Pricing Power : The phenomenon where the value of money falls below the price of goods is called inflation , and it is said we are currently in an era of inflation. However, it’s not that simple. Inflation is realistically characterized by prices not rising all at once during an inflationary period but rather increasing rapidly for some items and slowly for others over several years. This phenomenon is known as the ‘ Cantillon Effect .’ In other words, inflation is neither uniform nor regular. Conversely, when prices fall below the value of money, it is referred to as deflation . To survive deflation, companies must innovate, often by reducing costs and expenses. During inflation, rising costs must be passed on to other economic agents through increased prices, a concept known as Pricing Power. Since companies cannot pass on all the rising costs, many go bankrupt during periods of inflation. - Joseph’s “just my thoughts”
Every business has competitors, and succeeding in business means achieving victory over the competition. Winning the competition implies creating a monopoly. One of the most traditional methods of monopolizing the market is offering rebates to buyers, often referred to as a ‘bribe,’ which is illegal. The reason monopolies are so harmful is that they infringe on customers’ choices and benefits, as opposed to merely allowing one company to dominate the market. Facebook acquired Instagram and the messaging app WhatsApp to eliminate its competitors. Although Facebook is primarily a social media platform, why would it consider WhatsApp a competitor? Because WhatsApp provides group chat services to clients, and if it expands, it could easily transition into a social media platform. - Joseph’s “just my thoughts”