Large Corporations

[Joann Raytar]

In another thread we are starting to hit upon the concept of how big is too big when it comes to corporations. Including non-optical companies, is it possible to become to big? Take Altria for example. Kraft and both Phillip-Morris divisions have become Altria. You have to admit there's a ton of money tied up in those brands even if Phillip-Morris did take a legal hit over tobacco.

Will KMart's aquisition of Sears end up giving Walmart a run for it's money? Will Target? I've already noticed that Walmart's low, low prices don't stay so low after they knock out the competition; how hard would be for someone else to knock Walmart off the block?

Something has to give regarding the retail industry - what will it be? Will consumer realize that they have discount shopped themselves out of jobs and reverse the trend?

[Cindy Hamlin]

Jo,

It will be interesting watching Sears and K-Mart, 2 struggling entities that have made some strides in recent years to become more "today." Both have had their problems and both have made changes. Sears has certainly cleaned up their act and gotten more "hip" as of late. They have the Lands End brand in the store for one thing.

Both entities have been in BK protection and reorganized (maybe Sears was close, I cannot remember) and this I have to think hurts them a good bit. Wal-Mart will always be the behemoth it is now. The prices go up when the competition is eliminated as the competition is what keeps it low. They normally price compare with the local K-Mart or other low end discount store and once they are gone so are the bargains.

I cannot imagine anything affecting Wal-Mart. I am wondering how long it will be a stand alone.

[karen]

If one of those giant corporations could figure out how do do it cheaply in a beautiful setting with great customer service there would be no stopping them. Sears has come a long way- I was watching Extreme Home Makeover the other night and was actually thinking about shopping there, something I have not done in a very long time. When I was little we shopped there almost exclusively. Walmart is cheap but I have to wait in a really long line (almost no matter the time of day) and the store always seems so dirty. I stay out of Mervyns for the same reason, always looks like a bomb went off and the teenybopper at the register is rarely friendly. I think it becomes harder and harder for those companies to keep sight of the things that made them successful or desirable because it costs a fortune to compete and keep afloat when you are that big. I admit to being distrustful of large corporations (Spexy, I know this makes you gasp!) especially after having worked for one. As long as I am able, I will pay a little more for a friendly environment and service I can count on-not something I would associate with Kmart and its competition. Too bad you can't have the prices of Kmart and the service of Nordstroms! (hmmmm, perhaps paying a little more is worth it? ;) )

[Joann Raytar]

The other day there was a show on PBS that was documenting the attempts of a two person company to get their pet care product into Walmart. After presenting the product to Walmart they were told that the price was too high. In order to offer Walmart a lower price the couple had to ask their suppliers to lower costs. If the couple can't lower the cost of manufacturing you end up with two senarios - substandard product or the couple gives up. I suppose a larger manufacturer would look to outsourcing to another country.

Anyone know what created this drive towards products being offered dirt cheap at any cost and when? Are we shopping our way straight to the unemployment line?

[chm2023]

Cycles. Up, down, ebb, flow. At one time traditional dept stores ruled the roost; today it's big box and specialty; tomorrow who knows? I believe hubris and inertia (the stay at rest part) eventually brings down most monstrously large companies--at one time General Motors was the biggest and most profitable firm in the world. It will be interesting to see what happens to Microsoft once Gates retires, there are lots of cases of companies whose success and vision are so interwoven with the founder that once that influence is gone, the vacuum brings down the company.

[Pete Hanlin]

Actually, there are all kinds of problems facing Microsoft in the future- not the least of which being a legitimate alternative platform (Linux). Business 2.0 ran an article a month back regarding the vulnerability of WalMart to various attacks by companies such as Costco, Target, BassPro, etc.

Its all the "circle of life." This will draw heat, but I believe capitalism has a way of obsoleting pretty much any business model over time. Currently, I'm reading a VERY interesting book called "Confronting Reality." It speaks to the necessity of recognizing change and planning accordingly in business, and contains many references to companies just like GM who have failed to recognize shifting trends. My suspicion is that WM will also miss a trend shift eventually and become obsoleted. Partly it will be their own undoing, since they were a driving force in teaching many of their suppliers how to become more efficient and streamlined in delivering product.

Which brings up one of the advantages of a huge corporation that many seem to overlook- the power to effect change. It could be argued that Microsoft made personal computing possible by supplying a (albeit basically stolen) consistent platform upon which developers could design software apps.

[Joann Raytar]

Pete, since you're here, (or anyone else) ...

Care to define the type of Capitalist structure in place in America? My point being many people support Capitalism but I don't believe they understand what true unrestricted Capitalism would mean. Are current politics threatening our mixed economy? Are companies like Walmart pushing too much political clout?

[Pete Hanlin]

I would define capitalism as an economic and cultural system where capital is privately owned, and transactions are carried out between buyer and seller with little- or no- "interference" (aka regulation) by governments or other organizations.

Personally, I believe the cornerstones of capitalism are entrepreneurism and unfettered supply-and-demand determination of transaction price.

The question I believe you are asking (please correct me if I'm wrong) is: Are some corporations sufficiently large to completely skew the normal controls of supply-and-demand on transaction price? Or, in our system of "regulated/limited capitalism" (my own phrase), do some corporations have too much influence on the regulation of capitalism?

My opinion would be "no" to either question. As with feudalism, socialism, communism, and every other economic system, capitalism has its "weak" points when it comes to what most people would consider a rational measure of "fairness." For example, pure capitalism would dictate that- after a major hurricane- a vendor with a supply of clean water, plywood, batteries, etc., should be able to charge a premium price for his/her goods (after all, supply is low and demand is high). I don't think many people would necessarily call this "fair" (which is why we regulate this sort of thing in the US), but it probably is "just."

It is my understanding that the philisophical side of capitalism is heavily rooted in justice- and just does not always mean fair.

Anyway, yes- I am an avid supporter of capitalism. I personally feel that most of the regulation imposed upon capitalism ends up harming the consumer in the end (by imposing illogical conditions upon transaction negotiation). For example, most professions are regulated- which is a limitation on capitalism. You may know someone who is perfectly capable and willing to repair your plumbing- but is not recognized by the government. In some cases, this inhibits you from negotiating a transaction for the skills of this laborer.

I don't think I'm stretching too far to say that most regulation of professions help the professionals more than the consumer (just observe how strenuously professional organizations resist deregulation of their professions).

Finally, as another way of defining capitalism, I would use a phrase employed to describe an opposite system- socialism ("from each according to his ability, to each according to his need"). In my opinion, this system contains far more flaws when compared to capitalism.

Sorry for the ramble...

[Joann Raytar]

Fine, post a thread that won't get you any arguments. I agree, our economy has its weak points but its strengths have managed to outweigh them. I also agree that over-regulation is a bad thing.

Being part of a regulated profession, I am not thrilled over aspects of my trade being turned into a commodoty by big business. I'm also not sure that would benefit the consumer either.

[chm2023]

Capitalism is an economic system, and like all economic systems, morally neutral. It happens to be the system the US has adopted for cultural and historic reasons, has nothing to do with our system of government (I state the obvious because there are people--Ronald Reagan for one--who seemed to believe that capitalism was grounded in the Constitution) I am a big fan of capitalism, but see its shortcomings. I believe in letting a free market exist within reason; I am not starry eyed about the ability of a free market to solve every problem--why should it? Not every problem is an economic problem. (This is the crux of the disagreement about universe health care: is health care an economic issue/problem or a common good issue/problem? How you define it predicts your answer IMO).

I don't think regulation is good or bad either, depends on the situation. Do I want the food supply to be heavily regulated? Absolutely. Do I want the news supply regulated? Content, absolutely not; ownership, somewhat. Plumbers? Probably.

Pete, I don't get the difference between "fair" and "just". Your example of post hurricane scarce goods--the price elasticity model would lead you to the conclusion that you could charge outrageously, doesn't mean you should, or that it is "just". I don't think economics really delves into that realm, again, economic systems are morally neutral.

[Pete Hanlin]

The distinction I would draw between just and fair would be between these chosen applications.

Just 1 a : having a basis in or conforming to fact or reason

Fair 6 a : marked by impartiality and honesty : free from self-interest, prejudice, or favoritism

Is price fixing after a hurricane a just practice? Well, it is if you go from a philisophic construct called "just acquisition." In other words, if the original owner of a property acquired it through just means, what s/he does in the future with the product is entirely up to them. So, no one can complain from a justice based standpoint about anything the owner does with that property when it comes to reselling it. Therefore, it is "just" (reasonable) that a person with the foresight to stock up on supplies should be able to resell them at a premium (after all, anyone else with similar foresight could have purchased such stock ahead of time).

Fairness (as defined as an act free from self-interest) is almost antithetical to the purest form of capitalism. In other words, in capitalism, a seller wishes to get the last penny for goods/services, while the buyer wants to negotiate the lowest cost. Both parties are completely immersed in self-interest. The eventual price is determined by market conditions and leverage (which are neutral- being neither fair nor unfair).

Regulation, IMO, ideally exists to protect either the buyer or seller- but it necessarily limits the affects of the free market and leverage. Regulation is basically the attempt to insert fairness into capitalism. It is also a "necessary evil," because capitalism does not concern itself with providing for the indigent, or less capable. Capitalism is basically the "law of the wild," where the quick, large, ferocious, etc. rise to the top of the food chain. Of course, as in the wild, it is often surprising how quickly the hunter turns into the hunted.

Ah well, enough of this "Mutual of Omaha" crap! Have a great weekend!

PS- Capitalism is by no means always honest, either. For example, after said hurricane, one might set up a shop selling potable water. Perhaps the seller even knows that the government has free potable water not two blocks from the same location, but nothing in capitalism (which as chm stated is not a code of morality) compels the seller to disclose this special knowledge to the consumer. Once again, that knowledge is leverage. On the other hand, the consumer who knows of the government location would have leverage to drive down the selling price of the water at the shop in question.

[shanbaum]

Finally, as another way of defining capitalism, I would use a phrase employed to describe an opposite system- socialism ("from each according to his ability, to each according to his need"). In my opinion, this system contains far more flaws when compared to capitalism.

Well, that quote was taken (as I'm sure you know) from The Communist Manifesto, and to suggest that it is a maxim that describes socialism is to misdescribe socialism - at least as it exists, to the extent that it does, on Earth today.

It's obviously possible to have private ownership of the means of production (the actual opposite of communism) and an extensive social welfare state (as in a certain country that shall remain nomless). In fact, there's nothing about a welfare state that requires extensive regulation, or precludes vigorous competition. Nor is private ownership a guarantor of efficiency; compare the efficiency of the U.S. healthcare system to that of, uh, that other place.

I am bewildered by the notion that anyone familiar with the laisser-faire era of the late 19th century in America could fail to understand that unfettered capitalism is almost certain to degenerate into monopolism... because, uh, it happened. What do you make of that?

I also fail to comprehend how corporatism - which is the actual ascendant political philosophy of the moment (google "Christopher Cox") - is preferable to statism. Hell, at least in the case of the latter, you get to vote, which may translate to having some say over your life...

[Spexvet]

PS- Capitalism is by no means always honest, either. For example, after said hurricane, one might set up a shop selling potable water. Perhaps the seller even knows that the government has free potable water not two blocks from the same location, but nothing in capitalism (which as chm stated is not a code of morality) compels the seller to disclose this special knowledge to the consumer. Once again, that knowledge is leverage. On the other hand, the consumer who knows of the government location would have leverage to drive down the selling price of the water at the shop in question.

My problem is the guy who sells "potable" water knowing full well that it's tainted with raw sewage. :angry:

[jediron1]

Jo,

It will be interesting watching Sears and K-Mart, 2 struggling entities that have made some strides in recent years to become more "today." Both have had their problems and both have made changes. Sears has certainly cleaned up their act and gotten more "hip" as of late. They have the Lands End brand in the store for one thing.

Both entities have been in BK protection and reorganized (maybe Sears was close, I cannot remember) and this I have to think hurts them a good bit. Wal-Mart will always be the behemoth it is now. The prices go up when the competition is eliminated as the competition is what keeps it low. They normally price compare with the local K-Mart or other low end discount store and once they are gone so are the bargains.

I cannot imagine anything affecting Wal-Mart. I am wondering how long it will be a stand alone.

From what I hear Sears is not in good shape. It's all illusion being propped up
by public perception that all is well in Sears Land which it isn't! Sears optical isn't much better. With all the hoop-la over there new Promo of $97 (opps should say $185) what is lost in the fray is that you have to sell twice as many to reach the target they have set instead of putting out a decent
package at a reduced price like ( total package 450.00 you save 250.00 your cost 200.00) they would rather sell the $97!:hammer:
PS I hope you realize these prices are fictional and only made for demonstration purposes!

[jediron1]

Cindy Hamlin]Jo,

It will be interesting watching Sears and K-Mart, 2 struggling entities that have made some strides in recent years to become more "today." Both have had their problems and both have made changes. Sears has certainly cleaned up their act and gotten more "hip" as of late. They have the Lands End brand in the store for one thing.

Both entities have been in BK protection and reorganized (maybe Sears was close, I cannot remember) and this I have to think hurts them a good bit. Wal-Mart will always be the behemoth it is now. The prices go up when the competition is eliminated as the competition is what keeps it low. They normally price compare with the local K-Mart or other low end discount store and once they are gone so are the bargains.

I cannot imagine anything affecting Wal-Mart. I am wondering how long it will be a stand alone.[/QUOTE]


Just talking about how huge corporates will deal with there people. How will they handle if someone wants to take time off without pay? I just heard this one. The guys RM would not give him the day off without pay even though the person said I will take off with out pay, they gave him a hard time! Now there's a company I want to work for.
;)

[rinselberg]

You've probably heard at least one of those almost numberless Bud Light "Real Men of Genius" radio ads that have been airing now for almost two years -- at least a year and a half. Even if you never listen to radio, these newly famous commercials have been parodied on TV, and almost needless to say, the Internet. If you don't know what I'm talking about, just pull up this very brief Web page:
http://www.newmoanyeah.com/2004-revi...ommercials.php

Up until a few days ago, the "Whipnet" website had audio downloads of many (if not all) of the Bud Light radio spots that anyone could download for free. They were serving about 60,000 downloads per day, a measure of the national recognition that these carefully crafted commercials have achieved. Here is the notice that has just been posted:

As of 08.26.2005 you will no longer be able to enjoy these great advertisements, thanks to the infinite wisdom of Anheuser-Busch and their decision to prohibit up to 60,000 audio downloads served here DAILY! 60,000 one-minute radio spots that advertise THEIR beer. We at Whipnet (no association with Anheuser-Busch) don't quite understand why a business would want to stop their very own radio commercials from being distributed for FREE. It's not as if we are bottling counterfeit beer and selling it as "Bud Light" ... http://budlight.whipnet.com/.

... I can't hear you

Now that's an action by a large corporation that I just don't "get".



If you would like to hear a high quality recording of one of these radio ads, go to this webpage and CLICK on the second appearance of the phrase "Mr. Fancy Coffee Shop Coffee Pourer" -- it's in colored text. Or down near the bottom of the page, CLICK where it says Bud Light Real Men of Genius "Mr. Fancy Coffee Shop Coffee Pourer".

I guess it's just a website that has so far escaped the evil eyes of Anheuser-Busch's overzealous download-killer goons.

Our Bud Light national heritage -- endangered by the folly of a mega-brewery's mindless, soul-less legal department.

... not any more!


rinselberg salutes OptiBoard's "Real Men of Genius"
http://www.optiboard.com/forums/show...38&postcount=4


UPDATE: September 25, 2006
You can hear and download six more Bud Light "Real Men of Genius" radio spots at http://www.budlight.com/index.html ... after entering your birthdate, "mouse" onto REAL MEN OF GENIUS and then "click" to select RADIO SPOTS.

[ikon44]

great ad,s....shame about the product :cheers:

[jediron1]

Cindy, Hamlin, Jo,

It will be interesting watching Sears and K-Mart, 2 struggling entities that have made some strides in recent years to become more "today." Both have had their problems and both have made changes. Sears has certainly cleaned up their act and gotten more "hip" as of late. They have the Lands End brand in the store for one thing.

Both entities have been in BK protection and reorganized (maybe Sears was close, I cannot remember) and this I have to think hurts them a good bit. Wal-Mart will always be the behemoth it is now. The prices go up when the competition is eliminated as the competition is what keeps it low. They normally price compare with the local K-Mart or other low end discount store and once they are gone so are the bargains.

I cannot imagine anything affecting Wal-Mart. I am wondering how long it will be a stand alone.[/QUOTE]


From what I heard Sears Optical is losing money and LC has told them this has to stop. From what I was told there 97 promo and 2 for 98 are lost leaders. There new one is going to be 2 for 98 with no up grades and if you want an upgrade you have to sell it for 40% off frame and lenses, I know it didn't make much sense to me either but that is what I was told they will start doing, I think they said next week. Also was told that they are losing people left and right, Wal-Mart is offering anywhere from $2 to $4 more per
hour and I heard people are going to them in droves. Just my 2 cents;)

[philbert]

Fine, post a thread that won't get you any arguments. I agree, our economy has its weak points but its strengths have managed to outweigh them. I also agree that over-regulation is a bad thing.

Being part of a regulated profession, I am not thrilled over aspects of my trade being turned into a commodoty by big business. I'm also not sure that would benefit the consumer either.

if one has to rely on regulation/protectionism to prevent the commoditization of a product/profession, then they aren't adding enough value... this is the work of a properly working capitalistic system. if you just need to pick up a standard good at the lowest price, walmart is there for you. for those who need/want more selection/service/etc. there are options available, but will cost more. so i would say if you fear being commoditized, focus on the higher-end, value-added side of the business.

regarding the original post's question, i don't believe there is any bright line with respect to size... it's about the means by which that size is attained and the general business strategy. both walmart and microsoft, for the most part, were organically grown and very adept at forging new business practices/styles. merging two poorly run/strategied companies rarely works out (kmart/sears, hp/compaq, just about any airline merger...) in fact, very few large scale mergers yield anywhere near the synergies/efficiencies promised. the best acquisitions are usually picking up "little" pieces (channels/products/etc) that can be integrated into the core strategy of the concern.

the biggest problem facing GM, Ford, the major airlines... is not their size, but their union controlled labor force. the future is not bright for these companies, as enough challengers have emerged with a much more flexible and modern system. look at northwest airline's success in spite of a labor strike.

so, all in, capitalism works, and works best when left alone. there are too many examples of the failure of fighting basic economic "laws" (see our current "war on drugs" for one...)

cheers,
phil