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Old economical rule nr.2
31.12.2008.16:30
Seems to be common sense. This rule is still being applied worldwide at a very large scale. A lot of (production)companies think this way. It's just the Economy of scale: "Reduction in cost per unit resulting from increased production, realized through operational efficiencies. Economies of scale can be accomplished because as production increases, the cost of producing each additional unit falls."[1]
This is an old rule, which only works on the bases of knowing the future, of expecting that the future will be the same as the current reality.
Given the fact that markets, demands and customer behaviour does change, and changes much quicker than it used to do, this provides not a solid and sound basis for a profitable strategy.
Old economical rules: Rule nr.1
22.12.2008.23:49
This seems to be a valid rule, it looks quite logical. However, this rule contains one fatal flaw. The flaw is to be found in the fact that this rule is based on the assumption that the world around us is stable and constant. If this was true, and everything was stable and constant, this would be quite a good rule.
Unfortunately, this is far from the truth. The world around us isn't stable and constant, its actually very fluent and always in a state of change.
The flaw of the rule becomes visible clearer and clearer, when the long term projects have drifted to far away from reality. Or, so to say, when the reality has changed so much, that the expected world has not enough connections with it any more.
What happens, with big long term investments, is that an image of a future reality is established, and based upon this created image, investments are made.
if it's something small,and a projection in the future which doesn't take too long, it seems all harmless. But the bigger the project, and the longer the term of investment, the more dangerous it gets.
In the way this is formulated it looks like this is an old problem. And it is. But solutions to this problem have always been made in the same perspective. There are however ways, to think differently, without having to go in the same direction to still be successful in the long run
In the next blogs we'll continue on this subject.
From financial crisis to economical crisis to system crisis
13.12.2008.14:55
This has a few reasons. The most important reason is, is that our economy is so deeply rooted into the society, that any fundamental economical crisis will grow into a system crisis.
This effect is there, because the economical system has some basic rules from which is operates. Economical rules that used to dominate the systems don't seem to apply any more. In the next blog we'll elaborate more on these rules, and why they are failing.