Monday, March 18, 2013

Where the Grickle-grass grows.

The trick to playing the Economy game is to diversify your portfolio, and that's just what media companies have been doing for as long as media has existed. The simple reason is profit, the in depth reason is building a market to reach more people to increase the companies profit.

The easiest way to understand why a firm would desire to grow beyond it's current state can be found whilst analyzing the complexities of the Thneed market.

"I meant no harm. I most truly did not.
But I had to grow bigger. So bigger I got.
I biggered my factory. I biggered my roads.
I biggered my wagons. I biggered the loads
of Thneeds I shiped out. I was shipping them forth
to the South! To the East! To the West! To the North!
I went on biggering...selling more Thneeds.
And I biggered my money, which everyone needs."

Here we see the Once-ler's desire to increase the profits results in an increase in production. Through innovation (the Super-Axe-hacker is capable of chopping down four Truffula Trees in one smacker), Low prices (a Thneed sells for the low cost of $3.98), and versatility of his product ("A Thneed's a Fine-Something-That-All-People-Need! It's a shirt.It's a sock. It's a glove. It's a hat. But it has other uses. Yes, far beyond that. You can use it for carpets. For pillows! For sheets! Or Curtains! Or covers for bicycle seats!") the Once-ler seems to have a great product made from quality material ("The touch of their [Truffula Trees] tufts was much softer than silk. And they had the sweet smell of fresh butterfly milk."). The problem with the business model, other than the lack of sustainability, is his company is wrapped up in a single product. If he were to expand his operation to selling the Truffula fruits, a staple in the diet of the Brown Bar-ba-loots, or possibly a perfume made from the extract of the Truffula tuft he would have increased his share in the market for multiple items.

The ultimate downfall of the Once-ler and his Thneed company can be traced to Once-ler's ignorance of the Law of Unintended Consequences. If the Once-ler had been more of a fan of Adam Smith he may have known that his company, a precursor ot O'Hare Air, was falling victim to his own size.

When the Once-ler announces his intentions to continue "Biggering and BIGGERING and BIGGERING and BIGGERING, turning MORE Truffula Trees into Thneeds..." he does not count on the limitations of his business being reached. When the last Truffula Tree is felled reality crashes down onto our poor friend, the Once-ler. His company is wrecked, his family abandons him, his one companion, the Lorax, leaves him with a "sad, sad backwards glance."

A direct parallel can be drawn to today's businesses. To ensure continued success in a market and fiscal growth, a unique product is not enough. Proper planning and acquisition of other outlets to ensure profit flow is a necessity to growing a business beyond self sustaining.Even a diversity of offered products will increase the profit margins.

Big companies know this, and are capable of this. It is easier for them to buy other companies to obtain their product or idea, whereas a smaller company has more barriers to entry and competition due to smaller coffers.

All economics aside, the Once-ler should have practiced more conservation. If a Thneed is truly something that everyone needs, it is worth the extra time and money to plant a few trees.


A narrative based on The Lorax, by Dr. Seuss. 

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