Private equity firms have increased the pressure to cut costs by any means necessary, leading to more
Question:
Private equity firms have increased the pressure to cut costs by any means necessary, leading to more overseas outsourcing. Steve Pearlstein, a professor of public and international affairs at George Mason University and a Pulitzer-prize winning columnist, details the overseas outsourcing done by private equity firms in the 1980s, beginning with:
A wave of corporate takeovers, many of them unwanted and uninvited. Corporate executives came to fear that if they did not run their businesses with the aim of maximizing short-term profits and share prices, their companies would become takeover targets and they would be out of a job. Overnight, outsourcing became a manhood test for corporate executives.
For the private equity firms that took over companies, "the standard strategy has been to load up company executives with so much stock and stock options that they don't hesitate to make difficult decisions such as shedding divisions, closing plants or outsourcing work overseas." Do you agree with these business practices? If so, why, or why not?