4. Business Practices

New business practices in the areas of management and accounting made possible the more efficient operation of large companies. For example, in steel, coal, and iron companies 19th-century accountants utilized sophisticated, fully integrated accounting systems to calculate output, yields, and costs to satisfy management information requirements. South Durham Steel and Iron, was a large horizontally integrated company that operated mines, mills, and shipyards. Its management used traditional accounting methods with the goal of minimizing production costs, and thus raising its profitability. By contrast one of its competitors, Cargo Fleet Iron introduced mass production milling techniques through the construction of modern plants. Cargo Fleet set high production goals and developed an innovative but complicated accounting system to measure and report all costs throughout theproduction process. However, problems in obtaining coal supplies and the failure to meet the firm’s production goals forced Cargo Fleet to drop its aggressive system and return to the sort of approach South Durham Steel was using.