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Wharton Business Daily
Why the Question of Scale is an Ongoing Question for Most Companies
Nov 2, 2023
Gad Allon, Wharton Professor of Operations, Information & Decisions, discusses company scale, using the example of Stripe and the impact of COVID. The podcast also explores how Amazon hires part-time employees for increased profitability and their rapid growth. It delves into Amazon's diverse business sectors and the challenges of managing inefficiencies. Finally, it examines the role of technology and AI in improving efficiency and the potential shift to robots in warehouses.
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Quick takeaways
- Determining the optimal size for profitability is an ongoing challenge, requiring continuous evaluation of economic signals for hiring or downsizing.
- Retail companies like Amazon must carefully assess economic trends and customer behavior to inform their hiring decisions during the critical holiday sales period.
Deep dives
Scale and profitability
Companies strive for profitability by focusing on scale, but determining the optimal size for profitability is an ongoing challenge. Scale encompasses both infrastructure and people. For instance, Stripe hired a significant number of people during the COVID-19 surge in online transactions, only to later lay off 20% of them. Balancing scale requires continuously evaluating economic signals to determine if hiring or downsizing is necessary.
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