Corporate Greed: Cause of all trouble
A simple man starts a business. He then incurs costs, gives good service and makes some money. The money is enough for him to fund further growth, he expands and grows even better.
Then he wants to establish himself further…BUT HE IS EXTREMELY WORRIED about his image and his business.
Either he or his children then meet a finance guy.
He explains the concept of PRICE EARNING RATIO and says for every rupee that you earn, the market will value you at 30 or 50 or 135 or 215 (depending on the finance guys mood really).
So this simple man now concentrates on EPS. So that multiplied by this Magic number called PE his ‘net worth’ or ‘market value’ goes up. Also he realises that for increasing his ‘net worth’ by Rs. 30 he has to SHOW an EPS of Re. 1 because of this magical number. Simple.
Let us take the case of 3 businesses which were actually very personal in nature, but has yielded to corporate greed.
Hospitals, Banking, and Gymnasium.
You went to a bank because you had money to keep, and you needed a cheque book. Circa 1990.
Now you have a ‘Relationship Manager’ who will do anything for the bank to make money. However to do that he needs a sucker (bakra) who has a decent balance. So it is a ULIP, a mutual fund…..blah blah…
Take the case that you went to an Dopaollo Dental Clinic. As soon as you go one young kid will check each tooth and tell you 27 of them need some help. And of course they are ready to help. Of this 27, 4 are urgent, there are 2 root canal surgeries required, one tooth has to be removed, a bridge has to be built or replaced…
Of course all this can be done..however just to be on the safer side could you please get a BP and diabetes ‘routine’ check up done?
That can be done at Doapollo Diagnostics and they will recommend that you buy the medicines at Doapollo pharmacy.
At Doapollo Diagnostic they will try to sell you a ‘Gold package’ where your full body check up can be done. For a fee of course.
I am now convinced doctors treat reports, not the patients. Most of them have completely lost the ability to do any diagnosis.
Also it is possible that a ‘Relationship Manager’ is appointed who will ensure that you do not have to go from department to department. This RM will of course have a revenue target……now you know how it works.
Then you have the ‘Talk-walker’ gym. Surely when Mr. Talk-walker original started it, he did not know that it will have 200 franchisees with ‘eps’ and other targets.
So when a client comes in….a RM is appointed (for a group of 20 clients). Then a trainer takes over.
“Sir your body is fine, let us start you with some basic ‘Whey’ protein. Our dietician will be with you on a regular basis telling you what to eat……………’
Imagine if hospitals, banks, and gyms are run by RELATIONSHIP managers, the trainer gets alienated from the client because he is FORCED to do sales.
The distance between the guy who puts the money (in the form of shares) looks very different from the guy who comes to the gym to exercise. In most times they cannot even recognise each other.
Corporate Executive greed (only reward no risk) and Corporate Shareholder greed (short term return) are both lethal.
Milind N
Great Apt Article.We can see this happening in corporates,Hospitals,Malls,Bank….Origin of Misselling a Product by keeping Bank Balance of customer infront and Not customer.One way to tackle is Sleep over Greatest Offer with Last 2 days expiry for a week before signing cheque and handing over to Relation Ship Manager .Registering our Mobiles for DNC in Bank and Mobile service Providers reduces follow up by a great extent .Above all learning to Say NO needs to be Learned and Practised .
Muthu
Excellent piece!
Ashish
Very good article Subra Sir. Also once you make it clear that you are not going to invest any more money – the interest of RM wanes off.
Vishnu
Enjoyed reading this.
Superb Subra.
pravin
so the ‘bakra’ has no responsibility? he is a naive little lamb in the woods? c’mon. greed is common to everyone.corporate or individual. bad decisions by corporations and bad decisions by individuals are equally bad and the marktet should punish them BOTH with losses.
naga
Every where you mentioned Doapollo but in one place it is Apollo.
“At Apollo Diagnostic they will try to sell you a ‘Gold package’ where your full body check up can be done. For a fee of course.”
Raja
I came here to post the same comment as Naga. But then, I realized you have changed it already on the blog. But in my google reader(where i read all the blogs) it still appears as the old unedited version.
Not that donareddy of donapollo minds. I guess he is too busy allotting warrants to himself and converting them into equity shares.
Krish
We are doing an infrastructure project in one of the small town of Andhra Pradesh. Our company had to open an account locally with PSU bank (SBH) for ease of payments towards wages and materials. As per the BM, we are the largest value account holder for the bank.
We have requested for at par check facility. It came from central branch with a ceiling amount on each check. It was a big procedure to revise the ceiling.
Here comes the blow. For some requirement we had to make a payment to the tune of 30 lacs in Bangalore. We were told it would take a month to clear the non local check and clearance charges apply. Not willing for stretched time and charges, the party demands only a DD. With no other option it was decided to pay through DD incurring service charges. The story do not end here. Our accountant spent 2 full days time in the branch to take out the DD. The branch made a typo error 3 times in the DD and we had to literally plead the staff to correct the error.
Our next payment of 30 lacs, we have paid through HDFC bank on par cheque without any hassles. No charges and clearance was swift. I am willing to pay EPS of 30 or more for the service. In our country, the word ‘service’ is taken for granted and no one is willing to pay.
SSK
Amazingly true word. “I am now convinced doctors treat reports, not the patients. Most of them have completely lost the ability to do any diagnosis.”
Many years doctor after doctor, monthly reports, my wife arthritis never got cured. No diagnosis and finding root cause. Doctor read report and try few medicine combination. If got cured, it is your luck.