As the Industrial Revolution grew, new business practices developed. Before, most business was owned by a sole proprietor (single owner), or a small partnership. But, ways of doing business changed dramatically during industrialization.
|
New Ways of Doing Business
|
| Corporation |
A business with many share holders. Corporations are formed to raise capital for expansion. Share holders receive dividends when the company makes a profit, and can only lose what they put in. |
| Monopoly |
A monopoly is when a company or corporation controls an entire market. This allows them to raise prices to any level. Government regulation prevents all but a few monopolies such as utility companies. |
| Pool |
Companies in a single market making an agreement on prices and the division of business. Railroad companies practiced this until it was outlawed by the government. |
| Trust |
Corporations in the same market or related markets would form a trust that put control of business under a single group of trustees. Share holders still received dividends, but had no say in the business. Trusts were later outlawed. |
| Holding Company |
A holding company would buy enough stock in different companies to control them. This was done to get around the outlawing of trusts. Eventually, holding companies were outlawed also. |
| Conglomerate |
A corporation that owns many different unrelated businesses. Conglomerates are formed by mergers, where one company would take over another. These are still in practice today. |