I'm sure we all remember big companies who were cutting insane amounts of jobs, while still taking corporate jets out for a spin.
Although this period of outrage is primarily over, or at least kept out of the public eye, companies are still cutting whatever they can to maximize profit in a period where not long ago, profit was a rare and desired word. Many companies now find themselves trying to find a balance between maximized profit and maximized efficiency. However, this is not an easy thing to do. Many companies cut so much employment that any more job cuts would start eating into efficiency. In this article from the Wall Street Journal:
'"A number of firms had to slash costs as a survival exercise and it is the right thing to do
when you don't have time," Mr. Seale says. Yet, he says, most companies still need to become more efficient but can't do so by shedding more jobs, as they already cut so many
during the early stages of the recession.'
As more jobs are cut, more responsibility falls on those who remain in the workforce, and as we saw today, as more and more of an input is used, all else held constant, less and less additional output will be produced. So now, companies are looking for any other alternatives to cut corners while still maintaining maximum efficiency and maximum profit.
I know this is old news, but my question is: What next? How far can companies go before going under?
I think that extravagances such as corporate jets are a status symbol and are deeply connected to the pride of a company. Companies are not willing to show that they are in hard economic times until absolutely necessary because that would scare investors and potentially worsen business.
ReplyDeleteI agree, also they know where they are at financially and when they absolutely need to they will cut all possible to survive because they were once at nothing. only when they have to they'll become the smallest they can because even though they cut now, in the long run they will rebuild and prosper again.
ReplyDeleteI think for the amount the company uses the jet for its employees and big wigs would have to be cost effective for them to use it. I mean, yes they are a status symbol, but in order to be efficient in theses large international or just big companies, I feel that they have busy schedules and don't want to wait in line at airports for two hours. Meaning, they can do more in a lesser amount of time. Furthermore I think companies, like GM, will continue to cut down its operations in order to make profit so as Jared said, they can rebuild and prosper again.
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