Let's build a business fairy tale together.
Let's construct a hypothetical business model for making lots of money while keeping our risk as low as possible. We'll pick a new series of products that have very high returns. We know traditionally such products also have very high risks. Well, that's a small problem until we find someone to take the risk for us. How about taxpayers – there are a lot of them. OK, that's handled. Now let's sell as much as possible of our products until no one will buy them anymore. When that happens we'll just go back to selling our old products, especially if we can buy the raw materials at a new, low price. In fact, if we buy low and sell high – I read somewhere that that's a good idea - we may be able to make almost as much money as we did before the new products arrived. We'll set our pricing like this (compliments of The Wall Street Journal 10/30/08):
Oh, sure, we might not sell as much as we used to, but our higher margins will make up for that, and we'll need less people to handle the paperwork because there will be fewer sales to make. So we can have some layoffs to convince people we're seriously concerned about survival.
Now if things should get too scary while we're executing this strategy, we can accelerate the process by showing everyone they should be afraid of our not being profitable. Now, THERE'S AN IDEA! We'll do scary things, like not do business with anyone for awhile. That'll jam things up for a bit. Then we'll do just a little business but only at the highest prices with the most protection we can imagine. People will understand we're afraid because they will be too, by then. Our customers will be praying for us to be more profitable. We'll get concessions from our taxpayer supporters because they want us to stick around, and we'll use the extra buying power to buy out some of our competition or to expand. Won't have to worry about antitrust problems for sure. By then the government will be begging us to get bigger and stronger, and we'll be doing just that.
If only we could figure out how to do that – life would indeed be good…
As always, I welcome your comments.