The Doctrine of Double Effect
Firms are subject to the legal Doctrine Of Double Effect in times of economic recession. This law, which is usually referred to, allows the use of a known dangerous and harmful medical strategy in order to treat a more severe, more fatal disorder. This strategy is sometimes referred to as “the lesser of two evils.”
One of these enigmas is pro-cyclicality. It literally means “amplifying any economic or financial cycle.” This concept states that financial regulation should be relaxed in an expanding market to allow for more significant expansion. In reality, however, as the 2008 Banking Crisis has shown, the mentality is to use the Doctrine Of Double Effect in order to occupy the opposite strategy. Because of the unacceptable risk that default would occur, the Bankers knew that subprime lending was the only viable market. The choice was easy: lend today, meet today’s targets, and face the consequences tomorrow, or repent at your leisure.
The Volume Strategy
We were once told that quality lasts, and we believed it. This was a valid reason to pay a little more for superior materials and manufacturing, as well as for the services and guarantees.
The overall market is contracting. There are either too few Firms providing a lower demand, which leads to natural selection, or we all have to survive on less.
The Doctrine of Double effect is used when faced with harsh realities. It recognizes that while the cure can be deadly, it is not as fatal as the disease.
The new success metric is volume or quantity, which was once the prevailing metric. This has led to a suicidal Race to the Bottom.
The slow but steady profits of careful industry were not enough for men. They hoped for boundless wealth tomorrow and became apathetic to the present. Charles Mackay, “Memoirs of Extraordinary Popular Delusions” and “The Madness of Crowds.”
Pure price
First, we’ve forgotten the mantra of generations that says “quality always lasts,” as described in the introduction.
We have come to believe that market capitalization is a strategy for success. Although we don’t sell any product, we feel that more product means more sales.
The emerging trend is a result of the ‘herd mentality, which draws other people in the sector to it regardless of its truth. For no other reason than “everyone cannot be wrong,” we subconsciously decide to follow.
We must win or conquer customers to achieve market share above the natural saturation point determined by your brand positioning. This is done through price.
Everywhere you look, the word “SALE,” Discount, or Event is written in bright fluorescent letters. This draws attention to the price, which is the single point of comparison for consumers.
Pure price comparison and the madness of crowds caused by unwitting coincidence conform to Nature’s principle of collective protectionism. It shows us how shoals and flocks of fish evade natural predators through the appearance and movement of mass; they become more than the sum of their parts and are too large to eat. Through industry solidarity, the too big to fail philosophy suggests that we can’t all be wrong, but everyone else is doing it. We are comfortable in knowing that even if everything goes wrong, it’s all our fault. It also makes each individual indistinguishable. They are all fish or birds, and we don’t consider any distinguishing features.
In an age when everything is on sale, one starts to wonder if anyone will ever want to bid Kierkegaard Fear & Trembling.
Moral Hazard
Commercially, following a narrow and narrow strategy like “volume at all costs creates a vacuum” is a bad idea. This is also known as the Moral Hazzard. In our blind pursuit of volume, we ignore every other factor that could have a positive impact on business, such as customer satisfaction, brand loyalty, etc. We will do anything and everything to increase units, turnover, and quantity.
Concurrence
There is no market without accurate completion. Competition teaches us that in order to finish 1st in any field, the field must be larger than 1. Otherwise, there can’t be 2nd, 3rd, or 4th. If different industry sectors follow the same trend and adopt the same strategy, especially one that is as brutal as Volume, then the usual competitive forces can be altered.
This creates a problem in the normal Market pressures and influence, leading to erosion in Customer Satisfaction and Employee Engagement, and ultimately a race to the bottom’. Social Media has made it easier to generalize opinions and create a collective default to the lowest common denominator. Bad news and negative experiences can tarnish the reputations of the Firm, its members, and branches as a whole.
Let’s face it,
A lifetime of building a reputation is required to sell an item. Reputation, quality, and all other components of Value are what make businesses. One person once said that pricing and negotiation are best done starting high. Once you have reached the bottom, the volume will drive your business. Service and satisfaction are then thrown out in vain to defeat gravity.
