Quote:
Originally Posted by Irace86.2.0
Unfortunately this is the reality:
Many companies are so large with so many subsidiaries or locations that they can operate with slim margins or at a loss at many locations, which keeps them strong and drives out competition, but it also means they may be operating within a small percentage of failure. Example: if a corporation sells a million units at $10 then they have $10 million in revenue. If their operational costs are $9.50 per item then they only made $0.50 per unit or $500,000 in profit, which may not be enough to have money to invest to stay competitive or provide the owners with enough money to make the effort worthwhile, so they need to actually raise the price to $12, so they have $2.5 million in profit. A large, multi-national competitor sells 100 million units of the same product at $9.10, severally undercutting the other guy. Their operational costs are only $9.00 per unit because of efficiencies of scale, which the smaller competitor can't match. Their revenue is $910 million, and their operational costs are just $900 million, such that their profit is $10 million. This means the owner has more money in his pockets and more money to continue investing in the corporation. It also means if the operational costs unexpectedly go up because a commodity like rubber or oil goes up, and the price isn't adjusted proportionally, the big corporation could be in the red, so they decide to hire some top CEOs to make sure they are always in the green, but that costs them a million in profit. No biggie. The owner is still making a lot of money, especially compared to his rival, who is having a hard time selling even the million units priced so much higher than the large corporation. Eventually, his business sells to the large corporation or goes under. And the cycle continues.
As the profits roll in, the corporation has extra profit, so what does it do? Well, it can reinvest and develop. It can grow and expand. It can pay bonuses to those CEOs to retain their "expertise", but they don't "trickle the money down" to the average worker because those workers are expendable and easily replaceable.
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to the first bolded part. at the beginning of the pandemic, when publicly traded companies were whining and moaning for a bailout because they were operating on razor thin margins that suddenly vanished due to stop work orders, or changes in the supply chain, they had no rainy day fund to tide them over. there were some interesting article comments that delved deeper into it, and i came to better understand that publicly traded companies first responsibility(whether right or not, it doesn't matter) is to their shareholders to maximize the shareholders return. it is entirely unacceptable to shareholders to see a budget line item for "reserve". they expect that money to become part of their return, or dividends, and will oust any leadership that doesn't make that happen.
so the end of it is pure american greed that needs to be changed. and i think we can all agree that's never going to change.
to the second bolded comment, every once in a while, i'll be talking to a hiring manager or similar about how busy their company is, and there's time's where the results are "we're so busy, i wish we could find people to fill the position!" so i'll suggest that maybe they're not paying enough for the position if they're not getting the applicants they want, and they'll get all shocked and try to explain to me in useless advanced methodology that $x.xx is the market average for that specific job, and they can't pay more...
companies have worked themselves into a hole that they all want to complain about 'not being able to hire anyone', but they also refuse to pay any more for those positions that would attract either new or existing talent to those positions. they're left circling the literal drain of getting the same garbage applicants for the same position because that's what the talent pool at that pay level provides. of course, there's a variety of reasons against doing that both within the workforce (paying the new guy more than his superiors), as well as final product costs, but no one seems to want to adjust those things...