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Rockefeller & Horizontal Integration

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Stephanie Okiro

on 10 March 2014

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Transcript of Rockefeller & Horizontal Integration

Rockefeller & Horizontal Integration

Stephanie Okiro

John D. Rockefeller
John Davison Rockefeller, was born on July 8, 1839, in Richford, New York.
John attended high school in Cleveland, then went to commercial college
In 1859, Rockefeller and a partner established their own commission firm
During this time America’s first oil well was drilled in Pennsylvania
By 1863, Rockefeller and several partners entered the new oil industry by investing in a Cleveland refinery
Married Laura Spelman, and had four daughters and one son
Rockefeller was the first American to ever have a net worth over $1 billion
Rockefeller donated more than half a billion dollars to various educational, religious and scientific causes
He was viewed as a Robber Baron
At the time of his death in 1937, he was worth the equivalent of $340 billion in today's dollars
Video: http://www.pbs.org/wgbh/americanexperience/features/bonus-video/rockefellers-chapter-one/

Standard Oil

In 1870, Rockefeller formed the Standard Oil Company of Ohio,
John Rockefeller was its president and largest shareholder.
Standard Oil gained a monopoly in the oil industry by buying rival refineries and developing companies for distributing
These companies were combined into the Standard Oil Trust, which would control 90 percent of the nation’s refineries and pipelines.
In 1890, the U.S. Congress passed the Sherman Antitrust Act, which prohibited trusts and combinations that restrained trade.
Two years later, the Ohio Supreme Court dissolved the Standard Oil Trust; but, the businesses within the trust soon became part of Standard Oil of New Jersey
In 1911 the U.S. Supreme Court ruled Standard Oil of New Jersey was in violation of anti-trust laws and forced it to dismantle (it was broken up into more than 30 individual companies)
Standard Oil was broken into smaller companies like : Amoco, Chevron Conoco, and ExxonMobil

The total number of blood relative descendants as of 2006 is about 150.
Head of the family today is David Rockefeller, Jr. (great-grand son)
The total philanthropy of two generations of the family to over $1 billion
Family owns many historical buildings and centers across the U.S (mostly in NY)
Most notable building is the 30 Rockefeller center where 30 Rock is filmed

Horizontal Integration
“Horizontal integration is a strategy where a company acquires, mergers or takes over another company in the same industry value chain.”
Companies do this to strengthen their position in the industry
increase product differentiation
Reduce competition
Examples: Disney merging with Pixar , Exxon with Mobile

is the joining of two similar sized companies to make one joint company

is the purchase of another company (Example: AT&T buying Tmobile)
Hostile takeove
r is forcefully taking over a company that doesn’t want to be acquired

Key Vocab
John D. Rockefeller: A prominent business man during the Gilded Age
Horizontal Integration: A type of business strategy
Trust: A legal entity that acts as an agent or trustee on behalf of a person or business
Monopoly:Exclusive control of a commodity in a particular market, or a control that makes possible the manipulation of prices
Rockefeller Family Legacy
Rockefeller and Horizontal Integration
He first bought out all rival oil refiner companies and put them into Standard Oil
Then he established a monopoly on the business using these steps.
He lowered his prices immensely
His competitors couldn't compete, and they went out of business.
Was able to charge whatever he wanted, & there was nobody to compete
He made a deal with a railroad company to transport his oil for a cheaper price and he would give the railroad some of the profit.
Since other businesses didn't have deals, his oil was cheaper making people purchase his oil
Name the type of Horizontal Integration
Apple + Windows= AppWin
Apple + Google= Apple
At & T + T-Mobile= AT & T and T-Mobile
Facebook + WhatsApp = Facebook
Follow up questions
What was the name of Rockefeller's company?
What is the definition of a monopoly?
Why did Rockefeller's company have no competitiors
Full transcript