Forza
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- Mar 14, 2008
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Is it ethical to start a company that uses a network marketing (NM) model?
I know that Pampered Chef, which is owned by Berkshire Hathaway, is a NM company but it appears to be different. It makes each person primarily a retailer. The more people he/she has under him/her, the less he/she makes from each person in their downline. Other NM companies primarily increase rewards the bigger the downline. If Pampered Chef saturates a market and recruiting becomes extremely difficult, each person still has a foundation of retailing, whereas a typical NM company doesn't, due to tiny margins.
It seems to me that the continued existence of large NM companies like Amway, is because of the huge failure rate, and the continual replacement of people (rather than the retailing of products to non-members). Otherwise the company would hypothetically take over the world, then collapse like a typical pyramid scheme. This means NM companies actually WANT a lot of failure (yet still want growth). It's like using people (failures) to further the company's future, and the justification is that joining is an opportunity.
No doubt that the model can be effective... But ethical?
I guess one solution is to use the Pampered Chef model, but I don't understand why there doesn't seem to be any others like it. Maybe it's way more difficult?
I know that Pampered Chef, which is owned by Berkshire Hathaway, is a NM company but it appears to be different. It makes each person primarily a retailer. The more people he/she has under him/her, the less he/she makes from each person in their downline. Other NM companies primarily increase rewards the bigger the downline. If Pampered Chef saturates a market and recruiting becomes extremely difficult, each person still has a foundation of retailing, whereas a typical NM company doesn't, due to tiny margins.
It seems to me that the continued existence of large NM companies like Amway, is because of the huge failure rate, and the continual replacement of people (rather than the retailing of products to non-members). Otherwise the company would hypothetically take over the world, then collapse like a typical pyramid scheme. This means NM companies actually WANT a lot of failure (yet still want growth). It's like using people (failures) to further the company's future, and the justification is that joining is an opportunity.
No doubt that the model can be effective... But ethical?
I guess one solution is to use the Pampered Chef model, but I don't understand why there doesn't seem to be any others like it. Maybe it's way more difficult?
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