{"id":7592,"date":"2015-12-09T23:35:55","date_gmt":"2015-12-10T04:35:55","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/"},"modified":"2015-12-11T05:19:57","modified_gmt":"2015-12-11T10:19:57","slug":"monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/","title":{"rendered":"Monopoly, Mercenaries and Merchandize \u2013 Making of the biggest multi-national corporation ever"},"content":{"rendered":"

\u201cMonopoly is the condition of every successful business.\u201d \u2013 Peter Thiel<\/em><\/p>\n

December 31, 1600 AD is a seminal date in the history of the British Empire. On this day, Queen Elizabeth I signed a royal charter, creating the British East India Company (EIC), a company with a monopoly on trade from the Cape of Good Hope in Africa to Straights of Magellan in South America. The EIC went on to become the largest and most prosperous corporation that the world had ever seen.<\/p>\n

\"The<\/a>
The Mughal emperor Shah Alam transferring\u00a0tax collection rights of\u00a0Bengal\u00a0to\u00a0Robert Clive, representative of British East India Company (1765)<\/em><\/figcaption><\/figure>\n

The origins of EIC were rather modest. They started with a capital of \u00a368,373, in comparison the Dutch East India Company (formed in 1602) was 8x better funded<\/strong> and enjoyed substantial military firepower. EIC\u00a0is often accused of using gunboat capitalism to become the most powerful corporation in the world. By 1803, it had an army of 260,000 men<\/strong>,\u00a0had political control over Indian subcontinent and dominated the global trade\u00a0of basic commodities that included cotton, silk, indigo dye, salt, saltpetre, tea and opium. The big question is – Why did others, for instance the French, who had an economy more than double the size of Britain in 1600s and similar global ambitions did not\u00a0produce a worthy rival to the EIC?\u00a0French could have been the business language of the world had a few aristocrats in Paris, better appreciated the\u00a0mechanics behind running a multi-national company.<\/strong><\/p>\n

As Asia again becomes a global growth engine,\u00a0we can learn a lot by examining why the British East India company succeeded where others failed.<\/strong>\u00a0I have tried to distill four key strategic advantages\u00a0the company had over its peers:<\/p>\n

    \n
  1. Limited Liability Structure:<\/strong>\u00a0The concept of a limited liability company was unique for its time.\u00a0EIC\u00a0pioneered the concept of joint stock ownership as a way of raising the massive amount of capital needed for successful overseas trade, as well as managing the risk inherent in the enterprise. The\u00a0idea of receiving dividends\u00a0on the continuous operations of a company was relatively unique in 1600 AD. EIC was a 17th century financial engineering trailblazer\u00a0and\u00a0its financial structure allowed it the flexibility to deploy capital\u00a0at a scale and speed unmatched by its rivals.<\/li>\n
  2. Monopolies at Scale:<\/strong> During 1600s, travelling thousands of miles with unreliable navigation equipment, becoming a victim of pirates\u00a0and political persecution were some of many risks traders faced while travelling East.\u00a0\u00a0A 2011 Economist article sums it well-\u00a0“In the 17th century, round-the-world voyages were rather like space missions today<\/strong>“. Peter Thiel in a 2014 WSJ article says “Perfect competition is considered both the ideal and the default state in Economics 101…\u00a0The opposite of perfect competition is monopoly…\u00a0A monopoly like Google is different. Since it doesn’t have to worry about competing with anyone, it has wider latitude to care about its workers, its products and its impact on the wider world….In perfect competition, a business is so focused on today’s margins that it can’t possibly plan for a long-term future. Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits”. Changing the world often comes at huge upfront costs, a role perfectly suited for ambitious monopolies like EIC.<\/li>\n
  3. Gunboat Diplomacy:<\/strong> The reputation of EIC as violent raiders is not without a reason. They had a standing army of more than 200,000 men, they had forts, diplomats and even their own currency. This effort was augmented by unprecedented capex by the Royal Navy which helped create an extremely\u00a0powerful \u201centry barrier\u201d for future rivals<\/strong><\/li>\n
  4. Industrial\u00a0Revolution\u00a0meets Asia:<\/strong> In 17th Century, India and China accounted for about half of the world’s GDP. Today, this is comparable to the combined GDP share of\u00a0United States, Japan, Germany, the U.K., France, Italy and Canada. Like many multi-national companies of today, EIC took advanced\u00a0technological, financial and administrative innovations to a region\u00a0which dwarfed its\u00a0domestic market. This coupled with decline in the power of Mughals in India helped the company become a de-facto imperial power in Asia and its business became a massive state owned monopoly.<\/li>\n<\/ol>\n

    The history of the British East India Company has lessons\u00a0which will continue to remain valuable in an increasingly\u00a0interconnected world. We should however not forget that the brutalities of the company eventually led to the 1857 Mutiny in India and the Opium Wars of China. The company eventually got nationalized by the British Crown in 1858. EIC\u00a0was a monopoly which was “too big to fail”, its successor is known today as the British Empire.<\/p>\n

    Sources:<\/p>\n

      \n
    1. http:\/\/www.theguardian.com\/world\/2015\/mar\/04\/east-india-company-original-corporate-raiders<\/li>\n
    2. http:\/\/www.wsj.com\/articles\/peter-thiel-competition-is-for-losers-1410535536<\/li>\n
    3. Angus Maddison Data on World GDP<\/li>\n
    4. IMF World Economic Outlook 2015<\/li>\n
    5. http:\/\/www.economist.com\/node\/21541753<\/li>\n
    6. “The East India Company: Trade and Conquest from 1600” by Antony Wild<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

      Lessons from the once dominant East India Company, for the multi-national businesses of tomorrow<\/p>\n","protected":false},"author":757,"featured_media":7621,"comment_status":"open","ping_status":"closed","template":"","categories":[438,1202,1203],"class_list":["post-7592","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-global-leader","category-globalization","category-monopolies"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\nMonopoly, Mercenaries and Merchandize \u2013 Making of the biggest multi-national corporation ever - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Monopoly, Mercenaries and Merchandize \u2013 Making of the biggest multi-national corporation ever - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Lessons from the once dominant East India Company, for the multi-national businesses of tomorrow\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"article:modified_time\" content=\"2015-12-11T10:19:57+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/BritishEastIndiaCompany.3.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"435\" \/>\n\t<meta property=\"og:image:height\" content=\"383\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\\\/\",\"name\":\"Monopoly, Mercenaries and Merchandize \u2013 Making of the biggest multi-national corporation ever - Technology and Operations Management\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2015\\\/12\\\/BritishEastIndiaCompany.3.jpg\",\"datePublished\":\"2015-12-10T04:35:55+00:00\",\"dateModified\":\"2015-12-11T10:19:57+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\\\/#primaryimage\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2015\\\/12\\\/BritishEastIndiaCompany.3.jpg\",\"contentUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2015\\\/12\\\/BritishEastIndiaCompany.3.jpg\",\"width\":435,\"height\":383},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Monopoly, Mercenaries and Merchandize \u2013 Making of the biggest multi-national corporation ever\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\",\"name\":\"Technology and Operations Management\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"性视界Action\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Monopoly, Mercenaries and Merchandize \u2013 Making of the biggest multi-national corporation ever - Technology and Operations Management","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/","og_locale":"en_US","og_type":"article","og_title":"Monopoly, Mercenaries and Merchandize \u2013 Making of the biggest multi-national corporation ever - Technology and Operations Management","og_description":"Lessons from the once dominant East India Company, for the multi-national businesses of tomorrow","og_url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/","og_site_name":"Technology and Operations Management","article_modified_time":"2015-12-11T10:19:57+00:00","og_image":[{"width":435,"height":383,"url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/BritishEastIndiaCompany.3.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/","url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/","name":"Monopoly, Mercenaries and Merchandize \u2013 Making of the biggest multi-national corporation ever - Technology and Operations Management","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website"},"primaryImageOfPage":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/#primaryimage"},"image":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/#primaryimage"},"thumbnailUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/BritishEastIndiaCompany.3.jpg","datePublished":"2015-12-10T04:35:55+00:00","dateModified":"2015-12-11T10:19:57+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/#primaryimage","url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/BritishEastIndiaCompany.3.jpg","contentUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/BritishEastIndiaCompany.3.jpg","width":435,"height":383},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/monopoly-mercenaries-and-merchandize-making-of-the-biggest-multi-national-corporation-ever\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-rctom\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/"},{"@type":"ListItem","position":3,"name":"Monopoly, Mercenaries and Merchandize \u2013 Making of the biggest multi-national corporation ever"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website","url":"https:\/\/d3.harvard.edu\/platform-rctom\/","name":"Technology and Operations Management","description":"MBA Student Perspectives","potentialAction":[{"@type":"性视界Action","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-rctom\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/7592","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/users\/757"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/comments?post=7592"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/7592\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media\/7621"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media?parent=7592"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/categories?post=7592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}