Change In The Growth Of American Corporations

Change In The Growth Of American Corporations

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Change in the Growth of American Corporations
Technological change and organizational change both played integral parts in the growth of large American industrial corporations in the late nineteenth century. I don't believe that you can truly choose one or the other to be more important then the other because they are so directly related to each other, as one expanded the other would change. As technology improved you saw restructuring of management and planning, yet you also saw technology being forced to advance by the industries change in planning and restructuring.
The railroads played a very large part in the emergence of large industries in America. The American railroad systems were growing and expanding across the nation and the railway systems were becoming more and more complex all the time. These complexities led to the first pivotal point in our nations large industrial history. On October 5, 1841 two trains collided in Western Massachusetts. One conductor and one passenger were killed and seventeen other passengers were injured. The collision of the two trains was caused by an error in scheduling and this error is what led to the first restructuring within a very large company. Although this tragedy was seen as the major reason for the restructuring and planning of the railroad, the board of the railroad used this opportunity to look within itself and make the changes that would push the railroad into the future (Blackford and Kerr 125-126).
The railroad was faced with a couple of very large problems. The first problem that it faced was the on going expansion of the railroad. The restructuring had to be able to keep up with the overall growth of the railroad itself. In order to adapt to this problem the railroads setup the first ever-American business bureaucracies. The first changes that were made were new management systems that were put in place, that were designed to address specific business problems. The next set of changes included the separation of staff officers, who made strategic decisions at headquarters, and the line officers who carried out these decisions in the field. The railroad also added precise record keeping which would allow for headquarters to stay up to date on events in the field. The railroad also moved on to break the nation into three separate parts that were managed separately but all reported to the headquarters in Massachusetts.

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The railroad went on to develop and legal and secretary department. They also continued to develop the railroad from within creating even more elaborate bureaucracies. They continued to separate the duties of the managers from the three separate branches from the managers in the headquarters. The railroad also began to replace greater importance on middle managers. The higher management concentrated on the growth and strategy of the railroad while the middle managers were able to concentrate on the operational details. All of these changes allowed for a greater control of the railroad and pushed our nation into the first steps of growth for large industries (Blackford and Kerr 127-132).
Andrew Carnegie and Carnegie Steel is a great example of illustrating the ties between restructuring and the importance of the railroad systems. The growth of the railroads proved to be a vital market for Andrew Carnegie and his industry. Carnegie had learned through his time with the railroad that in order to maximize his profits he would have to lower his costs and create higher volume of production. During this time period Carnegie targeted projects like the railroad tracks, bridges, and locomotives. These projects would see Carnegie reach his volume goals. He would now search for ways to lower his costs. Carnegie implemented sophisticated cost accounting and record keeping which closely mimicked the same planning used by the executives of the Pennsylvania Railroad. The use of these methods would allow for Carnegie to identify production inefficiencies as well keeping tabs on his plant managers. From these changes Carnegie was able to create one of the most successful steel production company's in the country.
The next step in the evolution of big business came along with J.P. Morgan. He was America best-known banker and a very powerful man. He bought Carnegie Steel and combined this company with other smaller companies to create the world's first billion-dollar corporation. J.P. Morgan took Carnegie steel and Andrew Carnegie's ideas and brought them to the next level. He again looked for ways to push down the costs of doing business and to create higher production volume. Mr. Morgan did this by removing the market of competition. By acquiring other steel production firms and other related companies Morgan was able to drive down the overall price of the cost of producing steel, by removing the competition of pricing from other industries. These changes allowed for J.P. Morgan to take a national leader in steel production and turn it into an international leader in steel production (Blackford and Kerr 133-135).
During this time period we also saw the advancement of mass distribution in relation to mass production. The development of the telegraph allowed for the nations industries to enter a new period of contract talks. The nation was now able to create steady contracts that would give details to the amount, quality, price, and future delivery dates. This kept the constant demand for products alive, which in turn kept high numbers of volume inside the industries. The ability of mass distribution led to the development of mass retailing which in turn led to the development of retail stores popping up all over in large cities (Blackford and Kerr 136).
Mass production developed simultaneously with mass distribution. This is where we see much advancement in technology that would allow for the industries to develop new methods of producing material and products. New machinery designs allowed for mass production of many products across the states including cigarettes, matches, soap, and grain milling industries. There were also several new improvements made in the metal industry that would help the cause of mass-producing steel for the nation (Blackford and Kerr 137).
As you can see technological advancements worked hand in hand with the restructuring and reorganization of the industries during the nineteenth century. You could not have had one with out the other and that is why I feel that you cannot place more importance on one rather then the other. If you don't have the right technology then you are not going to improve. Also if you do not have the proper business organization and planning your overall goals will not be met. You could see in the readings that each time their was a technological advancement the business plans and organization of the companies would shift in order to fully benefit from these advancements. On the other end of the spectrum you can see that when a company was being reorganized if a certain technology was not up to date it would be reviewed and revamped in order to keep up with the company's goals. This was an important time period that saw America grow from producing mainly for itself to looking outside to international markets. It saw the change in companies to adapt to become international producers of goods, because of change in technology and organization.
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