Quote:
Originally Posted by ZenGum
Maybe the volt is dodgy, but the bean counters are forcing them to put it on sale anyway. Just a thought.
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Maybe. Maybe not. When Iacocca took over Chrysler, the K-car was a disaster designed by bean counters. Iacocca did an emergency total redesign that saved the K-car. And started the rescue of Chrysler. Then he used that design for mini-vans. Nobody previously had designed a new car that quickly. Did that happen with the Volt?
Economies of scale are a myth. Economies of scale only exist in smaller organizations. Why did GM products cost more to build than Mercedes? Because GM's scale made economies impossible.
If economies of scale existed, then Citigroup was the world's most efficient bank. Opposite was true because, again, that 'economies of scale' is only an economist's myth.
As 1980 Ford and IBM both demonstrated, 'economies' only existed after both companies massively downsized. Fiorina was so stupid in the HP Compaq merger meeting. She also repeated that economies of scale myth - claiming HP would be more profitable because they would be #1 in this business and #2 in that market. Reality. They had to throw her out to save HP. She promoted an 'economies of scale' myth because that is what they teach in business school. Fortunately, they threw her out before she did too much damage.
A company becomes #1 in the industry because they are innovative - first have 'economies'. But economists foolishly think if A results in B, then B must also result in B. Defective logic. If 'economies' result from being #1, then #1 must result in 'economies"? Total bullshit.
When a company is profitable, then it can become #1. If a company is #1, it does not automatically become profitable. Did the merger of Sears and Kmart make them more profitable? Of course not.
Mazda could sell less than 13,000 Myatas and be profitable. Due to 'economies of scale', GM could not be profitable on any model if selling less than 50,000. GM products always needed more parts to do same. Scale increased costs. Due to the 'economies of scale' myth, GM parts also cost more to build.
Auto companies would not innovate because management could not see an innovation if they sucked it up their nose. Then, as taught in the business schools, they invented excused to blame others. What made auto companies profitable and efficient? Downsizing. "Economies of smaller scale". Once a company achieves a certain size, then "negative economies" are created with increased scale.