On 11/12/2019 1:51 PM, Ken Norton wrote:
A company that loses kajillions of Yen every year....year after year
after year after year... is bound to examine "why" keep going with an
entire division that just costs the stockholders serious money.
I think the answer is obvious when you consider the non-obvious:
Accounting trickery. You bury R&D and Engineering costs for other
divisions into the one division that is "forgivable" for losing money.
The whole company benefits from having one loser division.
While technically illegal and/or unethical, there are a myriad ways to
do this without conflict with the regulators.
The art of allocating costs between areas of a company that's vertically integrated is a subtle one, with no hard and
fast answers.
For decades, Safeway considered their Supply Divisions, which sourced our private label brands, and especially the
plants that manufactured many of them, to be major profit centers.
Then we went through an LBO. The minions of our new owners went through all parts of the company, to determine what was
OK, what needed repair and what should be sold.
These new consultants came with different assumptions and came to different conclusions. Many of the plants that had
been profitable were now financial drags and were sold. Most to new owners who continued to supply our private label
brands and other needs.
So sure, Oly's camera division may be being saddled with costs that may not be appropriate, for whatever business,
political or philosophical reasons. Almost certainly not illegal, as it's all one entity. Unethical? Probably depends on
point of view.
Nuanced Moose
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What if the Hokey Pokey *IS* what it's all about?
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