• Ordinarily, we tend to think of businesses as simply money-making enterprises, but that can be very misleading, in at least two ways.

• First of all, about one-third of all new businesses fail to survive for two years, and more than half fail to survive for four years, so obviously many businesses are losing money.

Adjusting to Changes:

• The businesses we hear about, in the media and elsewhere, are usually those which have succeeded, and especially those which have succeeded on a grand scale.

• Just as companies rise and fall over time, so do profit rates even more quickly.

• Although corporations may be thought of as big, impersonal and inscrutable institutions, they are ultimately run by human beings who all differ from one another and who all have shortcomings and make mistakes.

• Social Changes:

  • Consumers are the principal beneficiaries of lower prices made possible by the more efficient allocation of scarce resources which have alternative uses.

  • Knowledge is one of the scarcest of all resources in any economy, and the insight distilled from knowledge is even more scarce.

  • An economy based on prices, profits, and losses gives decisive advantages to those with greater knowledge and insight.

  • Knowledge and insight need not be technological or scientific for it to be economically valuable and decisive for the material well-being of the society as a whole.

  • Individual businesses are forced to make drastic changes internally over time, in order to survive.

  • More important than the fates of businesses is the fact that millions of people are able to afford a higher standard of living than if they had to be supplied with goods through costlier channels.

  • The competitive advantages of those who are right can overwhelm the numerical, or even financial, advantages of those who are wrong.

  • The big advantage of a free market is that you don’t have to convince anybody of anything.

• Economic Changes:

  • Economic changes include not only changes in the economy but also changes within the managements of firms, especially in their responses to external economic changes.

  • Neither individuals nor companies are successful forever.

  • Death alone guarantees turnover in management.

  • Some individual executives are very successful during one era in the country’s evolution, or during one period in their own lives, and very ineffective at a later time.

  • No economic system can depend on the continuing wisdom of its current leaders.

• Changes in Business Leadership:

  • Perhaps the most overlooked fact about industry and commerce is that they are run by people who differ greatly from one another in insight, foresight, leadership, organizational ability, and dedication just as people do in every other walk of life.

  • What matters far more than the fate of any given business is how much its efficiency can benefit consumers.

  • Business leadership is a factor, not only in the relative success of various enterprises but more fundamentally in the advance of the economy as a whole through the spread of the impact of new and better business methods to competing companies and other industries.

  • When an industry or a sector of the economy is undergoing rapid change through new ways of doing business, sometimes the leaders of the past find it hardest to break the mold of their previous experience.

  • Market economies must rely not only on price competition between various producers to allow the most successful to continue and expand, they must also find some way to weed out those business owners or managers who do not get the most from the nation’s resources.

  • A poorly managed company is more valuable to outside investors than to its existing owners, when these outside investors are convinced that they can improve its performance.