Short Term Gain, or Long Term Success?

Too often we hear the complaint that big companies are putting little companies out of business.  It happens.  With the economies of scale that larger companies can harness, they can often get favorable pricing on their goods, and sell them at a lower price than smaller competitors can, making just enough off of volume to keep going.

That works fine with commodities, items that are identical no matter who makes them.  Most people don't care what company made the table salt they buy for their kitchen, so whoever can get it to them for the lowest price usually wins the battle.  Morton's has won the battle over much of the rest of the market precisely because they are the largest. They have lower unit costs because they have driven the volume up so high.

What's this got to do with fence?  Morton didn't copy someone else's formula for table salt, they simply came up with efficient ways to obtain it, process it, package it and deliver it.  Anyone can mine salt, grind it up, and put it in a box. (I know it is much more involved, humor me, it's beside the point.) Their success is predicated on having a huge footprint in the industry, and it works for them.

What about products that are not commodities, but are unique and innovative?  There are two ways to beat an innovator.  One, you can simply come up with more and better ideas to make oneself more competitive.  The second is by nature anti-competitive and ultimately prevents innovation.  One can obtain a temporary competitive advantage by copying a competitors design, then, by flooding the market with cheaper imitations, drive the competitor out of business, using a cheapened version of his own idea.

This is always temporary because, in the end, the consumer is disappointed in the quality and performance of the product and either switches to the next innovator's product, or switches to the next rip off because it is cheaper.  It is not a sustainable business model.  It destroys true innovation, and it destroys the businesses and lives of the kinds of people who make this country great.  In exchange for temporarily lining the pockets of investors, companies that capitalize on taking the businesses of others rather than innovating new and better products are destroying industry, not building it.  That's not 'the American Way'.