Thursday, March 25, 2010

Business/Leaves Me Confused.

Well, no one has challenged me by asking me to write about something difficult yet. Come on guys. So, I guess I'll jump into what's on my mind today.


I earned my degree from a business college. Stop laughing at me. It's not nice. I didn't really major in anything too business heavy, but I like to think I learned a thing or two about business, profits, customer satisfaction, supply and demand. It seems like some of it is pretty common sense anyway.


So, I don't get the actions of some of the struggling businesses out there right now. Two really stick out to me: The U.S. Postal Service and Blockbuster Video. It seems like they're using the same business model lately: The demand for their services is waning, and they counter this by raising prices and cutting perks. That makes no sense to me.


To be up front, I've always been hard on the Postal Service. I'm sure their infrastructure is very complicated and demands lots of man power, but email has been around for a long time now. I know that making mail delivery cheaper wasn't much of an option, but regularly making it more expensive just makes no sense to me. Now they're talking about dropping Saturday delivery all together.


In business, you look at your competition's strengths and weaknesses. You try to do better at the things they're weakest at and counter the things they're strongest with. Email is free and available 24/7. I'm scratching my head that they increase prices and cut back on days.


Blockbuster's strategy for competing with Netflix and online rentals was to seemingly drop late fees. Technically, if you read the fine print, they simply chose to let you keep the movies a certain length of time before charging you an inflated retail price for the DVD, effectively selling it to you. The problem they didn't fix was their already inflated prices. In their hay day Blockbuster was worth the extra expense because they offered a much better selection. Netflix trumped that easily.


Their newest effort to save themselves, from what I've heard is… to raise their base prices and re-instate late fees. On top of Netflix and the online rentals, they now have the one dollar Red Box company to deal with. I'm scratching my head again.


Another big part of business is determining what people are willing to pay for a product or service. That price can change and even lower. The companies I've listed don't seem to get this point, and I know it's a hard point to swallow for any business. Ignoring the market trends won't work for too long. This just seems like common sense to me. I'm scratching my head.

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