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Originally Posted by Beingist  No, actually, I don't know this, which is why I'm asking the question.
But how does it "serve" the public? By "not dying?" How does profitability "serve" the general public?  |
Imagine a company A that wants to serve the public directly (provides you with apples, puts a roof over your head, keeps you safe at night, entertains you, whatever you want). How can you tell how well it does the job of giving individuals what they want? By the revenue they generate. If consumers are making the choice of buying what the company has to offer, it is because each consumer sees value in it. If no one buys it, it is because they don't see the value, and then the company dies. Agree so far?
Now this company A must outsource some part of their process because it's not their core skill. If their core skill is growing apples, surely when it comes to manufacturing the farming tools, fertilizer and bug repellent necessary to grow apples, or shipping apples to Seoul, or defending the interests of apple farmers in Washington, there is someone out there whose core skill better matches this task than the guy who mostly knows really well how to grow apples.
So company A buys company B's products or services. But the goal of company A still hasn't changed - it is to provide customers with value in the form of apples. The only way A can afford to spend more (purchasing what B has to offer is an extra spending) is if eventually the value of A's product increases as well and the customer buys more. If what A spends on B doesn't increase revenues, A will eventually go out of business. And since A is keeping B alive, B will go out of business too.
So B's goal is to allow A to provide better value to its customers, even though B is not in direct contact with the general market. Because what is good for the public is good for A is good for B.
And if B purchases yet another services from company C, then C's goal is to help B help A serve the public. Etc. It's not that a company provides value by the virtue of being alive - it's that the fact that it is alive proves that it is serving the public, somehow, eventually. It's Darwinian - if it weren't generating value it would go out of business.