The Carnegie Steel Company was a “steel producing company primarily created by Andrew Carnegie and several close associates, to manage businesses at steel mills in the Pittsburgh, Pennsylvania area in the late 19th century.” Carnegie rose to success by believing in the vertical integration system, a system in which a larger company invents or absolutely controls all process of production, whether that be smaller companies or different sectors of the company. As well as owning the steel mills, Carnegie also took upon the coal and iron fields, controlling small railways systems, and iron ore companies. This strategy gave Carnegie the incentive to sell all of his products to the right buyer directly to avoid paying any other costly fees and demands.
Carnegie’s methodic use of vertical integration made him one of the wealthiest men in his time period, as well as being ‘immortal’ to all other competitions and opponents that he may have had in the industry.
I decided to discuss McDonald’s because they were a prime candidate and user of the vertical integration method. McDonals’s is a world wide fast food empire in which their physical presence helped boost business and the economies of local areas around the globe. McDonald’s use of vertical integration includes everything from the farms such as catering to livestock or production of potatoes, to the distribution and transport to their products around the world to their resturants. McDonald’s owns all of the farms and fields that they cater from, making them one of the most profitable and successful corporation in the entire world. The method of vertical integration when McDonald’s was growing made it easier for it to launch globally and become an international corporation.
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There are many ups and downs on the effects that vertical integration has on society. Some of the positives include more job security, more security in production and growth lines because of the constant regulation from a singular company, as well as companies do not have to pay third parties to cater for their goods and services because they supply and oversee every aspect of production. Some negatives of vertical integration would be the companies have the great possibility to become a monopoly among a certain sector of a market. This makes it easier for companies to gain total control and power over third party suppliers that they use and do not use as monopoly. At the start, production is extremely weak because of promised sales that are idealized that can affect the quality and effect in the long run.
