All business have to care about profit or they won’t be in business for long. Also if you want employees to get good pay/benefits and such they have to charge more and in turn you can’t shop for the cheapest.
That said I think the concern comes when they start trying to squeeze every last cent out regardless of the customer relationship and long term image. As soon as a company goes public you now have a board that will get rid of you if you don’t push stock values up another percent. Even if you want to have long term growth and goodwill the board is pushing for profit growth targets this quarter and they pay mostly in shares too. I find the best corporate customer/profit balance comes from private firms.
All business have to care about profit or they won’t be in business for long
Businesses have always cared about profit; just reasonable profit. They would make a product, determine the cost of manufacture, apply a modest profit margin to it (usually about 30%) and factor in things like employee raises and benefits, expanding the business, and building up a financial safety net.
Businesses were run by humans, for humans.
Hedge fund managers and venture capitalists in the 80s changed that. Rather than assigning a fixed profit margin each year to try to maintain, the rule became “how much profit can we squeeze out by sales and (most damning) by systematically dismantling anything that we pay for that benefits our employees”.
This is the end result of having taking human stakeholders out of the business decisions and replacing them with shareholders that are mostly other businesses, hedge funds, and venture capitalists. Profit becomes the ONLY motive, rather than one of many.
All business have to care about profit or they won’t be in business for long. Also if you want employees to get good pay/benefits and such they have to charge more and in turn you can’t shop for the cheapest.
That said I think the concern comes when they start trying to squeeze every last cent out regardless of the customer relationship and long term image. As soon as a company goes public you now have a board that will get rid of you if you don’t push stock values up another percent. Even if you want to have long term growth and goodwill the board is pushing for profit growth targets this quarter and they pay mostly in shares too. I find the best corporate customer/profit balance comes from private firms.
Businesses have always cared about profit; just reasonable profit. They would make a product, determine the cost of manufacture, apply a modest profit margin to it (usually about 30%) and factor in things like employee raises and benefits, expanding the business, and building up a financial safety net.
Businesses were run by humans, for humans.
Hedge fund managers and venture capitalists in the 80s changed that. Rather than assigning a fixed profit margin each year to try to maintain, the rule became “how much profit can we squeeze out by sales and (most damning) by systematically dismantling anything that we pay for that benefits our employees”.
This is the end result of having taking human stakeholders out of the business decisions and replacing them with shareholders that are mostly other businesses, hedge funds, and venture capitalists. Profit becomes the ONLY motive, rather than one of many.
Yup. If you are bought by anything with “capital” or “equity” in its name you are fucked.