The Business Book

134

M

ost economic models

state that during the

early stages of economic

development, low-wage workers

find themselves making products

that are bought by middle- and

upper-class consumers. The

workers tend to eat simple food,

such as potatoes, rice, or corn,

and travel on foot or—if they are

lucky—use a bicycle as a means

of transportation. Meanwhile, their

employers eat expensive meat-

based meals, and travel in

luxurious transportation—from

the fine horse carriages of the 17th

century to the sleek, “dream

machine” automobiles of today.

However, economic growth

takes a huge step forward when

workers are able to buy the products

that they make; when they, too, can

afford to eat meat and purchase

household and leisure goods. This

is now starting to happen rapidly in

China, where the the sales of staple

products—such as toilet paper and

refrigerators—are growing quickly.

Building a market

Workers were recognized as

potential customers by US car-

making pioneer Henry Ford. Ford’s

Model T automobile was priced at

$825 in 1908, at a time when Ford

workers earned less than $2 a day.

In 1913, Ford introduced a system

of conveyor-belt mass production,

reducing the time taken to make

a Model T from 750 to 93 minutes.

With this improvement in efficiency,

the company could afford to cut the

price of one of its vehicles to $550.

One problem remained, however.

The repetitive jobs required to run

the Model T production line made

YOUR WORKERS ARE YOUR CUSTOMERS

The Ford Motor Company quickly

realized that its production line was

efficient but made workers unhappy.

By giving them a large pay rise, Ford

created a market of staff-customers.

IN CONTEXT

FOCUS

Market expansion

KEY DATES

1914 Henry Ford doubles his

employees’ wages to $5 a day.

1947 US psychologist Alfred J.

Marrow finds that productivity

increases when employees are

involved in decision making,

and introduces the concept

of participative management.

1957 Douglas McGregor

publishes The Human Side

of Enterprise, claiming that

organizations thrive best by

trusting staff to apply their

creativity and ingenuity to the

enterprise in which they work.

1993 Ricardo Semler of Brazil’s

Semco writes Maverick!.

2011 Google is revealed

to have the highest job

satisfaction in the US high-

tech sector; young “Googlers”

are both employees and

customers of the company.

Companies should focus on

providing consumers with

good products and

services at low prices.

They can then provide

management with

valuable insights

and ideas, as well as

boosting sales.

They should also reward

their employees with the

highest wages possible.

This enables employees

to buy the company’s

products or services.

If your workers become

your customers, your

business will thrive.