When pro-fit is eradicated from the economic equation nobody benefits.
With the economy on the mend, lots of people in the material handling industry predict good times without having to make any changes in how they do business. Regrettably, that means the continuation of one particular practice that played a major role in obtaining the economy in big trouble a few years back.
Once the 'dot.coms' were flying high, they experienced rapid growth from the simple approach to offering impossibly low prices and constant expansion into areas about which they knew nothing. They operated at a loss for a long time on end, encouraging buyers that it would all change when they'd reached sufficient market share. Fundamentally, of course, this 'drop a bit on each deal but allow it to be up in volume' business model blew up in their faces. The balloons sprang, one by one, and the economy followed them down the tube.
Within the material handling market, this discredited business design continues to be very much in evidence. A lot of businesses have performed the merger game, getting them-selves associated with areas which they know nothing about. Too many have played the numbers game, moving cash from one pocket to yet another to make themselves look good for one more quarter (this is called managing for stockholder price), completely forgetting about long-range planning.
Worst of all, too many companies have bought in-to the notion of forgoing gains in search of market share, with the notion of becoming profitable after the competition is eliminated. It is called 'investing in a job,' meaning submitting a bid which allows for little if any gain. Theoretically, it's two benefits. It gets you the job, helping to make your sales figures (or even your profits) seem impressive. More importantly, for some people, it prevents your competition from getting the job.
But let's go through the disadvantage. Without gains, you've no money to invest in research and development, capital costs, an such like. To read additional information, consider peeping at: buy ledified competition. Your progress is all on paper, and may disappear when you go out of money to purchase jobs with.
With small profit margins, you have neither the money or the interest to support the sale after it's made. The result is an unhappy customer, and that's never good news for the future prospects of the business.
Finally, let's say that your method of underbidding the competition works, and your nearest competitor goes broke. What goes on? Somebody buys his resources for 2-5 cents to the money and starts a brand new company. He is able to undercut your prices, since his initial investment was so low. Learn more on a related paper - Browse this web page: rent fundable. You've not expunged opposition, you've caused it to be worse.
Pro-fit is not a dirty word. When gain is eliminated from the economic picture nobody -- least of all the customer -- benefits. I'm not saying we should not be searching for advantages which will allow us to keep prices down while maintaining an acceptable profit margin. Of course the client advantages of lower prices, but the material handling industry in particular and the economy generally will be much healthier when we all admit to wanting our fair share. It is suggested you purchase a government bond, if you are pleased with a 3% gain. It's safer..