V) Powerful Investor Pressure To Increase Or Maintain Returns On Current Assets

- many organisations have made large investments in assets, including infrastructure, and are keen to realise an adequate return on their investments. This mindset can result in a blind focus on the current situation and not the future circumstances to where the money will be. For example, most traditional telecommunication organisations have large investments in overhead phone lines and associated structures, yet the future is moving away from fixed phone lines. Many of these organisations are still showing a preference for the fixed phone lines owing to their desire for a decent return on their investments. A better investment strategy for future success would be focusing on the innovations away from fixed phone lines, etc and moving away from their current assets, ie selling them or finding alternative uses for them. This is sometime called the "ROA-maximizing death spiral trap". Ideally this situation is best handled by getting rid of the assets by outsourcing.

 

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