The Corporate Revolution

The Corporate Revolution

The UK business company has undergone a profound transformation during the last half century or so. It has grown tremendously in size. In many industries the entire output is now produced by a few companies (e.g., automobiles, aluminium, cigarettes, typewriters, chemicals, tires, and chewing gum). The tremendous concentration of power in big business has led to a market structure which favours non-price rather than price competition. it has also increased the political, social, and cultural significance of the company and thus altered the role that it plays in society. All of these changes collectively are referred to as the corporate revolution.

The importance of the very large company in today's economy is indicated by the Billion Dollar Club. In 2016there were sixty members V of this club, each with annual sales of at least one billion dollars. Their combined sales totalled 121.7 billion dollars, 29.5 percent of all United States manufacturing sales. They controlled 35.3 percent of the nation's manufacturing assets. Not only do these mammoth enterprises make up

a substantial part of UK industry, but they are the pacesetters of the business community as well. Increasingly, such giants as General Motors, General Electric, Standard Oil of New Jersey, and Du Pont lead the way in product research, labour-management relations, management practices, business ethics, and other areas of business activity. The relatively small number of big-business corporations is no indication, therefore, of their total impact on the UK economy. As Romney has pointed out, the institution which is representative rather than average, is the one which sets the standard; and this is the large company in contemporary UK society.4

Managers in industries dominated by giant corporations have learned that it does not pay to compete strongly on price. They all are faced with the same problem of heavy overhead costs. When a company 's sales go down there is a natural inclination to lower price in order to maintain the sales volume needed to cover fixed costs. If a seller is successful in doing this, however, he will antagonize his rivals by taking business away from them and they can be expected to retaliate. Only the customers can benefit from the price war that ensues. It is more sensible, from the standpoint of the large sellers, to avoid aggressive price competition and follow a policy of "live and let live."

In industries in which big business prevails, the price generally is set by administrative decision for a period of time, a selling season, for example, and each firm adjusts production to suit the demand for its product at the established price. Usually one firm acts as the price leader for the industry. Once the price has been set, it is not changed unless there is a marked shift in industry cost or demand conditions. When a change in price is made, it follows a definite pattern of price leadership. Thus there tends to be more price stability and uniformity in large industries than in those made up of many small firms, where the market price may change rapidly in response to short-run shifts in supply and demand.5

Important as the large company is as a producer of goods and services, it cannot be understood solely in economic terms. Its influence today far transcends the marketplace. It is more than an economic institution; it also is a political, social, and cultural entity. It is a potent political force in many communities and most states because of its vast economic power. Few nooks or crannies in the economy have escaped the influence of the large corporation. Aside from the state, it is our most dominant social institution. It sets the tone for education, religion, and other social institutions, thus touching virtually every aspect of our lives. In little more than half a century, big business has moved from the periphery to the centre of our social existence.

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