Where is the US economy headed?

hbg, There are many "simple" rules of business. I'm waiting to learn what this "universal rule" okie is talking about to manage any business - to survive most economic situations.

I worked in management for both commercial and nonprofits, and was not aware there were "universal rules" that applied concerning okie's list.

That to me would be a "universal rule." But then you can look at Wal-mart, where, it is alledged by some, employees are treated like scum.

Just goes to prove that some people's idea of "good business" is not always good for their employees. As I understand it, WalMart was sued (class action) and lost billions in the way they treated their employees.

Well, I am not taking this from a book in front of me, but it seems to me that Walton proved success by offering competitive products at a lower price. There are other factors involved like a great product selection, but the main point is that he did not raise prices to become successful. He sold more merchandise at a lower price. I think that is a pretty good rule. Selling at a higher price and selling less quality merchandise will not bring success. This may sound too basic to even mention, but I am leading up to a point.

I like the response of yours, rjb

It sounds like you set prices at what the products would deserve and bear in a competitive marketplace. It sounds like you eliminated unsuccessful product lines. It sounds like you raised wages for your most productive and most valuable employees and got rid of those that did not produce as much or were not needed for an unsuccessful part of your business. It sounds like you cut waste and inefficiency. And it sounds like you kept your good employees happy and treated them right by giving them decent wages and benefits.

The point I am about to make is this. The government cannot justify raising taxes (prices) if the product is not getting better and if some of the product or service is either unneeded or wasteful. The government cannot justify raising wages and hiring more employees if the productivity and service is declining. All we ever hear is we need to raise taxes. Well, first we need to evaluate what we are receiving for what we are paying for. Also, raising prices may not increase business, it could dampen it severely. Actually, the government must believe that or they wouldn't be giving instant rebates to all the customers this spring to stimulate business, which provides ample proof of what I am talking about here.

The above principles can be applied to many sectors. Start with schools. Product is declining, while cost is increasing. A smart CEO would quit raising the price and instead look at product quality. One of the best ways to improve quality is to inject competition between products. It works every time it is tried.

I don't think so, CI. Wal-mart has very good lawyers. They may have settled a handful of cases based on racial or gender discrimination, but the notion of them having lost billions is, I think, not proveable.

Important point about treating employees right. Over indulging employees leads to a failed business, example unions breaking businesses and chasing them to offshore. I am all for treating employees great, but only those employees that first care about the boss's customers besides looking out for themselves. The customer comes first, and if the customer is happy, the boss can be happy and then he can make the employees happy so that they can continue to serve the customers top notch. But as soon as the employee quits caring for the interests of the boss, which are happy customers, that employee is worthless.

rjb, I probably "imagined" billions, but the actual was probably "millions."

Judge awards Wal-Mart workers $62M more in wage suit Those millions could end up being billions.

I would be cautious about drawing a conclusion here. I have talked to Walmart employees that love their company. In contrast, there are some people that never like any job or any boss they ever worked for, and those people will never be happy. So it could be a rotten employee that thinks they are being treated like scum. There has to be a balance in evaluating any company's treatment of employees.

I was careful, Okie, in talking about Wal-mart, to include the phrase "it is alledged."

okie wrote :



i should have qualified my entry a little more for all to understand .
he was the owner of a small but very successfull business - he'd won many business awards .
i seem to recall that he owned a store with high-fashion baby clothes and acessories .

his motto was : "look after your employees first ! if you treat them right , they'll treat the customer right , the customer will be happy and recommend you to others . "

(of course , you would want to select and train your employees - make sure that they are right for the job)

obviously that would hardly apply to walmart where hardly any qualifications are needed to get a job and where it's often difficult to even find an emplyee who can look after your specific needs .
i'd say , it's really more "self-serve" at walmart .

in a specialty store you expect a knowledgeable employee to be able to look after your needs and even be able to good give advice .

btw. looking at many large retail chains that have bitten the dust over the years - many of those had been around for decades , even generations -
i wonder what caused their collapse .
hbg

Point duly noted, CI. Thank you for the references. I reckon my point was that Wal-mart might consider these awards for poor treatment of employees just another operating expense, like electricity. Something they can live with. Eventually they may, through lawsuits or unionization, have to do something about employee relations. In the meantime, they keep roaring along.
I was in a Wal-mart once. I never went back.

Many of the retailers could have failed for a multitude of reasons, but usually it's because top management failed to keep up with the competition and/or products and services.

Service is very important, but so are prices and quality.

Actually, when Sam Walton grew Walmart, he made the employees feel important, and he treated them that way. Slowly, the company is becoming like every other big company, they are not paying attention to what got them to where they are. I believe all of these things go in cycles, and Walmart will reach their pinnacle, perhaps they are near it now, who knows?

But ultimately, it is the customer that is all important. A happy employee is only one piece of the puzzle that reaches the goal. Happy employees are worthless if you have a lousy product at a high price. A satisfied customer is the best advertisement in the long run. Happy employees may provide good service, and if they are helping build the product, perhaps the product quality increases, I understand all of that.

But it gets back to government. Happy government employees are worthless if the product they sell is substandard, overpriced, or unnecessary. Case in point, teachers union, they demand what they want at the detriment of children that are receiving substandard educations. Government bureaucracies are delivering poor service and substandard products at too high of a price, and some of what they do is totally unnecessary. So the point here is raising taxes (prices) is absolutely the worst thing you can do if you don't pay attention to all of the other things that need to be done that make a business successful.

Poor products, unnecessary products, overpriced products, bad service, and overpaid employees are what you get with inefficient entities that are not subject to competitive forces. Government, by definition, is a monopoly, but many of the things government is involved in could be subjected to market forces or simply left to private enterprise.

My whole point is that raising taxes without looking at ways to save money, cut back useless bureaucracies or inefficient ones, weed out employees that aren't good, pay the good ones better, and inject some competition where possible, then raising taxes without doing anything else is absolutely the worst thing that could be done for the economy.

You went off, okie, in a whole different direction about the government and taxation. I am still curious what you meant by the phrase "universal rules" that, as I understand it, determine success in your mind.
Could you take another whack at listing those?

I made the above statement in regard to the following question to ci?
"ci, a question here, if you are running a business and it starts to lose money, how do you return to profitibility? "

Here is one universal rule that works in a free market:
Quality product at a very competitive price.

Included in the above are some factors, such as part of the quality of the product is also service, because part of what you are selling is the service. If you are selling cars, the car must be a good product, but part of the product is the assurance that something that is faulty will be fixed and that the business takes care of that with good service. Customer convenience in terms of purchasing and using is also part of the quality of the product. There are many parts of the equation too numerous to mention.

Also hidden in the quality and price are things like quality of employees and satisfied employees that are either very productive employees, or not very productive. If a company is too top heavy in terms of management vs producers at the bottom, it translates into an overpriced product or an inferior product. If there is too much inefficiency in terms of any expense that is not translating into quality of product, or that causes an overpriced product, this needs to be fixed.

This may sound too elementary to even bring up, but it is surprising how many people mis-identify a problem, and so they prescribe the wrong solution in an effort to fix it.

I went off in a different direction into taxation, but not really a different direction, because there is a point to be made here. If a business is failing, seldom does raising the price help anything, without at least revamping the company or doing something significant to improve the product quality. Often, the business needs to economize and become more efficient by cutting out waste and inefficiency, and then focusing on what brought them success in the first place. Same principle with government.

okie wrote: Here is one universal rule that works in a free market:
Quality product at a very competitive price.


You're ignorning the domestic economy with that statement.

Your answer is too simplistic; it ignores many aspects of how to manage a business.

It does not ignore the many aspects. The many aspects are included in the overall universal rule. The point is that if you don't analyze every aspect by considering if, how, and how much it affects the universal rule, then you are making a mistake.

As I explained, service is part of the product and price, and so is how you treat your employees, just a couple of many examples. But if you only look at your employees and your only focus is making them happy, you have lost sight of the universal rule. And if you become obsessed with service, but lose sight of the universal rule, you have also gone astray.

The point of bringing all of this up is that the government has gone astray, and often the solution does not address the problem.

okie, Some say we're already in a recession. As a manager, how would you handle the loss of business?

Well, since we are in a world market, we in aggregate as a country need to look at the product quality and price, how competitive are we? We are slipping, in my opinion.

My solutions would include lowering the cost of doing business here and increasing our skill level or ability to put out a good product.

To do that, part of the solution would be drastic tax and regulatory reform to enable more companies to stay here. I would also look at the "Fair Tax" as a possible way to level the playing field and be able to compete with the manufacture of goods overseas to be sold here. For example, goods produced overseas would suffer the same tax bite here as goods made here. It would essentially eliminate all income tax on businesses here. Another huge burden on our economy is the health care industry which has been burdened down with excessive and over intrusion by the federal government. They need to back out of the equation and we need to inject more market forces into health care. I am not against universal health care, perhaps, but I don't want it to be run by the federal government. We have almost universal auto insurance for example, so if anyone expects to ever need health care, they need to show the ability to pay for it. And health care insurance responsibilities should no longer be provided by employers. We need major reform, and this won't be easy to get it right, but government run health care is the absolute wrong solution to achieve the best results.

Secondly, we need drastic reform of our education system to make it more competitive and higher quality. I would incorporate competition into the market of education and destroy the monopolistic situation that we have now, that produces mediocrity and failure. Cost of education would decrease and quality would increase, which would give us both a short term boost and a long term boost. It would allow more people access to quality education, and it would provide more skilled workers later on.

These are good suggestions for starters, but these are mostly longer term.

Shorter term solutions are easy. Do what we can for ourselves, which would include drilling in ANWR, offshore, and loosening restrictions on all kinds of regulatory problems with doing business. One example would be licensing new power plants, mines, etc. Cut government spending and waste as soon as possible, like next year. Place hiring freezes on non-essential government bureaucracies. I have all kinds of suggestions, but these would be a good start.