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> On 11/04/2012 02:43 PM, scott wrote:
>>> For example, Ferrari is famous for making luxury cars that only a few of
>>> the richest people in the world can afford to drive. Ferrari is
>>> currently owned by Fiat, famous for making shit cars that no sane person
>>> in their right mind would want to drive, never mind own. So... how the
>>> hell did Fiat manage to afford Ferrari?
>>
>> Because there are 2 million Fiats sold each year, yet only 5000
>> Ferraris. Which brand would you rather own?
>
> On the other hand, the profit on selling one Fiat pales into
> insignificance compared to the profit on selling a single Ferrari. So
> you don't need to sell anywhere near as many to make the same yearly
> profit. It /should/ be a no-brainer; Ferrari /should/ be making vastly
> more money than Fiat will ever own. So...???
>
Just because one car's sticker price is 10 times that of another one,
doesn't mean it's all profits. The fixed prices of the plant, and
engineering are not spread among the same number of manufactured units,
so the unit cost will be higher regardless of the actual materials used.
Speaking of which, there isn't much carbon fiber on your average Fiat,
making the Ferrari's unit cost even higher still.
I would wager that the the profit of a Fiat is much higher in % that the
profit on a Ferrari.
>>> Similarly, Cadbury, maker of fine chocolates, was recently bought by
>>> Kraft foods, makers of naff cheap crap. How the heck did /that/ happen??
>>
>> They offered a high enough price that was acceptable for the company,
>> much like any other trade.
>
> My question was more "how the hell can they afford that?"
>
Kraft Foods Inc. had $49.2B in revenues and $4.1B in profits in 2010.
an amount very easily obtained from investors by a company the size of
Kraft.
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