How Subject will be developed?

• Evolution of Business
• Industrial revolution
• Indian Industry ,Globalization challenges and trends
• Business sectors and business organizations
• Start ups and business strategies of Merger Acquisitions for Growth
• Current Business and corporate social responsibility
• Business Management
• Strategic management and trends
Unit 1 Introduction
• Evolution of Business
1.What is Business ?
2.What is scope?
3.Business objectives
4.Environmental influences and challenges for business.
5. Business as process
• Industrial revolution
1. Evolution and revolution of Industry
2. Reasons and outcome
3. Today’s status
4. Future projections and trends
Business Definition
• The Definition Business :-
We may define the term business in the following words :
" As an institution organized by person or group of persons to produce
or distribute goods or services within incentive of earning profit
through the satisfaction of human wants. The element of risk is also
involved in it.“
• The word is coined from verb Busy -ness

• Engaged in activity to generate value and earn revenue

Business Need (opportunities)
Society is homogeneous group of people.
Income disparity.
Educational and cultural diversity.
Gender diversity.
Different needs.
Difference in living standard.
Expectations changes with experience.
Changing demands.
Population growth.
Business Need (opportunities)

Human activities
a) Business
b) Professional
c) Employment (service)
Business
 Business
Introduction
The term business is understood and explained in different ways by different people. For some, business is an activity,
for some it is a method of transacting, for some others, it is a method of money making and some people argue that
business is an organized activity to achieve certain predetermined goals or objectives. Dictionary meaning of business
is: the act of buying and selling of goods and services, commerce and trade. Based on all these meanings of business,
we may define business as: gainful activity through which various elements of society conduct exchanges of the
desirable things.
The purpose of business goes beyond earning profit. There are:
 It is an important institution in society.
 Be it for the supply of goods and services
 Creation of job opportunities
 Offer of better quality of life
 Contributing to the economic growth of the country.
 Standard of living
Business Goals
 Profit - Making profit is the primary goal of any business enterprise.
 Growth - Business should grow in all directions over a period of time.
 Power - Business houses have vast resources at its command. These resources confer enormous economic and
political power.
Business

What is business
• All human beings, wherever they may be, require different types of goods and services to satisfy
their needs. The necessity of supplying goods and services has led to certain activities being
undertaken by people to produce and sell what is needed by others. Business is a major economic
activity in all modern societies concerned as it is concerned with the production and sale of goods
and services required by people. The purpose behind most business activities is to earn money by
meeting people’s demands for goods and services. Business is central to our lives. Business is also
defined as organized efforts by certain persons(Entrepreneur, firm or enterprises)to supply
consumers with good/services.
• Thus Business need Capital, Organization, customer acquisition strategy, product or service with
features and brand ( Goodwill in Market) and service strategy for product having life . Business
has model and a process .Business earn revenue through sales and spends money for wages, rent
and process. Thus if we focus on expenditure to minimize and generate more revenue through
market expansion Business can grow and sustain in time or extinct. As business cycle will also
earn profit or make losses. Business Expansion plan or Business recovery plan( Business turn
around) Thus we need business plan.
 History of Business
• The business has started long back centuries ago . But limited and restricted to the
dwellings. Most of the business in agriculture, cloths and artisans articles( earthen pots
etc.) The demand were known .With developments and increased use of animals ,carts
the commutation among near by dwellings increased the demand and business grew.
Untill the development of currency it was barter transaction. As social development and
urbanization and colonial development increased the demand and to meet this
increased demand a inventions and innovations took place to enhance supply .This led
to industrial revolution in Europe then Britishers established colonels by travelling to
America ,Africa Asia the business increased many fold .
• Thus with new markets increased demands the business became imageable for the
entrepreneur or promotor . These led to development of management principles as well
commerce and tread and industry.
History of Business
Business Models
• Business Models. At its core, your business model is a description of how your business makes money. It’s an
explanation of how you deliver value to your customers at an appropriate cost. Model is process to
structure cost and revenue . Thus these process has three basic steps
• Everything it takes to make something: design, raw materials, manufacturing, labor, and so on.-cost
• Everything it takes to sell that thing: marketing, distribution, delivering a service, and processing the sale.-
cost
• How and what the customer pays: pricing strategy, payment methods, payment timing, and so on.-revenue
As you can see, a business model is simply an exploration of what costs and expenses you have and how much
you can charge for your product or service.
• A successful business model just needs to collect more money from customers than it costs to make the
product. This is your profit—simple as that.
• New business models can refine and improve any of these three components
Business Models

1.Direct sales Model .

Small business the owner takes order execute and dilever it example Chay vendor on railway station. Or A big
organization like Jahagirdar bakery has sales outlet( Organization with functions)
2.Franchise Model.
business owners purchase another organization's business strategy. Instead of creating a new product and the
distribution chain to deliver that product to consumers, the franchisee purchases an ownership stake in a
business model that has already been successfully developed. The company offering its proprietary product or
service, its business processes and its brand is known as the franchisor, and it benefits from a reduction in
capital output used to build new locations. McDonald, Subway etc or Mobile service providers.
3.Freemium Model
For companies that offer personal or business services via the Internet, the freemium business model is
common. Under a freemium model, a business gives away a service at no cost to the consumer as a way to
establish the foundation for future transactions. By offering basic-level services for free, companies build
relationships with customers, eventually offering them advanced services, add-ons, or an ad-free user
experience for an extra cost. The freemium model tends to work well for Internet-based businesses with small
customer acquisition costs, but high lifetime value. Spotify and Skype ,LinkDin these operate under a
freemium business model.
4.Subscription Model
Businesses that operate in an industry with high customer acquisition costs may opt for a subscription
or recurring revenue business model. The objective of a subscription business model is to retain customers
under a long-term contract and secure recurring revenue from repeat purchase of a product or service.Macfee,
Quick heal ,HRB
Business Models
5. Advertising
The advertising business model has been around a long time and has become more sophisticated as the world
has transitioned from print to online. The fundamentals of the model revolve around creating content that
people want to read or watch and then displaying advertising to your readers or viewers. You tube, Internet
editions of news papers
6. Affiliate
The affiliate business model is related to the advertising business model but has some specific differences.
Most frequently found online, the affiliate model uses links embedded in content instead of visual
advertisements that are easily identifiable. TopTenReviews.com
7. Brokerage
Brokerage businesses connect buyers and sellers and help facilitate a transaction. They charge a fee for each
transaction to either the buyer or the seller and sometimes both. Real estate agency , Placement agency
99 Acers, Naukari.com
8. Concierge/customization
Some businesses take existing products or services and add a custom element to the transaction that makes
every sale unique for the given customer. NikeId ,Thomascook,Hoteldesk
Business Models
9. Crowdsourcing
If you can bring together a large number of people to contribute content to your site, then you’re
crowdsourcing. Crowdsourcing business models are most frequently paired with advertising models to
generate revenue, but there are many other iterations of the model. Threadless, for example, lets designers
submit t-shirt designs and gives the designers a percentage of sales. YouTube ,
10.Disintermediation
If you want to make and sell something in stores, you typically work through a series of middlemen to get your
product from the factory to the store shelf. Disintermediation is when you sidestep everyone in the supply
chain and sell directly to consumers, allowing you to potentially lower costs to your customers and have a
direct relationship them as well Telemarketing, health and weight loss products
11.Fractionalization
Instead of selling an entire product, you can sell just part of that product with a fractionalization business
model. One of the best examples of this business model is timeshares, where a group of people owns only a
portion of a vacation home, enabling them to use it for a certain number of weeks every year. Mahindra
holidays
12.Leasing
Leasing might seem similar to fractionalization, but they are actually very different. In fractionalization, you are
selling perpetual access to part of something. Leasing, on the other hand, is like renting. At the end of a lease
agreement, a customer needs to return the product that they were renting from you. Big properties for Sales
offices, or Executive club house
Business
13. Low-touch
With a low-touch business model, companies lower their prices by providing fewer services. Some of the best examples
of this type of business model are budget airlines and additional charges for upgrading the service or choices Jet lite,
14. Marketplace
Marketplaces allow sellers to list items for sale and provide customers with easy tools for connecting to sellers. The
marketplace business model can generate revenue from a variety of sources including fees to the buyer or the seller for
a successful transaction, additional services for helping advertise seller’s products, and insurance so buyers have peace
of mind. The marketplace model has been used for both products and services. eBay, Malls
15. Pay-as-you-go
Instead of pre-purchasing a certain amount of something, such as electricity or cell phone minutes, customers get
charged for actual usage at the end of a billing period. The pay-as-you-go model is most common in home utilities, Post
paid service of mobile
16. Razor blade
The razor blade business model is named after the product that essentially invented the model: sell a durable product
below cost to increase volume sales of a high-margin, disposable component of that product. Gilet, Inkjet printer
This is by no means an exhaustive list of all business models that exist—but, hopefully, it gets you thinking about
how you might structure your business.
How Business happen

• Industry produces product or service to be sold to customer

• Commerce a transaction set up or link between producer and

consumer for smooth transaction

• Goods reaches to customer and money reaches to producer in trading

activity

• This completes the business

Business characteristics
• Activities : Industry- Extraction, reproduction, conversion ,processing and construction of useful products.
Commerce- Activities involving distribution of goods and services.
Trade - Purchase and sale of goods and services.

SCOPE: Industry- Consists of all activities involving conversion of materials and semi-finished products into finished products.
Commerce- Comprises trade and auxiliaries to trade.
Trade - Comprises exchange of goods and services.

CAPITAL: Industry- Generally large amount of capital is required.

Commerce- Need for capital is comparatively less.
Trade - Capital is needed to maintain stock and grant credit.
RISK : Industry- Risk involved is usually high.
Commerce- Relatively less risk is involved.
Trade - Relatively less risk is involved.

Input/output side : Industry-It represents supply side of goods and services.

Commerce-It represents demand side of goods and services.
Trade -It represents both supply and demand.
Business

• A business is an organization that strives for a profit by providing goods

and services desired by its customers.
• Businesses meet the needs of consumers by providing medical care, autos,
and countless other goods and
• services. Goods are tangible items manufactured by businesses, such as
laptops. Services are intangible
• offerings of businesses that can’t be held, touched, or stored. Physicians,
lawyers, hairstylists, car washes, and
• airlines all provide services. Businesses also serve other organizations, such
as hospitals, retailers, and
• governments, by providing machinery, goods for resale, computers, and
thousands of other items.
Business
• Business comprises

Industry

Commerce

Tread
Distinction between components of business
Relationship
Businesss
Industry
• Industry implies all the activities that are concerned with the conversion of raw materials into finished
goods. Conversely, commerce aims at providing goods at the right place, in proper quantity, in the right
condition and at right time. , we have compiled the basic difference between industry and commerce,
Economic activities associated with the procurement or extraction of raw materials and converting them into
finished products which reach the final customer is known as an industry.
• The term ‘industry’ is used to denote those activities which involve the use of mechanical appliances and
technical skills, i.e. activities with the manufacturing, production, and processing of products. It indicates the
supply side of the market. The activities covered under industry are as under:
• Extraction of materials such as coal, petroleum etc.
• Conversion of raw materials into useful goods like soaps, fans, cement, etc.
• Construction of buildings, dams, roads etc.
• The industry represents a group of factories, specialized in a specific product line. The different types of
industries are as under:
• Primary Industry: Industry concerned with obtaining and providing natural raw materials like mining,
agriculture or forestry.
• Secondary Industry: Industry engaged in conversion activities, i.e. converting raw material provided by
primary industry, into finished products.
• Tertiary Industry: Industry that provides support services to the primary and secondary industry.
Commerce
• The term ‘commerce’ means a business activity that involves buying
and selling of goods or services for value (cash or kind) and that too,
on a large scale, between businesses or entities, from one place to
another. When there is a purchase or sale of a particular item, it is
known as a transaction, but commerce refers to all the transactions
associated with the buying and selling of that item in an economy.
• All the economic activities which are in some way or the other related
to exchange comes under commerce. It covers the distribution aspect
of business, i.e. it facilitates consumption process by providing proper
distribution channel. Therefore, it ensures the availability of goods
and services to the customers, at the right time and place
 Commerce
What is commerce
What is Commerce? Is one of the main activity in business
Commerce is the activity of buying and selling of goods and services, especially on a large scale or quantity
Commerce is a branch of production that deals with the distribution; exchange of goods and services and all activities
that assist or facilitate trade. Including financial services like banking, financing, insurance ,crediting
Commerce is also defined as the study of all the activities concerned with buying and selling and distribution of goods
and series.

Commercial transactions are Monitory transactions like paying, lending , taxes, duties, levies etc
Commerce
Role of commerce
• According to the renowned personality James Stephenson, “commerce embraces all
those activities which help to break file harriers between produces and consumers. It is
the sum total of all those processes which are engaged in the removal of hindrance of
person, place or time”.
• (i) Hindrance of person refers to the problem of contact between producers and
consumers commerce removes. This hindrance is removed by trade.
(ii) Hindrance of place refers to the problem of distribution of goods at distant places
without loss. Commerce removes this hindrance by transportation.
(iii) Hindrance of time refers to the problem of existence of time gap between production
and consumption of goods. This hindrance is solved by warehousing or storage.
( iv)Hindrance of capital by bank guarantee and risk by insurance
Thus commerce comprises of banking, insurance, distribution activities a link between
producer and consumer.
 Commerce
Characteristics
Scope of Commerce
Commerce is the study of business activities
The scope of commerce may be seen as embracing the totality of all activities which ensure the distribution and
exchange of goods and services for the satisfaction of the people. Commerce embraces trade and aids to trade.
Functions of Commerce
The following are the various functions of commerce
1 Commerce offers employment opportunities to a large number or people
2 Commerce links buyer and seller together to do business without physical contact.
3 Commerce helps to create wealth for nations as duties are charge on either imported or exported goods
4 Commerce facilities the exchange of goods and services through transportation
5 Commerce leads to the improvement of standard of living and quality of life of the people.
6 Commerce facilitates mass production of goods and thus, people all over the world can enjoy goods and services
within and outside their countries.
Characteristics of Commerce
1.Commerce is an economic activity because it is undertake to earn profit.
2.Commerce involves the exchange of goods and services for profit.
3.The primary objective of Commerce is to earn profit
4.Commerce involves the creation of time and place utility for the products.
5.Commerce consists of regular transaction.
 Evolution of commerce

What is Commerce
Commerce includes all those activities, which are concerned with the distribution of goods and services. It embraces
purchase and sale of every kind as well as various services like transport, banking, insurance, warehousing, etc. which
facilitate trade. Hence, it provides link between producer and consumer. They have been expanding along with the
development of society. It has passed through a number of stages to reach the present level. The standard of living id
directly influenced by the degree of development of commerce. Following are the stages in the evolution of
commerce:
(a) Non-Existence of Commerce and Trade :
(b) Barter Economy :
(c) The Rise of Trade :
(d) National Economy :
(e) World Economy :
 Commerce
Evolution
Evolution of Commerce
(a) Non-Existence of Commerce and Trade : In the early stages of man there were no surplus to be exchanged. Our
primitive ancestors consumed what they produced. The production of goods was only to satisfy one’s need. Since
people did not exchange goods or services, commerce (and trade) was non-existent.

(b) Barter Economy : Human wants increased with the advance of civilization. They could not produce everything they
needed. People came to know that man is skillful in producing a few commodities. He can make them quite rapidly in
large numbers and in beautiful forms. So, at this stage people started producing excess of their needs what they could
produce. People started searching for persons who could get their surplus products in exchange for those goods, which
they required. Commerce made its beginning.

(c) The Rise of Trade : The barter system was not suitable for expansion of trade. The difficulties of barter system
compelled people to find out some common medium for exchange. Several commodities like shells, cattles, oxen,
precious stones, metals, etc. have been used for money from time to time. Ultimately coins paper notes were evolved.
With the evolution of money as a medium of exchange removed the defects and limitations of barter economy. The
money as a medium of exchange helped the expansion of trade. People started producing goods for sale. A class of
traders started helping the producers and consumers for exchange of goods and services. Gradually the traders started
selling at particular places, which later on became market places or trade centers. So the introduction of money led to
the growth of commerce.
 Commerce
Evolution
Evolution of Commerce
(d) National Economy : The introduction of money followed by several other improvements of commercial activities
(transportation, banking, insurance, etc.) greatly helped to develop commerce and trade. The division of work and
specialization helped producers to concentrate on few products only. They started producing goods not only for the
local markets but also for national markets. The specialization in different fields helped the growth of industry and
commerce. The development of transport increased the trade manifold. All these developments were responsible for
developing commerce at national level.

(e) World Economy : The discovery of trade routes between 15th, 16th and 17th centuries brought various countries
nearer to each other. The element of specialization extended to different countries. They started exporting those
products, which they could produce easily and would import those things in which they were deficit or could not
produce cheaply. In this way trade extended to world markets in which good were bought and sold between two
countries. This is also known as international trade. The industrial revolution brought drastic change in industrial
method and industrial organization, which increased the scale of production immensely and changed the scope
of trade. Several middlemen began to operate between the producer and the consumer. Specialized institution like
banks, transport companies, insurance companies and warehousing were set up to help the trader. All these factors
facilitated the development of worldwide trade and commerce. This is the globalization of business.
Commerce and Tread

• Commerce
• We can refer to commerce as all those activities which help directly or
indirectly in the distribution of goods to the ultimate consumer. There will
be no use of producing goods unless & until these goods reach the ultimate
consumer. Goods are produced at one place & consumers are scattered at
different places. Commerce can be classified into two broad categories:
• Trade
• Aids to trade
• Trade
• Trade is an integral part of commerce. It includes buying & selling of goods
& services. The trade segment of commerce brings together the
manufacturer & the consumer, i.e. it is a link between the manufacturer &
the consumer.
 Industry
Evolution
Evolution of an Industry
There was a time in the history of mankind when there were no industrial activities. Our primitive ancestors consumed
what they produced. Hunting was the first stage in the evolution of man. The needs of man were limited only to food,
clothing and shelter. This was an economy of self-reliance. Gradually man entered in pastoral stage under which he
started domesticating animals for milk, meat and skin. He lived near the banks of lakes and rivers because of
availability of grass and water. Soon after this, man entered the agriculture stage. He began cultivating land to grow
food-grains. The economy of the household remained self-sufficient.
(a) Handicraft Stage : Human wants increased with the advance of civilization. They could not produce everything they
needed. People came to know that man is skillful in producing a few commodities. They can make quite rapidly in large
numbers and in beautiful forms. Hence, under handicraft stage artisans living in village produced products for the local
people got in exchange what they needed. At this stage artisans used simple hand-tools and manual skill for producing
the goods. The organization of work was quite simple and there was no division of labor. Family was the unit of
industrial organization. The money exchange medium helped the expansion or industry and trade.
 Industry
Evolution
Evolution of an Industry
(b) Guild System : A guild may be defined as an organized group of artisans or traders. In the middle age (up to 15th
century) working people organized themselves into Guilds. These Guilds were – Merchant Guilds and Artisan Guilds.
The merchant were associations of traders. Artisans engaged in the same line formed artisan or craft guilds. The
membership of these guilds was compulsory. The guilds were able to help the growth of industries development. The
interests of members were protected. The members were protected. The members were expected to produce quality
goods. Reasonable profitability was ensured to the craftsman.

(c) The Domestic System : With the fall guild system, a new system developed which was known as Domestic System.
With the increase in population the demand for goods increased considerably. The artisans were not able to procure
huge quantities of raw materials. They were also unable to purchase latest tools because of their limited resources. A
new class of entrepreneurs came into existence. The entrepreneurs gave work to the artisans who worked in their
homes.
 Industry
Evolution
Evolution of an Industry
(d) The Industrial Revolution : The term ‘Industrial Revolution’ is used to describe a series of changes in the British
industry during the later part of the 18th century and the earlier part of 19th century. A number of inventions took
place in England, which changed the entire technique of production. The word ‘revolution’ means a
fundamental change. In this sense industrial revolution was a change in (a) industrial method, from handwork to work
done by machines driven by power, and (b) industrial organization, from work at home to work at factories. The
consequences of industrial revolution were mass production, mechanization, standardization, growth of capitalism,
specialization and improvement in standard of living.

(e) Present Stage : The present age has been termed as an era of large scale production. The twentieth century has
witnessed a evolution in technology. The latest technology improvements are automation, computerization and use of
atomic energy for peaceful purposes. With automation industrial work can be done faster and better. The machine
needs only to be started and everything goes on automatically. All complicated jobs are done with the help of
machines. The computer system helps to analyze various results. The feedback system in automation helps to make
adjustment if necessary. With the developments indicated above the world of industry is passing through a crucial
period of change.
Industry

Types of Industry
• The sector where raw material gets converted into useful products is called industry.
Activities related to production & processing as well as activities related to rearing &
reproduction of animals or other living species are all included in the industry. The
purpose of industry is to create form utility by converting raw materials into useful forms
of finished products.
• An industry may produce consumer goods or capital goods. Goods such as bread, butter,
cloth, radio, etc. are consumer goods. These goods are directly used by the consumer.
Goods such as machinery, cement etc. are called capital goods as these are used further
in the production process to make useful products.
• Industry can be classified into three broad categories.
• Primary industry
• Secondary industry
• Tertiary industry
Industry

• Primary Industry
• This is also known as extractive industries. It includes activity connected with the
production of wealth directly from natural resources such as water, air, & land
etc. Primary industry includes activities like extraction & processing of natural
resources etc. These industries are further subdivided as follows:
• Extractive industry: These industries extract or draw out products from natural
sources. Raw materials that are mostly products of the soil are some basic supply
of extractive industries. Manufacturing industries transform these products into
many other useful goods. Some of the examples of extractive industries include
farming, mining, lumbering, hunting & fishing operation.
• Genetic industry: The industries involved in the activities of rearing & breeding of
living organism i.e. birds, plants, animals etc. are known as a genetic industry. For
example, rearing of cattle for milk, dairy farms, poultry farms, rearing of plants in
the nursery, growing fish in ponds etc. are included in the genetic industry.
Industry

Types of Industry
• Manufacturing industries: These industries are engaged in the process of
conversion of raw materials or semi-finished goods into finished goods.
These industries create from the utility by changing the form of raw
materials into finished products.
• Construction industries: These industries are concerned with the
construction of buildings, dams, roads etc. These industries use the
products of manufacturing industries such as cement, iron & steel, lime
etc.
• Tertiary Industry
• These industries are concerned with providing those services which
facilitate a flow of goods & services. This industry helps in the activities of
the primary & secondary industry.
Trade
• Trade: The process of buying and selling of goods and services for
money.
• Trade involves the transfer of the ownership of goods or services from
one person or entity to another in exchange for other goods or
services or for money. Possible synonyms of "trade" include
"commerce" and "financial transaction". Types of trade include
barter. A network that allows trade is called a market.
• Theory of Comparative Advantage or Costs. It is the basis of trade.
• Auxiliaries to trade: All the activities which assist trade directly or
indirectly are auxiliaries to trade. It includes transportation,
warehousing, banking & finance, advertising, insurance and so on.
 Types of Trades
Internal trade: It refers to buying & selling of goods or services within the geographical boundaries of a country. It is also known as
home trade or domestic trade. Under internal trade, goods & services are bought & sold in the home currency only. The internal
trade can be two types:
• Wholesale trade
• Retail trade
• External trade: When the buying & selling of goods & services is beyond the geographical limits of the country it is called
external trade. It is also known as trade between two or more countries. In external trade, the market is very wide. External
trade is of the following types:
• Export trade
• Import trade
• Entrepot trade
• Aids to Trade The activities which help in the smooth flow of trade are known as aids to trade. These activities make buying &
selling of goods easier. These help in removing various hindrances of trade which arises in production & distribution of goods. The
common aids to trade are:
• Transport & communication
• Banking & finance
• Insurance
• Warehousing
• Advertising
• Cost and productivity
• Surplus.
Business Activities
1. Business is an economic activity

2. It includes the activities of production or purchase and distribution.

3. It deals in goods and services.

4. It implies regularity of transactions.

5. It aims at earning profits through the satisfaction of human wants.

6. It involves risk; it is not certain that adequate profit will be earned.

7. It creates utilities.

8. It serves a social purpose by improving people’s standard of living.

Business Activities

• Creates an employment opportunities

• Contributes economic growth of the country.
• Improves standard of leaving.
Following are the activities
Manpower
Buying
Financing
Selling
Earning profit.
 Modern Business objectives
• Objectives of business
• Success in business depends on proper formulation of its objectives. Objectives must be clear, and attainable. Objectives may be
divided into two parts -
• (i) economic and
• (ii) social.
• Economic Objectives :
• Earning adequate profit or satisfactory return on capital invested,
• Survival in the case of competition
• Growth to maintain progress.
• Social Objectives:
• Social objectives include providing employment opportunities, supply of quality
• goods and services at reasonable price, improving the standard of living and
• contributing to environmental protection. It also includes justice to workers
• in terms of wages, welfare amenities, improved service conditions and
• professional growth.
Business Goals

• Fundamental objective is profit maximization

• Profit is revenue –cost Revenue sales X price
• Cost is all expenses
Earlier it was sellers market turned to buyers market
Guaranty of profit no more with changed market condition.
Profit is an excess over expenses
Profit is Motivator 1.Main incentive, 2.Motivator 3.Strong sustainer 4.judicious allocator for resources
5.objective indicator for productivity 6. basis of growth.
Profit is an Enabler 1.Business Expansion, 2.Capital investment 3.Supporting Quality 4. Employee satisfaction,
5.Market leader ship 6.Better service conditions 7.Better service to Society 8.Joy of creation
Over a period with lot of developments The Business regarded as social business ,Profit has become secondary
goal.
 Business as Process
Management and organization
What is Business ? The ordinary meaning of the word business is busyness, i.e., any activity in which a man is busy.
Activity may be economic or non economic. But here it is an economic activity
Business is profit seeking activity.
Business may be understood as the organized efforts of enterprises to supply consumers with goods and services for a
profit. Business = Industry + Trade + Commerce.
Business is an economic activity consisting of production, distribution, exchange and auxiliary functions to satisfy the
changing needs and demand of customers to meet the economic goal of business. The business of present stage has
been developed from the very beginning of human civilization. It has been evolved from self-sufficiency stage of a
modern technological stage. Industry and commerce are the two major components of business which is related to
earning the profit and generating wealth. The evolution of business can be studied into two parts:
Evolution of Industry
Evolution of Commerce
Business has following features
Tangible goods Products
Intangible services
Create Value
Generate profit (Revenue-cost)
 Business as process
• Business is a planned process
Need entrepreneur, technology , Resources, Organization, operational procedure, Assets
• Employee satisfaction and development - Business is people. Caring for employee satisfaction and providing
for their development has been one of the objectives of enlightened business enterprises.
• Quality products and services - Persistent quality of products earns brand loyalty, a vital ingredient of
success.
• Market leadership - To earn a niche for oneself in the market, innovation is the key factor.
• Challenging - Business offers vast scope and poses formidable challenges.
• Joy of creation - It is through business strategies new ideas and innovations are given a shape and are
converted into useful products and services.
• Service to society - Business is a part of society and has several obligations towards it.
 Introduction
Business a value creation operation Business
 Resources Manpower , Material
 Assets Money (Capital), Machinery, Land, Infrastructure, Technology, Entrepreneurs
 Environment Internal External
 Stake Holder Government body, Competitor, Customer, Employee, Stock holders
Create value chain adds value and in transaction ( Trade) generates profit ( revenue-Cost)
Revenue is the money a company receives by providing services or selling goods to customers. Costs are expenses for
rent, salaries, supplies, transportation, and many other items that
Business as process
Business as process

Generic Value Chain

Business Changing trends

• Social Institute with social mission great place for people work together and leave high standard of living.
• Public Welfare is an mission people should get quality product and services at most reasonable economic
price.
• Modern thinking is business to take responsibility of serving and safeguarding societal interest.
• Large companies top executives, share holders are of opinion.
a) Profit maximization is not a primary objective.
b) Maximization of sale at maximum
c) Strive to gain Market leadership with maximum share, sales volume, fixed assets and employment.
With this changed outlook business out look is
1. Reduce prices.
2. Pay faire wages.
3. Pay faire and regular dividend to share holders.
4. Expand ,improve, develop business with financial independence
Business Changing outlook
With this changed outlook business out look objectives are as listed
5. Pay fair wages to employees.
6. Enhance Labour welfare substantially.
7. Enhance customer service an good will.
8. Create safe and good working conditions in factory.
9. Help developing Industry to which it belongs to.
10. Contribute to national goals.
11. Profit should be computable to discharge social obligations and responsibility.
Primary objective is not profit but responsible business.
Thus company has to earn reasonable profit to live alive to achieve the primary goal.
Business Changed goals and objectives

Profit works as seed money for .

1. Exploring more products and market
2. Diversification.
3. More dividends.
4. More Tax payment to government.
5. Creating more jobs.
6. More opportunities.
7. Reducing waste to increase productivity.
8. Promoting wellbeing of all societal classes. Rich, poor, privileged, less privileged ,consumers ,producers
,investors, non investors , suppliers etc.
Business Tree
Business operative environment
Business operative environment
Business operating environment
Business output

• The Two types of products are encompasses the market

• Physical product (tangible)
• Services (intangible)
This is dealt in operations Management
Physical products in production management.
Services in value chain management.
As Food, Clothing , Dwelling are basic human need more focus is on
production management
Business operating scenarios based on customer
Business developments
business
• Business owners and managers have a great deal of control over the internal environment of business, which
covers day-to-day decisions. They choose the supplies they purchase, which employees they hire, the
products they sell, and where they sell those products. They use their skills and resources to create goods
and services that will satisfy existing and prospective customers.
• the external environmental conditions that affect a business are generally beyond the control of
management and change constantly. To compete successfully, business owners and managers must
continuously study the environment and adapt their businesses accordingly. These leads to having various
associations, forums. lobbying activities in the nation’s capital in an effort to help policy makersunderstand
the industry and the importance
Business operating environment

Macro Environment
Business Environment Or External Environment
Demographic environment
Economic environment
Geographical and ecological environment
Legal environment
Technological environment
Social environment
Cultural environment
Political environment
• These environment creates challenge as well an opportunity
Business environment influences
• Political and Legal Influences
• The political climate of a country is another critical factor for managers to consider in day-to-day business
operations. The amount of government activity, the types of laws it passes, and the general political stability
of
• a government are three components of political climate. Restrictions and regulations(red tapism) National
laws for taxations ,property laws,, quotas, and export restrictions also must be taken into account. laws
passed and the many regulatory agencies cover such areas as competition, minimum wages, environmental
protection, worker safety, and copyrights and patents.
• For example, Congress passed the Telecommunications Act of 1996 to deregulate the telecommunications
industry. As a result, competition increased and new opportunities arose as traditional boundaries between
service providers blurred. Today the dramatic growth in mobile technology has changed the focus of
telecommunications, which now faces challenges related to broadband access and speed, content
streaming, and much-needed improvements in network infrastructure to address ever-increasing data
transmissions.
• Federal agencies play a significant role in business operations. When Pfizer wants to bring a new medication
for heart disease to market, it must follow the procedures set by the Food and Drug Administration for
testing and clinical trials and secure FDA approval. Before issuing stock, Pfizer must register the securities
with the Securities and Exchange Commission. The Federal Trade Commission will penalize Pfizer if its
advertisements promoting the drug’s benefits are misleading. These are just a few ways the political and
legal environment affect business decisions. States and local governments also exert control over
businesses—imposing taxes, issuing corporate charters and business licenses, setting zoning ordinances, and
similar regulations.
Business environment influences
• Political and Legal Influences
• This is measured as doing ease of business
• FDI –regulations ( Foreign Direct Investment)
• Environmental laws.
• Government policies.
• Minimum wages.
• Laws of land
• Infrastructure availability
• State and central government support
• State taxes, levies
• Income tax, sales tax ,excise duties ,Import duties, Export incentives
 Business environmental influences
• Social Factors
• Social factors—our attitudes, values, ethics, and lifestyles—influence what, how, where, and when people
• purchase products or services. They are difficult to predict, define, and measure because they can be very
• subjective. They also change as people move through different life stages. People of all ages have a broader
• range of interests, defying traditional consumer profiles. They also experience a “poverty of time” and seek
• ways to gain more control over their time. Changing roles have brought more women into the workforce. This
• development is increasing family incomes, heightening demand for time-saving goods and services, changing
• family shopping patterns, and impacting individuals’ ability to achieve a work-life balance. In addition, a
• renewed emphasis on ethical behavior within organizations at all levels of the company has managers and
• employees alike searching for the right approach when it comes to gender inequality, sexual harassment, and
• other social behaviors that impact the potential for a business’s continued success.
Business Environmental influences
• Technology
• The application of technology can stimulate growth under capitalism or any other economic system.
• Technology is the application of science and engineering skills and knowledge to solve production and
• organizational problems. New equipment and software that improve productivity and reduce costs can be
• among a company’s most valuable assets. Productivity is the amount of goods and services one worker can
• produce. Our ability as a nation to maintain and build wealth depends in large part on the speed and
• effectiveness with which we use technology—to invent and adapt more efficient equipment to improve
• manufacturing productivity, to develop new products, and to process information and make it instantly
• available across the organization and to suppliers and customers.
• Many U.S. businesses, large and small, use technology to create change, improve efficiencies, and streamline
• operations. For example, advances in cloud computing provide businesses with the ability to access and store
• data without running applications or programs housed on a physical computer or server in their offices. Such
• applications and programs can now be accessed through the internet. Mobile technology allows businesses to
• communicate with employees, customers, suppliers, and others at the swipe of a tablet or smartphone screen.
• Robots help businesses automate repetitive tasks that free up workers to focus on more knowledge-based
• tasks critical to business operations.
Business environmental influences
• Economic Influences
• This category is one of the most important external influences on
businesses. Fluctuations in the level of economic activity create
business cycles that affect businesses and individuals in many ways.
When the economy is growing, for example, unemployment rates are
low, and income levels rise. Inflation and interest rates are other areas
that change according to economic activity. Through the policies it
sets, such as taxes and interest rate levels, a government attempts to
stimulate or curtail the level of economic activity. In addition, the
forces of supply and demand determine how prices and quantities of
goods and services behave in a free market.
Economic environmental influences

• Economy created markets .Monopoly , Duopoly , Oligopoly

• Market decides the competition ,No competition ,or Cartel
• This has changed control as sellers market to buyers market
• Equation of profit
• Sellers market Cost + Profit = Price Monopolistic market
• Buyers market Price –Cost = profit Oligopoly Perfect competition.
• In the beginning market behavior was monopolistic .Thus led to
competition and development of product .
• Increases focus on quality and customer expectations
Industrial revolution
Industrial Revolution: a rapid development in industry … the development which took place in England in the
late eighteenth and early nineteenth centuries, chiefly owing to the introduction of new or improved
machinery and large-scale production methods
the industrial revolution was the culmination of a series of technical improvements in the textiles industry,
small improvements individually but collectively giving rise to profound and far-reaching change. The process
started with James Hargreaves’ spinning jenny, invented in 1764.
This invention made it possible to deliver more yarn than heretofore. Whereas, though one weaver had
employed three spinners, there had never been enough yarn, and the weaver had often been obliged to wait
for it, there was now more yarn to be had than could be woven by the available workers… Now that the
weaver could earn more at his loom, he gradually abandoned his farming, and gave his whole time to
weaving… By degrees the class of farming weavers wholly disappeared, and was merged in the newly arising
class of weavers who lived wholly upon wages, had no property
This process was accelerated by a series of subsequent inventions. The spinning jenny was quickly followed by
Richards Arkwright’s spinning throstle and carding engine, Crompton’s mule, Cartwright’s power loom, and
James Watt’s steam-engine, and this succession of inventions led in turn to the industrial revolution – ‘the
victory of machine-work over hand-work
Industrial revolution
The Continental movement and the British Agricultural Revolution Agricultural
Revolution made food production more efficient and less labor intensive,, •
encouraging the surplus population who could no longer find employment in
agriculture into cottage cottage industry , for example weaving weaving, and in the
longer term into the cities and the newly-developed factories factories. . • The The
colonial expansion of the 17th century with the accompanying development of
international trade creation of financial markets financial markets and accumulation
of capital are also cited as factors. in England – No civil strife– Government favored
trade– Laissez faire– Large middle– Island geography– Mobile population Everyone
lived within 20 miles of navigable river of– Tradition of experimental science – Weak
guilds
The The Industrial revolution was the was the major shift of technological,
socioeconomic and cultural conditions in the late 18th and early 19th century that
began in Britain and spread throughout the world
Industrial revolution
The single great cause of this increase in wealth has been industrialization. the early stages of industrialization are
often dirty, exploitative, and painful. Britain had achieved political stability, acquired a colonial and commercial
empire, founded banks and insurance systems, and discovered ways to increase its food output . First in the cotton
textile industry, then with improvements in coal mining, pottery manufacture, and iron smelting, new methods
began to catch on, including the application of water and steam power to machinery, the concentration of large
work forces in factories and mines, and the division of labor.
Carnegie in steel and Rockefeller in oil built near monopoly corporations of unprecedented size as they came to
dominate entire industries. Henry Ford, borrowing from the bicycle and meat-packing industries, worked out how to
mass-produce motor cars on a moving assembly line from fully interchangeable component parts.
Industrialization victimized some people It benefitted others. This course will examine the lives of early industrial
workers who suffered terrible working conditions in horribly polluted cities, frequent industrial accidents, reduced
life expectancy, and the shattering of traditional ways of life.
Industrialization base was innovations and inventions it has created a higher standard of living for more people than
ever before, greater longevity, and greater opportunities.
The overall effect of industrialization has been liberating; in fact, democracy correlates closely with industrialization,
as does the presence of mass literacy, widespread higher education, and respect for human rights.
Industrial revolution
The word industry tends to conjure negative associations, perhaps in part because of certain odd
characteristics that we nearly all share. First, humans are capable of an incredible depth of ingratitude. Most of
us never think about the debt we owe to our industrial predecessors—except when the things they gave us are
suddenly taken away. The people who brought it about were trying to make themselves rich and were rarely
motivated by a sense of benevolence toward others. Many of them were ruthless employers; the successful
ones made themselves rich while leaving their employees poor. Industry has also caused many of the
environmental problems we face today. extracting fossil fuels from the earth is dangerous and dirty, and
burning them causes pollution. Finally, the Industrial Revolution made warfare much more horrific mass killing
by machine gun high explosive bombs, and industrial gas. Worse still, it brought us nuclear weapons, the
ultimate indiscriminate killing machine, capable of destroying everything. It might seem paradoxical to
celebrate a process that shattered traditional ways of life, increased economic inequality, exploited workers,
fouled the atmosphere, and exponentially increased the horrors of war. It might seem paradoxical to celebrate
a process that shattered traditional ways of life, increased economic inequality, exploited workers, fouled the
atmosphere, and exponentially increased the horrors of war.
Industrial revolution
in traditional societies are powerless, and the accident of birth decides irrevocably what they will do in life.
These are ways of life that tend to be short, oppressive, and exhausting. To a hunter-gatherer or a peasant—
the fate of tens of millions throughout world history—is to live a life of constant drudgery, completely devoid of
choice. gap between the richest and the poorest often increases with industrialization. but it’s also true that
the poorest people in advanced industrial societies are in many ways richer than the richest people in a
traditional society. It would be pointless to deny that the exploitation of industrial workers has been severe at
many times and places throughout the Industrial Revolution.
The Marxists himself believed that as the rich got richer, the poor poorer until, finally they raise rebellion
against the wealthy minority. What Marx was seeking was industrialization without exploitation—that is,
industrialization without capitalism. Early 20th century the rich realized they could continue getting richer only
by making the poor richer. Richer recognized that their capacity to make things had outstripped their pool of
consumers;
The first employer to apply this principle in significant way was Henry Ford, who overnight raised the average
worker’s pay at his auto assembly line factories from about $1.50 per day to $5. The raise kept the workers on
the job and had the effect of turning them into buyers and drivers of Ford cars.
This gap between higher out put and lower wages led a great depression. Environmentally, the early stages of
the Industrial Revolution were filthy with appalling levels of smog and smoke in air.
Environmental remediation became a new entrepreneurial opportunity, and inventors hastened to supply the
demand. The horribly destructive weapons made possible through industrialization remain with us. Even here,
however, there are a few offsetting factors to consider. The maturing of industrial societies has led to a steady
fall in violence
Industry 1.0 Industrial Revolution
• Industrial Revolution initiated in England Positive points
 The conditions started creeping in incrementally from 1400.
 The Geographically very suitable and closely settled society.
 Only one religion ( Protestant) , Protestant countries had overtaken the Catholic world in terms of
income.
 Characterized by (1) secularization – freeing the economy from religious controls; (2) the growth
of education (and the Protestant emphasis on literacy – ability to read the bible); (3) the dismal
consequences of the Catholic Counter-Reformation; (4) the importance of the Atlantic (slave)
trade in creating an autonomous business class that would demand modernizing institutional
reforms. Which was conducive for development and prosperity.
 The plague in 1400 has reduced the population drastically.
 Government was stable and supportive and was giving lot of incentives.
 end of feudalism and the origin of mercantilism.
 For agriculture there were sacristy of manpower to work due to plague .
 The lands were open and scattered in small strips were fenced enclosed thus lot of experiments
and agricultural development happened for increasing yield many times.
 This led to increased research and experimentation and need for mechanization.
Industry 1.0 Industrial Revolution
• Industrial Revolution initiated in England
 Increased yield and innovations mechanization led to substitute need for manual labor and
handicraft methods.
 The climatic conditions were conducive mild whether and ample rain fall.
 Animal power used previously which was costly ,inconsistent having heavy transfer losses
replaced by use of Coal and steam power ,Steam engine as prime mover.
 The availability of coal and invention of steam engine enhanced the speed and convenience for
transportation.
 It has increased urbanization.
 Banking system was already developed.
 The land consolidation, increased yield , export trad , and loan from banks has eased out capital
requirements.
 Britisher developed canal and sea transportation network.
 Also advancement in ship building out of steel for cheap long distant transport was an added
advantage in economy.
Industry 1.0 Industrial Revolution
• Industrial Revolution initiated in England Negative points
 Increased mechanization ,increased production and yield ( due to high productivity).
 High literacy rate.
 High standard of living of middle and higher middle class.
 Poor industry conditions.
 Increased miming and steel production.
 Now growing population, urbanization Britishers moved out to Canada ,North America ,South
Africa, India, Australia along with other Europeans and established colony's started taking
control on local /original country men.
 Thus they conquered and established their control on such colony’s .
Thus the Industrial revolution happened in England and they become rulers .
Industry 1.0 Industrial Revolution
• Industrial Revolution did not happen in East ( India, Chaina, Japan)
 Conditions in India were not conducive .
 The country was divided and ruled by many dynasties and kings.
 There was social classification based on duties( Chaturvarna system) deep routed.
 Only brahmins are literate and had right to learn read and write.
 Lower class ( Traders and peasants were not allowed to get education).
 Trading community was considered as if thief and corrupt people minting money.
 No one religion ( Hindu, Muslim, Budha, Jain etc.) prevailing in country.
 The demographic distribution was uneven.
 Agriculture out put was less and uncertain no irrigation and less productive methods prevailed.
 Ample cheap labor force so no incentive for mechanization.
 Only few people were rich and were not entrepreneur .
 Business, Industry need huge capital and banking system which were negative.
 Due to poor class no purchasing power hence no demand.
 Whether conditions hot only seasonal rains.
Industry 1.0 Industrial Revolution
• Industrial Revolution did not happen in East ( India, Chaina, Japan)
 By the time conditions changed British people entered in India, started ruling by conquering the
kings and rulers.
 Established East India Company for dumping British industrial products to dump in India killed
local business.
 Started collecting tax and exporting raw material like Indigo, cotton, coal ,paddy etc to England.
 Englishmen came on assignment and not for permanent stay like America, Canada or Australia.
 England never took any initiative for development in these colonies
 Capital, raw material and market needs were fulfilled to great extent.
 Chania had no great incentive and inclination for development.
 Main cultivation is paddy which does not require mechanization.
 No incentive for invention, innovation and mechanization.
 Enough labor force , and central government .
 Country was well spread having different climatic conditions.
 Japan also having same conditions.
Thus it was not possible for Industrial revolution to happen.
 .
The Industrial
Revolution
The First Industrial
Revolution
Historical Significance of the Industrial
Revolution
• An ancient Greek or Roman would have been just as
comfortable in Europe in 1700 because daily life was
not much different – agriculture and technology were
not much changed in 2000+ years
• The Industrial Revolution changed human life
drastically
• More was created in the last 250+ years than in the
previous 2500+ years of known human history
What was the Industrial Revolution?
• The Industrial Revolution was a fundamental change in the way goods
were produced, from human labor to machines

• The more efficient means of production and subsequent higher levels

of production triggered far-reaching changes to industrialized
societies
The Industrial Revolution
 Machines were invented which replaced human labor
 New energy sources were developed to power the new machinery –
water, steam, electricity, oil (gas, kerosene)
 Some historians place advances in atomic, solar, and wind energy at the later
stages of the Industrial Revolution
 Increased use of metals and minerals
 Aluminum, coal, copper, iron, etc.
The Industrial Revolution
 Transportation improved
 Ships
○ Wooden ships → Iron ships → Steel ships
○ Wind-powered sails → Steam-powered boilers
 Trains
 Automobiles
 Communication improved
 Telegraph
 Telephone
 Radio
Developments
 Mass production of goods
 Increased numbers of goods
 Increased diversity of goods produced
 Development of factory system of production
 Rural-to-urban migration
 People left farms to work in cities
 Development of capitalism
 Financial capital for continued industrial growth
 Development and growth of new socio-economic classes
 Working class, bourgeoisie, and wealthy industrial class
 Commitment to research and development
 Investments in new technologies
 Industrial and governmental interest in promoting invention, the
sciences, and overall industrial growth
Background of the Industrial Revolution
• Commercial Revolution
• 15th, 16th, and 17th centuries
• Europeans expanded their power worldwide
• Increased geographic knowledge
• Colonies in the Americas and Asia
• Increased trade and commerce
• Guild system could not meet the demands of increasing numbers goods
Background of the Industrial Revolution
 Scientific Revolution
 17th and 18th centuries
 Discoveries of Boyle, Lavoisier, Newton, etc.
 Intellectual Revolution
 17th and 18th centuries
 Writings of Locke, Voltaire, etc.
 Atmosphere of discovery and free intellectual
inquiry
 Greater knowledge of the world
 Weakened superstition and tradition
 Encouraged learning and the search for better and newer
ways of doing things
Development of the Domestic System of
Production
 Domestic system developed in England
 Late 1600s-late 1800s
 Domestic system of production – “putting out”
system
 Businesspeople delivered raw materials to workers’ homes
 Workers manufactured goods from these raw materials in
their homes (typically articles of clothing)
 Businesspeople picked up finished goods and paid workers
wages based on number of items
 Domestic system could not keep up with demand
Factory System
 Developed to replace the domestic system of
production
 Faster method of production
 Workers concentrated in a set location
 Production anticipated demand
 For example: Under the domestic system, a woman might
select fabric and have a businessperson give it to a home-
based worker to make into a dress. Under the factory
system, the factory owner bought large lots of popular
fabrics and had workers create multiple dresses in
common sizes, anticipating that women would buy them.
Cottage industry Vs Factory
England: Birthplace of the Industrial
Revolution
• No concrete start date for the Industrial
Revolution

• Marked by gradual, slow changes

• After 1750 – these changes were noticeable first

in England
Why the Industrial Revolution Started in
England

Capital for Colonies and

investing in the Markets for Raw materials for
means of manufactured production
production goods

Workers Merchant marine Geography

England’s Resources: Capital
• The Commercial Revolution made many English merchants very
wealthy

• These merchants had the capital to invest in the factory system –

money to buy buildings, machinery, and raw materials
England’s Resources: Colonies and Markets
 Wealth from the Commercial Revolution spread beyond
the merchant class

 England had more colonies than any other nation

 Its colonies gave England access to enormous markets

and vast amounts of raw materials

 Colonies had rich textile industries for centuries

 Many of the natural cloths popular today, such as calico and
gingham, were originally created in India
 China had a silk industry
England’s Resources: Raw Materials
 England itself possessed the necessary raw
materials to create the means of production

 Coal – vast coal reserves powered steam

engines

 Iron – basic building block of large machines,

railroad tracks, trains, and ships
England’s Resources: Workers
 Serfdom and guilds ended earlier in England
than other countries

 English people could freely travel from the

countryside to the cities

 Enclosure Acts – caused many small farmers to

lose their lands, and these former farmers
increased the labor supply
England’s Resources: Merchant Marine
• World’s largest merchant fleet

• Merchant marine built up from the Commercial

Revolution

• Vast numbers of ships could bring raw materials and

finished goods to and from England’s colonies and
possessions, as well as to and from other countries
England’s Resources: Geography
 England is the political center of Great Britain, an
island
 Great Britain (as the entire island was called
beginning in 1707) did not suffer fighting on its land
during the wars of the 18th century
 Island has excellent harbors and ports
 Damp climate benefited the textile industry (thread
did not dry out)
 Government stable
 No internal trade barriers
“Necessity Is the Mother of Invention”

Spinning machine

Need to speed up
weaving

Power loom created

“Necessity Is the Mother of Invention”

Power loom

Increased demand for

raw cotton

Invention of the cotton

gin
“Necessity Is the Mother of Invention”

Cotton gin

Demands for stronger iron

Improvements in iron smelting and

the development of steel
(Bessemer process)
“Necessity Is the Mother of Invention”

As more steam-powered
machines were built,
factories needed more
coal to create this
steam
Mining methods
improved to meet the
demand for more coal

•The process of inventing never ends

•One invention inevitably leads to improvements upon it

and to more inventions
The Textile Industry

• Textiles – cloths or fabrics

• First industry to be industrialized

• Great Britain learned a lot about textiles from

India and China
The Birth and Growth of the Textile Industry
John Kay (English)
Flying shuttle,
Hand-operated machine which increased the speed of weaving
1733

James Hargreaves (English)

Spinning jenny, Home-based machine that spun thread 8 times faster than when spun
1765 by hand

Richard Arkwright (English)

Water-powered spinning machine that was too large for use in a
Water frame, 1769
home – led to the creation of factories
The Birth and Growth of the Textile Industry
Samuel Crompton (English)
Combined the spinning jenny and the water frame into a single device, increasing
Spinning mule, 1779
the production of fine thread

Edward Cartwright (English)

Power loom, 1785 Water-powered device that automatically and quickly wove thread into cloth

Eli Whitney (American)

Device separated raw cotton from cotton seeds, increasing the cotton supply while
Cotton gin, 1793
lowering the cost of raw cotton

Elias Howe (American)

Sewing machine, 1846 Speed of sewing greatly increased
Development of Steam Engines
• Early water power involved mills built over fast-
moving streams and rivers

• Early water power had problems

• Not enough rivers to provide the power needed to meet

growing demand
• Rivers and streams might be far removed from raw
materials, workers, and markets
• Rivers are prone to flooding and drying
Steam Power
 Humans tried harnessing steam power for millennia
 Hero of Alexandria, Egypt – created a steam-driven device in the 1st century
B.C.E.
 Thomas Newcomen, England (1704)
 Created a steam engine to pump water from mines
 James Watt, Scotland (1769)
 Improved Newcomen’s engine to power machinery
Steam Engines
• By 1800, steam engines were replacing water wheels as sources of
power for factories
• Factories relocated near raw materials, workers, and ports
• Cities grew around the factories built near central England’s coal and
iron mines
• Manchester, Liverpool
Coal and Iron
 Vast amounts of fuel were required to smelt iron ore
to burn out impurities
 Abraham Darby (1709)
 Discovered that heating coal turned it into more efficient
coke
 John Smeaton (1760)
 Smelted iron by using water-powered air pumps to create
steam blasts
 Henry Cort (1783)
 Developed the puddling process which purified and
strengthened molten iron
Increases in Coal and Iron Production, 1770-
1800
• Coal production doubled
• 6 million to 12 million tons

• Pig iron production increased 250%

• 1800 – 130,000 tons

• Great Britain produced as much coal and iron as every

other country combined
Bessemer Process and Steel
 Prior to the Industrial Revolution, steel was difficult
to produce and expensive
 Henry Bessemer, 1856
 Developed the Bessemer process
 Brought on the “Age of Steel”
 Steel is the most important metal used over the past 150+
years
 Other improvements in steel production
 Open-hearth furnace
 Electric furnace
 Use of other metals to produce various types of steel
 Transportation
Search for more Better and
Increased
markets and faster means of
production
raw materials transportation

Before the Industrial Revolution

•Canal barges pulled by mules
•Ships powered by sails
•Horse-drawn wagons, carts, and carriages

After the Industrial Revolution

•Trains
•Steamships
•Trolleys
•Automobiles
Transportation Revolution
Thomas Telford and
Robert Fulton George Stephenson
John McAdam
(American) (English)
(British)
• Steamboat (1807) • Macadamized roads • Locomotive (1825)
• Sped water (1810-1830) • Fast land transport
transportation • Improved roads of people and
goods

Gottlieb Daimler Rudolf Diesel Orville and Wilbur

(German) (German) Wright (American)
• Gasoline engine • Diesel engine • Airplane (1903)
(1885) (1892) • Air transport
• Led to the • Cheaper fuel
invention of the
automobile
Steamboats

 Robert Fulton invented the steamboat in 1807

 The Clermont operated the first regular steamboat
route, running between Albany and New York City
 1819 – the Savannah used a steam engine as auxiliary
power for the first time when it sailed across the
Atlantic Ocean
 1836 – John Ericsson invented a screw propeller to
replace paddle wheels
 1838 – the Great Western first ship to sail across the
Atlantic on steam power alone, completing the trip in
15 days
Steamer
Macadamized Roads

 Strong, hard roads invented by Thomas Telford and John

McAdam

 Improvement over dirt and gravel roads

 Macadamized roads have a smooth, hard surface that

supports heavy loads without requiring a thick roadbed

 Modern roads are macadamized roads, with tar added

to limit the creation of dust
Road Making
Railroads
 1830 – Stephenson’s “Rocket” train traveled the 40
miles between Liverpool and Manchester in 1 ½
hours
 1830-1870 – railroad tracks went from 49 miles to
over 15,000 miles
 Steel rails replaced iron rails
 1869 – Westinghouse’s air brake made train travel
safer
 Greater train traveling comfort – heavier train cars,
improved road beds, and sleeping cars
Railway
Communications Revolution
Samuel F.B. Morse Alexander Graham Cyrus W. Field
(American) Bell (American) (American)
• Telegraph (1844) • Telephone • Atlantic cable
• Rapid (1876) (1866)
communication • Human speech • United States
across continents heard across and Europe
continents connected by
cable
Guglielmo Lee de Forest Vladimir Zworykin
Marconi (Italian) (American) (American)
• Wireless • Radio tube • Television
telegraph, an (1907) (1925)
early form of • Radio • Simultaneous
the radio (1895) broadcasts audio and visual
• No wires could be sent broadcast
needed for around the
sending world
messages
Printing Revolution
 Printing – 1800-1830
 Iron printing press
 Steam-driven press
 Rotary press – 1870
 Invented by Richard Hoe
 Printed both sides of a page at once
 Linotype machine – 1884
 Invented by Ottmar Mergenthaler
 A machine operator could create a “line of type” all at
one go, rather than having to individually set each letter
 Newspapers became much cheaper to produce
 Cost of a newspaper plummeted
 Number of newspapers increased
Review Questions
1. What was the Industrial Revolution?

2. Describe at least three developments of the Industrial

Revolution.

3. Compare and contrast the domestic and factory methods

of production.

4. Why did the Industrial Revolution begin in England?

5. Explain why one invention or development leads to

another.
Review Questions
6. Explain how developments in the textile industry sparked
the Industrial Revolution.

7. Describe at least three developments in the area of

transportation.

8. Describe at least three developments in the field of

communications.

9. Considering the conditions necessary for industrialization to

occur, how well equipped is the undeveloped world for
becoming industrialized? Are modern undeveloped nations
in a better or worse position than 18th- and 19th-century
England?
The Agricultural
Revolution
The Agricultural Revolution
 Agricultural methods had not changed much since the Middle Ages
 Tools – hoe, sickle, wooden plow
 Three-field system – farmers left 1/3 of the land fallow each year to
restore fertility to the soil
 Open-field system – unfenced farms with few improvements made
to the land
 No significant surplus – only enough food was made to feed the
population
Agriculture and Industry
 The Industrial Revolution brought machinery to
farms
 The use of farm machinery meant that fewer farm
workers were needed
 Displaced farm workers moved to the cities to find
work in factories
 This is called rural-to-urban migration
 Growing populations in urban cities required
farmers to grow more crops
 Food to eat
 Raw materials (like cotton) for textile factories
Agricultural Innovators

Jethro Tull Lord Townshend Robert Bakewell Arthur Young Justus von Liebig
(English) (English) (English) (English) (German)
• Seed drill: • Crop rotation: • Stock • Agricultural • Fertilizers:
Planted seeds Ended the breeding: First writer: Invented
in straight rows three-field to scientifically Popularized fertilizers to
as opposed to system by breed farm new farming enrich
scattering illustrating animals for methods and exhausted soil,
them over a how planting increased machinery which
field different crops production of, increased the
• Horse-drawn in the same and better amount of
cultivation: field each year quality, beef, available
Loosened the kept the soil milk, wool, etc. farmland
soil and from becoming
eliminated exhausted
weeds
 Agricultural Machinery
Eli Whitney – Cotton gin (1793) – Increased cotton
production

Cyrus McCormick – Mechanical reaper (1834) –

Increased wheat production

Other important inventions: Horse-drawn hay rake,

threshing machine, steel plow

Steam engines, gasoline and diesel engines, and electric

motors were added to farm machinery as these types of
engines were invented.

The Industrial and Agricultural Revolutions

complemented one another. Developments and needs
in one created developments and needs in the other.
Agricultural Science
 Agriculture became a science during the Agricultural
Revolution
 Farmers and governments invested in agricultural
research
 Established agricultural schools, societies, and experimental
stations
 Progress in agriculture
 Pesticides, stock breeding, new foods, food preservation, new
farming techniques and irrigation methods, frozen foods
 Result
 Today, in the industrialized world, much more food is grown
by far fewer farmers than was grown 200 years ago (or is
grown today in the non-industrialized world)
Review Questions
1. Describe three features of agriculture before the
Agricultural Revolution.

2. How did agricultural machinery change farm labor?

3. Describe the inventions or methods of at least

three agricultural innovators.

4. Weigh the pros and cons of modern agriculture’s

use of pesticides, preservation, and stock breeding.
The Second Industrial Revolution
The First and Second Industrial Revolutions
 The first, or old, Industrial Revolution took place
between about 1750 and 1870
 Took place in England, the United States, Belgium, and France
 Saw fundamental changes in agriculture, the development of
factories, and rural-to-urban migration
 The second Industrial Revolution took place between
about 1870 and 1960
 Saw the spread of the Industrial Revolution to places such as
Germany, Japan, and Russia
 Electricity became the primary source of power for factories,
farms, and homes
 Mass production, particularly of consumer goods
 Use of electrical power saw electronics enter the marketplace
(electric lights, radios, fans, television sets)
The Spread of the Industrial Revolution
 Mid-1800s – Great Britain, the world leader in the
Industrial Revolution, attempted to ban the export of its
methods and technologies, but this soon failed
 1812 – United States industrialized after the War of 1812
 After 1825 – France joined the Industrial Revolution
following the French Revolution and Napoleonic wars
 Circa 1870 – Germany industrialized at a rapid pace,
while Belgium, Holland, Italy, Sweden, and Switzerland
were slower to industrialize
 By 1890 – Russia and Japan began to industrialize
Transportation
 Railroads
 Industrialized nations first laid track in their own countries, then
in their colonies and other areas under their political influence
 Russia – Trans-Siberian railroad (1891-1905)
 Germany – Berlin-to-Baghdad railroad across Europe to the
Middle East
 Great Britain – Cape-to-Cairo railroad vertically across Africa

 Canals
 Suez Canal (1869) – provided access to the Indian Ocean from
the Mediterranean Sea without the need to sail around Africa
 Kiel Canal (1896) – North Sea connected to the Baltic Sea
 Panama Canal (1914) – provided access from one side of the
Americas to the other without the need to sail around the tip of
South America
Transportation
 Automobiles
 Charles Goodyear – vulcanized rubber, 1839
 Gottlieb Daimler – gasoline engine, 1885
 Henry Ford – assembly line, 1908-1915
 Airplanes
 Orville and Wilbur Wright – airplane, 1903
 Charles Lindbergh – first non-stop flight across the Atlantic, 1927
 20th-century – growth of commercial aviation
Review Questions
1. Compare and contrast the First and Second Industrial
Revolutions.

2. When did the United States begin to industrialize?

3. Explain how trains and canals aided transportation,

citing at least one example for each.

4. What contributions did Charles Goodyear, Gottlieb

Daimler, and Henry Ford make to automobile
production?
Results of the Industrial Revolution
• Expansion of world trade

Economic • Factory system

• Mass production of goods
• Industrial capitalism
Changes • Increased standard of living
• Unemployment

• Decline of landed aristocracy

Political • Growth and expansion of democracy

• Increased government involvement in society
• Increased power of industrialized nations
Changes • Nationalism and imperialism stimulated
• Rise to power of businesspeople

• Development and growth of cities

Social • Improved status and earning power of women

• Increase in leisure time
• Population increases
Changes • Problems – economic insecurity, increased deadliness of war, urban slums, etc.
• Science and research stimulated
Economic Changes:
Expansion of World Trade
 Increased production meant that industrialized nations produced
more than could be consumed internally
 Sought new foreign markets
 Bought many raw materials from foreign markets
 New iron, steam-powered ships, along with other technological
advances, made international trade (and travel) cheaper, safer, and
more efficient
Economic Changes: Expansion of World
Trade – Free Trade and Tariffs
 Free trade – trade without barriers or tariffs – was
initially used

 As nations competed for markets, protective

tariffs were put in place to limit foreign
competition within an industrialized nation and its
colonies

 Motivation was to protect businesses in the home

country and colonies, but this often meant people
in the home country or colonies paid inflated
prices for goods
Economic Changes: Factory System Possible
Due to Standardized Parts
 Eli Whitney is popularly credited with the invention of
interchangeable parts in the late 1700s
 But interchangeable parts had already been used in Europe
 Before the late 1700s, each part of an item (like a musket) was
made individually by a single person, with each part made to fit
the whole
 Standardized, or interchangeable, parts were created en masse
to make a lot of duplicate products (such as hundreds of
muskets)
 Manufacturers decided upon standard sizes for their goods and
created large quantities of components
 Such as deciding that a musket barrel should be two feet long and making
100 duplicate musket barrels, then deciding that triggers for these muskets
should be two inches tall and making 100 2-inch triggers
 Standardized parts could be kept in a set location in a factory
 As a worker assembled an article, he or she would take whatever parts
were needed from a bin of standardized (interchangeable) parts
Economic Changes: Factory System
Perfected with the Assembly Line

• Developed by Henry Ford between 1908 and

1915
• Brought the work to the worker instead of the
worker to the work
• Product moves along a conveyor belt, with each
worker contributing labor along the way to
create the finished product
Economic Changes: Factory System –
Assembly Line Brings Division of Labor

• Assembly lines bring the work to the worker, saving

time
• Each worker specializes in one part
• An automobile worker may spend 30 years in a
factory only ever putting passenger-side doors on
motor vehicles
• Focusing on one aspect of production can be
repetitive but can also make a worker an expert at
that particular aspect
Economic Changes:
Factory System
 Manufacture comes from the Latin manu and facere, meaning to
make by hand
 But during the Industrial Revolution, the meaning of manufacturer switched
from the person who made an article by hand to the capitalist who hired
workers to make articles
 Workers no longer owned the means of production (simple hand
tools)
 Instead, the newer means of production (expensive machinery) were owned
by the capitalist
Economic Changes:
Mass Production of Goods
 Motor vehicle production in the United States
 1895 – 33,000 motor vehicles
 1910 – 181,000 motor vehicles
 2000 – 5,542,000 passenger cars alone
 Factors contributing to mass production
 Standardized (or interchangeable) parts
 Assembly line
 Labor division and specialization
 Mass production meant more items were produced
at lower costs
 More people could afford to buy manufactured goods,
which in turn spurred demand
Economic Changes: Industrial
Capitalism and the Working Class

 Pre-Industrial Revolution rural families did not rely

solely on wages for sustenance
 Owned their own farms or gardens where they raised
most of their own food
 Made their own clothing
 Unemployment was rare
 Industrialization destroyed workers’ independence
 Workers in cities did not have the means to grow their
own food or make their own clothing
 Workers relied entirely upon their employers for wages
with which they bought everything they needed
Economic Changes:
Industrial Capitalism’s Risks
 Workers came to rely entirely on their employers for
their livelihoods
 No more small family farms or gardens to provide extra food
 No more day-laboring for a neighboring farmer to earn extra
money
 When the factory slowed down, the worker had nowhere to go
for sustenance

 Entrepreneurs assumed enormous risk in establishing

new enterprises
 No more workers working from home – capitalists had to supply
a factory
 No more custom orders – capitalists had to anticipate demand
 No more at-will laborers – workers relied on capitalists for
steady labor
Economic Changes:
Industrial Capitalism
 The financial investments required to run large
industries brought about modern capitalism
 Capital – wealth that is used to produce more wealth
 Entrepreneur – person who starts a business to make a
profit
 Capitalist – person who invests his or her money in a
business to make a profit
 Corporation – company owned by stockholders who
have purchased shares of stock
 Actual running of the company left to hired managers rather
than to the stockholders
 As industries grew and small business operations faded into
obscurity, the relationship between workers and business
owners disintegrated
Economic Changes:
Industrial Capitalism’s Problems

• Small manufacturers cannot compete with large

corporations
• Consumers must buy from large corporations
• Workers have had to fight for decent wages and
working conditions
• Large corporations can influence the
government
Economic Changes:
Increased Standard of Living
• Mass production made manufactured goods less
expensive, so more people could afford them

• Standard of living wasn’t raised for everyone –

factories paid low wages, and many immigrants
and rural-to-urban migrants lived poorer lives
than their parents and grandparents had lived
Economic Changes:
Unemployment
 Overproduction
 Also called under-consumption
 Mass production anticipates demand – if goods don’t sell, a manufacturer
produces less and lays off workers
 Recession
 Overproduction across many industries with widespread lay-offs
 Depression
 Long-lasting recession
Political Changes:
Decline of Landed Aristocracy
 Before the Industrial Revolution – power was in the hands of
the landed aristocracy and monarchs
 Landed aristocracy refers to lords, dukes, etc., who owned the land
 Although vassalage was gone by the 18th century, the working
relationship between lords and peasants remained the same
○ Peasants either worked the land for lords or rented land from them
 Wealth was based on agriculture, which meant that those who
owned the most land were the wealthiest
○ Landed aristocracy owned and controlled the most land, making this the
wealthiest and highest-ranking socio-economic group
 Industrial Revolution – factories became more valuable than
land
 Wealth of the aristocracy dwindled
 Growing middle class, with wealth based in industry, wanted more
political power
 Political Changes:
Decline of Landed Aristocracy
Case Study: The Corn Laws

Problem: British landowners and agriculturalists (lords and farmers)

wanted high prices for their corn.
• Solution: Tariffs known as the Corn Laws established in 1815.

Problem: The growing working class could not afford corn.

• Solution: Repeal of the Corn Laws in 1846.

Problem: The price of corn declined following the repeal of the

Corn Laws, decreasing the wealth, power, and prestige of the
landed aristocracy in Great Britain.
• Solution: There was no solution. The landed aristocracy began its fall from economic
and political power. Economic and political power shifted to the wealthy capitalist,
middle, and working classes.
Political Changes: Growth and Expansion of
Democracy
• The middle class grew during the Industrial
Revolution
• Gained more rights
• The working class effectively began with the
Industrial Revolution
• The working class fought for rights in the workplace
• The working class demanded and earned a voice in
government
 Political Changes: Increased
Government Involvement in Society
 Government actions to help workers
 Legalization of unions
 Established minimum wage
 Standards for working conditions
 Forms of social security
 Government actions to help consumers
 Regulation and inspection of goods and foodstuffs
 Government actions to help businesses
 Laws to stop or limit monopolies
 Some governments took control of vital industries
Political Changes: Increased Power of
Industrialized Nations
• With wealth came power

• Imperialism expanded

• Imperialistic, industrialized nations built up their

navies to gain and protect assets
Political Changes: Nationalism and
Imperialism Stimulated
 Increased production meant an increased need for
raw materials
 Industrialized nations expanded their colonial empires
and spheres of influence in their search for more raw
materials
 Worldwide scramble for colonies
 Fought the peoples in the lands they controlled
 Fought one another for colonies and spheres of influence
 Governments saw imperialist expansion as the key to
continued industrial growth and wealth
 Political Changes:
Rise to Power of Businesspeople

• Along with the working classes, businesspeople gained political rights

• “Captains of industry” or “robber barons” – along with financiers

• Wealth brought political influence
 Social Changes:
Development and Growth of Cities
Paris London
• 18th century - • 18th century –
600,000 people 500,000 people
• Circa 1900 – over • Circa 1900 – over
2,714,000 in the 6,200,000 in the
Paris urban area London urban area
• Circa 2000 – over • Circa 2000 - over
11,000,000 in the 7,100,000 in the
Paris urban area London urban area
• Rural-to-urban migrants – people who left the countryside to live in cities
• A sign of an industrialized nation is that a large proportion of the
population lives and works in urban areas
Social Change: Development and Growth of Cities
Case Studies: Liverpool and Manchester
Liverpool
• 1800 – population under 100,000
• 1850 – population over 300,000
(part of the increase due to Irish
fleeing the potato famine)
• 1900 – population over 700,000
• Major British port city which grew
during the Industrial Revolution
• Population peaked in the 1930s
and has been declining ever since
due to the decline in
manufacturing and imperialism
Manchester
• 1800 – population circa 328,000
• 1850 – population circa 1,037,000
• 1900 – population circa 2,357,000
• Nicknamed “Cottonopolis” in the
mid-to-late 19th century because
of its textile factories
• Began to decline after the
Industrial Revolution but has
stabilized due to new industries
and greater business
diversification
Social Changes: Improved Status and
Earning Power of Women
 Initially, factory owners hired women and children
because they worked for lower wages
 This brought many women, otherwise impoverished, to
cities to work in factories
 Governments limited the work of children and, at times, of
women
 Women gained economic power and independence
 Before industrialization, it was almost impossible for a
woman to remain single and live on her own
 Factories and urban centers attracted women in large
numbers
 Women fought for and eventually gained political rights
Social Changes:
Increase in Leisure Time
 Labor-saving devices invented and produced
 Vacuum cleaners
 Washing machines
 Refrigerators
 Entrepreneurs and inventors developed new forms of
entertainment
 Moving pictures
 Amusement parks
 Birth of the weekend
 Traditionally, Western nations had Sunday (the Christian day of
rest) as the only day off from work
 Saturday was added (after the struggles of Jewish labor
unionists) to accommodate the religious observances of Jewish
factory workers (whose Sabbath, or Shabbat, runs from Friday at
sundown to Saturday at sundown)
 Social Changes:
Population Increases
More
Increased
Agricultural Lower food People ate healthy Population
food
Revolution prices more babies were skyrocketed
production
born

• 1750 – 144,000,000
Europe • 1900 – 325,000,000

• 1750 - 11,000,000
England • 1900 - 30,000,000

• Many people immigrated to industrialized countries

• Numerous nationalities to the United States
• Irish to Manchester and Liverpool in England
• Population growth in industrialized nations required growing even more food
Social Changes: Problems
• Monotony of assembly lines and factory life
• Loss of craftsmanship in manufactured goods
• War became more deadly as weapons became more technologically
advanced and were mass produced
• Economic insecurity – workers relied entirely on their jobs for
sustenance
 Social Changes:
Science and Research Stimulated
 Scientific and technological discoveries became profitable instead of
simply beneficial
 Companies and governments were willing to invest in research and
development
 Patent law
 Came into its modern form under England’s Queen Anne (reigned 1702-1714)
 Inventors have the exclusive right to produce their new inventions for a
period of time
Review Questions
1. Describe the economic, political, and social changes
which resulted from the Industrial Revolution.

2. What risks did workers face from the factory system

of production?

3. How did women benefit from the Industrial

Revolution?

4. Imagine that you are a government official in a

developing nation. What lessons for your country
might you take away from a study of the Industrial
Revolution? What pitfalls might you want to avoid?
The Labor
Movement
Changing Employee-Employer Relationships
 Domestic system
 Workers and employers knew each other personally
 Workers could aspire to become employers
 Factory system
 Workers no longer owned the means of production
(machinery)
 Employers no longer knew workers personally
○ Factories often run by managers paid by the corporation
 Relationships between employers and employees grew
strained
Problems of the Factory System
 Factories were crowded, dark, and dirty
 Workers toiled from dawn to dusk
 Young children worked with dangerous machinery
 Employment of women and children put men out of work
 Women and children were paid less for the same work
 Technological unemployment – workers lost their jobs as their labor
was replaced by machines
Poor Living Conditions
 Factories driven solely by profit
 Businesses largely immune to problems of workers
 Factory (also company or mill) towns
 Towns built by employers around factories to house
workers
 Workers charged higher prices than normal for rent,
groceries, etc.
○ Workers often became indebted to their employers
○ Created a type of forced servitude as workers had to stay on at their
jobs to pay their debts
 Considered paternalistic by workers
○ Some employers had workers’ interests at heart
○ But workers wanted to control their own lives
Slum Living Conditions
 Factory towns – often built and owned by factories
 Not a strange concept to rural-to-urban migrants who were used to living on
a lord’s estate or property
 Full of crowded tenements
 Few amenities
 Tenements – buildings with rented multiple dwellings
 Apartment buildings with a more negative connotation
 Overcrowded and unsanitary
 Workers were unsatisfied both inside and outside the factories
Rise of Labor Unions
 Before labor unions, workers bargained individually –
“individual bargaining”
 Before factories, a worker could bargain for better wages
and working conditions by arguing his or her particular
skills
 But in factories, work is routine and one worker can easily
replace another
 With labor unions, workers bargained together as a
group, or collective – “collective bargaining”
 Organized groups of workers elected leaders to bargain on
their behalf
 Used tools (such as strikes) to gain rights
Weapons Used by Unions and Employers
Weapons Used by Employers Weapons Used by Unions

• At-will employment • Boycotts

• Blacklists • Check-offs
• Company unions • Closed shops
• Individual bargaining • Collective bargaining
• Injunctions • Direct political action
• Laws that limit union activities • Favorable labor legislation
• Lockouts • Feather-bedding
• Open shops • Lobbying
• Outsourcing • Picketing
• Relocation • Sabotage
• Right-to-work laws • Strikes
• Threat of foreign competition • Union label
• Welfare capitalism • Union shops
• Yellow-dog contracts
 British Labor Achievements
Year(s) Event(s)
1799-1800 Combination Laws: Outlawed unions and strikes.

1867 Disraeli Reform Act: Suffrage for workers.

1875 Repeal of the Combination laws; unions and strikes legalized. Union membership grew as a result.

1900 Labour Party: Founded by bringing together different groups representing trade unions, etc.

1901 Taft Vale Decision: House of Lords ruled that unions would have to pay financial damages caused by
strikes (such as loss of income to employers), which threatened to end Britain’s unions.

After 1901 Labour Party: Worked for workers’ rights. (Other major British political parties were Liberals [Whigs] and
Conservatives [Tories].)
1906 Trade Disputes Act: Protected union funds from the Taft Vale court decision. Achieved by Liberal and
Labour parties working together.
1909 Osborne Judgment: Banned trade unions from donating funds to political parties. Hurt the Labour party
because poorer, working class party members could not provide salaries to party’s elected
representatives.

1911 Parliament Act: Stopped the House of Lords from vetoing laws passed by the House of Commons. Paid
members of parliament an annual salary.
1920s Labour Party: Surpassed the Liberal party in power.

1940s-1950s Social security: Labour party government brought increased social programs, including socialized
medicine, along with government control of several industries (electricity, steel, television).
Legal Protections for Workers
• Limited hours for women
• Later – equal pay for equal work
• Eventual end to child labor
• Schools and requirements for school attendance grew as children were
removed from the workforce
• Health and safety codes
• Minimum wage
• Legalization of unions
Rights of Female and Child Workers
 Women and children could legally be paid less than men
for the same work
 Factory owners were more willing to hire them
 Male workers grew resentful
 English child laborers
 England had a history (going back to the 17th century) of training
pauper children (even those younger than five years old) in a
trade
 Poor children followed their mothers into factories
 Early male-dominated unions fought to banish women
and children from the workplace
 Eventually this strategy was abandoned
 Women eventually won right to equal pay for equal work
 Though women today, in reality, still earn less than men at the same
types of work
 Social Insurance/Security
Type of France Germany Great Britain Italy United States
Security

Accident 1928 1884 1906 1898 By various

state laws
Sickness 1928 1883 1912 1898 By various
laws in some
states
Old Age 1910 1889 1908 1898 1935

Unemploy- 1928 1911 1912 1947 1935

ment

Socialized 1948 1884 1948 1948 Medicaid for

Medicine the poorest
(Universal citizens in the
1960s; under
Health Care)
Pres. Obama,
conservative
reforms set for
Review Questions
1. How and why did employer-employee relationships
change during the Industrial Revolution?

2. Describe living conditions in factory towns.

3. Describe the weapons used by employers and unions.

4. Why was the establishment of yearly wages for

members of parliament important to the British Labour
party?

5. What are the advantages and disadvantages of unions

for workers and consumers?
Karl Marx

Louis Blanc

The Cooperative
Movement and
Socialism
Cooperatives
 First cooperative – 1844 in Rochdale, England
 Formed to fight high food costs
 30 English weavers opened a grocery store with $140
 Bought goods at wholesale
 Members of cooperative bought goods at cost
 Non-members paid “retail”
 Profits split among members
 By 1857 – over 1000 members and £100,000 in annual profits
 Growth of cooperatives
 Spread to other industries – banking, building, insurance,
printing, etc.
 By 1900 – 20% of Great Britain’s population had joined a
cooperative
 Concept spread internationally
Socialism
 Socialists – viewed the capitalist system as
inherently wrong
 Belief that capitalism is designed to create poverty and
poor working conditions because of its end goal of earning
maximum profits for investors

 Socialism – government owns the means of

production
 Belief that if the government (“the people”) owns the
means of production, these factories and industries will
function in the public (as opposed to private) interest
Early Socialist Movement
• First socialists were Utopians
• Strove to create a fair and just system
• Community divided tasks and rewards equitably
• Robert Owen
• Charles Fourier
• Claude Saint-Simon
• Louis Blanc
Robert Owen (1771-1858)
 Utopian socialist
 Owned a textile factory in New Lanark, Scotland
 Set up a model community in New Harmony,
Indiana
 Decreased working hours
 Improved working conditions and employee
housing
 Shared management and profits with employees
 Proved that a socialist-based company could be
profitable
Charles Fourier (1772-1837)
 French philosopher
 Coined the term féminisme
 Advocated concern and cooperation as the means to create social
harmony
 Considered poverty to be the main cause of society’s problems
 Envisioned workers (paid at least a minimum wage) living in
“phalanxes” – communities living in a large shared structure
Claude Henri de Saint-Simon
 1760-1825
 As a young man he was in the Thirteen Colonies as part
of the French assistance effort during the American
Revolution
 French socialist philosopher
 Believed all human beings naturally greedy and eager to
obtain wealth and higher social positions
 These tendencies were to be eradicated through education
 Advocated an end to inheritances
 Movement of wealth from rich, powerful families to the state,
which is an instrument of the people
Louis Blanc (1811-1882)
 French socialist philosopher and politician
 Blamed society’s ills on the pressure of competition
 “From each according to his abilities, to each
according to his needs.”
 Came to political power during the Revolution of
1848
 Instituted labor reforms – believed everyone had the right
to work
 Terrible June Days – forced from power after Blanc’s chief
rival let Blanc’s public workshops (designed to give work to
the unemployed) fail
 Returned to France, restored to power, and given a state
funeral after his death
 His writings greatly influenced later socialists
Karl Marx (1818-1883)
 German socialist (communist) philosopher
 Forced to leave Prussia for articles attacking the Prussian
government
 Relocated to France where he was considered too radical
 Wrote Communist Manifesto with Friedrich Engels (1848)
 Relocated to England where he lived out the rest of his
life
 Wrote Das Kapital – the “bible” of socialism (1867)
 “Religion is the opiate of the people.”
 Belief that religion is designed to keep people submissive to
those in power by promising them that their reward is in heaven
Marxism – Communism
Economic
• Economic changes lead to historical changes.
Interpretation of • Historically, the wealthy classes have held all power.
History

• History has been a struggle between the rich and the poor.
Class Struggle • In the Industrial Revolution, the struggle is between the capitalists
(owners of the means of production) and the proletariat (workers).

• Workers produce all wealth but receive only enough to survive.

Surplus Value • “Surplus value” (profit) of the workers’ labor goes to the capitalists.

• Industrial wealth leads to the concentration of wealth among fewer

Inevitability of and fewer capitalists, while the living and working conditions of the
proletariat grow worse.
Socialism • The proletariat will eventually rebel and create a socialist state.
 Socialist and Communist Political
Parties
 First International
 Founded by Marx and others in 1864
 International Workingmen’s Association
 Urged proletariat to overthrow capitalism worldwide
 Broke apart in 1873
 Second International
 Founded in 1889
 National parties more concerned with the politics of their respective nations
 Broke apart during World War I
 Russian Revolution (1917)
 Communists – known as Bolsheviks, led by Vladimir Lenin, came to power
following the overthrow of the tsar
 Left and right wings
 Socialists – right wingers – advocated socialist reforms through voting
 Communists – left wingers – advocated socialist reforms through revolution
 Political parties of both types have existed throughout Europe, the United
States, and all over the world since around the turn of the last century
Soviet-backed Communism
 Russian communism
 Bolsheviks (Communists or Reds) won the Russian civil war
against the Whites
 World’s first socialist/communist state
 Comintern – Communist International
 Founded in Russia (Soviet Union) in 1919
 Sought to spread worldwide communist revolution
 Disbanded during World War II
 Cominform – Communist Information Bureau
 Founded in Soviet Union in 1947
 Disbanded in 1956 as part of de-Stalinization
 Soviet Union (and later China) spread communism
through satellite states and via proxy wars during the
Cold War
Syndicalists and Anarchists
 Syndicalism and anarchism enjoyed popularity during
the late 1800s and early 1900s
 Syndicalism
 Businesses and distribution of income managed by trade unions
 Unions exist separate from the state as opposed to being part
of the state
 Anarchism
 Belief that all governments are bad for the people
 Advocates direct action to remove all forms of government
 Various individual ideologies for post-government societal
organization
Social Catholic Movement
 Opposed to the atheism of socialism
 Yet also opposed to uncontrolled capitalism
 Pope Leo XIII
 Advocated Catholic socialism in 1891 through his support of
workers’ associations
 Pope Pius XI
 1931 – condoned Catholic socialism while condemning
communism
 Stated that workers should share in the profits and management
of industry
 Followed by like-minded Protestant organizations
 Numerous Christian-based socialist political parties still
active in Europe
Effects of Industrialization.
1. India and similar British established colonies lost opportunities of growth.
2. Briton has taken away resources and became more powerful and wealthy
3. Developments did not happen and India is labeled as developing country.
4. No efforts by British rulers to improve living standard of natives.
5. The political set up was directed post liberty for setting up the nation .
6. Less focus was on development and growth
7. Now politicians realized but mean while increased population and
unemployment levels could not speed up growth.
8. Since developed nations depleted resources heavily and deteriorated
environmental conditions brought restrictions on use cheap energy sources like
coal etc.
9. Increased capital demand and slow industrialization increased trade deficit and
increased requirement for loans and borrowings.
10. Now some measures are initiated to become self sufficient and growth oriented
nation.
Strategies adapted
1. More stress to attract foreign Investments through relaxing FDI steaks in various
sectors.
2. Anti dumping duties to safeguard certain business and crops.
3. More spending on education and social welfare to keep society healthy and fit.
4. Opening and collaborating with MNC and Trans national corporations for
bringing new technologies.
5. Taking steps to simplify tax laws and legal system for improving conditions in
ease of business.
6. Participating in open trads with neighboring countries by giving aids in
infrastructural development.
7. Budgeting and supporting the infrastructure development .
8. Trying to boost PPP Public Private Participation projects.
9. Privatization.
The Results of the Industrial Revolution
Industry 5.0 Loss innovation
Loss jobs
Not sustainable
Trend from mass production to
mass customization
Personalized product
Limits:
Limited minerals
No cheap labor
Opportunities: Brains – Creativity Control
complexity
Extensive range of variants due to
Individual requirements of customers
Societal challenges: Ageing population
Primary concern is safety
Improving ergonomics
Long life expectations
Industry 5.0
 Industry
• For centuries, goods including food, clothing, houses and weaponry were manufactured by hand or with the
help of work animals. By the beginning of the 19th century, though, manufacturing began to change
dramatically with the introduction of Industry 1.0, and operations rapidly developed from there. Here is an
overview of that evolution.
Industry 1.0
• In the 1800s, water- and steam-powered machines were developed to aid workers. As production
capabilities increased, business also grew from individual cottage owners taking care of their own — and
maybe their neighbors’ — needs to organizations with owners, managers and employees serving customers.
Industry 2.0
• By the beginning of the 20th century, electricity became the primary source of power. It was easier to use
than water and steam and enabled businesses to concentrate power sources to individual machines.
Eventually machines were designed with their own power sources, making them more portable.
• This period also saw the development of a number of management programs that made it possible to
increase the efficiency and effectiveness of manufacturing facilities. Division of labor, where each worker
does a part of the total job, increased productivity. Mass production of goods using assembly lines became
commonplace. American mechanical engineer Frederick Taylor introduced approaches of studying jobs to
optimize worker and workplace methods. Lastly, just-in-time and lean manufacturing principles further
refined the way in which manufacturing companies could improve their quality and output.
• The Second Industrial Revolution began in the 19th century through the discovery of electricity and
assembly line production. Henry Ford (1863–1947) took the idea of mass production from a slaughterhouse
in Chicago: The pigs hung from conveyor belts and each butcher performed only a part of the task of
butchering the animal. Henry Ford carried over these principles into automobile production and drastically
altered it in the process. While before one station assembled an entire automobile, now the vehicles were
produced in partial steps on the conveyor belt—significantly faster and at lower cost.
 Industry
Industry 3.0
• In the last few decades of the 20th century, the invention and manufacture of electronic devices, such as the
transistor and, later, integrated circuit chips, made it possible to more fully automate individual machines to
supplement or replace operators. This period also spawned the development of software systems to
capitalize on the electronic hardware. Integrated systems, such as material requirements planning, were
superseded by enterprise resources planning tools that enabled humans to plan, schedule and track product
flows through the factory. Pressure to reduce costs caused many manufacturers to move component and
assembly operations to low-cost countries. The extended geographic dispersion resulted in the formalization
of the concept of supply chain management.
Industry 4.0
• In the 21st century, Industry 4.0 connects the internet of things (IOT) with manufacturing techniques to
enable systems to share information, analyze it and use it to guide intelligent actions. It also incorporates
cutting-edge technologies including additive manufacturing, robotics, artificial intelligence and other
cognitive technologies, advanced materials, and augmented reality, according to the article “Industry 4.0 and
Manufacturing Ecosystems” by Deloitte University Press.
• The development of new technology has been a primary driver of the movement to Industry 4.0. Some of
the programs first developed during the later stages of the 20th century, such as manufacturing execution
systems, shop floor control and product life cycle management, were farsighted concepts that lacked the
technology needed to make their complete implementation possible. Now, Industry 4.0 can help these
programs reach their full potential.
 Industry 5.0

• “People will pay a premium if they believe a product will help them
meet their deeper, more personal goals.”
• Human beings have Intelligence and Emotions all other non living
objects have only Intelligence (Robot)
• Industry 5.0 products, on the other hand, empower people to realize
the basic human urge to express themselves – even if they have to
pay a premium price to do so. Making these products requires what
we call the human touch.
• Use of technology to reduce price of product and have virtual
environment to expand personal time will be objective
 Industry 5.0
• Products are customized products.
• Personalized products.
• Designer products.
• Virtually satisfy needs and expectations instantly.
• Reduce uncertainties.
• Reduce lead time
• Create comfort and personalization.
• “Industry 5.0 is a return to pre-industrial production, but one that is
enabled by the most advanced technologies out there.”
Industry 5.0
Mass Production and customized production
Why Industrial Revolution happened?

• Industrial production need huge capital investment for assets ,machinery etc.
• Industrial products have short life and marginal utility.
• Human Intelligence and emotions are limitless.
• Though inventions are limited( disruption) innovations(kaizen) are plenty and unlimited.
• Experience changes expectations hence customer satisfaction has short life.
• Capitalist ( Investor ) looking for speedy results and short pay back and higher returns due to risk.
• Hence the journey started with mass production to mass customization and finally customized designer
product.
• Revolution needed political stability , cheap availability of recourses , ample and interest free capital.
• Revolution is a capitalist driven. Few rich and many poor ( Exploitation)