Friday, July 18, 2008

Who moved my Cheese !!!

Long time back I remember I read a book called Who Moved My Cheese!!!.
I guess most of you might have read this. What this book says is you have to move on in life, in Management terms it's all about Change management. How will you manage the changes you are going to get in your daily life. We know that everybody has to agree the change at some point. But the point is how soon you are going to take the steps to accept the change.
We even know the problem of Inflation all over the world, particularly in India. Now we are almost reaching 12% as per the statistics of all major News channels and News papers in India. In this time if you want to control the inflation is it possible? or is there any way you could find for this?
If yes please let me know, I would like to tell this to P.Chidambaram who is the finance minister of India right now. Seriously I am not kidding.

Don't think that there is no relation between the first two paragraphs ....

I have an Idea which would seem like Inflation control is possible ....... But I am not 100% how it would work.

But it is really interesting to read the below story .......

Anyways..... now the point is I got a Mail today which gives you the idea of that you have to start at some point to change this Inflation.


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

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 starting buying by the dozen again.

Think about it for a min, coz I am going to ask you some questions....

I agree the story is really nice but I have some Questions over here,
Will you agree for the same?
Now, Can we transpose this analogy to the gasoline/Gold/Vegetables/etc any industry?
I might not agree with this concept for 100%. As in the story there might not be only one big Egg Farm which produces the products.
Now a days there is a huge competition in every field and industry and there are huge ware houses for all types of products. Even the transportation is too fast and economize these days and by all means you can send the goods all over the world instead of distributing only in a town.
By considering all these points I don't think this theory might not applicable for all products and industries.

But Still I appreciate the Idea of the author and the approach he took to solve the problem.

I appreciate your ideas too, if you could share.

1 comment:

  1. I really liked the way author explained the theory and the way You presented it relating it to the inflation problem we have today....

    But it's the same thing even i want to tell here... is it posible for an IT guy to buy daily at the end of the day , what ever he want for the next day???

    Cuming to things like gold, ppl buy it only when they need it in pretty high quantity.. .for marriages and so....

    Any ways let'z wait for an author who help us to cntrl inflation.. ..


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Bangalore, Karnataka, India
Programming today is a race between software engineers striving to build bigger and better idiot-proof programs, and the Universe trying to produce bigger and better idiots. So far, the Universe is winning. I am a proud participant of this Race !!!!