco and Armour illustrate the methods of organization, the processes of growth, and the ways of competition for enterprises that grew by integrating high-volume production with national and global mass markets. In such enterprises the marketing organization had the responsibility for maintaining and coordinating transportation, storage, distribution, and sale of

The Beginnings of Middle Management in American Industry

The pioneering enterprises described above were among the first of many entrepreneurial enterprises to build giant, global business empires. The operations of these integrated companies required the hiring of dozens and in time hundreds of lower and middle managers. The tasks of the managers on the lower level who had charge of the operating

The Managerial Enterprise

The practices and procedures of modern top management had their beginnings in the industrial enterprises formed by merger rather than those that built extended marketing and purchasing organizations. The process of merger brought more persons, with more varied backgrounds, into top management. In the new consolidations a family or single group of associates rarely

Top Management: Standard Oil Trust

The formation of the Standard Oil Trust on January 2, 1882, provided the members of the powerful Standard Oil alliance with a central organization to supervise and coordinate the operations of their constituent companies and to make investment decisions for the group as a whole. Such central direction could not be achieved through a

Top Management: General Electric Company

For several reasons the merger that created the General Electric Com- pany was more important to the development of modern industrial man- agement in the United States than were the early trusts. General Electric was the first major consolidation of machinery-making companies and so the first between already integrated enterprises. Its products and processes

Top Management: United States Rubber Company

General Electric adopted the centralized, functionally departmentalized operating structure even more readily than did American Cotton Oil and National Lead, not only because many senior executives were trained as engineers and its financiers were experienced students of railroad organization, but also because the merger was one of integrated firms that already had functional departments.