Andrew Carnegie and Vertical Integration

In the time when the steel industry first began in the 1850s and continued to become more recognized and established throughout, there were major players taking control of the field. One of the most renowned people who took the steel industry by storm was Andrew Carnegie.

As a little boy, Carnegie worked in a Pittsburgh cotton factory before he advanced to the position of division superintendent of the Pennsylvania Railroad in 1859. During his journey, he invested in a variety of ventures that included iron and oil companies, making his first fortune. Moreover, at a young age, Carnegie was a striving entrepreneur, but he really became famous when he amassed a fortune in the steel industry. He started his own company called Carnegie Steel, which soon became the most dominant company due to his very notable and clever strategy: vertical Integration. Vertical integration, according to the Strategic CFO, "is the process or a company's domination of every aspect of the production line or process for a particular product. This means that Carnegie bought different types of companies in order to enhance his company's supply chain, allowing him to not have to rely on a middle man to supply them for him. Prices were now able to be cut and opened a doorway for him to completely assert his dominance in the market.

Although, unlike horizontal integration that increases production of goods or services at the same part of the supply chain, vertical integration created so much of an unbalancing domination that was unfair in the steel industry that it is now illegal, being considered a vertical monopoly. It prevented startup companies or small companies from having a slight chance to make a contribution in the market. That is why today, we see more of horizontal integration than vertical integration.

https://strategiccfo.com/vertical-integration/