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Old 01-13-2019, 02:37 PM   #1
AlexanderHowl
 
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Default Using Megacorporations

I am wondering how people use and portray megacorporations in their campaigns? I do not think that current business models support such organizations, corporate executives are more destroyers than creators and hedge funds like to dismantle the large corporations that they have purchased after forcing them to take on the debt that they used to acquire said corporations, but I can see someone (or a group of someones) with more vision than greed adopting a more sustainable business model. After all, corporate executives are only legally obligated to maximize shareholder value when the company is purchased and can otherwise safely ignore shareholder lawsuits.

A megacorporation would then have a management culture that emphasizes stability, growth, and competition. In the case of stability, actions by executives that would destabilize the company in the long term, even if they are profitable in the short term, would result in summary dismissal without any compensation, and the employment contracts would stipulate such measures. In the case of growth, the company would grow in one market until it reached the point where the expense of further market share would limit profits, then it would enter a new market while keeping the profit generation of the old market. In the case of competition, the megacorporation would expand through competition instead of acquisition, as acquisition just allows inferior executives to enter the organization.

Such a megacorporation would want to keep employees reasonably happy to promote stability, would want to limit legal entanglements in order to profitably maximize market share, and would use every legal and quasi-legal method to drive its competition into bankruptcy before acquiring its assets. By keeping on the right side of the law, it would give the authorities no reason to look to closely at it, and it would toss anyone in its organization that is guilty of malfeasance to the wolves as a necessary sacrifice to keep the authorities and the public happy. Additionally, it would likely promote from within, as it would value loyalty as much as it values competence, and would hire and groom talented people straight out of college.

Now, such an organization would likely face stiff resistance from the established business community, as such long term thinking endangers the short term profits of corporate raiders and hedge funds, so they would need to effectively monopolize a new technology. After the first such company reached megacorporation states (defined here as having revenues of 1% global GDP or greater), other large corporations would adapt their structures in order to compete. Eventually, you would likely end up with a dozen megacorporations that control an average of 2% of global GDP each, a total of 24% of global GDP, with the remainder of global GDP being divided between governments, other corporations, NGOs, and the rest of the public.

At that point, the megacorporations start becoming their own states, though their exact status would depend on what they could leverage from individual governments. At the very least, they will want immunity from everything except federal and international laws, as they will not want state and local governments interfering with their affairs. Smart executives will gain the support of their unions, as union members vote in elections, as giving more benefits to union members will make them more likely to convince other people of the goodness of their employees.

Does this mean that megacorporations will be good? No, at least not any more good than any other governing structure. It does mean that megacorporations will likely want deniable assets to sabotage their competitors, negotiate with politicians, and convince the unions to work with them. For some of them, that will involve suitcases of unmarked nonsequential bills. In other case, it will involve assassination and blackmail. In any case, it will provide plenty of opportunities for PCs to find adventure.
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Old 01-13-2019, 04:33 PM   #2
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Default Re: Using Megacorporations

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Originally Posted by AlexanderHowl View Post
...
I like megacorporations, or more specifically mythology and the people behind them. In Apple we have Steve Jobs, behind Microsoft to Bill Gates, ahead of Amazon to Jeff Bezos, Mark Zuckerberg leading Facebook, and even McDonalds has Ray Kroc.

It is clear that each of these people has its peculiarities, but many of them shared a common goal: the dream and the passion to enrich themselves by changing the world (and even to change the world even if that does not mean getting rich).

Thanks to some of these people we enjoy many of the comforts of modern life, even internet we owe it to two visionaries, Tim Berners-Lee and Robert Cailliau. What I'm trying to say is that, even if it does not seem like it, maybe these particular individuals have done more for humanity than a superhero like batman or superman could ever do, and that fascinates me, motivates me to want to know that people, to find out how they think and why.

I never knew Steve Jobs personally, but the day of his death was for me the day when I realized that nothing lasts forever and all things have an end... but maybe that's why they also have a beginning.
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Old 01-13-2019, 05:32 PM   #3
Ulzgoroth
 
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Default Re: Using Megacorporations

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Originally Posted by AlexanderHowl View Post
I am wondering how people use and portray megacorporations in their campaigns? I do not think that current business models support such organizations, corporate executives are more destroyers than creators and hedge funds like to dismantle the large corporations that they have purchased after forcing them to take on the debt that they used to acquire said corporations, but I can see someone (or a group of someones) with more vision than greed adopting a more sustainable business model. After all, corporate executives are only legally obligated to maximize shareholder value when the company is purchased and can otherwise safely ignore shareholder lawsuits.
This isn't entirely accurate. I don't mean that to be complementary to the executive or investing classes, but mega-corporations are at most a moderate exaggeration of what we actually see often enough.

You seem to have a bunch of ideas about the megacorporation as having some kind of deep investment in multigenerational corporate health, but...why? How is any of that a necessary part of the concept? Is a megacorp not a megacorp if it rises and declines over the course of just a few decades?
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Old 01-13-2019, 06:22 PM   #4
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Default Re: Using Megacorporations

In my TL10 space game, I had mega-corps which were effectively governments. As space expansion accelerated due to FTL invention, they had effective rule over new space stations and planetary colonies. Because people wouldn't go to an unstable place, they had to create such stability. A few generations along, each corp was effectively a republic with very few voting citizens. Each VP had to prove that they could manage the long-term stability of a moderate number of companies before being voted into the SVP level. Only SVPs have the power to elevate members to that status and then from SVP to C-level positions.

Now that I write it out, I see it really works a lot like the Catholic church. This tends to keep like-minded folk in power, and anybody who can't plan long-term hits a dead-end before getting near the top.
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Old 01-13-2019, 07:21 PM   #5
AlexanderHowl
 
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Default Re: Using Megacorporations

Megacorporations are governing structures that manage vast amounts of assets, employ vast amounts of people, and earn vast amounts of money. If their managers do not have an eye towards stability, they will likely be broken apart by their shareholders or by their governments long before they reach megacorporation status. By the way, there are no current megacorporations, Walmart is the closest at 0.7% global GDP, while Apple is not even close at 0.3% global GDP and Microsoft is only 0.15% (Amazon is between Apple and Microsoft).

Another trait that should probably show up in a megacorporation is a significant amount of resources on spent on security. If a company spends less on its security than Brazil does on its military, it is probably not a megacorporation, as it depends on a nation to defend its assets. Of course, megacorporation security will probably be smaller, better equipped, and better trained than the Brazilian military, but that is just a smart investment strategy (especially if it uses its security force to showcase its arms division).
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Old 01-13-2019, 07:32 PM   #6
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Default Re: Using Megacorporations

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Originally Posted by AlexanderHowl View Post
After all, corporate executives are only legally obligated to maximize shareholder value when the company is purchased and can otherwise safely ignore shareholder lawsuits.
That depends a lot on the jurisdiction the corporation is based in. Of course a true megacorporation will just move their head office to the place with the business laws it finds most useful, and probably move as much of their paper assets and profits as possible to the place with the best tax law.
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Old 01-13-2019, 09:43 PM   #7
Donny Brook
 
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Default Re: Using Megacorporations

No offense, but there seem to be some of misconceptions at work in your analysis. I have some expertise in this area, so to be of assistance, below I have addressed where I think you might have some wrong ideas. Please don' take this as a general objection, just a desire to assist you on specifics.

Quote:
Originally Posted by AlexanderHowl View Post
... I do not think that current business models support such organizations,
There certainly are quite a number of successful and very large corporations, so to that extent current business models do support those at lease. If you are specifically thinking of corporations made up of a wide array of business lines operating as separate undertakings (let's call them 'conglomerates'), then there is some evidence that such structures may be inefficient or ineffective. General Electric is a prototypical example and it seems at times to be very successful and at other times to be barely surviving. One theory in management studies suggests that corporations should focus on their "core competencies" i.e. the few things they are really good at and the conglomerate model seems to diverge from that theory.


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... corporate executives are more destroyers than creators
That seems like a pretty subjective statement and can be falsified as a general position by several counter examples like Steve Jobs, or Bill Gates.

Quote:
and hedge funds like to dismantle the large corporations that they have purchased after forcing them to take on the debt that they used to acquire said corporations,
Many hedge funds have entirely different investing philosophies and many don't involve company stock at all. You are thinking of a specific kind of investor, the corporate raider, exemplified by the fictional Gordon Gekko of the movie Wall Street. Their premise is that a corporation is more valuable than is indicated by the market value of its shares and they buy up those shares and liquidate or disaggregate the company to get that value out.


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corporate executives are only legally obligated to maximize shareholder value when the company is purchased and can otherwise safely ignore shareholder lawsuits.
Not really correct. Except in jurisdictions that enact laws to add other considerations, corporate managers are supposed to always be thinking about maximizing shareholder value. They are supposed to work for the shareholders and not any other interest. But they should be exercising some judgement about what approaches BEST serve shareholder value and over what time frames. A quick-buck-strategy may well be the opposite of shareholder value.

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A megacorporation would then have a management culture that emphasizes stability, growth, and competition.
Those are frequent imperatives but not necessarily the only ones or the right ones for a given corporation. For example, growth and stability are often incompatible objectives, inasmuch as growth may require risk-taking or changes in practices. Another example, businesses in 'mature' industries are more likely to be focused on profit maximization rather than chasing growth.


Quote:
In the case of stability, actions by executives that would destabilize the company in the long term, even if they are profitable in the short term, would result in summary dismissal without any compensation,
Summary dismissal without compensation is generally not legal unless dishonesty or insubordination occurs. Even gross mismanagement doesn't excuse the corporation from paying compensation earned, contracted for, or compensatory under law. There is also a question of knowledge. It is often not clear what effect a business choice will have until the outcome arrives. Often the decision-maker has already left or retired by the time the outcome can be discerned.

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... and the employment contracts would stipulate such measures.
Well, they don't now, so while it is possible that such a change could occur it seems unlikely.

Quote:
In the case of growth, the company would grow in one market until it reached the point where the expense of further market share would limit profits, then it would enter a new market while keeping the profit generation of the old market.
This is often true, though some companies don't get to the stage of seeking new markets, being content to simply milk the established business line. The writings of Michael Porter, Harvard Business School professor, might be informative for you on this subject.


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In the case of competition, the megacorporation would expand through competition instead of acquisition, as acquisition just allows inferior executives to enter the organization.
The buy-or-build analysis is usually based on efficiency and value. While some companies are vulnerable to take-over because of inferior management, it is more often the case that they are targets because management has been excellent in producing something valuable but it has not yet grown so large that it cannot be bought by a larger or more well funded company. In many cases the inferior executives are the ones in the larger entity. You can probably think of cases where a good product disappears or becomes inferior after being acquired. Microsoft's purchase of Nokia is an often cited example.


Quote:
Such a megacorporation would want to keep employees reasonably happy to promote stability, would want to limit legal entanglements in order to profitably maximize market share
Most corporations of any size will have that outlook. Though some thrive by squeezing their employees, particularly when the labor market is skewed against workers.

Quote:
... and would use every legal and quasi-legal method to drive its competition into bankruptcy before acquiring its assets.
Actually that is not a productive strategy. If you want to acquire something valuable it is rarely sensible to destroy it first. Generally acquisition is a substitute for competition, not a follow up.


Quote:
By keeping on the right side of the law, it would give the authorities no reason to look to closely at it, and it would toss anyone in its organization that is guilty of malfeasance to the wolves as a necessary sacrifice to keep the authorities and the public happy.
Two factors determine how true that is: (1) the basic integrity of the company's executives and (2) the effectiveness of enforcement and public awareness.


Quote:
Additionally, it would likely promote from within, as it would value loyalty as much as it values competence, and would hire and groom talented people straight out of college.
That may be a good strategy, but there are successful examples that follow a flexible strategy or the opposite.


Quote:
Now, such an organization would likely face stiff resistance from the established business community, as such long term thinking endangers the short term profits of corporate raiders and hedge funds, so they would need to effectively monopolize a new technology.
Frankly I don't think there is an obvious connection between one company's long term thinking and the short term profits of others. And again 'hedge funds' are so diverse in strategy and investments that it's not safe to generalize about them that way.


Quote:
After the first such company reached megacorporation states (defined here as having revenues of 1% global GDP or greater), other large corporations would adapt their structures in order to compete.
Currently, the largest company by revenue is Walmart at 0.6% of GWP.
Companies will try to emulate successful examples LONG before one attains the levels you are describing.

Quote:
Eventually, you would likely end up with a dozen megacorporations that control an average of 2% of global GDP each, a total of 24% of global GDP, with the remainder of global GDP being divided between governments, other corporations, NGOs, and the rest of the public.
Maybe, but that seems entirely conjectural, honestly.
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Old 01-13-2019, 10:21 PM   #8
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Default Re: Using Megacorporations

If the Chinese government merged a bunch of state owned enterprises and nationalised corporations on the Hong Kong stock exchange you could end up with a mega-corporation.
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Old 01-13-2019, 10:55 PM   #9
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Default Re: Using Megacorporations

1% of GDP seems arbitrary. If I were going for a strictly financial metric, I'd look at how the megacorp ranks against countries on a GDP league table. Apple would seem to rank around #15, with more value than 90% of the countries in the world.

But even with large market value, a corporation wouldn't be a megacorp unless it fit some of Wikipedia's criteria:
It refers to a corporation (normally fictional) that is a massive conglomerate (usually private), holding monopolistic or near-monopolistic control over multiple markets (thus exhibiting both a horizontal and a vertical monopoly). Megacorps are so powerful that they can ignore the law, possess their own heavily armed (often military-sized) private armies, be the operator of a privatized police force, hold "sovereign" territory, and even act as outright governments.
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Old 01-13-2019, 11:15 PM   #10
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Default Re: Using Megacorporations

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Originally Posted by Daigoro View Post
But even with large market value, a corporation wouldn't be a megacorp unless it fit some of Wikipedia's criteria:
Megacorps are so powerful that they can ... possess their own heavily armed (often military-sized) private armies...
So would Pepsi, in the late 1980s, have very briefly edged toward being a megacorporation with its fleet of about two dozen warships?
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