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Thread: Only one way to run a business?

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    Registered User Magic Hans's Avatar
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    Only one way to run a business?

    Quote Originally Posted by someone!
    Those actions are fine in business because that is how business'es are (for the most part) run. They don't run that way because that 'just happens to be way they are run'. They run that way because that is the only way that works. See the 'Company liquidation' pages, communism etc. for ways of running businesses that don't work.
    Preconditions

    1. No negative or derogative references to any MJ or MJ related organisations. I'd like to keep this topic impersonal, and hence inside, rather than outside. [hence anonomising the quote]

    2. Please state any personal preferences or biases. We all have them (to varying degrees) and they often add much needed context to responses. {mine are at the bottom, in order to lessen this pre-amble}

    Topic

    How can businesses be run, effectively? What are the varying strategies, and their Pros and Cons?

    This country has many small businesses, fewer medium sized ones, and fewer still large ones.

    Many go bust within the first three years.

    Most successful ones last 40-50 years - or the length of an individuals working life (ie their business)

    And finally, a very few Exceptional businesses exceed 50 years.

    Strangely enough, many of these exceptional business started out as family businesses, and some retain that family connection. [Woolworths, Cadbury, Marks and Spencer, Boots to name a few]

    I was always led to believe that businesses had to be cut-throat, hard-nosed and ruthless to operate effectively. It simply seemed to me that the bottom line was top priority, and anything that adversely affected that would be addressed and eliminated.

    Then I read about SEMCO and Ricardo Semler:
    Quote Originally Posted by wikipedia
    Semler went to work for his father's company, originally called Semler & Company, then a shipbuilding supplier in São Paulo. Semler clashed with his father, Antonio Semler, who supported a traditional autocratic style of management while the younger Semler favoured a decentralised, participatory style. Further, Ricardo favoured diversification away from the struggling shipbuilding industry, which his father opposed.
    This 'participatory style' was something that I'd never come across before. Major management decisions being decided, or at least argued and debated on the shop floor?? Outrageous!! Surely all semi big organisations need a hierarchy of at least 4 levels, if not 5, 6 or 7?? And as for helping to support start-ups that compete with existing operations; madness, surely?

    Apparently not, it seems to have worked for one company. A new way of business? Or the exception that proves the rule?

    What's you're understanding of how business works best? What makes our economy tick? What are the acceptable casualties of good or effective business practice? Which casualties are not acceptable? Answers on a postcode!

    My bias? I call myself an anti-capitalist, which may be misleading. I have no love for large multi-hiearchical structures; they remain out of touch with the ground roots. I prefer the little guy. I mistrust the monetary system; it seems to conspire to make a few very rich at the expense of the rest. I trust myself, fate and the universe before an insurance company (even a reputable one). Yep, maybe I'm a bit of a hippy .... be it a pagan one!!! Having said that, I own my own house .... through capital gain the out capitalist world, and I am or have been, at least guilty, of complicity with the (capitalist) system. Although I have no grand ambitions to further materialistic gain. In fact, I am trying to foster my own self subsistence, difficult though that may be.

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    Re: Only one way to run a business?

    Quote Originally Posted by Magic Hans View Post
    How can businesses be run, effectively? What are the varying strategies, and their Pros and Cons?
    A very large question, rendered meaningless because of the scope. Why? What a business is is not defined (and the definition is not simple). What effective means is not defined. What strategies are is not defined. There has been no context provided within which pros and cons can be evaluated. All of these topics have a literature devoted to them, within economics, finance, sociology, and management theory (and, of course, the fluff in the associated popular fields). One little example, there's a great little book called, "Permanently Failing Organizations" which teases out a bunch of the more interesting themes form sociology and economics.

    Which ever definitions are adopted will largely determine the conclusions drawn. For example, If I take a strict, classical economic view, business (the firm) is defined as a profit seeking entity (which then defines 'effectiveness' as profit maximisation). One can critique that within economics (looking at satisficing/bounded rationality, behavioural economic, or transaction costs, for example). One can also critique it from a sociological perspective ("economic man" is so seriously flawed that it tells us nothing). And so on. The definitions matter.

    Quote Originally Posted by Magic Hans View Post
    This country has many small businesses, fewer medium sized ones, and fewer still large ones.
    This is a characteristic of most economies, regardless of structure. It's a statistic that's often trumpeted about, but very rarely understood. At a macro-economic level, industries generally tend towards oligopoly: a small number of large competitors. There are good reasons for this which I'm not going to dig too far in to, but they basically result from tensions between advantages from size and advantages from competition. There are very solid structural and institutional determinants of the industry profile. But you can't have a lot of large businesses or as many medium sized business as you do small businesses because the economy just isn't that large.

    The fact that a lot of small businesses fail is also neither as bad as it sounds nor as quite what it seems. The usual number is between 80% and 90% of business fail within their first two years. But this number includes a huge number of cases where:
    • formed companies are intentionally temporary (eg joint ventures)
    • purchases, mergers, acquisitions, and structural reoganisation (often causing a successful business to appear to fail)
    • shell companies (for various reasons)
    • various forms of tax dodges (legal and otherwise)
    • operating subsidiaries of larger companies

    Of the 'genuine' small businesses, you have a bunch of major types, for example:
    • The (wishful) start of something big
    • The (hopefully) profitable hobby
    • Self-employed, but still contracting to the corporate world
    • Service/business professionals (doctors, lawyers, etc)
    • The ma and pa business (eg corner dairy)
    • The passion business (someone who has a genuine idea that they think is so cool and want to take it to the world!!)

    The vast majority of small businesses are not in any valid sense 'little guy'. The successes and failures of most small businesses are not something that has any major ramifications for said small person.

    Quote Originally Posted by Magic Hans View Post
    Strangely enough, many of these exceptional business started out as family businesses, and some retain that family connection. [Woolworths, Cadbury, Marks and Spencer, Boots to name a few]
    Not even slightly strange. The vast majority of all businesses are founded within families (or using family names) and this was even more true 50 years ago. So naturally, most businesses that survive today from 50 years ago were family businesses. Some of them still are. It's not a particularly enlightening piece of information.

    Quote Originally Posted by Magic Hans View Post
    I was always led to believe that businesses had to be cut-throat, hard-nosed and ruthless to operate effectively. It simply seemed to me that the bottom line was top priority, and anything that adversely affected that would be addressed and eliminated.
    Whoever led you to believe that was a fool: very few who practices or studies business and management seriously subscribes to that view; and most of those few are in trouble very quickly. Organisations, of which business is a sub-class, all operate within a complex environment that places competing, often conflicting, demands upon the organisation. In business organisations, the economic demands are privileged (the bottom line does matter), but they do not have exclusive influence (other things matter too).

    Quote Originally Posted by Magic Hans View Post
    What's you're understanding of how business works best? What makes our economy tick? What are the acceptable casualties of good or effective business practice? Which casualties are not acceptable?
    Such sweeping questions cannot be meaningfully answered. Given your agenda, there's no real point in answering them.

    To summarise:
    • None of the relevant terms are unambiguous and the definition adopted will determine the conclusions.
    • The various "facts" cited are either misleading or unsurprising. They could be (mis)used to sustain a variety of conclusions, depending on the bias of the concluder.

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    Re: Only one way to run a business?

    Business is mostly about people. What sort of person you are determines how you should try to run your business. There are as many ways of running a successful business as there are ways of surviving in the African veld. Buffalo, crocodiles and lions all survive there. Two equally well run building firms may bid for an Olympic contrat. The selection may literally be down to coin flip. The winner survives the downturn, the loser goes under.

    Which small businesses and animals survive is often down to chance.


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    Registered User Magic Hans's Avatar
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    Re: Only one way to run a business?

    Quote Originally Posted by geoff332 View Post
    What a business is is not defined (and the definition is not simple). What effective means is not defined.
    Business Definition

    Quote Originally Posted by geoff332 View Post
    What strategies are is not defined.
    Strategies

    Quote Originally Posted by geoff332 View Post
    There has been no context provided within which pros and cons can be evaluated.
    Pros and cons

    Quote Originally Posted by geoff332 View Post
    This is a characteristic of most economies, regardless of structure. It's a statistic that's often trumpeted about, but very rarely understood.
    Nation of Shopkeepers

    Quote Originally Posted by geoff332 View Post
    The fact that a lot of small businesses fail is also neither as bad as it sounds nor as quite what it seems. The usual number is between 80% and 90% of business fail within their first two years.
    Business Failure


    Quote Originally Posted by geoff332 View Post
    The vast majority of small businesses are not in any valid sense 'little guy'. The successes and failures of most small businesses are not something that has any major ramifications for said small person.
    The little guy

    Quote Originally Posted by geoff332 View Post
    Whoever led you to believe that was a fool: very few who practices or studies business and management seriously subscribes to that view; and most of those few are in trouble very quickly.
    cut-throat, hard-nosed, ruthless, aggressive and brutal

    Quote Originally Posted by geoff332 View Post
    Such sweeping questions cannot be meaningfully answered. Given your agenda, there's no real point in answering them.
    Agenda? or Agenda?

    Quote Originally Posted by geoff332 View Post
    To summarise:
    Summary? or Summary?

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    Re: Only one way to run a business?

    Quote Originally Posted by Magic Hans View Post
    I'll pick on. Wiki provides one definition:
    A business (also called firm or an enterprise) is a legally recognized organizational entity designed to provide goods and/or services to consumers.
    Many people, myself included, would dispute that definition as being insufficient. Nor does it link it back into your original argument.

    I'm not going to read and argue with a series of links particularly not Wiki entries on topics I've got a Ph.D in. It's a complete waste of my time.

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