If you’re a business that wants to stay in business, best stay away from unfair trade practices.
Unfair trade practices are illegal via Consumer Protection Law in the U.S. Unfair trade practice is a term that covers a whole slew of unethical business practices, to the detriment of consumers: false advertising, fake raffles, deceptive pricing (looking at you, Overstock), and skirting around manufacturing and safety standards. Or any standards, really.
Insurance companies, landlords, and lenders are all subject to getting in trouble with Consumer Protection Law too via unfair trade practices...any deception in the marketplace is game for a class action lawsuit. You. Don't. Want. This.
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Cost Accounting: What is Predatory Prici...1 Views
And finance Allah Shmoop What is predatory pricing Let's pricing
below cost Hoping to drive your competition out of business
like you're the Predator you're willing to get sliced and
kicked and punched a bit knowing full well that the
sweet sweet juice of penguin du jour will be all
the sweeter when it's being you know guzzled well Why
or at least how does this work Well think about
the greatest retailer in the world the pre Amazon It
was this soon to be little company called Walmart which
is now dying in largely the same way it killed
the small mom and pop store Well for fifteen years
Amazon had no profits literally none It's sold product at
a loss and made up for the losses by selling
customer data selling ad space selling other information technology services
on its Web network and so on It did not
make money from selling books Well technically Amazon used predatory
pricing kind of sort of to take most of the
retail dollar in the country Well why was Amazon not
called out for the quote Felony unquote This represents well
because it was beating up on Big Seamus including Wal
Mart So like how would the dinosaur government come down
on this little Sora pod for beating up on this
huge T Rex Yeah it didn't make sense Well until
the store a pod became big enough to just stop
on the T Rex or uh you know do this
but spin the clock back to the nineteen thirties Yeah
that's the American landscape actin which was dotted with tens
of thousands of small stores like this one the country
store They had maybe a thousand different items crammed into
the small building The owner bought them from a sub
distributor fifty miles away and had things delivered by post
or by rail every week and bought like eight sets
of gloves at a time Then along came Wal Mart
with its megastore system where one store covered acres place
just in between eight small towns It was enough volume
available to buy tow warrant visitors driving in there You
know crappy cars in the forties and fifties to spend
all day shopping the four hundred thousand stock keeping units
or skews our escape use that a typical Wal Mart
store had And because WalMart ordered gloves in bundles of
ten thousand units from the manufacturer will the pricing it
could command was half or less of what the small
mom and pop store owner could buy them for And
in fact Walmart often retailed items for a price less
than what the mom and pop store could even buy
them for Like there'd be no profit for Mom and
or Pop So the mom and pop stores were all
driven out of business And ironically it's the same way
that Barnes and Noble and Borders and the others drove
out small book stores You know Mom and pop bookstores
before Amazon then destroyed Barnes and Noble and Borders and
the other was all this predatory like Did WalMart actively
seek to bankrupt the mom and pop stores so they
could well own a kind of monopoly which would then
in theory be able to raise prices forever with impunity
There may be Prove it Good luck in court of
law You gotta prove that it was accused of predatory
pricing anyway as family business after family business clothes and
a lot of arm waving in Nina Nina Ring and
the public read stories tearfully written by journalists who were
employees of large media companies about how terrible it wass
You know this family in that family who'd run their
store for one hundred fifty years now had to close
because Walmart ate their lunch Did the public stop shopping
at Wal Mart and then return to the much higher
priced much lower value mom and pop store products in
order to really show those evil predator people at Wal
Mart a thing or two about how American culture works
in supporting the little guy The underdog the downtrodden No
America is a capitalist country We vote with our dollars
So when predatory pricing activity happens it's kind of a
double edged sword For a short period of time Consumers
benefit by having amazing value given to them prices at
such low levels sponsored by the company dumping them and
having losses to essentially by market share for themselves in
the future But then what All the competitors were driven
out of business Well then in theory the seller has
a monopoly like WalMart kind of did at least locally
for a long time The consumer then pays handsomely for
everything with little or no alternate buying options But in
practice that almost never happens because competitors aire lurking behind
rocks pretty much everywhere And this type of activity happens
all the time in technology A given country wants to
own say mobile semiconductor manufacturing ability For the next decade
their factory costs five billion dollars there Country makes the
country's banking system is backing them with insanely cheap debt
as that factory puts toe work hundreds of thousands of
that country's local workers So that country then sells chips
for eleven cents each or at least per unit Or
however you want to do the math when it cost
that country fourteen cents to make him And the big
existing makers can't produce them for less than eighteen cents
a unit Well after a while those pennies add up
and there's just one ship maker who can then sell
their wares for thirty cents a unit and more than
make up for those predatory pricing Three sent a unit
losses they suffered in the beginning That's the theory anyway
for how predatory pricing works for how it should work
At least if you're a predator and if that makes
you happy well then you should clap your hands or 00:05:31.838 --> [endTime] try to anyway
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