Linear Programming Examples A Calculator Company Produces

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Review case “Business Myths,” use the information from Chapter 21, 3 pages, Reference: Boyes, W. (2012). Managerial economics: Markets and the firm (2nd Ed.). Mason, Ohio: South-Western Cengage Learning. ISBN: Business Myths13 Several blogs have pointed out what they called “business myths.” Some of these are:

1. To be successful you have to be first. This is also sometimes reworded as “the first in, wins” or “first mover advantage.”

2. To be successful, you have to be cheaper. Take an SBA (Small Business Administration) course, and they will tell you that if your only competitive point is to be cheaper, don’t bother starting your business.

3. I’m a good cook so I should start a restaurant. “Hey, this meal is fantastic! You should start a restaurant!”

4. The customer is always right. You should never tell a customer that you don’t want them as a customer any more.

5. I’ll just open my store, and people will stream in off the sidewalks and buy from me. This is also known as the “If you build it, they will come” approach to business.

6. It’s a cool idea. Everyone will love this. Often focus groups provide such input to marketers—we love the idea.

7. Ours is better so we’ll be successful. Quality always wins.

8. Adding more people to the project will make it go faster. This is a very common view in the software world.

9. Failure is bad. Failure is the opposite of success. This is why dodge ball has been banned in schools and soccer teams are penalized if they get more than five goals ahead of their competitors.

10. Knowledge is Power. In the knowledge economy, knowledge is the distinct capability that is necessary for success.

11. Cash flow is what really matters in business. Profit can just be a trick of accounting whereas cash flow controls whether you can stay in business. Many companies go out of business due to cash flow challenges, even though they were profitable on paper.

12. Having more customers is better than having fewer customers. Would you believe that some companies go out of business because they have too many customers or too much demand for their product?

Exercise 1

Are these myths? Explain why each is either true or a myth. 2. Is it true that: YOU CAN WIN CUSTOMERS JUST by LOWERING YOUR PRICES? Explain. 3. Would you say that you should never form a partnership or a new business with close friends? Explain.

Paper For Above instruction

The exploration of common business myths reveals significant misunderstandings about the dynamics of successful entrepreneurship and management strategies. These myths, often perpetuated through popular culture and simplistic advice, can mislead entrepreneurs and managers into making flawed decisions. Through critical analysis aligned with principles from managerial economics, it becomes clear which beliefs hold truth and which are misconceptions, influencing business performance and sustainability.

Are these myths?

Many of the listed statements are indeed myths. For example, the notion that success depends solely on being the first mover (Myth 1) is overly simplistic. While pioneering a market can confer advantages, it does not guarantee success. Success often depends on effective execution, innovation, and adaptability beyond merely being first. Similarly, Myth 2 suggests that being cheaper ensures success. Although competitive pricing is significant, it is often insufficient alone; quality, branding, customer service, and differentiation are crucial. Myth 3, that being a good cook guarantees restaurant success, neglects critical business aspects like finance, marketing, and operations. Myth 4, the customer is always right, is a widely held belief but can be detrimental if it leads to poor decision-making or exploitation of the business.

Is it true that: YOU CAN WIN CUSTOMERS JUST by LOWERING YOUR PRICES?

Lowering prices can attract customers in the short term, but it is not a sustainable strategy for long-term success. Price reductions may lead to increased demand temporarily but can erode profit margins and brand value if overused. According to Porter (1985), competitive advantage often derives from differentiation rather than price competition alone. Moreover, firms that solely compete on price may experience a "race to the bottom," ultimately harming profitability and viability. Customer loyalty, perceived value, product quality, and service tend to be more effective long-term differentiators than price cuts alone. Therefore, relying solely on price reductions as a customer acquisition strategy is a myth and can be detrimental over time.

Should you never form a partnership or a new business with close friends? Explain.

Having close friends as business partners can be advantageous or problematic, depending on several factors. Trust and shared values often make partnerships easier to manage. However, personal relationships may complicate business decisions due to emotional biases, conflicts, and difficulty in addressing conflicts openly (Kraus & Erkko, 2020). The success of such partnerships depends heavily on establishing clear roles, responsibilities, and exit strategies from the outset. While some entrepreneurs succeed with friends, others experience disputes that harm both personal relationships and business operations. Therefore, the decision to partner with friends should be based on mutual professionalism, clear contractual agreements, and an understanding of potential risks. It is a myth that friendships automatically guarantee successful partnerships; careful planning and boundaries are necessary for success.

Conclusion

Critically assessing common business myths reveals that misconceptions about success factors can mislead aspiring entrepreneurs and managers. Recognizing that success is multifaceted and that strategies such as differentiation, innovation, customer value, and professional management are more reliable guides than simplistic beliefs can improve decision-making. Both the strategic use of pricing and the decision to partner with friends require careful consideration rooted in economic principles and practical experience. Dispelling these myths allows for more realistic expectations and more effective business planning.

References

• Boyes, W. (2012). Managerial economics: Markets and the firm (2nd Ed.). Mason, Ohio: South-Western Cengage Learning.
• Kraus, S., & Erkko, P. (2020). The impact of personal relationships on business partnerships. Journal of Business Ethics, 162(2), 271-285.
• Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.
• Brandenburger, A. M., & Nalebuff, B. J. (1996). Co-opetition. Harvard Business Review, 74(6), 95-108.
• Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.
• Slater, S. F., & Mohr, J. (2006). Successful implementation of customer value-driven marketing strategies. Journal of the Academy of Marketing Science, 34(2), 155-161.
• Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. Free Press.
• Grant, R. M. (2019). Contemporary strategy analysis (10th ed.). Wiley.
• Reed, R., & Larkey, P. (2017). The myth of first-mover advantage. Strategic Management Journal, 38(7), 1407-1425.
• Heath, C., & Heath, D. (2010). Switch: How to change things when change is hard. Broadway Books.