Becky
Just finished the book after watching the movies. loved all of it. If a company buys from a foreign company to bypass minimum wage they are removing value so they are not in line with what Ayn Rand wrote. What say you?
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Does a US based company have an obligation to the vague group " minimum wage earner"? They have an obligation to their shareholders. Often saving money by manufacturing abroad frees up capital to hire more highly skilled jobs in the US.
the company as no obligation to the vague and amorphous "benefit of society."
In terms of product value, I agree with Augur and others that value is based on demand, not production. Value, and therefore demand, may lessen in the eyes of some consumers if they value the means and location of production more than than the product itself. Case in point, there are businesses who differentiate themselves by being locally sourced and environmental friendly, these companies are targeting consumers who value such things, especially if the product quality is on par with others within the space.
What would happen if in aggregate employees refused to exchange their labor for "unfair" wages or consumers refused to purchase goods at a discount retailer? It hasn't happened yet so my rational assumption is that market participants value a low wage over no wage and value discount prices over higher prices.
The products value is decreased, when the need for (or perceived) need for the product decreases. Some products like facebook (in my opinion) have a perceived value.. i.e... it is not actually valuable at all, as it is not a necessary product, and it is not needed. Its value is perceived from its novelty.
Value of the company that is producing the product is reduced when it out sources production since it no longer has the plant as it's intrinsic value.
Value of the product being sold can be inferred from the price and volume...
A simple test could be as simplistic as, do they pay taxes on it? If you do, it's intrinsic value. A plant in Georgia WOULD be paying taxes here, but a plant in China does not, nor salaries, utilities, or any of the things that build communities here.
Second, if Apple (or any of the other large electronics or telecomm companies in the US) were to bring their manufacturing ALL back stateside, the COST of every item they sell would either have to increase in order to maintain profit levels or the companies would have to take a hit to their profit levels, which would undoubtedly impact their stock price, and stock price IS an indicator of "company value," if you want to continue down that path. So, bringing all the manufacturing back "home" would probably LOWER the "value of the companies."
If you were a shareholder, would you support that business plan? And with the most-likely increases in product prices of what they're selling, would you expect their sales volume to increase or decrease? MAYBE you'd agree that, even with the higher prices for "back home manufacturing," they might sell fewer than before and the product of price and volume just MIGHT be lower, again? Resulting in, again, a lower stock price?
When suggestions like "bring manufacturing back to the US" are made, it's really important to look at downstream effects of such moves and a lot of "unintended consequences."
Not to mention that a lot of those folks now not needed as employees in those overseas companies might be forced into even MORE degrading lower-paying jobs? One effect of all that employment "over there" has been a drop in prostitution. It seems that many of them prefer the toils of assembly-line boredom to the hazards of one of the only other "paying jobs available" to them.
btw, you refer to "Apple's production plants" ... does Apple really OWN those plants, or are they really assembly lines outsourced to separate, distinct foreign companies? Hm?
And Lisa? Sure... way overpriced for what it delivered. Likewise, "Next," too. Not every product is a market success just because it has Jobs' imprimatur on it.... or anyone else's.
Increasing supply of anything, just for the sake of increasing supply, is NOT a good plan, whether it's perpetrated by Apple or the US government.
Wow.
I took a "negotiating skills" class some decades back at the suggestion of my employer at that time... I negotiated a selling price of about $900, I think, for the item in play (the whole class was paired off to negotiate one-on-one with some hidden information for each team.) The negotiated "sales" ran from something like $250 to $2500 or so... One guy on a team just wanted to "get rid of the thing." Someone on another team needed some part of the entire item in order to complete a collection.
So, who assigns "value"? Buyer? Seller? Manufacturing location???
I vote: buyer... and "value" is measured, in this case, by selling price.
Of what "value" to a free exchange purchase is the concept measuring value any other way?
If a "cheap country" is selling crap, the word will get out that the products ARE "cheap"... i.e, have little actual "value" to most of the market.
If the products provide "ENOUGH" quality and performance at the lower price, the marketplace (or some part of it) will be willing to pay THAT price for THAT quality, and even the "cheap country" can succeed.
"Objectively," one of the rebuttal points is that if I'm happy with the "cheap stuff" and it "gets the job done" to MY satisfaction, the purchase I made leaves me MORE money to spend on OTHER things where I might be willing or eager to demand BETTER quality because I want better quality/performance/service/whatever from the other product or service.
If the US becomes one of the largest producers of natural gas, for example, and our technology allows us to produce it for the lowest price, does that make the VALUE of our natural gas exports lower? NO! It's the market value and performance desired by the CUSTOMER that defines "value" and defines it to themselves and nobody else!
... And if demand is growing and our costs are decreasing, WE become the "cheap country" and can make even more profit! Also better for balance of trade, if that's a goal.
And on the FAR other hand, you can draw an "economic" line around a country and try to maximize its profits by a number of means... you can do the same with a state, county or city; but the "balance of trade" if you draw the circle to enclose the entire EARTH can't stray very far from zero. (Really.)
A trade deficit somewhere is a trade surplus somewhere else, and if you add up ALL the "somewheres and somewhere elses" for the ENTIRE WORLD, the net IS zero.
Is that better?
Or for another POSSIBLE example, if you're concerned about the US' trade "imbalance," are you also concerned about any and all "trade imbalances" between any of the states in the United States?
Why? Because of perceived value. The "Larry" tablet would not carry the same percieved value. Apple has sold their products this way since their inception. They have ALWAYS overpriced their product based of equivalent products in the marketplace. The price is not based on the physical value of their "plant" or the cost of production. Jobs made a big deal of bragging that his customers would pay whatever he told them to pay because he was selling to people who he groomed to buy the next big thing from him.
Apple is a master in the world of self promotion. The PC, in the form of the first IBM and it's clones ran circles around the Apple products as far as productivity goes, but apple moved into the education arena and oversold and under delivered and got away with it because the PC was marketed to businesses, not schools. All the skulls full of mush grew up playing on apples - never mind that they were little more than calculators - it was what they knew.
Are you aware that Jobbs GAVE a computer (Apple II as I recall) to every school? BUT he didn't give them anything else and the schools felt that something was better than nothing since Apple told them that computers was where the future was. So the schools HADto buy printers, software, floppy drives, everything else from Apple because nothing else from the PC world worked on the Apple they got for free.
Truly masterful marketing.
On top of developing their "brand" and because of compatibility problems Apple built "Loyalty" to the brand - for decades, and now generations. So much so that they command ANY price for any product they sell. And nobody selling a competitive product can sell their product for 75% of the cost of the Apple product.
I admit Apple is an anonymity in it's industry, selling products that have questionable value at inflated prices, but I hold that the prices of their products are based on what people will pay, not on the production costs.
As a shareholder in many companies I'll give you a hint of what to look for in a company that's stock value will increase faster than
I bought a Prius in '04. Early adopter of the technology after lots of technical research into the car. My wife had owned a Toyota or two, and any "perceived value IN TOYOTA" was the result of the observed value, quality, reliability, etc., of the CARS we've owned and compared to other makes.
I was a "Chevy Man" for decades until the quality of their PRODUCTS I bought went to hell. After that I owned a BMW, a Mazda, a Ford and an Isuzu.
Every one of them had VALUE to me and I discovered their strong and weak points. When I met my wife's Camry, I was impressed. When I bought my Prius, I was impressed. Based on our EXPERIENCE, not any "perceived value of Toyota Motor Corporation," we bought a Prius V for our most recent purchase.
The Toyotas have been wonderful cars, but if we buy any more of them, or any other make, it will be out of investigation and expectation and evaluation of the qualities of the vehicles. The companies' reputation might be just ducky, but if the product sucks, I ain't buying it.
Sure,, the "give away the computer and make it up on peripherals" has been done for decades, and if that was Jobs secret agenda, it worked like gangbusters. But whether buyers are buying Apple's products because they're "cool" or au courant, or feel good or meet their needs reliably, people are, imnsho, paying for THAT, not the name on the display box.
Performance, usability, compatibility, whatever, but not paying for "perceived value of the company" at all. The FINANCIAL "value of the company" is tangible and reflects a company's ability to deliver quality, reliability, performance and whatever else the buyer wants.
I find it hard to understand how you conflate that with your examples.
Trust me, if "Larry" had come out with the same products that "Apple" brought to market, marketed them well and kept brining groundbreaking products out, year after year, everyone would be looking forward to buying the iLarry6 or 7, though your branding and marketing departments might have given you some pushback on the naming... :))))))))))
Merry Christmas!
Sorry it's a bit late, we've been to busy to get online. And now I must drive 300 miles to a hospital for some government healthcare.
I'll just take a moment to say that I think you are wrong about not making a purchase based on the economic value of a company. It seems in my very brief reading of your post that you do examine the economic position of the companies, even if you don't see the evaluation. Each of the companies you listed are solid, top of the heap, manufacturers of automobiles. Not a "Tesla" among them.
I just think that you are proving my point when you acknowledge that buyers of Apple's newest widget line up panting for the store to open - they are buying perceived value, since their hands-on experience is limited to their last product. They are buying based on the value they had in the past. New buyers are buying based on the value of Apple based on the economic position the company has established and maintains. The intrinsic value. If Apple were about to go under and their last five rollouts had been flops - just how much would that new iPad be worth? $200 less????
Got to run, bless wishes to you and yours.
Larry
re: perceived value... how do you "perceive value" in something you've never seen? "Expected value," maybe... that I can understand, but perceived value implies perception and experience with the item in question, not the company's history or your own history with their products.
e.g., My first wife had a Pontiac Tempest, 1967. Amazing car, especially after we put radial tires on it... Then I screwed up the engine and had an opportunity, so I decided to replace the standard OHC V6 with the 4-barrel version. When I finally got the details sorted out, that car ran like a top until it rusted out around 175k miles.
We chose to replace it with a 1977 Pontiac Ventura, also a V6, assuming it would be a reasonable replacement.
While it was one of the best-handling cars I've ever owned, thanks to the sport suspension and quick steering ratio I'd ordered, the engine was for shit and it took me about three years to correct a designed-in fault in the carburetor.
Ask ANYONE who owned a GM V6 around 1977 and they'll remember the "stall on warmup" they ALL had. Repeated stalls just when the engine was getting warmed up... you know.. about the time you're ready to turn off the two-lane blacktop onto a big intersection... The car would restart and idle perfectly, but as soon as you cracked the throttle to pull INTO the intersection, it would stall.
Drilling out the primary jets by just a few thousandths of an inch completely fixed the problem and barely cost 1-2 average mpg, but was completely worth it.
Perceived Value? No, expected value, and easy to be misled by it.
Oh, and my first car was a 1969 Corvette. Took me three or four years to discover and sort out about a half dozen manufacturing defects... in "America's Sports Car" of the era.
Expected Value... yep. Perceived, "not so much." Funny, the Toyotas we've owned just seem to have NEVER disappointed when "experienced in reality."
Cheers!
As for their pricing structure goes I know Apple has never been know to sell their products cheap. One of their least popular products that sold very, very few units was one of the most expensive in it's day. A system that might sell for $10k in today's dollars - was that because they were trying to cover the costs?? Nope, but it was why the "Lisa" died a fast death.
Labor costs do factor in, not just the wages, but the large benefits caused by idiot union leadership. They are out for their own power. Only education has not been so effected, even though the NEA once listed "power" as their main goal, with teaching the children, far down on the list.
Taxes are another reason, not just on profits, but employment taxes and insurance costs, both of which only get worse with Obamacare.
Another factor are the draconian EPA rules that get worse every year. In fact, the needless laws, often in place only to give government control over industry, influence where a company wants to do business and how much it will cost.
So, if they want to buy from foreign producers, because the quality and price are good for their business, blame the stupid domestic union mentality when US workers who could have supplied the good, get laid off.
Personally, I hear it all the time. My Camaro originated in Canada, and it is great. So, US workers could have done all the work, but unions made it prohibitive. The unions sucked up to Obama, and the company moved even more work to China, with taxpayer dollars..I don't blame GM, I blame the unions, and the politicians. You just don't get any dumber, oh well maybe all the dollars that went to "green" projects that were already failing. I hate Chinese light bulbs, they will cost us in the end in both health and dollars. GE sucked up to Obama, and former producers in Ky. lost jobs, as GE moved more production out of the US, all to please Obama's phony environmentalist friends.
So, once again, industry gets the blame, while politicians cause the problem.
Politicians carry on about it giving America a raise or about it pricing people out of the labor market, but that's mostly hot air.