1. How would you reference the article in a bibliography?

In the bibliography at the end of my essay. I would reference it as. 1. Nick

Robins The Corporation That Changed the World First published by Pluto
Press 2006. page 23
2. How would you reference it in a footnote?
At the foot of the page I would number the reference. Click insert then
Reference then Footnote.1
3. What did the British East Indian Company (BEIC) do?
Firstly the BEIC participated in the import of Asian goods into England and
exports to Asia. Its chartered monopoly status made it the only legal
importer and exporter of good to and from India. Secondly the company also
provided education in England, by establishing a college. (Hailey bury)
.Allowing it to recruit and train competent employees. It collected taxes
from India, for example from Bengal. From approximately 90 Million
Indians. 2 Lastly the company limited competition from Asia through its
polices against Asian competitors and by bribing government officials
because it was given a lot of freedom by the state.
4. Explain some of the distinct characteristics of the business model of the
BEIC
The resources of the company were allocated to the most profitable divisions
of the company. This not only meant that profits were maximized by
focusing on the profitable divisions, but also meant risks were minimized.
Initially the companys system of terminable stocks over permanent stocks
allowed flexibility in the buying and selling of stocks. Most importantly the
BEIC was a vertically integrated company. Its agents purchased the good,
and then these goods were sold at the companys auction floors. By
1 Nick Robins The Corporation That Changed the World (Pluto Press 2006) Page 10
2 The Economist The Company That Ruled The Waves page 4
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controlling both ends of the chain. The company reaped high profits by
importing cheap and low quality goods, and then selling them at high prices.
As compared to other modern companies it had a low shareholder-todirector ratio. 3This allowed the affairs of the company to be monitored
closely, and promoted efficiency.
5. What special circumstances led to its formation? (I.E what problems did it
solve?)
In general the BEIC solved problems that smaller companies failed to solve.
For example most small companies had centralized organizational structures,
and this resulted in heavy workloads burdening senior executives. With the
formation of the BEIC and its decentralized structure work could be
delegated and efficient management achieved. Shareholders did not have to
know each other in order to enter business together, as opposed to
partnerships, which could take time to formulate and reach agreements.
Shareholders did not have to manage the company, which meant anyone
who could afford to buy stocks but had no knowledge of running a business
could get involved as opposed to sole traders at the time. With this type of
business there was continuation. Meaning in the event of the death of a
shareholder, trading continued. As opposed to partnerships and sole traders
where business would stop. This company also assured its investors of
limited liability, giving the company a legal personality and not making
them liable for its depts. This encouraged people to invest in the company.
This in turn led to looses being shared. The BEIC helped meet increasing
demand for Asian goods which was difficult to meet due to a lag time of
transport which was approximately two years. Finally the company
prevented bankruptcy in England. It achieved this through loaning the
government money in times of need.
6. What relationship did it have with the state?
The company had a close relationship with the state. It relied on the state for
its continual existence, and the state allowed the company to operate within
3 Stevens 1967 page 58
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very few boundaries. The BEIC was one of the few companies to be given a
royal charter. The state would allow the company breaks from paying taxes,
a privilege not extended to other companies. The crown was also responsible
for bailing the company out of dept in 1784. In return the company would
give the state expensive gifts such as diamonds, and would pay
tariffis.However after the state brought the company out of dept the
relationship between the BEIC and the state became tense. Primarily because
the state was angered by the company deciding to rule India. This led to tight
supervision by the government which then established a body to direct the
companys directors.
7. What were some of the key problems associated with the BEIC?
The formation of the BEIC brought with it high prices. In an attempt to
please shareholders by increasing dividends. This was also one strategy the
company used to increase investment. The size of the company and the
reliance of the state on the company for extra funding, gave the company
great influence over the state. Leading to the ruling of India by the
BEIC.Another problem was the exploitation of India. In 1757 the company
shifted its focus in India from trade to financial exploitation through high
taxes. This in turn led to a famine in Bengal this wiped out a third of the
population, from starvation,4
8. What does figure 2.1 tell us about the companys share price?
Figure 2.1 tell us that the companys share price was greatly influenced by
economic conditions in England. For instance it dropped significantly at the
start and the end of the South Sea Bubble in 1713.Although the share price
started very low in 1688, they reached peak in1693.The sudden drop in share
price thereafter shows us that the company operated in a bubble which then
burst after investors in England discovered that the company was exploiting
Indians financially. All in all figure 2.1 proves bad management.
Management that failed to keep the share price stable.
4 G A Anderson The Economic Organization of the English East Indian Company
Auburn University USA 1983 Page 13
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