22 April, 2017

Fortune 500 Rankings: The Top Are Not Necessary the Great

If you stroll through the Fortune Rankings of the world’s companies, you probably see the MNC you are working in at the top 500 list. Or in another instance, your employer may be one of the best or top performers in a particular market or industry which is operating similarly to how the smartphones’ market share is dominated by a few major competitors. The main point here is not that they can be toppled down on any day since it is always possible to fall when one climbed so high. The point to be made here is that being the elite or tyrant does not necessary makes one fantastic. This is what I learnt from my recent months and it is really true to say “do not judge a book by its cover”.

There are countless strategies to becoming a top notched market leader but there will never be a perfect company. Loopholes will always linger waiting to be exploited, to be revealed or to surface. A company can reach the top of the world through dignity and sheer hard work or through means of attempting to hoard as much market share as it possibly can. Predatory pricing with the mentality that the firm will rather breakeven or lose money than to invite competition is near to the term which I am trying to describe. However, I am referring to examples in which it is still legal. These are where elite companies climb up the ranks to be on top but are they really great in terms of monetary profit?

The loss by setting low prices will be shown on their annual Net income. It is not a wise long-term choice to aim for mere breakeven due to market inflation, needed future investments and the highly sought wage increments/staff bonuses. All these require money and without profit, it is like taking your own meat to sustain the company. And let’s not forget that due to the low prices, work volumes are also high for your staffs to manage. Due to high stress, greater mess and peak volumes, you either need more staffs or your staffs have to sustain highly stressful workloads.  Either way, your service will eventually deteriorate. Thus, top companies may look good on the outside but the high volumes will likely make its internal operations a real mess. When an organization gain more, it will lose more control on how to manage the load.

 An organization can be one of the best but such power will only be temporary when the pillar (finance) to lean on is slowly eroding.

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