Countertrade: When cash can’t be king

Reylito A.H. Elbo

Reylito A.H. Elbo

I’VE seen and heard a lot of people who make money the old-fashioned way. They borrow and then forget from whom. Then they make themselves scarce as if the lenders are like the plague. The reason for this is simple. It happens because many people try to live beyond their means. Visit a bank and take a good look at its listing of cars and other properties that are repossessed and the main subject of resale.

The banks now are looking for some willing victims.

But sure, there are bad at times, which according to Ralph Waldo Emerson, are good occasions a good learner cannot afford to miss. If you accept the teachings of Emerson, “bad times have a scientific value.” The critical issue then is to identify the lessons so that you can move on to a productive direction.

So how can you tell whether bad times have the potential for you and the organization? I know how major organizations approach this problem or opportunity. That depends on your perspective.

Essentially, they break out the major problem into several bite-size pieces to discover several opportunities. They empower people, even ordinary ones to help the organization to come out with thousands of solutions.

Management guru Gary Hamel talks about “corporate sperm count” to help organizations spit out thousands of ideas, depending on the size of the workforce. The higher the number, the greater chance that management can secure brilliant ideas from people.

Sometime ago, I had the chance to visit a small business that prided itself as being in the forefront of the quality movement. They don’t have the money to spare for workers’ training, and yet they appreciate the value of continuing education. They have routinely secured free training programs offered by government agencies, except that they’re not helpful enough despite their resources as they rely much on inexperienced and unqualified management consultants who are also doing it for free.

That brings us to the age-old theory—that in reality, there’s no such thing as free lunch. In the 19th century, there was a bar and a night-club practice of giving away free meals to customers to entice them to buy drinks. The trouble was that the food offered was salty and fatty that you end up ordering more drinks to digest them in the process. This means, that more often than not, you’ll spend up more money like what you do when you’re tempted to try reasonably priced buffet meals in many restaurants today, as their drinks are unconscionably priced higher.

In today’s business world, salespersons offer free lunch to customers to entice them to buy their products or services. Even government functionaries would routinely accept lunch invites from suppliers under the guise of business meetings. In the medical professions, pharmaceutical firms offer doctors to finance its annual national conferences and give routine foreign trips in the guise of research.

The approach may appear reasonable and acceptable. After all, you can believe the assumption as legal as long as hard cash is not given away, except of course, that you and I believe that free lunch is an introduction to graft and corruption.

Greg Mankiw says “to get one thing that we like, we usually have to give up another thing that we like. Making decisions requires trading off one goal against one another.”

That’s why it’s better for us to consider doing countertrade than accept free lunch. Countertrade is an alternative means of completing a sale when money is difficult to procure, costly for the parties, or practically non-existent. The most common type of countertrade is barter or the direct exchange of goods or services between two parties without the benefit of a cash transaction.

In marketing, people and organizations rely much on ex-deals. For instance, event organizers give complimentary seats to a media organization in exchange for publication of its ads promoting such public program. It is primarily used for a one-time deal only but may be repeated from time to time, depending on the professional relationship of the parties.

Of course, we would always prefer cash transaction. But if this is not possible, countertrade becomes an option, at least in the meantime. That’s assuming there are willing victims. I mean, when all is said and done, cash is still king.

Rey Elbo is a business consultant specializing in human resources and total quality management as a fused interest. Send feedback to or follow him on Facebook, LinkedIn, or Twitter for his random management thoughts.


Please follow our commenting guidelines.

Comments are closed.