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The author is pushing the idea that there is something wrong with the way American companies are managed, stemming from the simplistic calculus of pursuit of short-term profit without looking at the bigger picture.

I came across this series of articles reading up on HP's decision to get out of the laptop business. In that case, they calculate that home computers, though a third of their business, are not as profitable as other segments, so they should cut them loose. HP is being stupid, IMO. Besides the free advertising they get from having HP consumer products at home and in the office in constant use, they are going to lose their buying power for components they will need for specialty products they think they would make higher margins on.

1 posted on 08/24/2011 10:45:22 AM PDT by Dick Holmes
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To: Dick Holmes

this is absolutely classical Business School Thinking (the stuff they teach you when you take an MBA). It is all based on the short-term, quick hit, maximize our near-term value.
Companies were not run like this for the first 200 yrs of our Republic until MBA programs started popping up like mushrooms.


2 posted on 08/24/2011 10:48:22 AM PDT by Buckeye McFrog
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To: Dick Holmes

Focusing on the short term is one of the best ways to ensure you won’t have to deal with the long term.


4 posted on 08/24/2011 10:53:11 AM PDT by Sherman Logan
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To: Dick Holmes

On the other paw, I work for (and I suspect millions of other Americans work for) companies without which manufacturing ties in asia would mean we’d simply be out of business also. So I guess you’re damned if you do and damned if you don’t.


5 posted on 08/24/2011 10:54:46 AM PDT by bkepley
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To: Dick Holmes; NationalSpotlight

Does ANYONE in FR Land know of ANY example of ANY Union having a positive impact on the USA Economy in this century ?


6 posted on 08/24/2011 10:56:20 AM PDT by Graewoulf
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To: Dick Holmes; ding_dong_daddy_from_dumas; stephenjohnbanker; DoughtyOne; calcowgirl; Gilbo_3; ...
RE :"Dell accepted the proposal because from a perspective of making money, it made sense: Dell’s revenues were unaffected and its profits improved significantly. On successive occasions, ASUSTeK came back and took over the motherboard, the assembly of the computer, the management of the supply chain and the design of the computer. In each case Dell accepted the proposal because from a perspective of making money, it made sense: Dell’s revenues were unaffected and its profits improved significantly. However, the next time ASUSTeK came back, it wasn’t to talk to Dell. It was to talk to Best Buy and other retailers to tell them that they could offer them their own brand or any brand PC for 20% lower cost. As The Innovator’s Prescription concludes:.....Bingo. One company gone, another has taken its place. There’s no stupidity in the story. The managers in both companies did exactly what business school professors and the best management consultants would tell them to do—improve profitability by focus on on those activities that are profitable and by getting out of activities that are less profitable."

In theory American companies cannot do this without the Federal governments permission, Federal Export Laws that regulates the control of shared information from US to other countries. ASUSTeK must have got some design information from Dell given the story above.

If the US government is too stingy with permission it can backfire too as companies go bankrupt, it's a worthwhile problem to try to correct.

8 posted on 08/24/2011 10:58:57 AM PDT by sickoflibs (Obama :"We all were undocumented workers once")
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To: Dick Holmes

HP is not being stupid at all. Laptops and desktop computers will go the way of the VHS tape.

The new tablet stuff has rendered them obsolete and as the tablets become more powerful there will be no need for personal computers as we understand them, outside of core infrastructure.


12 posted on 08/24/2011 11:01:08 AM PDT by Ouderkirk (Democrats...the party of Slavery, Segregation, Sodomy, and Sedition)
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To: Dick Holmes
Decades of outsourcing manufacturing have left U.S. industry without the means to invent the next generation of high-tech products that are key to rebuilding its economy,

Yes, but we do have REALLY GOOD trial lawyers, Gov't regulators, and community organizers....

13 posted on 08/24/2011 11:01:56 AM PDT by PGR88 (I'm so open-minded my brains fell out)
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To: Dick Holmes

I’ve ragged on this for 20+ years to anyone that would listen. The problem with most companies is that they let the bean counters run them, and the bean counters are present oriented.

An example: the was a local factory that, to make their profits look good at corporate, made no investments in equipment. They were a liquid chemical factory with lots of piping that was literally duct taped together. They constantly did a boom bust as they fixed their machines just enough to do a big production run and then they’d blow something and be down.

Old manager finally retires, new manager comes in. He sees how threadbare things are - and very dangerous - and commits capital to upgrading. Corporate is ticked, profits are down, they question his job, and he finally explains that ‘profits were so good because my predecessor spent no money for upkeep’. He kept his job only because they weren’t OSHA spec and a major work hazard that HAD to be fixed.

Typical American corporate thinking. We don’t understand that investment and innovation is leverage and the present value is greater than if there were none all, even if it requires an up front hit to profit.


16 posted on 08/24/2011 11:04:58 AM PDT by Free Vulcan (Obama/Biden '12: No hope and chump change.)
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To: Dick Holmes
I've been using Asus motherboards for years. When my wife wanted to buy a whole machine built by Asus, I had no problem. They make a good product. Dell isnt' completely out of the business. I have a new Dell laptop coming around September 14th as a replacement for the 2003 vintage Dell desktop machine I've using at this moment.
17 posted on 08/24/2011 11:06:46 AM PDT by Myrddin
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To: Dick Holmes

ASUS gets my money quite frequently. They are far and away one of the best manufacturers of gaming motherboards.

I have an ASUS mobo, TPM chip (actually Infineon mfg), and 27” monitor by them, and I’ve never had a problem with the equipment or support.

This article just shows me that the Asian chip manufacturers are ahead of the curve. I am leaning heavily against profitable American manufacturing of semiconductors and chips since unions usually demand astronomically higher salaries for less work than the Chicomms can accomplish.


18 posted on 08/24/2011 11:09:44 AM PDT by rarestia (It's time to water the Tree of Liberty.)
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To: Dick Holmes
After Congress, the most dangerous influence on this country's prosperity is the Harvard business School and its graduates.
20 posted on 08/24/2011 11:10:01 AM PDT by I am Richard Brandon
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To: Dick Holmes

“So Dell, where do you see yourself in the economy in the next five years?”

Standard interview question these momo’s will ask everyone who wants a job there, and can’t answer it themselves.

If anyone thinks the desktop/laptop/notebook is going away anytime soon, they’re mistaken.

You are just going to see more special purpose computing in more places.


21 posted on 08/24/2011 11:10:55 AM PDT by RinaseaofDs (Does beheading qualify as 'breaking my back', in the Jeffersonian sense of the expression?)
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To: Dick Holmes

Complex supply chains are the basis for a healthy industrial base. Ship the low level stuff off and in a few years or decades they grow up to replace your industrial base. In the short term, great profits were made. In the long term, the overseas guys became your boss and ate your lunch. The fallacy of business schools is that they treat making maximum profit as the only thing that is important. American companies will learn the hard way when Chinese and Indian companies have replaced them because we do not think strategically like our overseas competitors. It took decades to gut our industrial base and it will take decades to fix it. The current leadership better clue in as a 20% unemployed population will be very focused on taking them out and replacing them with people that care about this issue.


50 posted on 08/24/2011 1:08:18 PM PDT by Gen-X-Dad
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To: Dick Holmes

Thanks for posting this great article


53 posted on 08/24/2011 1:30:39 PM PDT by Last Dakotan
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To: Dick Holmes

bookmark


54 posted on 08/24/2011 1:34:34 PM PDT by Bon mots ("When seconds count, the police are just minutes away...")
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To: Dick Holmes

It’s really up to us, specifically who we elect to public office, whether we want to be a manufacturing power again.

We’re not now, because people have placed other priorities higher, such as a clean environment and stringent labor laws.

...which is fine until you realize that a THIRD WORLD country (as we’re about to become) cannot afford expensive pollution controls and ridiculous labor laws.


60 posted on 08/24/2011 5:09:40 PM PDT by BobL (PLEASE READ: http://www.freerepublic.com/focus/f-news/2657811/posts)
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To: Dick Holmes
"I came across this series of articles reading up on HP's decision to get out of the laptop business. In that case, they calculate that home computers, though a third of their business, are not as profitable as other segments, so they should cut them loose. HP is being stupid, IMO. Besides the free advertising they get from having HP consumer products at home and in the office in constant use, they are going to lose their buying power for components they will need for specialty products they think they would make higher margins on."

Think you're wrong here. HP is getting out of the laptop business for the right reasons:

First, PCs are not a core competency of HP. HP bought Compaq Computer less than 10 years ago, at a time when Compaq was not even dominant. It will have turned out to be a bad investment so HP will be divesting what was a bad investment for them.

Second, PCs, especially laptops, are endangered. Notebooks and tablets will quickly consume the laptop market because they are lighter, "cooler," equally powerful, with far better operating systems. Also, cloud computing and virtualization will mean the end of most desktop computers, in business at least.

For many years, PCs have been money-losing propositions. Most companies stay in the business for other reasons -- profits off bundled software, etc.

When HP bought Compaq they morphed from being an innovative company to being just another bottom-feeding PC company. With the PC divestiture they will perhaps regain their former status.

65 posted on 08/24/2011 7:51:29 PM PDT by tom h
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To: Dick Holmes
—improve profitability by focus on on those activities that are profitable and by getting out of activities that are less profitable.

I used to work for a company that did that.

Darned near destroyed the company, and nearly shut-down the Boeing 777 assembly line, to boot.

75 posted on 08/26/2011 7:54:31 PM PDT by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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