Planned Obsolescence

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Product manufacturing companies adopt this methodology for lot of products now a days. Products will become defective over time in various ways and the timeframe is planned by the companies. However there are two sides to it and it is always tagged to do more bad than good. Hmm .. Lets see …

One is where you see from the consumer point of view. How can some thing i buy can go non-functional or starts malfunctioning after sometime ? True. Consumer buys a shaving razor for 10 bucks and he wants it to stay atleast for an year or two but company designs it to work right only for 6 months. After that you see that it has not met the value you actually paid for.

Another point of view is from the manufacturing companies. You just paid 10 bucks and you want to work for a decade ? True. They want the consumer to return to them for two reasons. One is, after 6 months to 1 year the product goes non-fashonable or there is a new product which is more productive. He has to return to it anyways. They design the blades and the handle which are supposed to work for only 6 months. That’s business ! If your Laptop is only supposed to work for 5-10 years then why design a key board that is supposed to work for ever. This is point one.  Second is for economic reasons, there is a need for consumers to come back to purchase new products and regulate the money. It is healthy that way.

Ever wondered why Intel gives an Ad which says “Intel manufactures P4 processor, It is faster than P3.” How can they contradict their own product ? Even if the superior one is their own product ? Planned Obsolescense is the reason. They want consumers to realize that there is a new product in themarket which is much faster and even an owner of a P3 should think may be he should purchase that. Sales of P4 then become inversely proportional to P3.  In order to meet diversified market needs they keep their portfolio as P4 and P3. After some time it becomes, P5, P4 and P3 which later becomes P5, and P4.  P3 is slowly moved out of the market. P3 owners by that time realize that P3 started giving problems and also at the same time, they want to upgrade to P4 since the price might be considerably low comparable at the time of the release.

Same is the case with the software industry. Company X releases version 2.0 and also stops supporting 1.0’s upgrades. You need to buy the new one. One does not have to mention FMCG since it is understood that it is the best example for obsolescense. The great depression of 1929 was because of the consumer products not getting sold very frequently. The solution for that phase was planned obsolescence however.

Planned Obsolescence is not eco friendly in today’s World ..

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Corporate Growth – A view point!

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Growth is what every corporate is behind now a days. It can be coined in many terms, from revenues to building great workplaces. Depending on each individual organization’s situation their growth factor will vary. I have listed down some which I could think of below.

We can divide growth in big terms like as below.

  1. Business (Vertical / Horizontal)  Growth
  2. General Growth

Business Growth (BG)

From big organizations to recent start ups, this is a common place where they try to get better. But what are the deciding factors or areas where they pick to improve to help make this growth happen vertically / horizontally vary from company to company.  Some are general and are listed below.

Market Share

 This is the first indicator of BG. Growth of market share depends on various factors like Age of the organization, Opportunity in the market, Strength of the brand with respect to the customers, Strategies related to Pricing, Marketing and Sales, Innovative spirit in the organization to lead the market and various others depending on each industry.

 Age of the organization does not matter if your idea is brand new in the case of a start up. Then you own the 100% market share anyways. Holding on to that % is clearly impossible. As the market matures new players will come in and take their share.  Taking the advantage of starting the domain always help in retaining major market share as long as you are focused and providing the best product to the customers. If you are a new player in a matured market then you will have barriers to enter the market like competing with existing well established companies in the same market. The chances that you live in the market are slim to none, unless you distinguish the product from others. Especially if the market has players with strong branding adapted and have heavy infrastructure, assets, customers etc., already in place. Imagine you want to start a business that manufactures cars who are you competing with? Ford, BMW, VW, TOYOTA … Forget it! That is why you never see a start up entering such markets, you can attribute it mostly in that case to infrastructure but I am just quoting an example.

Vision

 Building long term and short term goals for the organization and executing them with milestones make sure that the growth is Progressive and Healthy. Short term goals include commercializing existing products or new products (in case the company is new to the market) to generate revenues to withstand the operating costs and be profitable. Customizing products to make the customer interested in buying the same. Maintaining / Creating good business terms with customer and vendors (if any).  Long term goals include creating a good brand for the product. Build core competency in the organization.  Find the future / more productive markets and moving the business towards it. Expanding business to other geographical location(s) in order to hire more skilled man power. It will also help in building bigger business contacts. Create a plan to move the business horizontally to expand the company to be more profitable and sustainable. Planned Acquisitions and Mergers is also a way to expand or grow the organization as long as they have a strategic fit in the new organization.  

General Growth

General growth includes creating great workplaces for the employees of the organization. Satisfy customers by following good business etiquette.  Create loyalty in customers by providing quality products. Establish processes in the organization to follow Six Sigma or likewise to ensure the smooth running of the company. Motivating employees to constantly learn something new to help them grow by the way they are contributing to the organization. Making it a habit to estimate and plan things meticulously.

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