Quote:
Originally Posted by stp6237
I am not an economics professor, but in my opinion, the fact that Continental now owns the Hoosier brand, along several other brands, Hoosier is now more beholding to the stockholders of Continental than to the racers who buy their product. The stock market fluctuates wildly on a regular basis, but the few shares I have owned for a long time in various companies have grown in value. From what I learned in Economics 101 over 50 years ago, to increase stock value you need to increase demand for your product or service. You can do that by making the best product on the market, cut the cost to manufacture your product or reduce your product's competition by merger or buyouts. If you want to race you need to buy tires. If a track or organization says to race with us you MUST have this tire, you are reducing that product's competition thus increasing the value of the stock. Again, I am not an economics professor but a retired science teacher who stressed to the kids observation was the key to problem solving. Observe the problem, gather as much information about the problem, form a hypothesis to solve the problem, test the hypothesis (experiment), collect data, evaluate if your hypothesis was valid, (did the data support or reject your hypothesis.) There has to be a solution out there to our problem, we just have to work at finding it.
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To explain this a bit further, I was re-educated about how the economics work in a publicly traded organization. I was always under the impression that the customers of the CEO of an organization were the folks that bought their particular product. My re-education came when I was informed that the customer of the CEO/Board of an organization are actually the investors of that organization, and the powers-that-be will do whatever it takes to insure those investors get their dividend/income in order to keep the stock price at satisfactory levels. I realized this when I put a notice in my office reading "When our focus shifts from our customers to our investors we deserve the failure that will result". I was told to remove this notice immediately. You see, if an organization begins to believe the product they make will not meet the investors expectations they are tasked with either increasing sales (such as removing competition , etc.), increasing sale price (and thereby margins/profit), or eliminating that product from their offering.
What this boils down to is publicly traded organizations have gotten to the point that they cannot continue to operate without investors so they keep them satisfied even to the point of upsetting their customers. The focus has shifted for many organizations.
Kind of backwards to my way of thinking but that's the way I see it.
Tim Simmons