The law of property determines who owns something, but the market determines how it will be used.
Ronald CoaseRead
Roughly speaking, when you are dealing with business firms operating in a competitive system, you can assume that they're going to act rationally. Why? Because someone in a firm who buys things at $10 and sells them for $8.00 isn't going to last very long in that firm.
Interpretation
Firms in a competitive market act rationally to survive.
The quote by Ronald Coase emphasizes that in a competitive business environment, firms are incentivized to make rational decisions in order to remain viable. If a firm consistently operates at a loss, such as buying products for $10 and selling them for $8, it will struggle to survive because rational economic behavior dictates that firms must seek profit to continue their operations effectively.
In practice
During a business seminar to illustrate the importance of making wise financial decisions.
The law of property determines who owns something, but the market determines how it will be used.
During the two centuries since the publication of 'The Wealth of Nations,' the main activity of economists, it seems to me, has been to fill the gaps in Adam Smith's system, to correct his errors and to make his analysis vastly more exact.
We must first note that economic factors are taken into account in a world in which ignorance, prejudice, and mental confusion, encouraged rather than dispelled by the political organization, exert a strong influence on policy making.
My concern is that we live in an economy in which stabbing someone and waiting for them to complain before we remove the knife has become the normal way of doing business. When did we lose sight of the fact that it's not nice to stab people in the first place?
On the simplest level, telecommuting makes it harder for people to have the kinds of informal interactions that are crucial to the way knowledge moves through an organization. The role that hallway chat plays in driving new ideas has become a cliche of business writing, but that doesn't make it less true.
The idea that you can create a template that will work forever doesn't happen in any business. There's some really, really bright people in this business. You can't do the same thing the same way and be successful for a long period of time.
Remember that, in the end, the customer doesn't know, or care, if you are small or large as an organization - she or he only focuses on the garment hanging on the rail in the store.
Marketing is too important to be left to the marketing department.
As an entrepreneur, I've learned how crucial it is to be able to call a spade a spade and avoid falling in love with a particular strategy or product. Instead, you need to let the customer tell you what she needs - and to change her as she changes.
Subscribe for the occasional hand-picked quote. No noise.