What would happen if a companies profits just stayed the same over a period of quarters? I obviously don’t understand it at all but isn’t it just unsustainable to expect growth indefinitely?
In: Economics
The problem here is you have a false premise that somehow companies can easily CHOOSE to keep profits constant. Profits are the result of the activities of a company. Company activities are not constant. New products and services are developed, competitors enter the market, old products are retired, new technologies are discovered, laws change, machines wear out and need replacement or maintenance.
Other than really simple businesses, so many things need to happen to keep a company operating. A wrong decision, an unexpected technology, natural disasters, etc can all affect a company’s operations for better or worse. Execution is uncertain so most of the time a company sets up slightly ambitious goals knowing that some come to fruition and others may not. If a company aims for zero growth, then any unexpected adverse event means missing their goals. A good company with a good track record naturally gets it right more often than not and grows.
Your idea of how companies work is a bit naive.
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