Illustration of economic growth due to Indutrialization
[audio]Business Competition

Competitive Advantage

  • Competitive Advantage is a condition in which a company dominates other companies that sell the same products or services by making a greater profit.
  • Two ways to get a competitive advantage:
    a. To lower the costs of producing their product or service.
    b. To increase the amount of product or service sold.

Larger Profits through Lower Production Costs

  • Three ways a company can lower its production costs:
    a. By paying its workers less.
    b. By using better tools and faster equipment.
    c. By finding a cheaper source of natural resources.

[audio] Mass production

  • Mass production gave some companies a competitive advantage by providing efficiency to their work.

James Hill

  • Lower production costs by using better equipment and methods gave Hill's Great Northern Railroad a competitive advantage.
  • Other railroad companies began using Hill's methods because the Great Northern Railroad was able to charge lower rates from these methods.

Vertical integration

  • Vertical integration is a condition that a company is able to control everything needed to make a product such as natural resources, transportation, and tools and equipment.
  • Vertical integration can lower production costs and give a company a competitive advantage by not paying anyone a profit for the materials needed for creating a product.

Andrew Carnegie

  • Andrew Carnegie's steel industry is a good example of how vertical integration can give a company a competitive advantage. He controlled everything he needed to make and sell steel products (buying land that contains iron ore, coal, and limestone; making favorable agreements with other companies to buy his steel for making wire, nails, and for constructions).