the air

This is part III of a series of posts designed to introduce you to me on a more intimate level. It is my intention to help you learn more about me and my views. It will also give you some insight into my own beliefs and what I hope to accomplish through this blog and in life. Please feel free to comment or use the contact form.

Part III of the series introduces you to my corporate beliefs.

• Part I
• Part II

What is wrong with corporate America?

Corporations in America are simply perplexing and perfect examples of failing capitalism. These companies pride themselves on milking the consumer for every last penny and abusing the political system to ensure that no fair market can exist. Before everyone begins to complain about my reasoning, please note that this piece, like many of my posts, is just an opinion. Corporate America suffers from three major things:

• Consumer unfriendliness
• Emphasis on short-term gains
• Penny pinching

Consumer? What Consumer?

When operating a business, I find that it is important to follow three principles in order:

1. Focus on consumer
2. Employee satisfaction
3. Profit

It is imperative for any corporation to cater to the consumer first. All actions that the company takes should be in the interest of the consumer. Why? Without the support of the consumer, how can a business expect to make money? Many corporations in the US tend to give their shareholders more preference than the consumer. This is completely unfair and is definitely not in the best interest of the company. So repeat after me: consumers drive business. Take for example the case of major textbook publishers such as Addison Wesley, McGraw-Hill, and many more. These companies charge severely prohibitive prices for questionable college textbooks and force the average college student to further let themselves slip into debt. What many people do not realize is that the same textbook is available in other countries at lower rates. A book that I had for on my classes retailed at bookstores for about $170 and that same book was available in India for a little under $9. How is that fair to the average American consumer? Why should the American consumer pay higher fees, leading to subsidizing the cost for other students around the world? I can understand that less priviledged students in third world countries could never afford the same rates as American students, but why not charge American students rates that are more favorable? I don’t mind paying, on average, $50 per textbook; compared to $140 per book. I can force myself to see the logic in the pricing, but I cannot agree to that.

Another good example is that of many wireless communication service providers (e.g. Cingular, Sprint, etc.). They try to push so many services onto you, but they fail to offer any reliability. In many situations they force you to sign lengthy contracts while telling you that they do not have to provide service in return. If you have read your service agreement carefully, they reserve the right to drop you as a customer, not guarantee their service, some even go as far as to say that you will not take them to civil or criminal court for any reason. How is that fair to the consumer? Why not give the consumer the right to drop you as a carrier if the service provider fails to live up to their expectations? The main answers to this question and others is simply profit. This will automatically lead me into my next bold point.

Employee satisfaction is a given and many companies excel in this area. Many companies realize that without employees, they have no hope for survival either. The employee is the life and blood of the company. Google does an excellent job of catering to their employees’ needs by serving gourmet meals, allowing them to pursue personal projects on company time, and much more. A decentralized and organic approach has allowed many companies, such as Google, to find creativity, harvest it, and unveil it glamorously. From this approach, we now have GMail and Orkut. I feel much of this area is left up to companies and does not need further elaboration.

My personal favorite is the fact that all these companies are into penny pinching. Cingular has recently raised its on demand per sent SMS rate from $0.10 to $0.15. Why? Only to increase profits and force consumers to sign up for one of their text messaging plans. The worst part is that Verizon Wireless is now moving to copy Cingular’s move. Why not lower the rates to encourage more users to use this feature rather than raise it? I think that if rates were much more favorable, many consumers would at least try to use the new features. Cingular has a habit of only allowing 1 MB of data access to its GPRS/EDGE subscribers. However, T-Mobile charges a flat fee of around six dollars for unlimited data transfer. Why not copy that move? Whatever happened to generosity? All of these companies pretend to be parsimonious but are able to create lavish severance packages for their top executives. Need I go on?

The ballad of quarters

These days, the “job life” expectancy of a CEO is around two years. As such, most of these CEO’s have only eight quarters to prove that they are effective and deserving of another year of service. So what happens? Every CEO is only concerned with quarterly results. That means, they are trying to maximize profit, increase production, increase sales all in one quarter. A side-effect of this grave mis-calculation is a degradation of quality in the company’s product or service. You also lose out on customer satisfaction and loyalty. These days, businesses are competing with firms that have brick-and-mortar stores and those who have only an online presence. For almost any product, there are always alternative stores to go to. If you find that Home Depot is selling your tool at a high price, I challenge you to go online since you will find that same tool for a much lower price. In fact, if you shop around, you might even find that same tool cheaper at another local hardware store. Nevertheless, the CE0’s are willing to sacrifice quality and customer satisfaction so that they can show the Board of Directors that they improved sales and the company has grown. In reality, these CEO’s have abandoned their customers, encouraged lower quality, and are mis-leading their shareholders. And these CEO’s are so talented, that they force the Board to develop lofty severance packages so that if the CEO is fired, he/she can leave with a big sack full of money and laugh in everyone’s faces. This is the world of American Corporations. A sad and pathetic world it is.

A penny saved is a penny earned

I think I have made it very clear that these companies are all about milking the consumer for every singly penny. They raise their rates for no reason, introduce annoying “services” so that the consumer can fork over more cash, and they don’t improve service in any way. For example, Verizon Wireless and other wireless service providers plan on introducing advertisements so that they may offer cheaper services and more content. What is the real reason? These companies have found another route for making more money while sacrificing the consumer. Data services have been slow in acceptance amongst most wireless customers in the US. This is because most consumers don’t realize that the service is even available or they find the price too high to really use. As such, companies want to encourage/force their customers to use these services. In order to do so, they have to lower the rates so that the customer feels like he/she is getting a bargain. What better than to introduce annoying advertisements and offer cheaper rates. What the consumer fails to realize is that the actual phone service will probably not even improve. Companies don’t really care what you think as long as you pay them premium fees for lousy service. Instead of building a strong and healthy customer base, these companies wish to make you pay high fees for absolutely nothing.

Here’s another good example, TiVo. TiVo is DVR that will allow you to record your shows digitally. It functions like a VCR, but without the tape. The company charges you approximately 20 dollars a month to use their system. What do you get? You get a box that will show you more advertisements as you fast forward through recorded advertisements. What the hell is the point of that? Recently, Phillips patented a technology that can disable the remote control of your television set once a commercial is on. How is that not going to annoy customers? Companies like TiVo and Phillips will have you pay for lousy technology and service only to force you to watch annoying adverts that you are trying to fast forward or change. As I have mentioned, too many companies are putting too much emphasis on advertising and not enough strength in content, quality, and service. A very disappointing move.

Fin

Corporations have lost touch with their customers. They are all persevering to milking the consumer for every last penny. Instead of developing quality and service, they strive to increase their profit margin and show bloated numbers to their share-holders and the Board of Directors. Just a few years ago, CEO’s of Enron and other companies were caught doing illegal activities simply because they wanted more money. In case you haven’t figured it out, better numbers every quarter equals bigger bonuses for CEO’s. Some companies are genuinely interested in their consumer and spend a great amount of time ensuring that their products and services meet their needs. Remember Apple? Apple products are priced high, but you also get a product that is of higher quality as well. Some will always argue that Apple actually makes inferior products, puts them in a nice package, and charges a premium. However, you only need to look at iPod sales and Macbook sales to know that Apple is not really making an inferior product. Rather, Apple knows what the consumer wants. The consumer wants to be treated like a king. The consumer is willing to spend big money if they know that the product they get is high in quality and backed by great service. You can also compare a Mercedes dealer with a Cadillac dealer. I remember that at the Mercedes dealer, I was treated with great respect and they made a sincere effort to ensure that I was not pressured into buying a vehicle, but rather that I knew what made a Mercedes a Mercedes. At the Cadillac dealer, the sales staff kept pressuring me to purchase a vehicle without really telling me anything about the car. What do you think happened? I paid more for a Mercedes, but I am also getting higher quality and service. If you dare disagree, bring your Cadillac and I’ll show you my S550. Once you sit in that car, you’ll know what luxury really is. By the way, the S550 is my mom’s car, not exactly mine, but I did do all the negotiating and research. I think that once companies learn about their consumer and design their products and services to cater directly to the consumer, companies will automatically realize higher profits and a strong customer base.

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