Communism and your condo co-op

  • #26
brewnog
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Pengwuino said:
I really wanna know what product exists that you can sell for 10x the production/labor/distribution costs...

I couldn't tell if you were being sarcastic, but Coca Cola works. Large restaurant chains can currently get Coca Cola into their taps for something in the region of 1p (~2 US cents) per serving. Just an example, but you'd be surprised by the overall mark-up on many items, especially branded food and drinks.
 
  • #27
Pengwuino
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lol oh yah... well sodas a pretty bad example cause it doesnt follow alot of the ideas of economics. For one you can dilute it like crazy. Two you usually buy a soda and can drink 50 if the mood suits you and only pay for 1 at restaurants. Got any other examples that really follow the correct suite of economic necessities? Oh and you forgot that you would need a real world situation where you have to pay for rent, equipment, staffing, taxes, etc.

What would really be more accurate is a whole building that sells only 1 or 2 products. Then you could say "incoming inventory costs..." and then add in staff, taxes, equipment, rent, utilities, advertising, etc and then figure an outgoing inventory cost (selling) and the profits arent exactly huge. 75% of small business go belly up in a year for a reason :D.

And of course... its pretty easy to get a big payoff on soda because i dont nkow about you, but if coca cola at a restaurant cost $1.25 compared to $.99 in a meal that costs $10+tip, im not really gonna take much notice. I mean how many of you actually look at the cost of your soda when you buy it.

Computers are a good example. You make a $30 memory chip that sells for about $90. You have to build it... then add packaging.. then distribution... then re-distribution, then send it to stores/builders who then dispense to the general public at $90 (or u know... in case of buildiers, whatever the system costs using the same method for all components). Then of course people forget to add manufactorers costs/utilties/staff/taxes/profit margin along with the same set of costs for each distributor and hten the same costs for the retailers. By then you should realize that you can only really scrape off a small profit for each company because according to the highly used rules of capitalism, all someoen else needs to do is take less of a profit and he'll take your customers away.
 
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  • #28
brewnog
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Pengwuino said:
lol oh yah... well sodas a pretty bad example cause it doesnt follow alot of the ideas of economics. For one you can dilute it like crazy. Two you usually buy a soda and can drink 50 if the mood suits you and only pay for 1 at restaurants. Got any other examples that really follow the correct suite of economic necessities? Oh and you forgot that you would need a real world situation where you have to pay for rent, equipment, staffing, taxes, etc.

What would really be more accurate is a whole building that sells only 1 or 2 products. Then you could say "incoming inventory costs..." and then add in staff, taxes, equipment, rent, utilities, advertising, etc and then figure an outgoing inventory cost (selling) and the profits arent exactly huge. 75% of small business go belly up in a year for a reason :D.

I think you're wrong here Pengwuino. The drink gets sold to restaurants at that fractional price. That's already accounted for manufacture, advertising, branding, bottling, logistics etc. Even when the end retailer has paid for its vending equipment, staff and tax there's an awful lot of pure profit there.
Take a look round your average supermarket. In particular, compare branded goods with no-name goods. Can you account for the price difference?

I don't know where you're from and what products you'll be familiar with, but compare (say) a bottle of Fairy Liquid with a bottle of Asda washing up liquid. Shouldn't the Fairy be cheaper due to economies of scale?

Your supermarket will fleece you on bananas and brocolli so that it can be competitive on the goods which you are likely to know the value of (mobile phones, CDs, petrol, etc).

You are correct that with many products (and here I'm talking about cars, dishwashers, aeroplanes, just general big things) the difference between what it costs to make, and what is costs to buy may not be very large. But when you start thinking about Mars bars, you'll realise that the profit margins are absolutely gigantic.

The reason 75% (two thirds in the UK!) of businesses go belly up in the first year is largely due to poor management, which encompases a whole range of things. It has nothing to do with low profit margins.
 
  • #29
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selfAdjoint said:
The original name, Tragedy of the Commons, was introduced in a book of that name by Garret Harden (sp?).
Garrett Hardin.
 
  • #30
Pengwuino
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brewnog said:
The reason 75% (two thirds in the UK!) of businesses go belly up in the first year is largely due to poor management, which encompases a whole range of things. It has nothing to do with low profit margins.

Wanna bet? Im starting a computer business and if i chose to go retail store-front as opposed to in home, id be dead in the water. In my market, some people get as low as 1 sale a week. Considering my profit marget in 10% more hten what other shops in my city do, i can pretty much say they are making $200 profit per computer. Now... if you get a business going 1 a week, thats $1000 profit a month. Now business space around here... for a small lil shop to sell computers, that'll run you $2000-$5000 a month. Then of course you have staff that probably costs $3000 a month for basically 2 people on average at around 50 hours a week (and thats short business hours) so your costs are $5000-$8000 a week and some of these people are selling 1 a week. Say its an actual decent time and you get 1 every day. Thats about $7000 profit (oh and when i say profit, if ur fo llowing, thats not including rent or emplooyes or anything). So $7000 and then you gotta pay off the $5000-$8000 for rent and employees so you might very well go bankrupt. Then of course, theres annoying taxes, utilities, insurance, security... if you even survive, its not gonna be by much. But then again this is a simple case study that may not reflect upon other industries. And when it comes down to it... managing a business is not very difficult at all... but then again people seem to amaze me on a daily basis by how incompetant they are so who knows, maybe it is difficult for most people.
 
  • #31
Pengwuino
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brewnog said:
I don't know where you're from and what products you'll be familiar with, but compare (say) a bottle of Fairy Liquid with a bottle of Asda washing up liquid. Shouldn't the Fairy be cheaper due to economies of scale?

Your supermarket will fleece you on bananas and brocolli so that it can be competitive on the goods which you are likely to know the value of (mobile phones, CDs, petrol, etc).

And im from the US so ... i have no idea what the comparison will be lol. But if ya look at the super market example, again, bananas are a fairly unnoticable balance in your budget that dont get much attention. But if you do compare cars or televisions or spas or something, your talking about large-sticker items where people actually care to research and look at whats cheaper. Thats where capitalism actually has a big effect. No one cares if your bananas are $.50 instead of $.40, but you do care if your 52" tv is $5000 compared to $5500.
 
  • #32
brewnog
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But Pengwuino, this is all stuff you can consider before setting up a business. If you did choose to go "retail store-front" and went bust, that would be because of a poor management decision.

You'd be surprised at the level of ineptitude a good deal of people in management have! As an aside, the only really successful computer retailer around me buys in absolutely massive quantities, and can afford to price its competition out of the water.

Good luck anyway! :smile:
 
  • #33
russ_watters
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misskitty said:
Uh-huh. Where are most of these people from? Because I doubt if they have experienced anarchy they would still support it the way that they do.
What an "anarchist" considers "anarchy" doesn't fit the definition - it looks a lot more like communism.
 
  • #34
brewnog
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Pengwuino said:
And im from the US so ... i have no idea what the comparison will be lol. But if ya look at the super market example, again, bananas are a fairly unnoticable balance in your budget that dont get much attention. But if you do compare cars or televisions or spas or something, your talking about large-sticker items where people actually care to research and look at whats cheaper. Thats where capitalism actually has a big effect. No one cares if your bananas are $.50 instead of $.40, but you do care if your 52" tv is $5000 compared to $5500.

Haha, that's exactly what I was talking about. However, consider that your bananas might be $.50 instead of $.05, (rather than the $.50/$.40 you suggested) and then you can appreciate that the only reason people don't notice that they're being charged enormous amounts for their vegetables, is because they genuinely don't know what they cost, or what they're worth.
 
  • #35
Pengwuino
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I thought you meant management on a day to day scale. If you know your going into a market where all signs point to getting tossed around like a ragdoll.. then yes, that is rather poor management. But then again how many companies do we know that saw a crowded market place and went in guns blazing and ended up being multi-national corporations. The computer businesss had its fair share of companies all competing for the same thing but in teh end, the , as we know em now, big names were able to survive and turn into Dell or HP or Gateway. But then again they were all competing for a new market... my markets pretty much taken up... by those same jerks :D.

And yah... the successful american corporations buy in insane quantities. THey'll buy a million copies of windows XP at a time and just price other people out of the water. Problem is they leave themselves vulnerable in some areas that allow small businesses to come in and take away some of their market (what im doing :D).
 
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  • #36
Pengwuino
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brewnog said:
Haha, that's exactly what I was talking about. However, consider that your bananas might be $.50 instead of $.05, (rather than the $.50/$.40 you suggested) and then you can appreciate that the only reason people don't notice that they're being charged enormous amounts for their vegetables, is because they genuinely don't know what they cost, or what they're worth.

Well if it meant that , as you said (it was u right... i cant keep up with things), as long as my cell phone doesnt cost $500 (ok so some do... people are nuts) when it can cost $200 or my big ribs cost me $20 when it can cost me $5, ill live with a $.50 bunch of bananas.
 
  • #37
brewnog
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Yeah, it seems like I posted something, and there were already two replies! Anyway, we're both right; there's a lot more competition with the big label goods purely because that's what people actually care about.

Big ribs? They sound awesome! Better than Persil anyway.
 
  • #38
Pengwuino
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And all this talk about bananas makes me hungry. I swear i walked into a class of mine friday and all i could smell was pudding... and no one was making pudding or anything. And i smelt it in the hallway on both floors. I almost went to the store instead of going home after that
 

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