Masood Mortazavi's Weblog

Tuesday May 03, 2005

[ Business ] Who Said This Today?

Who was quoted today in one of the leading business papers to say the following?

. . . how do you perceive me and my experience? And if there's anything I can do to help going forward, please keep me in mind . . .

Paper name, author name, article title?

In the same context, note that "looking for a job is an investment in your network."

2005-05-03 23:59:00.0 -- ; Permalink ; Trackback.

[ Business ] Alfred Sloan on How the Old Master Failed to Master Change

LaSalle (1927)
In his discussion of how U.S. automobile markets transformed in the 1920s, Alfred Sloan wrote about four important trends: installment selling, the used-car trade-in, the closed-body car and the annual model. (Chapter 9, My Years With General Motors.)
Ford seems to have missed at least some of these trends.

"The old master had failed to master change," wrote Sloan:

When first-car buyers returned to the market for the second round, with the old car as a first payment on the new car, they were selling basic transportation and demanding something more than that in the new car. Middle-income buyers, assisted by trade-in and installment financing, created the demand, not for basic transportation, but for progress in new cars, for comfort, convenience, power, and style. This was the actual trend of American life and those who adapted to it prospered.

Sloan also described how the new-car market leveled off in the mid 1920s. This was about market stablization when a new product takes hold.

The same, I would imagine, happened with the PC market in the mid 1990s. The only issue with the PC market is that the replacement does not work quite in the same way. Rather, the life-time of the product forces a leveling.

Now, here is an application of physics to market saturation: It is easy to use mass and heat transfer phenomena, which are based on the classical rules governing conservation of mass and energy, and to extend those models to create models of how markets saturate and to discover the importance of product innovation to capturing replacement and growth markets.

After market saturation, if a replacement or trade-in market exists, innovative products will still continue to sell. That is bascially what Sloan was trying to convey in his criticism of the "old master."

Paykan
Samand

New, better quality cars, were enough to "cover scrappage and growth in car ownership" while the used cars, at much lower prices, "dropped down to fill the demand at various levels for basic transportation," observed Sloan with his accute sense of idustry-wide automobile market.
I can see the same trends occurring, for example, in the car market in Iran, the country that is now the leading automobile producer in the Middle East, according to a recent report in Financial Times. For a long time, Paykan ("Arrow") was providing "basic transportation," and up to this year, this highly-polluting, originally British 1960s car was the scourge of the streets in Tehran.
Iran Khodro, the manufacturer has finally announced the end of Paykan's production. Its falgship car is now Samand, an Iranian-designed car of much higher quality, and or course, there is also the huge used-car market. Samand has actually been produced by a global team.
A Czech company, Cedea, seems to have been involved in the design of Samand's coupe model.