Do you know what business you’re in?

what-business-are-you-inI recently was talking with a prospective client. The conversation was a general one, in order to ascertain their needs and the type of business
they conduct.

They told me they were a manufacturer. “Great”, I said, because it is one of the areas I can speak from direct work knowledge. I asked where the
plant was located and whether or not they were running MRP (manufacturing requirements planning), and with what costing model.

The answer was the plant was located in China. Their Production Manager, located in Hong Kong, handled all those issues. If we weren’t on the phone,
he would have noticed my perplexed facial expressions, because something was amiss.

I asked again, to re-clarify, maybe I heard wrong, that they were indeed a manufacturer.

I didn’t – which on some levels is very good, because my hearing is still working.

The potential client of course isn’t a manufacturer. At least they are an importer and probably also a distributor and a retailer (they do retail e-commerce). But they are not a manufacturer.

They probably licensed the manufacturing of their designs to the plant in China, an again there is absolutely nothing wrong with that business model. But when you don’t own, have no direct oversight of any aspect of the manufacturing process, you are not a manufacturer. You are a wholesaler, distributor, and/or retailer and in this instance since you buy it overseas, an importer. But you are not a manufacturer.


Why is this distinction so, so important?

There was an article as my business friend Alan Berkson of the Intelligist Group passed around. He said that we should read this “…brilliant article that was written for Harvard Business Review in 1960. Yes, 1960.” The article called Marketing Myopia by Theodore Levitt was re-published in July 2004 Harvard Business Review. It is well worth a few minutes to read, because I think you’ll find answer to why it’s so important in knowing what your business is and isn’t.

Think survival!