CHAPTER 13

Section 3: New Methods and Business Organizations

Objectives:

Identify the elements that made mass production possible.

Explain why corporations emerged and how they affected the way business was conducted.

Describe the pattern known as the business cycle.

The Industrial Revolution

Israel and the Occupied Territories

SECTION 3

13.3 Bell Ringer:What is the chain of events in the business cycle?(create a Flow Map)

New Methods and Business Organizations

SECTION 3New Methods and Business Organizations

THE BUSINESS CYCLE

falling demand for goods

DEPRESSION

PROSPERITY rising demand for goods

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Capitalism• Economic system

where individuals (not gov’ts) control the factors of production.

• Businesses and the means of production are privately owned and operated.

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Industrial Capitalism:produce and manufacture goods.

Commercial Capitalism:Merchants bought & sold goods.

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Capitalist: investorin a business…became moreinvolved inproducing andmanufacturinggoods ----

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Division of Labor and Interchangeable Parts

• Divided into steps• Hire unskilled labor for each step

– DIVISION OF LABOR!

• Increased production• Lowered costs• MORE PROFIT

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Eli Whitney• Used division of labor to make muskets• Parts were all alike• interchangeable

parts• Speedy production

of inexpensivemuskets

• Easily repaired!

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Mass ProductionProducing large numbers of identical items

What do you need for Mass Production?

Division of labor

Use of interchangeable parts

An assembly line

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

The Assembly Line

Parts brought together toone location

Carried from worker to worker

Saved time and energy

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Henry Ford• Used a conveyor belt• Founded one of the

largest industries in the world

• Model T would be assembled in 93 min.

• Other industries would mass produce items….

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Rise of the Corporation

Sole proprietorship:one person owns &runs the business.

Partnership:two or more peopleown and run a business.

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Rise of the Corporation• Company that allows people

to buy “shares of stock”• Each share would receive a

portion of the profits• By late 1800s, some

corporations were very largeand powerful.

J.P. Morgan – US Steel

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Monopoly

When a corporation gains COMPLETE CONTROL over the production or sale of a good/service

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

CartelWhen corporations join togetherto control every stage of anindustry.

Example: German steel industry-coal & iron mines-steel mills-factories

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

business cycle

Alternating periods ofprosperity and decline

depression

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

19th-century political cartoon of Rockefeller, caricatured as "King of the World" sitting on a barrel of oil.

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

Any Questions?QUIZ TIME!

Commercial

Depression

Individuals or corporations

Monopoly

Industrial

prosperity

One step

Cartels

Corporations

Mass production

Israel and the Occupied Territories

SECTION 3New Methods and Business Organizations

SECTION 3New Methods and Business Organizations

THE BUSINESS CYCLE

falling demand for goods

large firm reduces orders for iron & lays off workers

iron suppliers cut production & lay off workers

employers pay less

many workers competing for jobs

workers buy less

prices go up to cover the cost of production

rising demand for goods

new factory opens & hires many workers

wages go up and people buy more

production increases to meet demand

more machines and workers needed

factories increase orders for iron and hire more workers

PROSPERITY DEPRESSION