how Carnegie used vertical integration to reduce competition and make his business more profitable.

Question

whpalmer4 · Answer

Andrew Carnegie used vertical integration in the steel business to great profit.  His operation controlled every step of the process from mining the ore, mining the coal, shipping the ore and coal to the foundry, actually making steel from the ore (using the coal as fuel), owning and operating ships and railroads to transport the raw materials and finished goods, etc.  What better way to make your business profitable than to arrange for much of the money it spends to be paid to another one of your businesses?  Keeps the money in the family, prevents some other company from putting the screws to you by cutting availability or raising prices, and the peripheral businesses (such as railroads and shipping) may be stronger competitors for other business because they have all of your business.