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Question

Difficulty: MediumDevelopment of Industrial Capitalism and Transnational Businesses

"Our acquisition of extensive tea estates in Ceylon has allowed us to control every stage of production, from the planting of the leaf to its packaging and final sale in our British shops. By bypassing the traditional brokers and auction houses of Mincing Lane, we can offer tea at a price that brings this former luxury within reach of the working classes. Through the application of modern machinery to crush and dry the leaf on-site, and the utilization of steamship lines to transport the cargo directly, our enterprise demonstrates how the integration of agriculture, transport, and retail under a single firm maximizes efficiency."

—Business prospectus for Lipton’s Tea, Ceylon, c. 1890

The business model described in the passage best illustrates which of the following developments in the global economy during the late nineteenth century?

  1. The growth of transnational businesses that organized production and distribution on a global scale to maximize efficiency.Answer
  2. B
    The persistence of mercantilist monopolies that restricted international trade to state-chartered companies.
  3. C
    The reliance of private Western corporations on direct political administration and territorial annexation to establish trade networks.
  4. D
    The emergence of steam-powered maritime transportation as a key technological innovation of the Second Industrial Revolution.

Answer

The growth of transnational businesses that organized production and distribution on a global scale to maximize efficiency.
The correct answer is correct because the business model described—wherein a British company owns plantations in Ceylon, processes the tea using industrial machinery, and transports it directly to its own retail shops in Britain—is a prime example of a transnational business utilizing vertical integration to maximize efficiency and reduce costs in the global economy.

Step-by-Step Solution

1
Analyze the source text to identify the type of business activity and its geographic scope.
The passage describes a British tea company (Lipton) purchasing agricultural estates in Ceylon, using machinery to process the tea, and transporting it via steamships to sell directly in British shops.
This establishes that the business operates across multiple countries and integrates different stages of production and distribution under a single corporate entity.
2
Relate these features to the broader historical developments of the late nineteenth century.
These practices represent the development of transnational businesses and vertical integration, which were key features of late-nineteenth-century industrial capitalism.
Connecting the specific case of Lipton to global economic patterns allows for the identification of the correct historical concept.
3
Evaluate the choices to eliminate historically inaccurate options or common misconceptions.
Mercantilist monopolies were no longer dominant, direct political rule is not the focus of the private business strategies detailed, and steamships are a product of the First rather than the Second Industrial Revolution.
This confirms the correct option by systematically ruling out distractors based on established chronological and conceptual errors.

Key Concept

Development of Industrial Capitalism and Transnational Businesses
Estimated Time:1m 30s
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Topics

Development of Industrial Capitalism and Transnational Businesses

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