Social environment of business
Chapter 3 - Business Power
James Buchanan Duke was born on December 23rd 1856 in North Carolina. His father was the owner of a small factory which produced a brand of chewing tobacco named Pro Bono Publico. As he became older it was time for him to take over his father's business, however the number of competition was too high. Taking a major risk, he committed his company to a then-novel product- the cigarette. Unfortunately, back in those days, cigarettes were used by people from the lower class, and they were looked down upon. 1 In spite of this, in 1881 Duke brought 10 Russian immigrant cigarette rollers to his North Carolina factory and made about 2,000 per day. Since there was no demand at first, Duke decided to use a famous actress to advertise his cigarettes on a full page newspaper ad. By that time, James Bonsack had invented a machine capable of rolling 200 cigarettes per minute, which failed. Duke saw the opportunity and signed an agreement to operate the machine. The costs of production per thousand was down to $30 from $.80. 2 Duke moved to New York and had the idea to hire people to visit tobacco shops and demand his new machine-rolled Cameo and Cross Cut brands. At one time, he even put glamour photos of semi-nude American actresses on cigarette packs in China. In fact, his cigarettes became a big hit with Chinese men due to this. After carefully observing Rockefeller's conquest of the oil industry he saw that his methods could be applied to the tobacco industry.3 In 1884, he built a holding company called the American Tobacco trust. By1892 he had built the trust into a monopoly that controlled 98 percent of the domestic cigarette market and sold 2.9 billion cigarettes. His method was to sell his cigarettes at full retail price to dealers which were spied on occasionally by detectives to make sure they were not selling competitors brands. Duke's method shows how much the power of commerce can influence society. Although cigarettes are
James Buchanan Duke was born on December 23rd 1856 in North Carolina. His father was the owner of a small factory which produced a brand of chewing tobacco named Pro Bono Publico. As he became older it was time for him to take over his father's business, however the number of competition was too high. Taking a major risk, he committed his company to a then-novel product- the cigarette. Unfortunately, back in those days, cigarettes were used by people from the lower class, and they were looked down upon. 1 In spite of this, in 1881 Duke brought 10 Russian immigrant cigarette rollers to his North Carolina factory and made about 2,000 per day. Since there was no demand at first, Duke decided to use a famous actress to advertise his cigarettes on a full page newspaper ad. By that time, James Bonsack had invented a machine capable of rolling 200 cigarettes per minute, which failed. Duke saw the opportunity and signed an agreement to operate the machine. The costs of production per thousand was down to $30 from $.80. 2 Duke moved to New York and had the idea to hire people to visit tobacco shops and demand his new machine-rolled Cameo and Cross Cut brands. At one time, he even put glamour photos of semi-nude American actresses on cigarette packs in China. In fact, his cigarettes became a big hit with Chinese men due to this. After carefully observing Rockefeller's conquest of the oil industry he saw that his methods could be applied to the tobacco industry.3 In 1884, he built a holding company called the American Tobacco trust. By1892 he had built the trust into a monopoly that controlled 98 percent of the domestic cigarette market and sold 2.9 billion cigarettes. His method was to sell his cigarettes at full retail price to dealers which were spied on occasionally by detectives to make sure they were not selling competitors brands. Duke's method shows how much the power of commerce can influence society. Although cigarettes are