Question

Why was Rockefeller’s use of horizontal integration such an effective business tool at this time? Were his choices legal? Why or why not?

Answer 1

Answer: Horizontal integration enabled Rockefeller to gain tremendous control over the oil industry and use that power to influence vendors and competitors. For example, he could pressure railroads into giving him lower rates because of the volume of his products. He undercut competitors, forcing them to set their prices so low that they could barely stay in business—at which point he could buy them out. Through horizontal integration, he was able to create a virtual monopoly and set the terms for business. While his business model of a holding company was technically legal at that time, it held as much power as a monopoly and did not allow for other businesses to grow and compete.

Answer 2

Rockefeller's use of horizontal integration allowed him to control the petroleum industry.

While his methods would later be deemed unfair, there were no laws in place at the time making his actions illegal.

Step-by-step explanation:

Rockefeller's use of horizontal integration was an incredibly effective business tool at the time. Horizontal integration is where a business acquires or merges with its competitors in the same industry at the same point in the supply chain. This allowed Rockefeller to gain a monopoly over the petroleum industry, thereby controlling price and quality without competition.

As for the legality of his tactics, this was a grey area at the time. Many of his methods were later categorized as unfair business practices under antitrust laws. However, these laws were not in place at the time Rockefeller was building his empire, so technically, his actions were legal then.

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