aceventura3

I am intrigued by how people with liberal leanings view business challenges. So I have a question based on the scenerio below:

Let's say you have a solid well run business with the following cost structure for a product that you sell for $100.

50% is cost of materials and overhead.
40% is the cost of labor.
10% is profit of which 5% you reinvest (Capital improvement, R&D, etc.)

A new competitor enters the market, selling the same product you sell for $85.

You can reduce the cost of materials and overhead by 5% right away by re-negotiating contracts with suppiers and vendors and going on a cost savings program.

In the first year you are willing to sacrifice profits ( and your reinvestment) to make up the 15% difference. and you lower your price to $85 to meet the competition.

In the second year your competiton lowers their price to $80. You can not lower your overhead any further, in fact inflation is going to make any future savings almost impossible. You have already lost one year of profits and sacrificed one year of re-investment in the business.

What do you do?

In your answer please indicate if you lean conservative or liberal.

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highthief

Sell to the highest bidder while you can still make a buck!

Fiscal Conservative, Social Liberal.

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Paradise Lost

You'd stop selling the product. Last I checked, companies stopped selling products they couldn't sell. Texas Instruments used to make a computer, the Ti-91, I believe (I own one, it's old as balls), they lost money, they stopped selling it. Also, unless the two products are identical, you're assuming that somehow this competing product is going to make so much of a difference that a company has no choice but to drop its price, rather than producing one of a higher quality, or perhaps marketing it towards a different crowd. This is almost like a scenario where a generic drug producer comes into the playing field to somehow knock down a name brand product. I can't recall times when a name-brand company was forced to critically rethink their drug's production such as this when a generic brand came along.

I really don't see what this has to do with conservative or liberal, especially considering I have no idea what either word means.

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ratbastid

I'm a liberal. I'm also a businessperson and an entrepeneur.

I'd say in the first place, you're working with terrifyingly small margins if you're only making 10% of your retail price. Most everywhere I've worked (and CERTAINLY every business I've managed) has had a minimum margin expectation of 20% and targets in the 25% to 30% range. That's for general retail sales, there are certainly circumstances where you'd extend discounts, but that margin range allows you to do that.

Second, I've been in businesses where the competition undercut my prices to un-competable levels. It's not fun. What you do is, you don't even try to compete on price. You position your product as distinct from the competitors', you compete on features and services, etc. Profit margin is the lifeblood of any business, and if there comes a time when I can't sell my products or services in a way that preserves the margin I need, I'll go into the shrimp business.

Infinite_Loser

I'd cut labor by about ten to twenty percent while increasing R&D by about ten to fifteen percent.

If the competition is going to undercut your prices to the point where you can't remain competitive, then you should take a different stance regarding your business decision. Instead of trying to offer low-cost, generic items offer high-quality, high cost items.

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highthief

Yeah, that's well put. You have to differentiate on things other than price. Someone will ALWAYS undercut you but that won't matter in many markets where people seek better quality and service.

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host

I would simply cull the best ideas from the article, below, to "motivate" an influential member of congress to "convince" a federal agency to buy my product, at my stipulated price, whether it wanted to, or not, via one of the federal "no bid" contract opportunities that has become so commonplace in the last six years........
Disclosure: I am a cynical liberal, resisting the "bait" of the "t word" tone of this thread's OP.

docbungle

This doesn't sound like a very "solid well-run" profitable business to begin with. It sounds like a money pit to me. If you go into business selling a product with only a 10% profit margin (or 5%!) , you're going to have a lot of stress in your life, as if running a business isn't stressfull enough. You at least better hope this product is not your primary source of income, but something of a loss-leader.

As far as competition goes, this little "experiment" doesn't really deal with any sort of reality, as far as the complications of business ownership. There are ALWAYS adjustments that can be made to overhead, labor, cogs, and such. And also to the items which you wish to sell.

Owning a business is not a political decision. How do "liberals" view business? What an utterly vague question . What does that even mean? Is business a different color to "liberals?" Does business smell different?

Small business owners can ill-afford letting their political leanings interfere with their work, as they are to busy working.

As far as "leaning" politically, I try not to. I am what I am, I think what I think, I am open to suggestions. What does that make me?

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aceventura3

Profit margins depend on the industry. Microsoft has profit margins that average 25.3%, GE - 11.8%, Mcdonald's - 10%, Intel -17%, Ford - less than 1% average over the last five years. 10% in the example is reasonable.

Would anyone cut employee costs?

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Willravel

This depends greatly on the market that you're in. Depeinding on what you're selling, there are very easy ways to seperate yourself from the rest of the pack, despite having an identical product. In food, for example, places like Trader Joe's do excellent business because they market to the health conscious crowd. Now when you get down to it, a bag of tortilla chips is the same no matter where it comes from. Fritos use the same ingredients as the tortilla chips from Trader Joe's, but because of marketing people expect that the product is healthier. Now, this is slightly deceptive, but this is also business. You are responsible for the incomes of a lot of people in your company, and trying to play the hero by not allowing your marketing division to do their jobs will hurt those people.

If I were in the hypothetical business situation layed out, I would do a number of things. First, I ALWAYS have a plan B, C, D, and E. Putting all your eggs in one basket in business should be a lasy resort, as it's massively risky. I would fall back on plan B, which was a lot less profitable than plan A in the beginning, but is safer now. Say when I start a business I have plans to sell widgits, bleebles, and shnozles. Because widgits provide the best effiency of cost to profit, I sell widgits in the beginning. Now that someone else is selling widgits cheaper, I move back to bleebles. I recoup cost with bleebles in order to reestablish the widgit business (market research, product development, etc.).

I would only cut employee costs as an absolute last resort.

aceventura3

Generally you give up the market rather than compete?

If you cut back on capital investment, R&D, etc., how do you distingush your product?

Where do you get the money to switch production from your plan A to your plan B?

Your employees want at least a cost of living wage increase, what do you do?

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Willravel

I was guessing that you were intending to give a situation in which competition was no longer possible.
Experience in marketing tells me that I can do it by myself in a few minutes. A responsible business owner has to know his market and his customers backwards and forwards. Know what they want, and be sure that what they want is your good or service.
Unless one is planning on selling off the business, one would need to invest money no matter what direction you take to deal with the problem. Even if you cut wages, you're cutting production. You lose something no matter what.
I would cut employee costs only as a last resort. Employees work harder than dollars, so I'd rather have one that the other.

Charlatan

Cutting employee costs does not always entail cutting wages. Sometimes it is just laying off one or two employees. Sometimes it means not paying yourself.

The key is to diversify your product base and/market your products in such a way that your "premium" price is acceptable by the public.

The last step in the process is cutting your wages.


There are many unanswered questions in this scenario:

what sector (retail, service, manufacturing, etc.)
what other products do you sell
what is your employee base
etc.

Currently I am assuming retail and one product only (which is stupid because as a retailer with one product you deserve to go out of business).

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Ch'i

...................Withdrawn........................

Dilbert1234567

I think everyone here is overlooking the obvious solution... hired thugs… to remove the competition.

Oh yeah my political leanings, Anarcho-capitalism... but mostly I’m liberal towards social issues, but conservative towards business. But my response does still stands; remove the competition before they get to big.

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Elphaba

The OP insists that only two choices exist, and as some have already pointed out is a false assumption. Even a "widget" identical in every way to the competitor's discounted "widget" has the potential for product differentiation.

Ace, the act of reducing employee expenses in either pay or benefits has the unintended consequence of high turnover. Turnover is extremely costly to a business, and poorly trained employees create poorly made "widgets." The higher priced "widget" maker capitalizes on this mistake.

Edit: Oops...I am a biconceptualist.

Marvelous Marv

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Ustwo

A very good friend of mine who happens to be a raging liberal thanks to having his balls in his wifes purse, and who worked for moveon.org to look for voter fraud (pause for laughter) just started his own business.

I'm waiting to see how long his liberalism lasts

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ASU2003

1. You hope that there is a segment of society that doesn't want to shop at that other store for whatever reason...

2. You could wait them out for a while longer to see if they are purposely taking a loss at this store compared to the locations where they are the only store in town. (Is it against the law to lower prices until your competition goes out of business and then raise prices really high knowing that the barrier to entry in the market is too high for anybody else to start up a different business)

3. Look at expanding into other markets. Or advertising it differently.

4. Could robotics be used instead of lots of labor? The setup costs might be high, but robots work 24/7 and the government doesn't regulate and tax them.

5. Either offer early retirement to some employees or let some employees go.

Social liberal, fiscal conservative. Libertarian on a lot of issues.

aceventura3

I agree the scenerio is simplistic, and we can make it a lot more complicated. But I think those who question the simplicity and the assumtions are trying to take the easy way out of dealing with the real delimas faced by real business manager every day.

At some point, you have to address your labor costs if you want to stay in the market.

Fundementally, if you leave the market most if not all jobs are lost. That is not good for employees.

If you do nothing, and leave your price higher than the competition, you loose market share, and jobs will be lost.

If you continue to cut other expenses and fail to earn a profit and re-invest, the business with deteriorate and jobs will be lost.

If you address labor costs, you may be able to save the business and save jobs for many while only sacrificing either the jobs of a few or lowering wages/benefits.

It seems that no course of action would be acceptable to some of you, but let's assume you do address labor costs. How would you do it?

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Marvelous Marv

Easy rule: If it costs you $1.25 to make widgets, and you sell them for $1.24, eventually, you will go broke.

Try to compete in the areas of service and quality, and avoid the price war. If you can't compete in those areas, you're in big trouble.

I'm a card-carrying Barbara Boxer-Michael Moore supporter.

__________________
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Margaret Thatcher

Baraka_Guru

If I were a conservative, I would slash middle managment, shift production overseas, reduce operation and materials costs at the expense of product quality, divert some R&D funds into celebrity-endorsement advertising to dupe customers into believing the company has a leading-edge product, and then go public.

If I were a liberal, I would be in an industry where I would only have to wait for the government grant cheques to come in.

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ASU2003

You could fire all of your employees and hire people desperate for a job, any job. They will work for $5.15 (or less, if you don't ask questions). Then tell them how to use public assistance to get benefits like health coverage paid for by taxpayers, WIC assistance because your stay at home wife just gave birth and you don't make enough money, you can take away the pensions and 401k's because retired workers don't help the company make money (they might get some social security when they reach 75-80*).

*The age will be raised in the next 40 years since people are living longer and are healthier...and the system won't have enough money currently.

But, then every job will be the same with low pay. If my competitor will only pay X amount, why should I pay more than that? If they don't want a job, they can live on the street. Nobody will be able to get ahead except for the people who own multiple businesses in many locations, or hold large amounts of shares as initial investors in the company.

The crazy idea would be to give a small amount of stock to your employees each month. The longer they have worked there, the larger amount of the company they own. Yes, management might have to give up the large percentage of the company they are holding on to. The hedge fund and mutual fund managers might not like it because there are a lot more people owning the stock so it won't move as much, but there would be fewer outstanding shares so that might help.

(I wonder if they track what the average hourly wage for an American worker is, and if it has gone down since NAFTA and other free trade agreements. Technically, the wages are supposed to go back up once those foreign countries start buying goods made here. What will probably happen is businessmen there will start up companies to compete and sell locally in those countries.)

Or you would wait for them to put a tarrif or tax on some foreign component that your competitor needs.

And better quality does sell if you market it right. I paid $180 compared to $140 because the more expensive one made by a big American company had a density of 4lbs/cubic foot vs. 3lbs/cubic foot. A stupid consumer would of said, I'll take the $140 one because it's cheaper (and it won't do the job). If the no-name brand comes out with a 4lbs/cubic foot version for $170, then the other company has to show me that their product will last longer or is better in some way to justify spending the extra $10.

kutulu

Although I can't speak for their tortilla chips, the items that Trader Joe's sells tend to have little or none of the crap that the national brands use. Compare the ingredients on something like mac and cheese (Kraft vs TJ's) etc.

Willravel

Most, yes, but in tortilla chips you have: corn, oil, salt. That's the same in Fritos or Trader Joes.

roachboy

i have considered responding to this thread, but find the little experiment in the op to be incoherent. i understand it to have been spun out of the discussion about walmart exploiting economies of scale unfairly---ace seemed to have difficulty with this notion that not all firms are equivalent as a function of differences in scale, and so posed this problem that eliminates scale as a problem.

in the op model, abstract variables (firms) produce an undefined commodity.
nothing is defined about how that production is organized--modes of organization are treated as if they do not matter in principle--which is absurd if you are actually trying to think about production practices and strategies.

the rules of the economic game are not defined--apparently in this fictional land of econ 101, you can assume that the metaphysics of capitalism are such that one can arbitrarily move in and out of the scenario provided in order to locate legal and/or institutional parameters that enable your argument to function.

the reverse of this apparently also obtains: competition is assumed to be shaped by something on the order to natural laws--ok so if not natural then mechanical--economic activity is a kind of hydraulics--an action on the part of one actor is assumed to result in a reciprocal action from another. this assumption has to be in place if the erasure of the organization of production as a factor is to be coherent--that is if this erasure is not to grind the game immediately to a halt.

within this game, labor costs are a variable cost: so it is assumed that firms can treat workers like they treat other forms of overhead and that no particular issues follow from eliminating or deskilling the workforce. without making stipulations as to types of production, all that is happening in the op in this regard is a kind of strange little test the function of which is to see how disposable you, as hypothetical capitalist, understand the workers to be--you know, workers---the people who actually make the commodities that your profit margins rely on.
so there is a way in which these little "thought experiments" function to help you as hypothetical capitalist to rationalize elimination of people's modes of livelihood in the interest of protecting your own profits.
in this regard, it is little more than a version of comuter games that get you used to blasting other human being to atoms with death rays.

underneath this is a refusal to accept the simple fact that capitalist economic activity is a type of social activity, that there is no coherent separation between the economy and the wider social formations within which economies operate.

and this separation of the economy into a special zone of human activity, one that floats above society and history, governed by a special metaphyics of capitalist competition, is at the origin of most of the more obviously self-defeating tendencies of capitalist activity.

the treatment of workers as things----as dehumanized, as simply a type of technology that can be thrown away once "market forces" render them "obsolete" or at the whim of management----or as a response to the only Law that capital takes to be meaningful--its own profits--is generally not isolated--it is generally of a piece with assumptions about consumers, about the social formations that surround both firms and consumers (for example) that treat everything as a means to an end. that end is profit.

so the allegorical game presented in the op is incoherent unless you accept a whole series of assumptions that ace did not spell out----and unless you bring into the game assumptions concerning when and how you can step outside the rules and refer to social factors in order to make the game coherent. so it puts folk who consider the game into the position of having to create coherence for themselves in order to play---but because the game leans on econ 101 modelling practices, players find this importing of information to be simply the way in which one plays this sort of game and not a problem with the game itself.

all this is very strange and on another morning would not be worth my time to explain. for better or worse, it is friday and the sun is out and so it seems interesting, in a fleeting kinda way.

o yes--i am neither a conservative or a "liberal"--the conservative mode of parsing politics and the categories that it relies on is also incoherent.
but whatever.

__________________
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spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

aceventura3

Personally I don't respond to the incoherent, why do you?

What I have difficulty with is the notion that a corporation is often considered "bad" when the corporation does what it need to do to survive.

The model is not the point of the OP. What I want to understand is given a business problem that may lead to a negative impact on employment, how people with different political leanings would respond. My gut tells me that most people would respond the same given the exact same set of circumstances. If that is true then how do you explain the views that some posters have toward business?

I find beauty in simplicity, I fully understand that many do not.

I assume a basic understanding of the rules of economics.

True, the OP is fictional, but I can point to hundreds of real companies who have had to deal with the kind of problem outlined in the OP. If this were an MBA course we could spend a full semester on a real business scenerio, but this is not an MBA course. In fact - I am about at the limits of my attention span as it is.

I wanted this to be open ended. Giving those interested in responding the ability to make some of their own assumptions. You could have taken the scenerio in any direction you wanted. I admit failure. There was not much creativity in the responses, and I am sure that is my fault.

In most business situations familiar to me, labor is a variable cost.
If you make that assumption, that is your decision. I have not directly stated how I would respond to the scenerio. There may be ways to respond that I have not considered, hence the open-ended question.
I remember in the early 80's - I had a Commodore 64 computer. I purchased a very simplistic game titled - Themal Nuclear War". In the game you could obtain an arsenal and start a war, and hope to win or not start a war and hope to win if the computer started one. You could build an offensive or defensive arsenal. You could avoid building an arsenal and hope your computer opponent did the same or simply would not attack, etc,etc In all there were about 10 variables and time, to this day it was one of my all-time favorite games and it was just a grid, x's o's and a few other characters. I could have harped on the assumptions put into the game my choice was to enjoy the game. You seem to want to harp on the assumptions for some reason that I really don't understand. The developer of the game had an agenda as do I in my OP. They felt nuclear weapons proliferation would always lead to nuclear war and the death of millions. I would have loved to talk to the guys who wrote the game, but thats me. I don't have a problem with people who I disagree with.

My point here is that everyone has to do what is their best interests, because there is no free lunch. The world is either eat or be eaten. employees must be proactive and not take their jobs for granted. companies should not take things for granted either.

I agree with you here. Not sure your basis for stating I have a "refusal"...

What?!? I am just an average "Joe" who went to a state school. the above is way over my head.

Did you ever state what you would do?

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

roachboy

i did what i would do, ace: i rejected the problem.
and i provided reasons for it.
so in a way i played the game.
rejecting the game is a way of playing it.
i wouldnt have had the sun not been out this morning, though.
i was in a reasonably good mood.
then i started reading more about this obscene legistlative travesty in the senate yesterday and that went away.
now i am going to find coffee and push reset.


and just to be sure you know----this is purely an intellectual game for me---but i realize that my tone slips away from my complete control sometimes, particularly when i strongly disagree--so nothing personal in any of this, yes?

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

aceventura3

I don't want to get all Matrixy on you - but by rejecting the problem you accepted the problem. Perhaps your response is more creative than I originally thought. However, in the real world when you reject your business problems for whatever the reason your employees still suffer. I guess I have to conclude you have no more concern for employees than any greedy capitalist.

__________________
"Democracy is two wolves and a sheep voting on lunch."
"It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion."
"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

Charlatan

The problem ace, is that in the real world, no problem is this simple.

There are all sorts of variables.

Playing your game does nothing more than provide an answer of convenience to your agenda (as you put it).

If that was all you wanted was an answer within the parameters of your game... fine. The problem is, you wish to take your extremely limited premise and extrapolate it into the the real world.

Most here recognize that and either refuse to play or have pointed out the short comings of your premise.

__________________
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- Old Man Luedecke

Johnny Rotten

The answer really does hinge upon what kind of business it is. There are all kinds of things each sector can do besides firing people and/or lowering salaries. The OP wants the stereotypical Liberal response, I'd wager, which is to not fire anyone and therefore look like pussies.

The incompleteness of the question is my rebuttal to that argument. And the fact that it has obviously gotten around despite its incompleteness is perhaps a testament to the mindframes of its messengers. Not of deficiency, necessarily. But of selective vision.

tecoyah

......Exactly..............No Offense to Ace, Just not worth the time,and inevitable arguments.

dc_dux

I agree. I thought it was a simplistic contrived scenario not worthy of response.

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pan6467

I can answer from my own experience as a business owner, but as previous people have stated your guidelines are not true to life.... at least not in any experience I have ever had.

In Sept. of 1995 I bought a pizza place in a city of 16,000 and 8 other pizza joints (Pizza Hut, Domino's, Little Ceasar's were the nationals, East of Chicago, Checker's and Tubby's were regional chains with more stores elsewhere and 2 drive thrus that had pizza delivery and could deliver beer and wine).

The place I bought did about $1,000 -1,500 a week in sales. They paid their drivers as independant contractors and really didn't make much. But the owner was rich and he had given it to his kids to run because he felt they needed to learn business. They didn't do anything but live off dad so he sold it to me for $35,000.

I took over on Sept. 7th 1995, my mothers birthday and by Dec. 1, 1995, I was doing $10,000 per week in sales and still climbing. My net profit after all my overhead, was about $1500/week. By March, 2 competitors were close to going under.

How did I do it?

I worked my ass off, I was there an hour before opening to an hour after close (95% of the time), I did whatever needed to be done thus showing my employees that I didn't ask them to do anything I wouldn't. I started paying my employees $7.5 an hour (with monthly raises), bonuses, plus mileage, had charitable Tuesdays, where the first Tuesday of every month all sales monies went to a certain charity in town (and I never wrote any of it off).

I offered the best product, most reliable service and took pride in what I did.

By paying my employees more and treating them with respect and allowing them to have fun, (I would take them out to dinners, take them to my home and have hot tub parties, and so on) I promoted loyalty. This loyalty showed by their families and friends ordering on a regular basis, respect amongst the town for not just how I treated employees but how I ran my business.

I had to pay full price for my goods (and those prices especially on cheese could skyrocket and were unpredictable from week to week), unlike the nationals that have their own distribution, or those locals that had more than 1 store and could contract lower prices, my overhead was far more. My prices were low, but there were 2 or 3 lower.

Domino's (and a friend of mine was the franchisee) would cut their prices to match or beat mine. If I ran a special, he did the same one (except he couldn't offer the Ribs, subs and the pasta dinners like I could).

I could have easily dropped wages and made more for myself, but I made what I needed and was living quite well. At first the wages were bogging me down and I was losing money, but every week as sales grew my losses became less and profit prevailed. It was about a month before I started showing profit, had caught up on debts and was pretty much becoming a cash coww.

I could have lowered the quality of the product, by buying cheaper ingredients, but again, why? I wanted to serve the best at affordable prices and I did.

I could have written off Charitable Tuesdays (which were loss days because I gave away food that day, however, employees were not forced to work and volunteered, so I didn't have to pay their wages), but it wasn't about that it was about helping the community that supported my livelihood.

I was even looking into expanding into other nearby cities.

The only thing that stopped me was my gambling addiction. Had I not gambled there is no doubt in my mind I could have kept the business thriving. But I gambled, I chose to stop paying attention, I chose to hire people that would steal me blind, and I chose not to be there.

So, there you have it, a business that grew and thrived and was run by a very liberal owner.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

filtherton

I would hire a bunch of thugs to go over to my competitor's business and kill them. I am the ultimate free-marketeer.

pan6467

Ah the mafia way of doing business. Better yet, be the one that loans the money, or own major shares of stock in that company, so when his profits rise, he is paying for you to stay in business and compete against him.

Then when he can't make payments you close him down or better yet own enough stock so that when he starts beating you, you dump your shares at a premium price and hurt him that way.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

ratbastid

See, Ace, your question is posed from a black-and-white paradigm of corporate behavior. It's survival at all costs, and that's that. What I hope pan and I, and other liberal entreupeneurs have demonstrated is that there are a myriad approaches to having a business succeed while still treating the staff like human beings, and not like numbers on a general leder. It may take more creativity, but it's also more fun and more rewarding, and it's WAY better than mere survival.

filtherton

It's more like the Rockefeller way of doing business. Or the original union-busting way of doing business.

aceventura3

I certainly understand people not wanting to respond, etc. but the thought that the scenerio is not true to life or unreasonable strikes me as a bit odd.

The begining analysis of any business problem begins with a review of historical information and making assumptions about the future. I don't know how some of you would make your business decisions, but the way I make mine is to assess my costs and income and build a proforma income statement. This is exactly what was in the OP, in a simplified form.

Perhaps some of you can tell me how you would have made the OP more realistic. Otherwise, I will conclude that you simply want to avoid the embarassment of answering the questions I presented.

You have not proved anything. Pan's business failed. Roachboy rejected the problem. Others have took the route of saying the OP is not realistic. Like the ostrich that sticks his head in the sand - liberal entreupeneurs seem to want to take the path of avoiding reality, avoiding tough choices and avoiding real debate.

Just to be clear. Regardless of the OP, assumptions, simple business problems, etc. - I ask this question:

If you have to address labor costs, how do you do it?

__________________
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"If you live among wolves you have to act like one."
"A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

ratbastid

With as much sensitivity as possible.

I've fired people. I've fired people for cause, and I've fired them because their continuing employment is fianancially untenable for the company. I hated having to do it, but I had to do it. I did it in a company of under 20 people, where every employee is like family, you know their kids, you've been to the company baseball games and cookouts together. It doesn't get harder than that. At those times, I wished I could treat them as numbers, just subtract them off the balance sheet. But I couldn't--not and look at myself in the mirror that night.

I think part of what makes answering your question difficult, ace, is that we're suspicious that there's a point you're trying to make, and nobody wants to step into a pit of quicksand. So here's a simple question for you: what's the point of this thread? What point are you out to make here?