Revolutionary Investment Strategy

Over the past couple of years, I have continually seen a number company’s state that they need to increase their prices now in order that they are able to fund their investment in providing their services. This is particularly the case by companies who effectively have a monopoly or a significant market share.

Maybe I am “old fashioned”. But I have always been brought up on a “diet” that you reap your rewards from making the investment through one of the following:

• Cost savings achieved
• Increase your customer base
• Benefits to customers that you can enhance your revenues

So what are the consequences of this revolutionary investment strategy?

1. Effectively, the investing company does not have to be creative in developing their product or service offering to achieve enhanced returns.

2. Since their capital investment is already funded by the customers, there is likely to be less due diligence or creativity around ensuring that the capital costs are optimized or managed effectively, for either benefit to the customer or the shareholder!

3. Once the investment has been made there is likely to be less commitment and scrutiny to ensure that the revenues or cost savings are accruing in accordance with the business case, as it simply just too easy.

It is absolutely critical that the regulators ensure that these businesses and operators are not able to operate in this manner! Or am I delusional…?

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