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It happens all the time. Tool Company A is known for making quality tools. Company B buys company A and immediately decides that they can make more money in the
by learc83 7y ago
It happens all the time. Tool Company A is known for making quality tools. Company B buys company A and immediately decides that they can make more money in the short term by using cheaper components. The cheaper components aren't immediately obvious--it takes a few hundred hours of wear to be apparent.
It takes even longer for word to spread that Tool Company A is no longer a quality brand.
Company B sacrificed the long term brand, but they managed to increase short term profits.
- unlinked_dll 7y agoI mean there are a couple ways to look at that. For me it's recognizing that building trust as a brand is part of creating value. The pump and dump scheme that you're describing is about exfiltrating that value from the brand. But that doesn't really work until either the company is in a situation where you need to pump and dump to exit or it's in late enough stage that the leaders/owners want to exit/retire. Either way the long term health of the company and brand don't matter, by that point it doesn't matter to build trust with customers.
- learc83 7y agoThat's not what pump and dump means. >Either way the long term health of the company and brand don't matter It's does matter because the long term option will often result in more value overall to the new owners and customers. There is definitely a tension between short term profit and long term profit. It's well recognized and has been studied extensively.