His protégé Dave Thomas later followed similar practices when he created his own chain of Wendy's hamburger stands. Although Colonel Sanders and Dave Thomas could not be everywhere in a nationwide chain, no local franchise owner could take a chance on seeing his profits being thrown into a garbage can by the head honcho of the chain.

When the processed food industry first began in nineteenth century America, it was common for producers to adulterate food items with less expensive fillers. Horseradish, for example, was often sold in colored bottles, to conceal the adulteration. But when Henry J. Heinz began selling unadulterated horseradish in clear bottles, this gave him a decisive advantage over his competitors, who fell by the wayside while the Heinz company went on to become one of the enduring giants of American industry, still in business in the twenty-first century. Similarly with the British food processing company Crosse & Blackwell, which sold quality foods not only in Britain but in the United States as well. It too remained one of the giants of the industry throughout the twentieth century and into the twenty first. Perfection is not found in either market or non-market economies, nor in any other human endeavors, but market economies exact a price from enterprises that disappoint their customers and reward those that fulfill their obligations to the consuming public.

In the credit card era, protecting card users' identity from theft or misuse has become part of the quality of a credit card service. Accordingly, companies like Visa and MasterCard “have levied fines, sent warning letters and held seminars to pressure restaurants into being more careful about protecting the information” about card-users, according to the Wall Street Journal, which added: “All companies that accept plastic must follow a complex set of security rules put in place by Visa, MasterCard, American Express Co. and Morgan Stanley's Discover unit.”

Behind all of this is the basic fact that a business is selling not only a physical product, but also the reputation which surrounds that product. Motorists traveling in an unfamiliar part of the country are more likely to turn into a hamburger stand that has a McDonald's or Wendy's sign on it than one that does not. That reputation translates into dollars and cents — or, in this case, millions or billions of dollars. People with that kind of money at stake are unlikely to be very tolerant of anyone who would compromise their reputation.

Add comment

Security code

Copyright © 2019 | "The Theory of the Business"