They do actually teach this in business school, but not in the way you're thinking. There's a strong business option* where marketing (and thus brand) is more important than actual engineering or innovation. So under this strategy, if you are just a "premium" brand with a mostly outsourced and relatively cheap product line, that's a good thing because your margins will be high. You can actually see this happen to a lot of brands over time that were once trusted for quality and are now kind of garbage (ex. Craftsman tools). It is, of course, a short-term strategy because eventually the market figures it out and the party ends, but while it works shareholders (and executives) are quite happy.
*Note that business school teaches other options, strategies, tools, etc. as well, it's not like everyone is trained from day one to pump and dump.
Yes I've seen it happen many times with products. So it's a conscious decision by the CEO, Board and execs to extract maximum value for themselves and shareholders and do a runner? I imagine they couch it in different terms in the minutes.
Edit: I probably didn't phrase that well - how would this happen, is it a nudge and a wink thing to the board, or the board is clueless and the CEO / execs just decide etc?
It's more of a strategy to maximise short-term gains, and the downsides aren't considered - because they don't need to be.
Public shareholders have absolutely no loyalty to any company they extract wealth from, and they can move their capital elsewhere in seconds. And CxO/execs are typically awarded bonuses on share price movements.
So any action that moves the needle on the share price is a good thing. If this has bad long-term consequences, CxO/execs can always try to bail if they see incoming. They don't always succeed, but they have a fair chance. Employees are more likely to be left without lifeboats in the sinking ship.
Who cares?
I don't mean it in a snarky way, more so I am curious as which groups of people actually get affected. Workers? Certainly. Capitalists? Not so sure.
Somebody in charge is making these decisions and they deem them to be good decision, otherwise they wouldn't make them
The shareholders need to be put in the dark otherwise the stock would drop since there is a explicit short term pump and dump scheme. Surely it has to be at executive and board level to maximize bonuses not in the interest of the stock holders.
Good insight, I feel like engineers/developers would benefit from basic business classes, just to understand the thinking that can lead to the downfall of great engineering companies and hopefully how to avoid it.
Having recently seen this first hand, i.e. great developers being shuffled around and questionable business decisions carried out without a strong engineering buy in, it sucks.
> You can actually see this happen to a lot of brands over time that were once trusted for quality and are now kind of garbage
You can see this in Silicon Valley as well with the number of startups that are absolutely worthless but have exorbitant valuations because because they came up with a metric that everyone fell for.
*Note that business school teaches other options, strategies, tools, etc. as well, it's not like everyone is trained from day one to pump and dump.
Source: went to business school.