In terms of the global economy.?

Question

If a large company makes massive record profits, does it follow that others, somewhere, have lost pretty much the same amount.

Answer 1

Actually, it depends on the stage of the life that the industry in which the company competes is in. If the industry is a mature industry, then, yes, it is possible that another company (or group of companies) has lost close to the same amount. For example, in some B2B services markets where companies sign up for a service to be provided by just one company, then growth is a zero sum game. In other words, growth primarily comes simply from poaching a client from the competition - one company's revenue goes up, the other's goes down.

Otherwise, it is highly unlikely that this will happen.

Answer 2

No, their gain isn't necessarily someone Else's loss.governments these days print money more or less willy nilly anyway. If the company makes massive profits by trading worldwide to a large consumer base - piling it high and selling it cheap. Everyone benefits, the company, the consumer and the investors. If they make record profits by operating a cartel or some business practise that stifles competition and are in breach of anti trust laws then they are being greedy and the full force of the law should be used against them. But often it's not.

Answer 3

I see he question as a theoretical one--first you assume that the whole world is a closed economy. It isn't in my opinion.
Next, exactly what do you mean by loss? Loss of the cost of acquiring foreign goods which may increase your own domestic
economy or improve the quality of life for domestic consumers
may no really be a loss at all but a gain through trade. Think about an importer who sells goods the domestic economy wants--is he/she not better off as well as he domestic economy? What about a firm that invests in productive imported
capital equipment? Doesn't this lead to the importers increased future cash flows(in finance its positive net present value projects) caused by increased production capacity from the equipment.?

So...it seems to depend upon how the large firm accumulates the large profits. It may be good for everyone in an open world economy where one's gain is not necessarily another's loss.

Answer 4

YES, the economy operates on the changing hands of values of wealth, although it does expand when new supplies and resources are found, Earth only has so many resourses to offer. Although the truth is that it doesn't mean another company has just lost all that, what it does mean is that many people have lost a little bit to make that companies profit.

Answer 5

No, not at all. It follows, one or more than one factor listed below, 1. the company is dealing in a monoplastic products.
2. the company is operatig at low operating cost.
3. value addition is phenominal.
4. high technology required to convert raw materal, into finished product.
5. very high volume are dealt. etc.

Answer 6

Absolutely no!

Anyone who says yes has no understanding of finance and economics. There is no fixed "stock" of profit which is shared around. Accounting is the language of business which gives rise to the concept of "profit". Its merely a way of signalling that; a) a business has controlled its costs, b) it produces something (good or service) which is found to be attractive to someone.

Answer 7

No, what you are referring to is exploitation. For the most part, wealth is created--it does not require that one segment of society "lose" in order for the other to "win".

Answer 8

no, it means they charge 2 much 4 their products or services!