Organised Minority Advantage – An Exposition

Paradise Island

Paradise Island is the home of a relatively small community of 10,000 people. The people of Paradise Island are famous for their production of high quality widgets that they sell as components to larger manufacturing client companies on the mainland.

The population of Paradise Island has been changing in recent years. The widget business has been depressed for some time and competition for contracts on the mainland has been fierce. A number of widget companies have imposed a wage freeze in order to keep wages down and their prices competitive. The wage freeze has cause a number of families from Paradise Island to emigrate to the mainland in search of more lucrative employment, thus creating housing vacancies and one of the widget companies, Acme Widgets has taken to employing cheaper immigrant labour.

The immigrants from Auslandia have taken up the vacant housing and now compose 5% of the population of Paradise Island. The Islanders are polite and friendly people and for the most part have welcomed the Auslanders into their community. The Auslanders are hard working people and they appreciate the opportunity to better themselves on Paradise Island. They do their best to live harmoniously and for a while at least, life on Paradise Island remains good.

Grocery Stores

The island is served by 10 grocery stores that are fairly evenly distributed across the island and each store attracts on average 1000 customers. The grocery store owners are conscious of the fact that times are difficult for the island's main industry and that many workers have not had a pay rise for several years and therefore they have tended to keep their profit margins low, to around 2.5% of turnover. On average each islander spends £1000 per year on groceries, and this means that each grocery store has a turnover of £1,000,000 per annum and as a consequence, each grocer makes a profit of just 2.5% of £1,000,000, which equates to £25,000 per annum. Not a princely sum, but enough for an honest man who cares about his community.

A day comes however when one of the grocers has grown too old and his health has begun to fail. He decides to retire and advertises his shop for sale. He places his shop for sale at auction with a reserve price of £200,000, and when the auction takes place there is vigorous bidding from the nine remaining island grocers who are all keen to expand their businesses. There is an upset at the auction however because the highest bed comes not from the existing island grocers but from a consortium of Auslanders who manage to outbid all of the grocers. The vacant grocery business is sold to the Auslander consortium for £250,000, more than any of the islanders could afford to pay.

The Auslanders were able to outbid the Paradise Islanders because they had pooled the savings of all of their people on the island and had also received money sent by relatives from back home in Auslandia. The Auslanders are not just a very hard working people, they are thrifty and they have a strong sense of community which motivates them to work together as a community and to help each other to get on and better themselves.

The strong group loyalty of the Auslanders means that they will in future all buy their groceries from the Auslandic Grocery Store. They will do this out of a strong desire to see their store become successful. This tendency on their part however begins to create an imbalance within the community on Paradise Island.

The Paradise Islanders had been raised to treat others fairly and not to discriminate, and this means that Paradise Islanders continue to distribute their custom fairly equally between the ten grocery stores on the island.

With 9,500 indigenous islanders, this means that each store enjoys the custom of 950 people on average and has a turnover from the indigenous community of just £950,000.

The Auslandic store however, also has the benefit of the turnover from the Auslandic community, which amounts to 500 x £1,000 = £500,000 per annum. The Auslandic store therefore has a turnover of £1,450,000 compared to the turnover of just £950,000 enjoyed by the other indigenous islander store keepers, and while the indigenous storekeepers incomes have reduced to just 2.5% of £950,000 = £23,750 each, the Auslandic store made a profit of 2.5% x £1,450,000 = £36,250.

It is the group loyalty of the Auslanders that made the Auslander Grocery Store instantly the most profitable grocery store on the island.

Pressing Home The Advantage

Things do not stop here however, the Auslander consortium being keen businessmen decide to capitalise on their commercial advantage and realising that due to hard economic times most Islanders are very cost conscious, the consortium decide to reduce their prices by reducing their profit margin from 2.5% to just 2.0%. While this means that their profits will not initially be quite as great as they might have been (just 2.0% of £1,000 x 1,450 = £29,000 per annum), their store will still be more profitable than any other island grocers and they will be able to undercut the other island grocers on price and thereby attract a greater share of the island’s custom.

Although the 0.5% drop in prices is relatively small and goes unnoticed initially, it does have the effect of winning the exclusive custom of another 500 of the island’s indigenous population.

This means that in future the ten island stores enjoy an equal share of the custom from just 9,000 people, producing a turnover each of just £900,000, while the Auslander store enjoys the custom of an additional 1,000 people, the 500 Auslanders and the 500 most price conscious indigenous Islanders, producing a turnover for the Auslandic store of 1,900 x £995 = £1,890,500. The Auslandic store now has a turnover that is more than twice that of any other store and even with the reduced profit margin is making profits of 2.01%* of £995 x 1,900 = £38,000 per annum compared to 2.5% of £1,000 x 900 = £22,500 for the indigenous Islander stores.

* Note: A 2.0% profit margin based upon original price levels equates to slightly over 2.01% of prices once they are reduced by 0.5%.

One day, one of the indigenous storekeepers having suffered a 10% reduction in his income finds that with the needs of his family to consider he just cannot remain in business. He decides to sell up and emigrate to the mainland in search of better opportunities and his business goes to auction.

Predictably, none of the indigenous island store holders is able to afford to buy the vacant store because with dropping turnover and squeezed profit margins, they are already struggling to stay in business. Facing unfair price competition from the Auslandic store, the indigenous storekeepers are suffering a much reduced income and are only just able to keep their heads above water as it is. The second store is purchased by the Auslandic consortium and they calculate that the increased turnover it provides will enabled them to reduce their prices even more and press home their competitive advantage to greater effect.

The increased turnover now means that the Auslandic store is able to successfully apply to the grocery wholesaler on the mainland for a 2.5% discount on the normal wholesale prices paid for produce, and following this, the Auslandic stores on paradise Island will be able to charge prices that significantly undercut the indigenous island stores.

Profit Margins Are Squeezed Again

The ten island grocery stores currently enjoy the custom of 900 indigenous islanders each, and operating now with the 2% profit margin forced upon them in their efforts to compete with the Auslandic stores, each indigenous island grocer now has turnover of just £895,500 and profits reduced from their original level of £25,000 per annum, to just £895,500 x 2.01% = £18,000 per annum.

The Auslandic stores however are going from strength to strength and with the 2.5% reduction in wholesale prices are now able to increase their competitive advantage by reducing their retail prices further.

Originally wholesale prices amounted to 50% of retail prices, i.e. 50p in every £1.00 spent by customers. With retail prices discounted by 2.5%, this means that the Auslandic store now only pays £48.75 for every £100.00 worth of produce sold at the original retail prices, increasing the potential profit margin from £2.50 per £100 worth of produce, to £3.75.

Prices have already been reduced from their original levels by 0.5% however, and so the while the indigenous island grocers are only making a margin of £2.00 per £100 of produce sold at the original retail prices, the Auslandic stores could potentially make £3.25. To increase their competitive position however the Auslandic stores reduce their prices by a further 0.75%, pitching their profit per £100.00 of produce sold at the original prices to £2.50, and thereby returning to the original norm of £2.50 per £100.00 of produce sold, i.e. a 2.5% profit margin.

To compete with this latest price reduction, the indigenous grocers face the prospect of reducing their prices to match the Auslandic stores, but without the benefit of discounted wholesale prices, the indigenous grocers are forced to reduce their profit margin from 2.0% based upon original price levels, to just 1.25%. Thus the profit they make per £100 of produce sold at original prices is reduced to just £1.25, precisely half what they were making originally and now a long way below sustainable levels. The indigenous island store holders are now slowly going broke.

With the custom of just 900 islanders each, spending £1,000 per annum on food at original prices, the indigenous grocers are now making just £11,250 per annum in profits, while the Auslandic stores with a total of [(2 x 900) + 500 + 500] = 2,800 customers are making 2.5% of £1,000 x 2,800 = £70,000 in profits, £35,000 per store.

A Commercial Empire Is Born

As the months and years pass, the Auslandic stores expand buying up more of the indigenous stores and the indigenous grocers go broke, until they own six out of the ten original stores. The Auslandic stores adopt a brand name based upon a combination of the first letters of the surname of the original Auslandic founder Mr Cobana and the first letters of his wife’s forename, Bess, and the chain of Auslandic stores become known as Besco Stores.

So dramatic had been the rise of the Besco empire that Mr Cobana is hailed as a genius of commerce and is invited to become the Chairman of the island’s Retailer’s Guild.

Some of the remaining indigenous grocers complain about unfair competition and point to the unfair advantage that Mr Cobana enjoyed due to the ethnocentricity of his compatriots, but they are admonished by the ‘great and the good’, who crave the friendship of the now wealthy and influential commercialist, and by the local newspapers who fear losing his vast advertising revenue.

Mr Cobana is not the only Auslandic businessman to rise to prominence on Paradise Island. Like him numerous other Auslanders have started a whole range of businesses and through the support of their compatriots have gained a competitive advantage over their unwary indigenous island competitors. Now almost all of the seats on the board of the Retailer’s Guild and most other trade bodies are taken by enterprising Auslanders and a myth emerges that they are simply very astute businessmen. They possess this, ‘je ne sais quoi’ that enables them to mysteriously rise to the top in whatever field of endeavour they choose.

What can it be though, this illusive quality that commentators find so difficult to pin point?

Academics and social commentators who study the rise of such people shy away from alluding to the ethnocentricity of the Auslanders, for fear of being labelled anti-Auslandic, the most abhorrent form of racism. Some fearless members of the community claim that the Auslanders have carried out a conspiracy to gain dominance on Paradise Island, but through a process of opprobrium and social exclusion, such people are dismissed as ‘conspiracy theorists’, and nut cases.

Organised Minority Advantage

As we can see from the story outlined above, it is easy for an organised minority to prosper disproportionately and gain undue influence within a weakly cohesive host community. They don’t need to be commercial geniuses, they don’t need to work harder than others, they simply need to give preference to their own group, and to do it covertly, so that no one objects until it is too late.

Some organised minorities within our society are religious based, while some are ethnically based, and many are simply commercial alliances, such as Masonic groups. The most powerful and successful such groups however, employ all three of these factors reinforcing the cohesion and co-operation of their ‘in-group’ and more clearly separating them from the host ‘out-group’ community.

By doing so, they can counter the opposition they encounter from individuals that might complain about their tactics and dismiss those complaints as evil racism and religious intolerance. Thus the complainants are cowed and thrown on the defensive.

Organised minority advantage is a phenomenon, which is often described by those who observe it from the outside as a ‘conspiracy’. It is not necessarily an explicit conspiracy however, in which the individuals concerned follow a predetermined and written set of protocols, but it is a conspiracy in that it involves individuals behaving just as if they were engaged in a conspiracy and produces results that are precisely those that one would expect if a conscious conspiracy were taking place. This is one of the reasons why multiculturalism and multiracialism always results in antagonism between different religious, racial and ethnic groups, because their innate ethnocentricity causes each ethnic group to behave in a way that grants them an advantage and places other ethnic groups at a disadvantage.