K Venkatachari
PP - Probus Club of Chennai,
From: Mohan V.R via K.venkatachari
Nice Logic - It May Work!!
A man eats two eggs each morning for breakfast. When he goes to the Kirana
store he pays Rs. 12 a dozen. Since a dozen eggs won't last a week he normally
buys two dozens at a time. One day while buying eggs he notices that the price
has risen to Rs. 16. The next time he buys groceries, eggs are Rs. 22 a dozen.
When asked to explain the price of eggs the store owner says, "The price has
gone up and I have to raise my price accordingly". This store buys 100 dozen
eggs a day. He checked around for a better price and all the distributors have
raised their prices. The distributors have begun to buy from the huge egg
farms. The small egg farms have been driven out of business. The huge egg
farms sell 100,000 dozen eggs a day to distributors. With no competition, they
can set the price as they see fit. The distributors then have to raise their
prices to the grocery stores. And on and on and on.
As the man kept buying eggs the price kept going up. He saw the big egg trucks
delivering 100 dozen eggs each day. Nothing changed there. He checked out the
huge egg farms and found they were selling 100,000 dozen eggs to the
distributors daily. Nothing had changed but the price of eggs.
Then week before Diwali the price of eggs shot up to Rs. 40 a dozen. Again he
asked the grocery owner why and was told, "Cakes and baking for the holiday".
The huge egg farmers know there will be a lot of baking going on and more eggs
will be used. Hence, the price of eggs goes up. Expect the same thing at
Christmas and other times when family cooking, baking, etc. happen.
This pattern continues until the price of eggs is Rs. 60 a dozen. The man says,
"There must be something we can do about the price of eggs".
He starts talking to all the people in his town and they decide to stop buying
eggs. This didn't work because everyone needed eggs.
Finally, the man suggested only buying what you need. He ate 2 eggs a day. On
the way home from work he would stop at the grocery and buy two eggs. Everyone
in town started buying 2 or 3 eggs a day.
The grocery store owner began complaining that he had too many eggs in his
cooler. He told the distributor that he didn't need any eggs.
Maybe wouldn't need any all week.
The distributor had eggs piling up at his warehouse. He told the huge egg
farms that he didn't have any room for eggs would not need any for at least two
weeks.
At the egg farm, the chickens just kept on laying eggs. To relieve the
pressure, the huge egg farm told the distributor that they could buy the eggs
at a lower price.
The distributor said, " I don't have the room for the eggs even if they were
free". The distributor told the grocery store owner that he would lower the
price of the eggs if the store would start buying again.
The grocery store owner said, "I don't have room for more eggs. The customers
are only buying 2 or 3 eggs at a time. Now if you were to drop the price of
eggs back down to the original price, the customers would start buying by the
dozen again".
The distributors sent that proposal to the huge egg farmers but the egg farmers
liked the price they were getting for their eggs but, those chickens just kept
on laying. Finally, the egg farmers lowered the price of their eggs. But only
a few paisa.
The customers still bought 2 or 3 eggs at a time. They said, "when the price of
eggs gets down to where it was before, we will start buying by the dozen."
Slowly the price of eggs started dropping. The distributors had to slash their
prices to make room for the eggs coming from the egg farmers.
The egg farmers cut their prices because the distributors wouldn't buy at a
higher price than they were selling eggs for. Anyway, they had full warehouses
and wouldn't need eggs for quite a while.
And those chickens kept on laying.
Eventually, the egg farmers cut their prices because they were throwing away
eggs they couldn't sell.
The distributors started buying again because the eggs were priced to where the
stores could afford to sell them at the lower price.
And the customers started buying by the dozen again.
Now, transpose this analogy to the gasoline industry.
What if everyone only bought Rs 300.00 worth of Petrol each time they pulled to
the pump? The dealer's tanks would stay semi full all the time. The dealers
wouldn't have room for the gas coming from the huge tanks. The tank farms
wouldn't have room for the petrol coming from the refining plants. And the
refining plants wouldn't have room for the oil being off loaded from the huge
tankers coming from the oil fiends.
Just Rs. 500.00 each time you buy gas. Don't fill up the tank of your car. You
may have to stop for gas twice a week, but the price should come down.
Think about it.
Also, don't buy anything else at the fuel station; don't give them any
more of your hard earned money than what you spend on gas, until the prices
come down..."
..just think of this concept for a while.
Sent from my iPad
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