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January 28, 2005

Comments

Guy Montag

Hello neighbor from across the river!

Umm, who cares if it is "good for society"? They are supposed to be running a business, not a charity.

Montag

Mexigogue

You're arguing for society?? Are you SURE you read Atlas Shrugged or did you just look at the pictures?

Libertarian Girl

Atlas Shrugged taught us that there are two ways to make money. By producing products or services that benefit society (like Hank Rearden's metal), or by "mooching." Economists call the latter rent-seeking behavior.

The purpose of the merger is not to make better products for less money, but to better control the distribution channels and keep competitors from getting their products on the shelves. Thus it's rent-seeking behavior and bad for society.

David

Auuggghhhhhhhhhhhhhhhhh!

David Foster

I'm a shareholder in both P&G and Gillette. So far this morning, G is up and PG is down, which is exactly what I would have expected. I have some thoughts on mergers & acquiditions, complete with a nice quote from Warren Buffett, here:

http://photoncourier.blogspot.com/2005_01_01_photoncourier_archive.html#110662037516907025

David Foster

Hey LG...Attempting to optimize distribution is not necessarily evil behavior. If I have a group of people calling on supermarkets every week, that's a true cost, every bit as much as manufacturing or shipping the product. And if I can consolidate the jobs of the P&G guy and the Gillette guy, that's a true cost savings, every bit as much as if I brought in Hank Reardon and had him design some better packaging machinery for the plant.

Libertarian Girl

David, I don't think I said that it's "evil" to be concerned with distribution. A company can't compete or sell anything without paying attention to marketing.

But investments in marketing don't benefit society in the say way as investments in R&D or production.

Nicolas

You made a mistake. its not cajones (that means drawer) it´s cojones.

the zero sum game only happens when there is coercion between the counterparts involved in the action (in this case the shareholders and the managers in the companies involved in the merger) or one of the counterpart mislead deliberately the other.

Your second question it´s irrelevant. If the society dont want, or dont like the decision of the managers and shareholders, the don´t have to buy their products.

P.S. Good decision to move to Typepad.

Joe Pulcinella

Let's follow this scenario through. P&G gets big. P&G raises its prices because it feels it has total control over the market. Other companies see an opening in the market and horn in on P&G's product line with their own products. Competition happens. P&G loses market share. Shareholders flee. P&G comes down off high horse. Market reaches equilibrium for about 15 minutes. Whole thing starts over again. Libertarian Girl is happy once again!

David Foster

What actually seems to be happening is that channel power is shifting from manufacturer to retailer. If you are Wal-Mart or Safeway, you have access to large numbers of customers. You can select the brands you want to carry, and you can also have your own store brands manufactured.

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