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The
New Business Philosophy
September 2003
What do you think about the current business philosophy of
companies today?
I remember hearing once on
a financial business show the following statement “the only reason for a company to exist is
to make as much profit (money) as possible for their shareholders”.
When I heard this, I knew it was the wrong philosophy for companies
to follow in America. I asked myself the following questions:
are companies important to the national security of America?
Is it important for a company to make massive amounts of profits
at the expense of America’s economic security and the
American people?
Are companies important to the national security of America?
I believe companies are very important to the national security
of America. Companies provide jobs, which in turn gives the
American people and the government stability, which is very
important to the security of America. What do I mean by this,
well when all Americans are able to find jobs paying wages
that allow them to become consumers of the products that
companies produce, it will create what I call a domino effect.
We saw this during the 90’s when Americans were able
to find jobs that allowed them to be consumers, companies
prospered and America as a whole prospered.
Working Americans pay taxes that the government uses to
keep America secure and help Americans that need help. It
also allows the government to create good will between America
and other countries by helping them. Working Americans buy
the products of companies, which makes the companies profitable.
There is a domino effect at work between companies that produce
consumer products and companies that produce the materials
these companies use to create those consumer products. Both
types of companies need each other, just as both types of
companies need the American workers who are the consumers
of the products they produce together.
Everything is connected except
the Americans who look to make selfish riches to gain power. These
people try to make as much wealth as possible at the expense of America’s
security and the well being of the rest of the American people.
Because of this wealth they are able to influence what makes
a company’s stock valuable or worthless by buying large
amounts of stocks or by selling large amounts of stock. In
business the price of a company’s stock determines
whether company is good or if a company is bad. The price
of the company’s stock will be one of the factors the
Americans running the company will use to decide if they
will layoff employees to create the elusion the company is
making massive profits. Layoffs are done to increase a company’s
stock price by falsely inflating the company’s profits.
How does it make you feel when you hear a company laid off
employees then reports the company has made record profits?
When a company is profitable year after year and has a layoff
to create record profits, who do you think is really benefiting?
Is it the Americans running the company, the stockholders
or the employees of the company? The employees don’t
benefit because they have been laid off and the employees
still at the company have to try to make up for the lost
work force. The stockholders may benefit in the short term
but when the company’s employee shortage (which includes
knowledge, skills and manpower) catches up the company will
lose revenues because of quality and production issues. The
only ones that seem to benefit are the Americans running
the company, because they get to keep their job and are patted
on the back for the record profits but if they had done a
better job of managing/running the company there would not
have been a need to layoff employees.
I am not saying companies should keep employees just to
have workers, companies must manage their expenses. What
I am saying is companies should understand the domino effect.
Allow me to explain what I mean, if everything is connected,
a company that is well managed should be able to forecast
when they should start reducing their workforce through attrition
(workers leaving on their own) instead of economy impacting
layoffs. Companies should be reviewing the revenues (sells),
profits, expenses and inventory of the companies they sell
to and buy from. By reviewing these financial details, a
company should be able to determine when a slow down is coming
and be able to manage accordingly. If a supplier to a company
revenues decrease significantly this should be of concern
to the company because the supplier probably deals with other
companies. This would mean that the supplier is not getting
orders from other clients. Revenues down, profits down, expenses
the same or up and inventory high would be a sign of things
to come. Companies should review financial details other
than just clients and suppliers they deal with directly.
Companies should look at the financial details of the clients
and suppliers to their clients and suppliers, to see if a
trend is developing that would signal a down turn in demand.
Because if the lowest level of clients and suppliers financial
details are down that could mean the highest level has stopped
buying because they have stopped selling. It is a supply
and demand business market, so if there is no demand there
will be a high supply (inventory).
I worked in the Information Technology (IT) field, specifically
for a company that figured out the bills and sent them to
the customers of wireless communication companies. This company
has had massive layoffs due to the problems in the wireless
communication business. Allow me to inform you that this
company had record profits before and after the layoffs started.
I think part of the problem the wireless communication companies
are experiencing is because they bought bandwidth putting
the company in massive debt when the only thing they had
to sell that would use this bandwidth was crude text messaging
and ring tones at the time. What kind of vision did this
show the Americans running the companies had; they needed
millions of customers to buy cell phone service to pay off
this debt. The only thing these companies had to sell other
than service was expensive crude text messages (nobody wanted)
and different ways to have their cell phone ring called Ring
Tones (extra charge for nothing).
The bottom line is companies are so busy trying to eliminate
their competition they have no vision and do not see the
bigger picture. Companies should be trying to collaborate
creating new and inventive products. A couple of ideas/examples
would be cell phones that are able to play games across networks
with another cell phone but companies would need to collaborate.
If Internet providers collaborated (instead of trying to
eliminate each other) to create games that could be played
across systems and networks so people in Europe could play
chess with someone in Chicago. Would the domino effect happen
here, how many more people would buy products to get on the
internet, how many more people would sign up for internet
service. How many inventive things could be created for companies
to sell to increase revenues, how many jobs would things
like this create, who knows because it is not happening.
Would this be the domino effect because more than just cellphone
companies and Internet companies would prosper from this
way of doing business? Vision, seeing the big picture, what
is good for America and Americans is good for business.
Is it important for a company
to make massive amounts of profits at the expense of America’s
economic security and the American people?
Again the statement “the only reason for a company
to exist is to make as much profit as possible for their
shareholders”. I believe a company should make as much
reasonable profit as it can to increase the value of the
company’s stock for the shareholders (stockowners).
But it should not be at the expense of one of the assets
of the company, employees. Employees are considered an expense
of a company, when employees should be considered a part
of the assets of a company. Employees are the consumers of
the products a company sells to be in business whether directly
or indirectly. One company buys the products another company
produces; a company should manage assets (employees) as it
does expenses. Try to keep both at a level that is of value
to the company’s bottom line (profits). Laying employees
off seems like a good decision to increase the bottom line
but really what happens is knowledge of the company’s
procedures and needs are lost. When there is a slow down
in work that is the time companies should have the employees
start correcting and updating the things that everyone was
too busy to fix and correct before the slow down.
The government could give tax breaks to companies based
on two things, the number of employees and the salaries above
minimum wage paid to these employees. It should be done this
way because it would not be of benefit to America as a whole
if the company was able to get large tax breaks paying minimum
wages to the majority of their employees. The higher the
wage the company pays the employees together with the number
of employees receiving these wages would determine the size
of the tax break the company receives. This would be good
for America as a whole and companies. Companies would be
less likely to use layoffs as a means to increase the bottom
line. The operating expenses could be reduced when the employees
correct and update the things that were put off because of
being to busy. The federal government and the states would
not lose income tax revenues from employees. The states would
not need to pay unemployment to workers that have been laid
off.
I have come to this conclusion
about business. As long as a company’s expenses are managed,
their revenues grow or are stable at an acceptable level, they make
profit versus loss and the company shares some of the profit in the form
of dividends with shareholders, the company should be considered
a profitable and valuable company.
The way business is conducted
now is not good for America. There's no vision, companies take over
other companies to stop competition instead of letting true competition decide
what companies will be successful. True competition to me
means letting the best products win out in the market place.
When companies buy other companies the bottom line (profits)
of the buying company will usually be falsely inflated. Think
about this, when a company buys another company what happens
to the employees of the company that was bought? Most of
the time employees are reduced because the company that buys
the other company has employees that will be able to do some
of the work. This makes sense because there is no need for
redundancy, which is an unnecessary expense. But is it good
for America having employees out of work? Is it good for
competition, it has been said that “necessity is the
mother of invention”, because of competition it is
necessary for a company to stay inventive to stay in business.
When the competition is eliminated there is no need for inventiveness
so companies can create defective products because consumers
have no where else to go or the competition’s products
are worse.
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