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Finance: What is Planned Obsolescence? 201 Views


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Description:

What is planned obsolescence? Planned obsolescence is the idea that products will need to be replaced. Companies strategize and plan ahead for this, i.e. they intentionally put out product that will deteriorate, so customers will need to purchase replacements. Technology is probably the most recognizable arena for planned obsolescence; people replace their cell phones every few years, and the new cell phones have cooler abilities than the old ones, hopefully.

Language:
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Transcript

00:00

Finance allah shmoop What is planned Obsolescence We officially nominate

00:08

this business strategy for the top five dumbest business ideas

00:13

in history In the late nineteen sixties the american auto

00:17

industry was taking over the world America bought the most

00:22

steel and rubber shipped vastly the most cars and came

00:25

to dominate the banking and capital landscape Because this heavy

00:29

industry had such global impact on so many levels a

00:32

booming car industry pushed other countries to build roads and

00:36

bridges and infrastructure like stoplights and gas stations It spurred

00:40

interest in mining coal and steel and it brought nations

00:44

together to build something well practical and you know fun

00:48

Never drive it convertible in summer that's pretty cool music

00:51

blaring and we like that But then came along well

00:55

a bunch of idiots These were managers of the big

00:57

car companies in the nineteen seventies who observed that our

01:01

cars were lasting too long They were being too well

01:05

made And if we continued to make our cars better

01:08

and better so that they didn't wear out for twenty

01:11

years Well then the they'd sell fewer cars presumably So

01:16

what do they do Well they tried to make them

01:19

Worse Yes You heard that right They actively tried to

01:23

make american cars obsolete at some point not too many

01:27

years after you bought one so that owners would have

01:30

to turn them in and presumably by another american car

01:34

from an american manufacturer All right Yeah They'd have to

01:38

buy another car And another and another well The financial

01:41

managers at the time had the arrogance that the u

01:44

s auto industry was so powerfully dominant that nobody in

01:48

the world would ever catch up or compete They thought

01:51

they had so much room ahead of the japanese korean

01:54

and german car makers that well we could afford to

01:56

make them worse Yeah instead of a ten twelve year

01:59

cycle from birth to death the managers of gm ford

02:02

and others thought that if we created cars that died

02:05

after six or seven years well people would be forced

02:07

to buy mohr of them or rather buy them more

02:10

often And you khun bet that the legions of mechanics

02:14

might iss muffler shops and other repair areas Well they

02:17

were delighted with this notion and highly supportive of planned

02:21

obsolescence Unfortunately the us managers who made these decisions well

02:26

they didn't get out much at least not to japan

02:28

or korea and you know what happened Well look out

02:31

the window over your parking lot you see on lee

02:33

american cars not so much The japanese automakers stepped in

02:38

with much simpler builds in their cars with fewer parts

02:41

and better assembly and they were able to make them

02:44

at meaningful cheaper prices Will the american auto companies couldn't

02:48

change fast enough when they realized what a fungal mess

02:51

they've made and wealthy us dominance in auto manufacturer ended

02:55

quickly as buyers were introduced to a whole new and

02:58

better way of driving courtesy of Well the japanese players

03:02

mercedes and bmw also made big inroads at this time

03:06

as well So whatever happened to the geniuses who planned

03:10

this obsolescence pretty much nothing they're retired They took their

03:14

pensions built good golf games and well that's about it

03:17

Tesla could change things but well then again they might

03:19

get so distracted chasing mars that only missed the game 00:03:22.92 --> [endTime] entirely but we're better known Juan

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