Klarinet Archive - Posting 000177.txt from 2003/03

From: Neil Leupold <leupold_1@-----.com>
Subj: Re: [kl] More corporate shenanigans
Date: Tue, 4 Mar 2003 16:49:40 -0500

--- GrabnerWG@-----.com wrote:

> 1. Companies that do not make money - meet their expenses and have some left over - will
> eventually go out of business or be sold.

*Might* eventually go out of business or be sold. It's not a foregone conclusion or anything
resembling an identifiable trend. Shut-down (as opposed to Exit) strategies, lines of credit,
down-sizing, debt restructuring -- there are innumerable means by which companies buy themselves
time while adapting, i.e., making themselves competitive again. 'Happens all the time, and this
is more the rule than the exception. Fledgling companies, on the other hand, more typically
follow the route you suggest, i.e., five years or younger, often due to management inexperience
and an inability to penetrate the target market.

> 2. Companies that make inferior instruments will eventually fail.

Nah, not true. Product quality is relative. If there's a market for the product, the company
could very well flourish, questionable quality notwithstanding. Just look at Microsoft! ;)

> 3. Both good and bad business decisions are made every day in the "business world".
> 4. Business is not evil. It just "is".

All true enough, in the aggregate.

> 5. Competition will always find a way to make good products available.

Again, "good" being relative and very much contingent upon market composition. Businesses don't
make good products for the sake of making good products, no matter how noble their marketing makes
them appear. Without critical mass, they're not going to waste their time making a product any
better than it needs to be. Many people are more than willing to pay for crap, at least up to the
point where marginal utility meets the price of the product itself. They are the market for that
product, and entire industries exist to serve them.

> 6. Prices will always rise due to inflation.

The fact that you cite inflation suggests an understanding that price alone is not the sole
determinant of value in an efficient market. Inflation affects the purchasing power of the dollar
and is, like so much else, a relative phenomenon. Nominally (and with purely hypothetical
numbers), $400 for a new R-13 in 1965 compared to $1500 in 1990 looks like a bargain. If you were
to take the CPI (Consumer Price Index) for each of these years and recalculate purchasing power in
1990 relative to the year 1965 (i.e., find the Real value of 1990 dollars given a 1965 base year,
thereby adjusting for inflation), you might find that $1500 is the bargain after all.

> Also, please remember that clarinets are among the cheapest instruments, especially at the pro
> level. Have you priced a pro quality bassoon lately? A flute? A cello?

So true. And now we have plastic reeds good enough to play in a professional context.
Clarinetists are sitting in the cat-bird seat if ever a particular group of instrumentalists were.
Peter and his Wolf might both be a little envious if they knew. :)

Neil

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