Mergers

Driving home from her office one summer day, a woman noted that there were four places within two blocks of her home where she could stop and buy a five-cent glass of iced tea. Each little stand had two or three youngsters behind it, all eager to serve any customer who came their way. During the next two weeks, the woman managed to stop at each of the stands to encourage the entrepreneurs. In each case the tea was very good. Small talk revealed that all the youngsters were selling tea made by their mothers, who used tea leaves and real lemons in making the tea.

One day the woman discovered that only one stand was operating. Behind it was the new kid on the block. She stopped and ordered a glass of tea. It was served in a paper cup and it cost 10 cents.

Some conversation brought out the fact that the young man's father was a lawyer who specialized in mergers, which had inspired the boy to buy out his competitors, bartering with baseball cards, marbles, and stuff he had laying around in his garage. His first act, he explained, was to raise the price of the iced tea, and cut costs. He was using a powdered tea mix from the supermarket, he said, which eliminated buying real lemons as well as the bother of squeezing them or putting them in the juicer. He didn't have to brew real tea either, he pointed out. He had plans to cut costs further, he said, and with his competitors out of the market, he expected sales to grow.

Intrigued, the woman made a half dozen more stops at the stand and became aware that the tea was getting weaker and weaker. One day the young man confessed that sales were dropping and he attributed this to the fact that he was using less and less of the powdered-tea mix. Then one day he went out of business, as attempts to turn things around failed.

The moral of this story is: Honest tea is the best policy.