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"There is no ‘dividing up the income" Yes, that is effectively what is happening. The value is 'divided' between customers, suppliers, employees, executives a
by jollybean 5y ago
"There is no ‘dividing up the income"
Yes, that is effectively what is happening.
The value is 'divided' between customers, suppliers, employees, executives and investors and it will go to who has the most power.
If the power balance means they can charge higher prices (less surplus to customers), then that money will go to the remaining parties. If suppliers are commodity, then it's a 3 way fight between execs, employees and investors.
If the company sees increasing sales and is flush with cash, the execs and workers will try to negotiate for higher pay.
"Management just focuses on making more revenue than it’s paying for all expenses, and tries to employ as many people as it thinks it needs to acquire that revenue or grow future revenue."
That process boils down to dividing up surpluses.
- 1123581321 5y agoIt’s a useful mental model to picture the contributions of all these parties, and it can serve some indirect value as a framing in overt negotiations, but it’s not an actual process.
- jollybean 5y agoThe process matters, but is not hugely important. Whatever the process is, it's walking along a gradient towards finding somewhere close enough to the balance of power.