Business Combinations Quiz

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Questions and Answers

What paved the way for the development of large-scale business?

  • The narrowing down of profit margins
  • The industrial Revolution (correct)
  • The policy of price-cuts
  • The doctrine of free competition

What compelled industrial magnates to think of ways to eliminate unhealthy competition?

  • Doctrine of free competition
  • Policy of price-cuts
  • Narrowing down of profit margins (correct)
  • Economic warfare

What philosophy became the seed for the growth of business combinations?

  • Doctrine of free competition
  • Economic warfare
  • Cooperation through combining with others (correct)
  • Policy of price-cuts

What resulted in the narrowing down of profit margins?

<p>Policy of price-cuts and economic warfare (A)</p> Signup and view all the answers

What are business combinations?

<p>Combinations formed by two or more business units (D)</p> Signup and view all the answers

Flashcards

What paved the way for large-scale business?

The shift from manual labor to machinery, innovations in technology, and new power sources.

What caused industrial magnates to eliminate unhealthy competition?

The reduction of earnings on sales due to intense rivalry among businesses.

What philosophy led to business combinations?

The idea that businesses could prosper by merging or collaborating.

What resulted in the narrowing of profit margins?

The practice of dramatically lowering prices to undermine competitors.

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What are business combinations?

Entities formed when two or more independent business units join together.

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Study Notes

Development of Large-Scale Business

  • The Industrial Revolution paved the way for the growth of large-scale business.
  • New technologies, transportation, and communication led to an increase in production and expansion of markets.

Rise of Industrial Magnates

  • Industrial magnates sought to eliminate unhealthy competition due to cutthroat competition, excessive advertising, and unfair trade practices.
  • They aimed to reduce rivalry and create a more stable business environment.

Philosophy of Business Combinations

  • The philosophy of Social Darwinism, which emphasizes the concept of "survival of the fittest," became the seed for the growth of business combinations.
  • This philosophy encouraged industrialists to adapt to changing market conditions and eliminate weaker competitors.

Profit Margins

  • The increase in production costs, combined with the decrease in prices, resulted in the narrowing down of profit margins.
  • Rising labor costs, raw material prices, and other expenses also contributed to the decline in profit margins.

Business Combinations

  • Business combinations refer to the process of consolidating multiple businesses or companies into a single entity.
  • This can be achieved through mergers, acquisitions, or joint ventures, with the goal of increasing efficiency, reducing competition, and enhancing profitability.

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