Big Business

Big Business is a term used to describe large corporations, in either an individual or collective sense. The term first came into use in a symbolic sense subsequent to the American Civil War, particularly after 1880, in connection with the combination movement that began in American business at that time.
Organizations that fall into the category of "big business" include ExxonMobil, Wal-Mart, Google, Microsoft, General Motors, and Citigroup.

History, The Great Merger Movement

From 1895-1905, the United States industry underwent major reorganization that had long term impacts on the structure of businesses. Small firms consolidated into giants with a large market share (see Mergers and acquisitions). These mergers involved mass producers of homogeneous goods that exploited efficiencies of volume production. They were generally capital-intensive with high fixed costs; when demand fell, output would re
Long-run factors which led to the rise of big business include technological change, which increased the efficient size of plants from non-mechanized factories with very few workers to large, modern industries, and reductions in transportation costs, which made it easier to produce goods in one location and ship to markets around the country. However, the immediate factor which led to the Great Merger Movement, according to Naomi Lamoreaux, was a result of large investments in new capital stocks, financed through bond issues. The bond issuances led to high fixed costs for companies, who had to make the interest payments on the bonds regardless of the number of units produced

. When the Panic of 1893 ensued, called the Great Depression at the time, the demand for purchasing bonds declined dramatically. However, companies still needed to finance the bond payments. Therefore, every company wanted to increase their output to increase the quantity sold in order to finance their bond payments, known as “running full.” This led to falling prices, and less revenue for every unit sold. As a consequence of this, companies desired to collude because of the incentive for horizontal integration, in which every supplier in a particular industry combined under one roof, with one manager making supply decisions.

History, Post World Wars

The relatively stable period of rebuilding after World War II led to new technologies (some of which were spin-offs from the war years) and new businesses.

Computers

The new technology of computers spread worldwide in the post war years. Businesses built around computer technology include: IBM, Microsoft (Bill Gates), and Intel (Gordon E. Moore and Robert Noyce).

Electronics

Miniaturization and integrated circuits, together with an expansion of radio and television technologies, provided fertile ground for business development. Electronics businesses include JVC, Sony (Masaru Ibuka and Akio Morita), and Texas Instruments (Cecil H. Green, J. Erik Jonsson, Eugene McDermott, and Patrick E. Haggerty).

Energy

Nuclear power add to fossil fuel as the

Criticism of big business

The social consequences of the concentration of economic power in the hands of those persons controlling "Big Business" has been a constant concern both of economists and of politicians since the end of the 19th century. Various attempts have been made to investigate the effects of "bigness" upon labor, consumers and investors, as well as upon prices and competition. "Big Business" has been accused of a wide variety of misdeeds that range from the exploitation of the working class to the corruption of politicians and the fomenting of war.

Influence over government

Corporate concentration can lead to influence over government in areas such as tax policy, trade policy, environmental policy, foreign policy, and labour policy through lobbying. In 2005 the majority of Americans believed that big business had "too much power in Washington".

Human rights and working conditions

German industry collaborated with their Nazi government during the Third Reich, thus exploiting the working class in the interest of productivity and efficiency.

Hitler's order offered German capitalists, badly hit by the great recession, the prospects of huge profits. German workers did, admittedly, enjoy full employment, but, as William Schirer has said, this was at the cost of being reduced to serfdom and poverty wages. It was not long before these conditions became the lot of the whole of occupied Europe.

Benefits of big business

It has been generally admitted that much of the technological progress since 1850 has been dependent on and fostered by the growth in size and the increase in financial strength of individual business units.

During the rise of big business in the late nineteenth century, long run factors contributing to the consolidation of businesses included technological changes and reductions in transportation costs. Cheaper transport costs made it feasible to produce in one location and then ship the product to market, instead of producing where the market was located. Technological changes made plant sizes more efficient in regards to capital-intensive assembly lines.

The rise of railroads contributed to decreased transportation costs during the 1800s. To expand, the railroad companies required large pools of capital to finance infrastructure development and daily operations. However, the government did not have the budget to provide financing due to the depression in the 1830s and 1840s. As a result, the railroad firms turned to private investors and investment banks to raise the necessary capital.

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History, The Great Merger Movement