Let’s pretend we’re a manufacturer of widgets (School of Business lingo for generic products) that are purchased by the government. The government, however, has decided to grandfather in 35 of its last year’s suppliers of these widgets and any other manufacturer must meet certain minimum specifications on its widgets before the government will purchase them.
Even if our widgets exceed the minimum specifications, the government might not purchase them because the other manufacturers who are also not grandfathered into the agreement have also exceeded the minimum specifications. Even if any of the 35 suppliers that were previously grandfathered in as guaranteed suppliers meet only the minimum specifications and are bypassed by any of the other non-guaranteed suppliers, the 35 still have their products purchased.
Eventually, the stockholders of our company see the “handwriting on the wall” and sell their shares in our company and buy into the 35 companies that are guaranteed to have their widgets purchased, thereby making those companies even more successful because of the increased capital.
Is the government’s policy really fair for all? Why grandfather 35? Why not grandfather only, let’s say, 12? Now, substitute the following in the appropriate places: NASCAR, Nextel teams, qualifying times, sponsors. Get the picture?