When you buy a hamburger from McDonald’s you know the product and you know that you value it more than the money paid for it. Combine this sort of voluntary transaction with Darwin’s principle of “survival of the fittest,” and you have the doctrine that “in economic competition the firms that survive are the most efficient available ones in providing economic benefits to society.”1 According to this point of view, successful firms are those which are capable of providing the most value to buyers at the least cost. This perspective informs most modern discussions of business strategy.
If people and firms only competed by offering superior value in voluntary fully-informed transactions, the world would certainly be a better place. Unfortunately, only Dr. Pangloss could overlook the amount of parasitism, coercion, rancid character, and exploitation of human weakness in the world.
Competition is not limited to rivals trying to offer more value at lower costs. Many firms will routinely exploit the natural human weaknesses of their buyers, earning profits that are disconnected from any social benefit. Once a company establishes a competitive advantage, parasites will attempt to skim payments without providing any value in return. More seriously, some agents will try to extort payments from any successful enterprise. Politicians will enact general rules and then reserve special exemptions for those who have curried favor. And, competitors will misrepresent products and exploit the ignorance of naiveté of buyers. As a strategist, you must be prepared for the dark side.
- Clem Tisdell, “Economics, Ecology, and the Environment,” University of Queensland Working Paper No. 62, 2001, p. 7. [↩]
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