Koch History
What decade were Elizabeth and Chase Koch born in?
Elizabeth - 1975
Chase - 1977
What is a Competitive Advantage?
The ability of a company to create greater value than its competitors
What is Charle's philosophy when it comes to governmental policy?
Economic freedom is more beneficial than governmental control
What is a sunk cost?
An unrecoverable past expenditure that should not be considered in future decisions
What nearly caused Koch to go bankrupt?
A combination of the Arab Oil Crisis and price/wage control within the US
What is a Comparative Advantage?
Comparative advantage - "Each person... can compete and make a contribution even if other can do everything better. No individual should attempt to do everything no matter how good they are"
What is an opportunity cost?
This is the true cost of an activity, the highest-value activity foregone
What was the "Charts for Charles" incident?
Charts were being created to satisfy management, when in reality they were supposed to be used for process improvements
What is creative destruction?
+100 extra if you can list 3 pros
Creative destruction - "Creating the new commodity, the new technology, the new source of supply, the new type of organization"
pros -
Maximizing value, Minimizing waste, Productivity, Innovation, Higher standard of living
What is a requirement to obtain mutual benefit?
Rules must be in place to prevent aggression and allow voluntary consent to transact
How should Koch employees interact with customers?
What was the name and what became of the department store that Liz's grandfather owned?
Hinkel's Department Store -
Their in-store cards were replaced by VISA/Mastercard/Amex all of which charged transaction fees, turning their income into an expense
What were the initial struggles with implementing PBM?
Misapplication, Rigidity, Adaptability, Understanding
Cons -
less innovation & not as competitive
What concept did W. Edwards Deming introduce to the Japanese and how was that incorporated into MBM
He brought the idea of continuous improvement, which then became an important aspect for MBM
What did Charle's and his brother's girlfriend argue about in New York?
Political Philosophy - specifically surrounding the government's role in society and the freedom of the individual
According to Charles, what is the role of business?
"The role of business is to respect and satisfy what customers value (even if its other forms of merchandising) rather than lobbying the government to mandate what can or cannot be offered"
What quote from the philosopher Adam Smith did Charle's include?
"it's not from the benevolence of the butcher, the brewer, or the baker that we expect our diner, but from their regard to their own interest"
According to Polanyi, they are organized in a way which resembles features of a body politic and works according to economic principles similar to those by which production of material goods is related