Quote:
Originally Posted by cockerpunk
this.
venture capital destroyed quality in america.
the purpose of a business shouldn't be profitability, it should be sustained value creation. the focus on profitability means you just gut everything, make a bunch of money, and destroy what someone else took a lifetime to build. you destroy it in 5-10 years, profit handsomely, and then move on to the next company that someone took a lifetime to build. and they built that business over a lifetime with sustained value creation.
labor builds, capital destroys.
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It is/has always been about profit, if not why bother. I had an uncle who had several larger car dealerships. He has passed on many years ago and my family knows the car business well. Every department was a profit center. when his numbers didn't look right, I remember him saying, "do you think there is a red cross flag in the front of my store?". I knew what that meant.
There is an essentially a 3 yr corporate cycle in which high level management looks to get promoted either within the company or move outside of the company for a better position. During this period, you want to score home runs by any means. And if the company gets sold, there are consultants who create a playbook to get these savings in with a 2 yr ROI or less. McKensey comes to mind - and they have a reputation.
These folks don't care where it is made. During my last year at the company I worked for, they have a plan (and it is still in process) to move 40 million in parts offshore in 2 years. Savings: $80 million and 70 heads. The time and dollars to move just don't make sense but no one, internally, will say otherwise. And if it doesn't succeed, "someone will fall on the sword". I had many reasons for retiring, this was one of many.