3 ms·

Let me reduce it to a simple example: Two companies buy tires from the same tire manufacturer. The tire manufacturer owns a significant amount of stock in com

Let me reduce it to a simple example: Two companies buy tires from the same tire manufacturer. The tire manufacturer owns a significant amount of stock in company A and none for company B. If company A does well, the stock value increases. This could be worth billions. Company B has a legitimate concern here. Is company A getting any preferential treatment? Lower pricing? Preferential deliveries? Better access to resources? Etc. While two companies can buy exactly the same product from a manufacturer, the nature of the relationship and the advantages one receives over the other can be massively different. The easiest way to understand this, of course, would be volume. If a company buys a million units a year it will have preferential treatment and access over another only buying 10K/year. My point is that owning billions of dollars of Tesla opens the door to a set of questions. This door is closed permanently the minute Panasonic got rid of all the stock.

frumper 5y ago
The problem in your example isn't for Panasonic, it's for company B. I'm not sure why you think preferential treatment between companies is a bad thing. If you're Panasonic or Tesla you'd want to keep a good thing going and if Tesla wants to change battery design, Panasonic isn't going to cater to the car company buying a rounding error of what Tesla buys to keep some appearance of "fairness." You make what your customers want, and you definitely favor making what your best customer wants.
- robomartin 5y ago
  Where did I say preferential treatment is bad? I think you are missing my point. Here's another quick take: If I am going to enter into a non-trivial business relationship with a supplier and I have multiple equivalent options, I will avoid a supplier with potential conflicts of interest with competitors. If it is important enough for that supplier to get business from many potential large customers, they must avoid having conflict-of-interest issues. I have a relevant example from a project we are working on right now. It's a specialized aircraft simulator. We have about $250K in CNC laser tube cutting and welding work we need to outsource to a vendor with the right capabilities. We have been in conversations with about a dozen of them. One of them has a consulting relationship with a company that is a competitor to our client. Not a direct competitor (not the same product) but close enough to raise a question. We had to disqualify this vendor on that basis. In fact, this sort of thing is so important in business that the vendor actually brought up the conflict of interest to us. We didn't know about it. They informed us that a potential conflict existed and suggested they should not be be considered for the contract. That's what I think Panasonic is doing. If they want to go after relationships with direct Tesla competitors it is a lot easier to manage if there are no conflicts. Owning billions in stock on one company and none of the others is a clear conflict. Remember that owning stock in a company means you are an owner of the company. It is YOUR company. Becoming a supplier to companies that compete with a company you own is a very clear conflict minefield.

frumper 5y ago

The problem in your example isn't for Panasonic, it's for company B. I'm not sure why you think preferential treatment between companies is a bad thing. If you're Panasonic or Tesla you'd want to keep a good thing going and if Tesla wants to change battery design, Panasonic isn't going to cater to the car company buying a rounding error of what Tesla buys to keep some appearance of "fairness." You make what your customers want, and you definitely favor making what your best customer wants.

robomartin 5y ago
Where did I say preferential treatment is bad? I think you are missing my point. Here's another quick take: If I am going to enter into a non-trivial business relationship with a supplier and I have multiple equivalent options, I will avoid a supplier with potential conflicts of interest with competitors. If it is important enough for that supplier to get business from many potential large customers, they must avoid having conflict-of-interest issues. I have a relevant example from a project we are working on right now. It's a specialized aircraft simulator. We have about $250K in CNC laser tube cutting and welding work we need to outsource to a vendor with the right capabilities. We have been in conversations with about a dozen of them. One of them has a consulting relationship with a company that is a competitor to our client. Not a direct competitor (not the same product) but close enough to raise a question. We had to disqualify this vendor on that basis. In fact, this sort of thing is so important in business that the vendor actually brought up the conflict of interest to us. We didn't know about it. They informed us that a potential conflict existed and suggested they should not be be considered for the contract. That's what I think Panasonic is doing. If they want to go after relationships with direct Tesla competitors it is a lot easier to manage if there are no conflicts. Owning billions in stock on one company and none of the others is a clear conflict. Remember that owning stock in a company means you are an owner of the company. It is YOUR company. Becoming a supplier to companies that compete with a company you own is a very clear conflict minefield.