Why are way facing such situation right now is because technology developed too fast. Just imagine tons of unsold products because they were out modeled by newer ones. Those impressive business models and marketing strategies to increase sales of most companies maybe worked for a short period but failed to thrive in the long run because of leaving too much unsold previous products behind.
Just imagine a car manufacturer. To cope up with the market's demand and to be competitive enough over the other manufactures - the solution should be a predictable update of models and parts. Just imagine the costly revisions within their production plants and demands for newer and faster technologies.
Every technological advancement cost money. Many entrepreneur never realized that because they profit better on their new lines of products. What they usually don't do is checking their balance sheets and study the long term effects of their business decisions. They seldom notice loses incurred from unsold older products.Just imagine a car manufacturer. To cope up with the market's demand and to be competitive enough over the other manufactures - the solution should be a predictable update of models and parts. Just imagine the costly revisions within their production plants and demands for newer and faster technologies.
I guess those slow paced business models are likely to thrive during these trying times.
I hope you've got something to say too?
Interesting. I worked in an intellectual property firm in the late 1990s and early 2000s, and watched the dramatic burst of the tech bubble. Things were definitely moving too fast there for a while.
ReplyDeleteI think manufacturers should try to focus on more software upgrades rather than design updates. It also make sense that our products be legacy free.
ReplyDeleteThank you for your comment The Logician.
I'm looking forward to write deeper on this topic. I hope you'll follow my blog. Again, thank you!
Hm, this is a very novel idea regarding our economic situation... and, I like where you're going with this.
ReplyDeleteI work in software and you're right that our business model encourages offering newer and more advanced products, consequently making the "older" products extinct.
But, this model "forces" consumers to buy more frequently, as better features are available at fair costs. For example, I can buy a cell phone now for less than the cost of my first cell phone, and it has a million more features. Why keep my first cell phone (which still works, btw!) when I can constantly buy a cooler cell that breaks the very first time I drop it? No reason, except that I can. And, I've bought 3 more cell phones since.
Now, I can't speak for other industries (such as automobiles which definitely incurs losses from unsold vehicles that just waste space on a lot).
But in technology, I certainly do believe that this business model works, as the costs for production keep going down while their sales are recurring.
But, concerning how this business model affects our economic failure now... I do believe that this has been a major contributor to consumers' over-spending and credit debt. Which certainly IS relevant to the failed economy now.
:(
PS, just my opinion, and sorry I wrote so much.
Thank you for your comment Pwn Star. You've shed more light with what you've just said.
ReplyDelete