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ADMS 1010 Study Guide - Quiz Guide: Therefore I Am, Whole Foods Market, Invisible HandExam


Department
Administrative Studies
Course Code
ADMS 1010
Professor
Eytan Lasry
Study Guide
Quiz

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Assumptions are basically things that are believed but not said or written down in proof. There
are few underlying assumptions that are presented in Peter Cohan’s article “Wall & Main: GE,
Amazon, and the future of corporations. Both ‘real’ and ‘value’ assumptions are present in the
article which have been affected by the economic theories from Philip Roscoe’s book, ‘I Spend
Therefore I Am’. In this book, Roscoe argues that economic thinking has become very influential
within modern society, and is certainly true in the area of management and corporate strategy.
He does this by giving examples on how the market should be left alone to handle various issues,
and that theories have influenced society to act in an algorithm manner. Furthermore, he explains
with theories such us Adam Smith’s Invisible hand and Neoliberalism. Moreover, he gave
examples of Neoliberalism, such as the parable of goats and dogs and explained how everything
adjusted when left alone.
In Peter Cohan’s article the underlying assumption is that companies need to risk some of the
strategies in which those risky investments will bring about growth and profits. The ability to
take risks financially will help the company gain profits and this can be evident from the article.
Amazon invented a corporate strategy while GE used an outdated model. Amazon did not
majorly focus on how to increase revenue, but focused on having a risky investment and relying
on expectations and was able to succeed. The value assumption made is that customers are loyal
to firms with lower prices. As we have seen, Amazon was able to risk buying Whole Foods’s and
end up achieving profits, the most important thing was that Amazon had a clear purpose, which
was to give customers great products and excellent services at a lower price. This enables
customers to be more loyal towards Amazon as they are getting what they asked for. Moreover,
this is because Amazon values its customers as they are price responsive. The reality assumption
that is made is that expansion leads to economies of scale. With Amazon acquiring Whole
Foods, it will be able to achieve economies of scale, thus able to incur low costs and maybe pass
it down to the customers as low prices.
I do agree with the above assumptions that are made, as I believe what Peter Cohan talked about
how companies need to have self-interest and take the risk and be able to succeed by putting the
stakes. This can be seen in the modern corporations such as Amazon, which was able to risk
inventing a model and thus able to acquire profits.
Sources:
Roscoe, P. (2014). I Spend Therefore I Am: How Economics Has Changed the Way We Think
and Feel. Random House Canada. (Chapter 2: From Truck and Barter to the Meaning of Life)
Cohan, P. (2017). Wall & Main: GE, Amazon, and the future of
corporations: http://www.telegram.com/news/20170626/wall-amp-main-ge-amazon-and-
future-of-corporations
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