The Businessman’s Trapdoor to Extinction: Economic Barriers

During World War 1, battles were severely determined by one kind of weapon: the trenches. The soldiers would dig many of these and position them in a way that when the enemies come close they are sure to showered with bullets and gun powder. In between the skirmishing respective nations’ territories, this span of land is known as “no man’s island”. The armies setup a lot of obstacles such as minefields, trenches with gunners, aluminum spikes and other forms of deadly devices which surely discourage the attackers from coming near. These are definitely great barriers for the generals before finally reaching the other side.

In modern times, the ambitious always think of ways of generating income. One risky way is by opening a profitable business establishment which either sells service or products. One must be really cunning and creative to come up with idea that will surely cater to the satisfaction of the customers thus, profit. However, the entrepreneur understands the risks and hardships involved in starting a business and trying to penetrate the market. We should always know that there will always be the obstacles discouraging and holding us back before starting something.

It is more likely for a developed product or service to fail. Statistically true, however, there is always the belief that products fail simply because of certain factors or barriers. Not including obviously poorly brainstormed ideas (such as a carry-on urinal bag which was once featured in the TV show American Inventor), the brilliant and high potential ideas for a business interest appears a fluke in the eyes of a normal consumer because of unfamiliarity. A product or service, if well thought of, should always have a purpose for being thought of in the first place. The thinker knows this particular “need” has to be satisfied. Every well thought product does a job that should be useful in certain times and this is why, optimistically speaking, it cannot be a failure.

There is definitely a bigger chance for a product to be successful if all the resources are present. These are great important barriers that are to be considered. If you don’t have the proper resources such as equipment, capital, labor and other important factors, might as well not expect an attractive cash flow. Limited natural resources such as oil will always discourage us from trying to sell gas.

There is also a bigger chance of success if the product carries a mother company’s prestigious name such as Microsoft or Sony. Because of the loyalty of the consumers with these brands, consumers will tend to stick with these brands and thus already creating the product an immediate market. This fact acts as a barrier for the newbie which has no name. The only chance for it to be recognized is for prestigious mother company to buy the business plan from its original creators which more likely will lead to success.

Another factor is the market feasibility to indeed penetrate. The competitors will always try to put newbies down in order to retain or even gain more market share. They use their set resources to overwhelm new establishments.

Basically, what matters the most even before starting a business, is to surpass the barriers to entry. Many establishments fail because they are not as profitable as those in the real market. Those products who survive the market are lucky enough to withstand the barriers because of reasons stated above. That is why we should be wise enough to be always sticking with the logical choice if it is proper to invest in a business interest. Risky, yes, but once we gather some momentum to surpass the barriers, then the end goal of achieving success is not far anymore.

Jon Gancayco

Understanding Selfishness Through the Law of Supply and Demand

Putting money aside, the law of supply and demand is probably the first thing that comes to people’s minds when they think of economics. This law dictates the prices of goods in a given market. The said concept is very easy to understand that even people who don’t have any background in economics use it to their advantage. The perfect example would be scalpers. We see these people loitering around Araneta Coliseum during the UAAP Basketball Season. As we all know, the demand for UAAP tickets, especially when it’s an Ateneo-La Salle game, is really high. Finding tickets for an Ateneo- La Salle duel is like finding gold for the good is very limited. This phenomenon gives scalpers the power to triple or even quadruple the ticket prices. Although illegal, scalping is indeed a good business.

It is not only in UAAP games do hording occur. It also happens in the world of collectibles. As an action figure collector, it is crucial to take note of the release dates of certain figures because hording and scalping exist in this field as well. In collecting, you must be an aggressive buyer. If you see something that you like, purchase it right away because having second thoughts can hurt you. Most collectors are aggressive buyers which gives another reason for hobby shops to sell figures and other collectibles at a higher cost. I really hate them for doing such a thing. There would be enough toys for everyone if people would learn to be selfless! Greed starts with little things like these. I won’t be surprised if I find out that George Bush was a scalper during his early years. He loves oil and weapons too much that he’s willing to take several lives for it.

We shouldn’t blame the poor for being poor because poverty is caused by greed. I know that everything in this world is limited/scarce but I believe that there is enough for everyone. The only problem is several people take more than what they should have. Rich people get richer and poor people become poorer. Why can’t we be happy with enough? Why do we want to have more when we have enough? This mentality of wanting to have more is also a cause of certain illnesses. Cancer is brought about by putting in too much toxic material in our bodies like nicotine, alcohol, unsaturated fat and more. AIDS is caused by having too much sex which is bad. Maybe all of you are wondering what all of these things have to do with economics and the law of supply and demand. Everything that I mentioned has something to do with selfishness and greed. The law of supply and demand exists because people want to get an advantage over their fellow human beings. If everyone is willing to share, we wouldn’t even bother studying economics, finance, political science, and other disciplines that are related to systems of money and power.

Raymond V.

The Luxury Car

Cruising down the highway after a tiring trip with my immediate circle in Subic, I noticed the signs saying 80 kph. I was the driver that time. I didn’t really expect my other companions to volunteer and sacrifice sleeping instead. So, being the responsible driver, I chose not to attract heat from the patrol and just simply follow what the sign said. Besides, the car didn’t really have the look of a law-breaker. We were riding my friend’s battered Isuzu Fuego pick-up truck, a vehicle adequate enough to perform to our needs.

As a good driver, I remembered the fundamental words I had learned from my mentors: to check out the mirrors as much as possible. Then, I suddenly noticed in the mirror that this silver piece of metal was swiftly approaching me. It’s a rule breaker! It must be going around double my speed. I grinned remembering the tales I heard that the cops are more active in catching speeding cars nowadays. I just hoped that they catch this one.

Before I knew it, the speedster was on my left side. Hearing its noise, one of my asleep friends was forced to wake, look and say, “shit pare!” Thus, I glanced as well and suddenly I felt my eyes bulge as well! What the hell?! I was so star struck in recognition of what I witnessed. It’s a Ferrari! A rare silver Ferrari F430 whose shimmer was trying to lure me out of the car. It’s a vehicle any hopeful automobile enthusiast like me will be willing to lick simply for satisfaction. My friends and I stared at it for a long while (or did its presence just make it long?). It also took a while until the “woahs” and the “wows” disappeared from us. After this experience my lust towards luxurious cars were upgraded.

The luxury car. Of course, who wouldn’t want to own one? The market offers several tempting brands such as the Benz, BMW, Audi etc. which for most of us are very present in dreams. Even if you are not so much into cars, you understand the value and prestige they offer with their name and their expected quality. I can’t wait for that day when I’ll be able to park my own Ferrari in my garage, if ever it still comes.

Then I ask myself, is there really such thing as a luxury car? After my philosophy got better, realizations between me and the real world just got better. I concluded, luxury cars do not exist (even though it was hard for me to proclaim this, I guess this is the truth). Why? Simply because, rationally speaking, every owned vehicle IS a luxury. Toyota is a luxury. Even the owner-type jeep is a luxury! I guess that simply owning any kind of vehicle is a luxury because owning a car in general already means going over what we really need.

Obviously, people need to move from point A to point B. If it’s not walking distance, we’ll need the help of a car. Basically, the need here is just transportation and that is why public transportation was invented. I could call this a second order form of need, probably staying in the same level as clothing and social life. I believe we can survive the present world without really considering of owning our own vehicle (not minding the picky).

I’m speaking in line with economics. There is no such thing as a luxury car, because every owned car is a luxury. Now this is what the rational person would say. Yet honestly, when it comes to cars, I become too irrational. This is where my own preferences and utils would come into play. If someone out there can understand me, luxury cars such as the BMW are better than the ones economically manufactured by Kia Motors. It’s always best to keep rational because you’ll be able to save a lot of money, but when it comes to things you love and desire, you’ll do anything to acquire it no matter what. These personal desires come with a force which pushes us to the limit. It enhances our ambitions which should encourage us to work harder. Thus, sociologically, if everyone has desires to make them work harder, thus, making them work harder, then good this means good news for our country’s economy. Ayos ba? Wahahaha.

So, I guess it’s not all good to be rational at all times. We need our liberal expressions and desires create ambitions for the better.

-Jon Gancayco

My Life as a Bagger

Last December, as part of the Junior Engagement Program (JEEP) of the OSCI, I was required to go on a three day immersion at Robinsons Supermarket in Marikina. What seemed to be fun at first eventually led to much boredom and a significant improvement in understanding the lives of people behind the cash registers and customer service counters. At the time, I was enrolled in an Operations Management class where terms such as employee empowerment, job specialization and “idle times” became familiar to me. Theoretically it was easy to understand, however, putting faces behind these words made it a matter of a little more significance to me.

Similarly, in Economics we learn the idea behind the Law of Diminishing Returns – where if a firm keeps increasing only one input such as labor, while holding the level of other inputs like supplies and grocery stocks constant, they experience inefficiency. During my first 8-hour shift behind the customer service counter, I witnessed the gravity of the situation. Considering I was one of several students in the JEEP program, so much extra workers were on hand while the level of work was constant. To my “ate”, the personnel assigned to me, I seemed like more of a distraction and the more I helped, the more idle time we had. By the end of the day, I was practically ready to write her life’s biography. As a grocery store employee, you can only do so much. Merchandisers roam about all day, while cashiers beep away and baggers simply bag. It’s not like the work is all that difficult really, it’s just that they can only do as they are tasked. In this situation, there is no room for growth and employee empowerment. Although Adam Smith says job specialization can be good for work is more concentrated, this too has its downside. Standing for 8 hours is no joke. Neither is it when you have to call a supervisor to correct a petty mistake that you can well do on your own.

Workers such as those employed in Supermarkets are employed contractually – meaning no job security and no benefits. As the law of Diminishing Returns indicates, oftentimes not enough work + too many employees = inefficiency. There always comes a point wherein if all else remains the same, increasing workers will no longer be beneficial to the firm. At times where shoppers are less, less workers are hired. The workers I met during my three-day stint in the grocery, were very dedicated to their jobs and took every 15 minute break very seriously. In spite of this, in another month or so, they once again go in search of new jobs no more challenging than the ones they had. What happens to the person stuck in this never ending cycle? I wonder what this says about the state of the Filipino?

- Karissa Herrera

Photos from http://www.robinsons-supermarket.com.ph/EWSL/ewsl.htm