Devoted to Managers and those that seek to improve their management skills

The Goal of Warren Buffett and Berkshire Hathaway  (BRK-A)

We always talk here about the importance of the simplicity of what the purpose of a company is. The reason why is that even big companies fall into the trap of getting off center, which results in an identity crisis which can not only have a strong, negative impact upon current customers, but also ineffectively reach out to potential new ones.

What was the specific goal of Warren Buffett and Berkshire Hathaway? He said if very specifically: “Our goal is to find an outstanding business at a sensible price, not a mediocre business at a bargain price.”

I'm not bringing this up again to get into the importance of a simple, focused purpose for a business, but to take what Buffett specifically said and tie it into your business, or the business you're managing.

Forget the idea of buying businesses, like Buffett was talking about here, and look at it from the point of view of any product or service you may create or buy. Many businesses create or buy products only based upon price alone, and suffer immediately when an indistinguishable product is made by a competitor that consumers simply switch to.

But when you look at creating or buying products that are "sensibly" priced, there will be something within them that justifies the price they're at, making it harder to compete against. I know that it's an assumption to say there will be something within a product or service that justifies a certain price, but we sure do need to know how to price what it is we're offering.

So changing Buffett's wording a little, it's better to offer an outstanding product or service at a sensible price, than to offer mediocre products or services at bargain prices. Even low-priced items are expected to perform at certain levels today. So an outstanding product or service in the eyes of a consumer can command a good price. It's not really any more complicated than that.

Whether it's an entire company or a unique bar of soap, this principle applies across the board.

Other Buffett Resources:

Company growth

“Everybody Else is Doing it”

MSU students have special visit with billionaire Warren Buffett

WARREN BUFFETT PHILOSOPHY II

Sticking to what you know  Core businesses

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