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Max Roberts's avatar

The kind of manager to reach for the kind of rebrand covered here, rarely appreciates what firms need to keep what they already have and even less to get more and keep it. They are in a hurry.

The quickest way is to cut costs. Such measures include cutting customer-service, firing non-flashy employees, instituting measures that make running the firm convenient for employees and not for customers, adding product features management likes and charge customers for those bright ideas. Think of MS software. The push is 'Change something, to boost eps'. Making cost and financial changes is the easiest thing in the world--any dope can do it and for a while look like a hero.

Might as well sell off assets and liquidate, then where would the CEO work? Oh! How about getting rid of nearly everything, but keep a PO Box open and ask the public to send regular checks there? Ideal, if you can make it work. IF!

Firms exist to satisfy customers with a good or service that customers both need and want. Many firms must also compete with other firms for customers to satisfy.

Firms have to make a profit, but profit is a residual--what's left after costs. Profit is a requirement of survival not the purpose of survival. Think like this. Do you breathe to live or breathe to live? Firms are not in business to make a profit, nor in business to make losses either. Too many losses spell doom.

The dirt-floor truth is without customers firms cannot exist. Satisfying and keeping a customer is easier and cheaper than getting a disappointed customer back. Start losing customers and the end could be near.

Contrary to Harvard Business School, my old school, the order of priorities is not: Stockholders, management, employees, then customers.

The order of priorities is customers, employees, managers, then stockholders. Stockholders of firms that follow those priorities end up with plenty. Unless a firm has a near-monopoly, firms that ignore those priorities stagnate then die.

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George Shay's avatar

Pro tip: check the Risk/Reward ratio before starting.

In this case:

Upside--virtually non-existent

Downside -Stock down 14%

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