This is probably just confirmation bias on my part, but it seems like M&As and going public almost always make things worse for non-shareholders in the long run. Be that employees, customers, or the community around a company.
Did a 1997 merger ruin Boeing?
101–110 of 354 posts
Re: Did a 1997 merger ruin Boeing?
#102I feel like this pattern occurs in too many companies across all sectors: 1. Company is product-quality focused 2. Beats competition and creates mini-monopoly 3. Sales becomes somewhat inelastic to changes in quality 4. This leads "cost-cutting" and marketing focused execs/decision making to beat out product quality execs/decision making 5. Company's product quality takes predictable linear path to the bottom
It is a bit more nuanced:
4.1 Company starts to talk about politics instead of products in their marketing campaigns
4.2 Company starts to cut cost on workforce by pushing out experienced people and hiring cheap newbies
4.3 As a result of the previous one, expertise drops rapidly and product quality starts to drop
4.4 As the product quality decreases, bleeding experienced people makes it impossible to stabilize
4.5 There is nobody left to innovate. The cafeteria manager is the best path to become an IT director (real case: 3 consecutive cafeteria managers in the same office were promoted as IT directors in one of these companies), so the best expertise the management has is to pick the right beverages for the automated vending machines in the office
4.6 Principles and values disappear, corruptions grows, while internal controls don't even bother to look into frauds less than $1 million per incident
4.7 stock price drops, even if the company continuously spends money on shares buybacks
Re: Did a 1997 merger ruin Boeing?
#103The article seems really thin. I'd be curious what decision-making process went into the situation where "McDonnell Douglas bought Boeing with Boeing’s money". Was the MD management team just savy about mergers? Were consultants pushing for "value creation" involved? Or what? Anyone have a better link?
I imagine it follows the same lines as Musk buying Twitter with Twitters money?
Re: Did a 1997 merger ruin Boeing?
#104Earlier quoted context omitted.
> Is it really that cheap? 737 MAX uses 20% less fuel. Incidentally, this fuel-efficient design is what lead to the design defect. The fuel efficiency is thanks to larger engine (larger engines burn hotter and use less fuel). To make the larger engine fit under the wing without raising the fuselage, they had to reposition the engine forward. This forward-positioning of the engine causes the nose to pitch up when acce…
> larger engines burn hotter and use less fuel I thought it was mostly due to the much higher bypass-ratio than burning temp?
The two are probably related. Intuitively, at least. For a given thrust level, a higher bypass ratio seems to imply less air going through the combustion section. Thus this smaller amount of air "works harder", probably getting hotter in the process.
Re: Did a 1997 merger ruin Boeing?
#105Earlier quoted context omitted.
I'm guessing a lot of the purchase orders were placed well before the MCAS incidents occurred. These purchases tend to be contract based, and not something you can just leave with the cashier when you suddenly decide not to purchase them. So you're contractually obligated to spend the money, so might as well get a plane out of it and hope for the best
I’d imagine the plane you are primed to buy dropping out of the sky due to engineering malpractice to be a reason to re-evaluate, if not automatically cancel those contracts. Unless you are a sociopath and only care about your balance sheet I suppose.
> Unless you are a sociopath and only care about your balance sheet I suppose
well, there you go
Re: Did a 1997 merger ruin Boeing?
#106Earlier quoted context omitted.
I'm guessing a lot of the purchase orders were placed well before the MCAS incidents occurred. These purchases tend to be contract based, and not something you can just leave with the cashier when you suddenly decide not to purchase them. So you're contractually obligated to spend the money, so might as well get a plane out of it and hope for the best
Lawyers for the airlines should have made their orders conditional on a continued high safety record.
Planes have a limited life and a shelf life. If you are an airliner and your planes are either aging or becoming not competitive due to fuel consumption (this is the biggest change from a generation to another), you are forced to buy anything you can find. Waiting lists are 5 to 10 years long, depending how big pockets you have. There is no competition, it is a duopol, so many times you are forced to buy.
Re: Did a 1997 merger ruin Boeing?
#107Earlier quoted context omitted.
It's going to take a long time, but first is to destroy the myth that corporations have one purpose they need to fulfill: Generate revenue and ensure things are profitable for shareholders. This myth artificially took root in the 1970s. Business schools have to stop teaching this.
It's not a myth. It's a fact. The whole point of any for-profit company is to generate a return for the company's owners. Companies which fail to do so go out of business. It has always been thus. As for the notion that Boeing has prioritized shareholder value over safety: just look at their share price over the last few days. It tanked by 10% since this accident occurred. Clearly, making safe planes is a prerequisit…
It’ll tank for a few days, maybe even weeks before it resumes it’s upward trend.
Re: Did a 1997 merger ruin Boeing?
#108Earlier quoted context omitted.
> Is it really that cheap? 737 MAX uses 20% less fuel. Incidentally, this fuel-efficient design is what lead to the design defect. The fuel efficiency is thanks to larger engine (larger engines burn hotter and use less fuel). To make the larger engine fit under the wing without raising the fuselage, they had to reposition the engine forward. This forward-positioning of the engine causes the nose to pitch up when acce…
> larger engines burn hotter and use less fuel I thought it was mostly due to the much higher bypass-ratio than burning temp?
It's both.
"The new two-stage High Pressure Turbine section adds advanced coatings for cooling metal parts that will enable the same metal temperatures as today’s engines despite hotter gas path temperatures."
https://web.archive.org/web/20150418191419/http://airinsight...
Re: Did a 1997 merger ruin Boeing?
#109Earlier quoted context omitted.
> Is it really that cheap? 737 MAX uses 20% less fuel. Incidentally, this fuel-efficient design is what lead to the design defect. The fuel efficiency is thanks to larger engine (larger engines burn hotter and use less fuel). To make the larger engine fit under the wing without raising the fuselage, they had to reposition the engine forward. This forward-positioning of the engine causes the nose to pitch up when acce…
The reason they didn't want to raise the fuselage was to pretend it was actually a 737 and not a completely different plane, so that they could avoid all the testing required. If they'd just built it properly in the first place...
There was no way to raise the fuselage. That would require longer landing gear with no space in the wings to retract it, so it required new wings, leading to re-certifications of both the planes and the pilots and the associated costs.
This grand-fathering of 737 is the reason it still does not have fly-by-wire in 2024: it simulates the antique original 737.
Re: Did a 1997 merger ruin Boeing?
#110I feel like this pattern occurs in too many companies across all sectors: 1. Company is product-quality focused 2. Beats competition and creates mini-monopoly 3. Sales becomes somewhat inelastic to changes in quality 4. This leads "cost-cutting" and marketing focused execs/decision making to beat out product quality execs/decision making 5. Company's product quality takes predictable linear path to the bottom
Hewlett-Packard
90s Apple ?