Thread regarding DST Systems layoffs

Managing the decline

I really like someone’s post that says the management here is actually managing the decline. Exactly! They are trying to get as much out of it as possible now, not caring too much about what will happen in the future.
My guess is that it's because they're not counting on that future either. I don't think that anyone here really believes that the management is busy figuring out how to make improvements?

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Post ID: @OP+1epdmUYF

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I'm pretty sure the Tom's nor anyone else in the ab-rtion of a company have ever studied product life cycle, certainly not to the degree previous poster alludes to!

Post ID: @7lrk+1epdmUYF

It's well known in financial management how product lines develop in general and how you manage their lifecycle profitably; most product lines aren't forever, some of your products will be at a investment stage (expenses with a calculation of future profit extraction), for many there's a growth stage where you reinvest profits to gain revenue, there's a stable running stage where you get some sustainable margins, and there's often an extraction/"milking" stage with intentional unsustainably high margins - one well-known way to shut down a product is to milk it until death while starving it of any resources. In quite a few (though not nearly all) cases that is the most profitable way of closing down a product line for which you don't think a long-term future is profitable; you cut expenses so that you extract at least some profits out of the inertia as opposed to running at near-zero profits until it eventually dies anyway.

It would certainly be incompetent to just keep investing in all declining product lines; it's a valid business strategy to buy (or build) a product with no long-term future and extract as much as you can before it collapses - the point of the business is not to sustain/operate products as long as possible, but to extract as much profit as possible from those products. Extra investment in a declining product might make the product last, say, two years longer - but will those last two years be profitable enough (as opposed to just self-sustaining) to repay that investment? Business always has to take care to not fall for the sunk cost fallacy.

Post ID: @1xsq+1epdmUYF

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