Reference no: EM132223783
For The Humans that were not replaced by The Robots, the respite was short-lived. They soon discovered that there existed another group of The Humans that had joined forces with The Robots so as to destroy the profit margins of BoltonCorp. This newly discovered group has been known by many names, but the most ubiquitous name is customers. To the chagrin of The Humans Known As Employees, The Humans Known As Customers are just as necessary for the success of BoltonCorp, and their demands must be met.
The Humans Known As Customers have two identifying features that attempt to destroy the profit margins of any firm that crosses their path. First of all, they want the price that they must pay for the goods or services to be as close to zero as possible. Second, they want the value that they receive from the goods or services to be as high as possible. To put this in our Value-Price-Cost (V-P-C) framework, they want to maximize the V-P gap and minimize the P-C gap. Given that all of BoltonCorp’s potential for profits is derived from the P-C gap, efforts to minimize it are alarming, to say the least. (As if this were not alarming enough, BoltonCorp has actually tasked some of The Humans Known As Employees to make every effort to attract MORE of The Humans Known As Customers! In an unbelievable turn of events, BoltonCorp has actually increased its costs through marketing and advertising expenses to create more interactions and engagements with those who want only to reduce the price! Has BoltonCorp lost its mind? Does it even know that maximizing the P-C gap is critical to survival?!)
Meanwhile, The Humans Known As Customers have created and leveraged The Robots Who Reduce Information Asymmetry (Web sites, apps, price comparison software, product reviews, etc.) as their primary weapon against the profit margins of BoltonCorp. Information asymmetry exists when the two parties involved in a transaction have different amounts and types of information. For example, BoltonCorp knows the exact cost to deliver their goods or services, but the price that the The Humans Known As Customers are willing to pay is unknown. Conversely, The Humans Known As Customers know the exact price that each of the goods or services is worth to them, but the true costs are unknown. Both parties in each transaction desire the other side to be as uninformed as possible. Put another way, both sides are trying to maximize information asymmetry.
You are the CEO of BoltonCorp, a multinational firm that operates in 27 countries. You are sure that you need The Humans Known As Customers to be satisfied or else you will go out of business. However, you prefer The Humans Known As Customers to have zero information about your costs. Unfortunately, The Humans Known As Customers have joined forces with The Robots Who Reduce Information Asymmetry and have become much more informed. Some of the information they have curated is sourced from BoltonCorp itself through its participation in trade associations and competitive advertising campaigns and compliance with media outlets that evaluate products and services. BoltonCorp seems to be complicit in its own demise.
1. Should you increase your efforts to hide information from The Humans Known As Customers?
If no, how will you explain your decision to the board of directors that were hired to monitor your firm and defend shareholder interests?
If yes, how will you explain your decision to the news media that report on your actions to the entire global society of The Humans Known As Customers?