When Better Profit Margins Aren’t Better

A recent article by McKinsey & Company argues that there are times when cost cutting and higher prices can hinder a company’s growth and harm its value. Offering several examples, the article argues how cost cutting can be “counterproductive, starving a company of new sources of growth and undermining performance over the long term.” Offering data from a recent study of 615 of the largest nonfinancial companies (from 2001 to 2013), the article reports that… Read More