Tuesday, August 16, 2005

A deal at work that saddens me, how to write business, and me

I'm close to closing a deal where we provide a product to a well known children's clothing manufacturer. Because I do not fully understand the legal implications of giving details, that is as detailed as I will get about the possible client.

My reason for posting is that the client recently purchased a rival or possibly a 'market extender'. I say 'market extender' because they are also a children's clothing manufacturer/retailer but for a different market of children. My reason for posting is that the acquired firm made many of my clothes as a child. The brand is well known and will continue but over time the company will become nothing but a name that the dominant company will use for consumer recognition. The purchasing company denies that they will close down the rival firm, but we all know how these mergers end. The dominant company will eventually strip down the bought company of it's useless assets and keep what it needs to maximize revenue, earnings or shareholder value.

Of course, it is very nice to work on high profile names. I enjoy working on cases and pricing the financial services that some of the nation's best known companies and universities will use. It was a reason I changed companies that I worked for in the first place. This new company gave me an opportunity to work on large cases which would show me the deals that one must cut to get business in the door.

One major thing that I have since learned is that ultimately, to write business in a market setting with bids, it comes down to the tolerance one has for the probability of losing money. Once in a blue moon you can get something in an open market setting that is at the perfect price. That requires all of the actors in the market to act rational. In the mature market setting for my industry, competition is fierce for new business and someone is always in a 'buying' mode. Many times I think about how bad a miss would be, how much would we lose if we underprice this, can we lose money early on and recover losses later on with price increases?

It's a sobering realization. Some of my coworkers view me as aggressive, creative and dynamic. I do not share their views. I view my work as controlled recklessness. I think it comes from knowing that we will sell 1 in 10 cases or so, so why not try everything possible to sell a case? If you do not sell it, you look great to your sales force because of the effort you put in and creative to your superiors. I think another part of it comes from my risk friendly personality. I'm willing to ride the razor's edge for sucess. Maybe that is why I love sports, poker and anything with a challenge. It is no surprise that the greatest risks offer the greatest rewards.

When written in Chinese, the word "crisis" is composed of two characters. One represents danger and the other represents opportunity. - John F. Kennedy

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