We all do what we do because we believe that it’s the right thing to do.
However, when you consider that some people believe that what we do is just a way to support our beliefs or to make our lives easier – you realize that there is a disconnect between what we do and our underlying motivations.
When business owners use examples from nature (what is necessary) and from history (what has been done) to justify how they are operating, they can benefit from applying philosophy to explain and justify their actions.
The term “Good”
From its earliest beginnings, philosophy has been about the subject of right and wrong and good and evil.
However, the primary difference between philosophy and other disciplines, such as economics, is that the subjects that philosophy deals with are many and the principles and rules that apply to them are at the fundamental level.
Business is an example of this, as much of the business world exists to meet a consumer need.
This consumer need will change over time and each business must adapt to this reality. This article looks at one particular example – why do businesses sell what they do?
Different consumer need
At its simplest, a product is something you need to survive and is made up of several parts that come together to fulfill this need.
Each component is known as a “unit”. For example, our current cell phones are made up of:
- a processor
- an operating system
- a screen
- a battery
- a web browser
- a camera
Each of these components has a specific function and we can combine them in different combinations to build our ideal phone, for example:
- A lower-priced phone without the camera
- A more expensive phone with the camera
- A phone with both a web browser and a camera
- A phone with a rear-facing camera and a front-facing camera
Each of these combinations comes with different advantages and disadvantages.
Some of these advantages will be negated by a deficiency in a different component and this will affect the overall performance of the phone.
The purpose of selling
A business is only as good as its consumers. Therefore, when a business decides to sell its products, it is making a trade.
This trade is for one exchange.
A business wants to make a profit by selling more of its product. This is because the cost of producing the product is greater than the value of the product it produces.
However, a business does not want to waste resources producing a product that does not meet the needs of the market.
Therefore, a business will purchase a piece of marketing collateral, such as advertising, to attract consumers to its product and drive them to a physical store where they can engage in an activity that will create additional value for them.
This activity will generate a return on investment for the business and could help it to become more profitable in the long term.
However, the sales activity undertaken by the business is nothing more than a sales pitch.
It is an attempt to create the need that will ultimately become its consumers.
In this example, the consumer who visits the store will not purchase the phone right then and there but will be encouraged to do so over time, with the first purchase being a simple test.
The buyers of the phone will be made to think that they are deciding to buy a phone right there and then.
The process will continue over time until the seller can create the long-term needs of its consumers.
It will be this strategy that will allow the business to make a profit in the long term.
The current models of capitalism can be compared to animals at the market. The animal is attracted to the animal feed.
It then chooses which animal to devour. It will eat it and move on. As the market is dynamic, the animal may eat different animals.
It will also eat certain animals and move on. It does not need to.
Each animal does not want the same thing. They will devour different animals to maximize the benefit that each animal will provide the animal.
So, the animal will only eat one particular animal. It will select a product based on what it needs to survive at this moment in time.
Similarly, a business needs to select what it needs to survive in the market. It does not need to eat all the foods in the market, nor does it need to consume all the resources of the earth.
Instead, it has to choose which foods it wants to eat, where it wants to go and how it wants to get there.
The goal of every business is to maximize its profits. This is not easy and requires a different approach to business. This is because not all companies have the same objectives.
Not all companies are in the business of selling goods and services. Some are in the business of trading financial instruments such as stocks. Some are in the business of trading legal services.
The most successful companies have learned to maximize profits by selling products and services that fulfill the needs of consumers and avoiding the activities that create no value for consumers.