Executive Pay: The Curious Case of Carlos Ghosn’s Arrest
February 12, 2025
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Supply Chain Management is concerned not only with the flow of raw materials and finished goods, but scope extends beyond this to include reverse flow of unsold finished goods, parts and packaging materials from the point of consumption at customer’s end back to the organization or to rework/refurbishing vendors. Today reverse logistics has been adopted […]
Trade Wars and Zero Sum Thinking The ongoing trade wars between the United States, on one hand, and the rest of its trading partners, including China, Canada, and the EU or the European Union stem from a basic misinterpretation of global trade in Zero Sum terms or I win, You Lose kind of thinking. As […]
Who are HNIs and Why They are Valuable to Businesses We often hear the term HNIs or High Net-worth Individuals mentioned in a wide variety of contexts. Whether it is bankers launching a new product aimed at these individuals, media outlets reporting on their private lives and covering the weddings and other events, or for […]
The Current Situation: Donald Trumps administration had signed in a draconian law. This law made it necessary for immigration officers to deport adults who were illegally entering the United States. However, the children who were detained in the United States were to be kept in detention centers built specifically for the purpose. The end result […]
In the 21st century, marketplaces have become more competitive. This is because the availability of information has become the norm. Consumers can now choose amongst competing products and make an informed choice. As a result, getting customers has become increasingly difficult. This has given rise to price wars on several occasions. Since companies find it difficult to woo customers using other tactics, they have begun using price as a weapon.
Price wars happen because someone somewhere in the industry believes that prices are high and that they can make money by rationalizing them. However, often all competitors follow suit and offer retaliatory price cuts. This often leads to a precipitous decline in the prices which may be good for the customers. However, such extreme price cuts are definitely bad for the industry. For instance, in the year 1992, the airlines in the United States had indulged in an all-out price war. The end result was that air travel reached record highs during that year. At the same time, the airline industry made losses that were enough to wipe out all the profits that they had earned since inception.
The above situation clearly illustrates that a price war is devastating for all the participants involved. It does not matter who wins the war because at the end everyone is worse off. However, price wars are not optional. If one competitor begins a price war, others are often dragged into it. In this article, we will look at some strategies required to sustain and fight in a price war.
Entering a price war can also do damage to the brand equity created. Hence, companies must instead compete on quality because even if they fail, at least the brand equity, which they have spent years trying to build, still remains intact.
Hence companies should instead focus on offering a new product in a new market. Instead of branding itself as a cheap supplier, companies must try to be innovative.
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