| Labor: | The increasing popular movement towards a 32-hour, 4-day workweek.
What will be the use or activity of those having increased free time? Will it be additional employment or self-improvement? Will being entertained become an even greater than present use of time? In the case of employee productivity not being, at least offsetting, will the additional cost of production result in either lessened profit or increased prices? |
| Wages: | Compensation and other employment terms currently being offered to administration, marketing, and management personnel, at all levels, has risen sharply.
Will the increased cost of acquiring and maintaining personnel adversely impact profits unless price increases can be made and sustained? |
| Taxes: | It seems inevitable that state and federal taxes will have to be increased in the future to pay for that which cannot be paid for by the sale of additional debt.
Will per share, net-after-tax, profit levels be able to be retained without an increase in the price charged for products. |
| Cost of $ | The cost of money will be more in the future than it has been in the recent past. Therefore, profits will be reduced unless prices can be increased.
The ability of a company to increase the price of goods or services is dependent on customer need, satisfaction, and available competitive alternatives. Assuming that competitors will be faced with the same issues as the company being described, the desired price increases will likely be customer acceptable, based on the company’s customer’s ability to raise its prices. |
Therefore, increased inflation will be the result of all the above elements of business operation, and my greatest of concerns. The necessary management and investor decisions are much the same. Will customers be willing and able to pay the higher prices, or will they reduce the amount of goods or services purchased, at the higher asking prices?
The difference between managers and investors is that investors can sell their investments if their belief in a company’s future comparative market valuations is negative, and managers have less flexibility.
Arthur Lipper, Chairman arthurlipper@gmail.com
British Far East Holdings Ltd.