A buddy of mine works in a niche retail market. The store he runs is quite profitable. Almost all the other stores make decent money. Yet the corporation as a whole loses money because all the stores have to support this vast corporate superstructure that has built up over the years (way to many VPs, all with their own secretaries and expense accounts, etc). I worked years ago for a restaurant that lost money for the same reason.

This made me wonder how many other American companies actually make money from operations yet somehow end up as net losers. I'm not sure, for instance, how well it's known that American auto and steel companies are absolutely crippled by the cost of their employees healthcare plans (since every single one of their major competitors have government paid healthcare).

A lot of companies out there have profitable little niches without a reasonable way to scale up. Unfortunately, management often wants to scale u anyway. This is primarily because the people running a giant company barely breaking even get paid a lot more than people running a tiny very profitable company. So you get stores built in so many places they manage to compete with each other (as in Borders and Walgreens) or management buying unrelated or tangentially related new businesses. Or you get "vertical integration" for no good economic reason (when becoming your own supplier or own distributor actually costs more than outsourcing).

Just seems a shame that profitable small businesses so often become unprofitable big ones. This is especially true when the big corporation doesn't add any value other than perhaps a name brand (Starbucks, et al).