Chapter 1
Rule 1: Someone is going to sell your product at cost or less
The first rule of the New Normal makes no sense at all, does it? How can it be that competitors can spring up and so massively undercut traditional retailers? After all, management textbooks talk about return on capital, and surely it can’t be the case that someone can operate a business making essentially no profit year after year and yet continue to invest and grow? It defies common sense. And yet it happens over and over.
This low-price, and apparently low-profit competition can in fact spring up for several reasons:
- A competitor might not be selling below their cost but just below your cost. They might simply have a much lower cost base. The most obvious example ...
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