General Question

niki's avatar

Why factory/manufacture business tend to make a lot of profits?

Asked by niki (714points) September 1st, 2010

Everytime I see people around me here in my country (Indonesia), it seems that the wealthy ones are usually the one whom:
1. do business (instead of just “normal jobs”), and also
2. do factory or manufacture kind of business, such as furniture, oil company, coal mining, etc etc.

My question is simple one, well, make it two:

1. Why or how come these type of business are always making very large amount of money & profits, and thus make the Owners wealthy, ie: i’m talking about buying three nice cars, a big house, can send their children to study overseas, etc

2. Is this really the only and ONLY way to get the most money (other than playing/investing in stock/financial market) nowadays??
what if let’s say I want to enter a music business (I’m an indie musician/songwriter), won’t I ever able to make as much money and wealth/profits as those type of businesses I’ve mentioned earlier?

Please give some general explanations of why this is (or SEEMS to be) often the case.
thanks.

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5 Answers

wundayatta's avatar

What you are asking for is an economics lesson. The first thing to understand is the relationship between supply and demand. In your case, people want furniture, oil and coal much more than they want music.

There are a few musicians who are desired the world over, and they can make a lot of money. But most musicians are a dime a dozen—too many chasing too few dollars.

In any case, the best way to make money is to provide a quality product that people really want. If you provide good music that people are fighting to listen to, you will make a lot of money, too. You’ll have to be really special, though.

In business, you also have to be special, but it isn’t as hard to create demand for you product. People need energy and they need beds to lie in. You don’t have to create that demand. All you have to do is convince people to buy your stuff, either because it is of unparalleled quality or because it is dirt cheap. In either case, consumers will feel they are getting good value for their money.

If you want to make money, it’s best to go into business. If you want to feed your soul, go into music, but don’t expect the money to follow you.

Ben_Dover's avatar

Because they are using slave labor.

Cruiser's avatar

Aside from the obvious answer @Ben_Dover provided my stock broker summed it up to me this way. Everybody wants the big score that one investment that strikes it rich but they are rare and timing is everything. He said (figuratively speaking) you make the real sure money with the guys (companies) that sell the pick axes to the miners.

So these manufacturers are making the goods that people or other companies need to purchase to do their business, consume or simply to survive. Simply put make the stuff people need and regularly buy.

Ron_C's avatar

There are only a few ways to create wealth, mining, agriculture, and manufacturing. Anything else is just moving money around.

Much of the world’s manufacturing has moved to poorer countries because labor is cheap and in Indonesia, Malaysia, and India you can get really good labor and engineering at bargain basement prices. Of course that is only temporary because as countries modernize and it’s citizens begin to expect a fair wage, their jobs are then outsourced to other places where labor, while not as high in quality, is much cheaper. This happened to most western countries and is now happening in China, Mexico, and Japan, just to name a few.

It seems that the modern MBA is taught to seek the cheapest labor and their country is not important except as a market to the remaining people that still have incomes. My advice to you is to make money while you can because that window of opportunity closes quickly. Look at the U.S. to see how the idea of profit without responsibility ruins countries and its citizens lives.

dabbler's avatar

As Marx asks “Who owns the means of production?”

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