Building Standard Oil Company - Research Paper Example

Rockefeller paid attention to every aspect of his business, checking every detail to cut his costs, to make his product better, and to add new products. Sometimes he worked with the manual laborers to understand his business better and greatly influenced his partners and managers to follow his example. Dominick Armetano described that his business: “prospered quickly in the intensely competitive industry due to the economic excellence of its entire operations. Instead of buying oil from jobbers, they made the jobbers' profit by sending their own purchasing men into the oil region.

They also made their own sulfuric acid, barrels, lumber, wagons, and glue. They kept minute and accurate records of every item from rivets to barrel bungs. They built elaborate storage facilities near their refineries. Rockefeller bargained as shrewdly for crude as anyone has before or since; and Sam Andrews coaxed more kerosene from a barrel of crude than the competition could. In addition, the Rockefeller firm put out the cleanest burning kerosene and managed to profitably dispose of most of the residues, in the form of lubricating oil, paraffin wax, and Vaseline.

” (Armetano, 1982) In his quest to make better products Rockefeller started in-house preparation of important inputs into the production process now recognized as “vertical integration”. . Turning waste into a product to resell increases income and lowers the costs. Rockefeller made the oil-refining industry much more efficient, so he was able to purchase many of poorly managed refineries yet his competition like Sun Oil in the USA still existed while international competitors were even larger.

Even his most hostile critics like Ida Tarbell (whose brother was in management of competing company, Pure Oil Company) recognized this efficiency: “Not far away from the canning works, on Newtown Creek, is an oil refinery. This oil runs to the canning works, and, as the newmade cans come down by a chute from the works above, where they have just been finished, they are filled, twelve at a time, with the oil made a few miles away. The filling apparatus is admirable As the newmade cans come down the chute they are distributed, twelve in a row, along one side of a turn-table.

The turn-table is revolved, and the cans come directly under twelve measures, each holding five gallons of oil — a turn of a valve, and the cans are full. The table is turned a quarter, and while twelve more cans are filled and twelve fresh ones are distributed, four men with soldering cappers put the caps on the first set…. The cans are placed at once in wooden boxes standing ready, and, after a twenty-four-hour wait for discovering leaks are nailed up and carted to a nearby door. This door opens on the river, and there at anchor by the side of the factory is a vessel chartered for South America or China … waiting to receive the cans….

It is a marvelous example of economy, not only in materials, but in time and footsteps (Tarbell, 1972) Making good quality products efficiently and selling