by: fandy
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Date: Wed, 12 May 2010 Time: 10:52 PM -
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In July 2002 the shareholders' annual general meeting was held for NAFOSAT. Since Nestle is the largest shareholder, it was agreed that the meeting would take place in the company's factory in Namangan, At the meeting the local shareholders became very an?gry and wanted to know where their profits were. Martin Woolnough, the manager for Nestle in Uzbekistan, faced the crowd. He knew this was not going to be easy, but Nestle was in Uzbekistan for the long haul. It was absolutely crucial that these farmers understood the concept of profit and realize that nobody had stolen their money. Martin likes to tell stories that his audience can relate to. Here is what he said.
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Let's imagine that all of us in this room were friends and we decided that it was worth building a restaurant there. Let's imagine it would cost U. S. $ 100 to build this restaurant and that in order to raise the money, we all contributed $ 1 each. Okay?
So, it takes us one year to build our restaurant ... Would we expect our $ 1 invest?ment to have made any money for us yet? No, of course not. To attract customers, we hire a good chef, but business is a bit slow to start with and we find that after the first year, instead of making a profit we make a loss. How will we pay for the loss? I guess we could borrow money from the bank, or maybe each of us could provide additional funds. Since we do not have any extra money, we decide to get a loan at the bank. What about our initial $ 1? Has it made us any money yet? Of course not. But we still own a restaurant, and if it were sold, maybe we could get our dollar back. However, we have worked very hard, and we don't want to sell it now. Do we?
As each year goes by, our restaurant becomes more and more popular, and after about three years we make our first profit. Does that mean that every owner can now get a share of the profit? Of course not; we still have to repay the bank the money we needed when we were making a loss. What about our initial investment of $ 1 each? What's it worth now? Well, that depends on the value of our business do we just own a restaurant building and equipment, or do we also have a proven way of earning profit? What if our chef is the best in the region and people have started coming from miles around to eat our ploy [a local Uzbek rice-based dish]? We have become famous for our restaurant. Now we own more than just buildings, don't we? Maybe other peo?ple would see our restaurant, and a rich local man might come and offer us a great price for our restaurant. What if he offered us $ 200 for the lot? Excellent! If we sell it, we would each get U. S, $2. Great, but does it mean we have really made U. S. $ 1 yet on our initial investment? Only if we sell... but we don't want to.
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