Friday, November 18, 2022

SLT Works Great Until Your Business Cannibalizes Itself

If you've watched Arrested Development, you're by no doubt familiar with the Bluth family Frozen Banana Stand. If you haven't... I'll wait here. It's only a few short seasons. Particularly episode 8, season 3:

The family company's competent president Michael Bluth foolishly gives his brother, the incompetent magician Gob (pronounced Job (pronounced Jobe)), funding for and control of a second Bluth Banana Stand. Gob finds no trouble justifying his opening of the second banana stand "twenty feet from the old banana stand": "I did the research. Did you know that more frozen bananas are sold on this boardwalk than anywhere else in the O[range] C[ounty]?" 

Gob's justification calls to mind spatial location theory, as his firm establishes itself where it has the greatest chance of capturing the most customers, based on market research. Due to the frozen banana market consisting of one other supplier, another Bluth Banana Stand, who is really the same supplier, this attempt to increase profits by capturing consumers fails. This attempt backfires... to say the least. 

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