WSJ.com – For Caterpillar, Commodity Boom Creates a Bind
A reminder that profit = price – cost, where the price is set by the market (not the old approach of price = cost + profit). Sure you might be able to increase your selling price, but that's based on customer demand. Suppliers might have the same leverage over you to increase raw material cost, as is happening with Caterpillar. Only by reducing their own internal costs, and by helping suppliers do the same (as mentioned in the article), can you improve your profit. Don't rely on price increases or squeezing your suppliers to cut costs the wrong way.
What do you think? Scroll down to comment or share your thoughts and the post on social media. Don't want to miss a post or podcast? Subscribe to get notified about posts via email daily or weekly.
- Katie Anderson Discusses Larry Culp's AME Keynote and Their Fireside Chat - November 30, 2022
- GE's Larry Culp on Making it Safe for Bad News to Flow to the CEO (or Other Leaders) - November 29, 2022
- Learn How to Reduce Nursing Turnover and Attrition in Healthcare — Free Webinar - November 28, 2022