The problem with Congress reflects the inherent conflict between its interest in the Postal Service as shareholder and its institutional interest in reelection. As such, the Postal Service has frequently become a tool to help balance the Federal Budget, with these actions constantly weakening the financial position of the Postal Service. (See. USPS-OIG white paper, Federal Budget Treatment of the Postal Service) Other actions reflect institutional interests in serving constituent groups that could be affected by postal business strategies, many times to the detriment of the enterprise.
The Postal Service has not helped its shareholder see these conflicts as its business strategy has been opaque to even many seasoned observers. Its current strategy focusing on reducing costs by reducing retail locations and delivery days raise this question again. As the observer, Rag Content notes:
A similar question is now being raised by shareholders by another troubled enterprise, General Electric. General Electric, a diversified financial, manufacturing, and entertainment company, has gone through probably the worst year in the company's history. The company had to take funds from TARP funds to shore up its financial unit and has sold nearly $10 billion in assets and slashed its dividend by two-thirds in order to improve its liquidity.
Now shareholders are looking for a clearer picture of how General Electric will earn a competitive return on investment dollars going forward. A recent Bloomberg News story covering General Electrics upcoming December 15,2009 shareholders meeting illustrates how involved shareholders think about a company with an unclear business plan.
The shareholder of the Postal Service needs to ask the same types of questions that the shareholders of General Electric are asking GE's management.
- What is your long-term strategy to ensure a commercially viable, and more importantly self sufficient enterprise?
- How do short-term cost cutting efforts affect that long-term strategy?
- What is the long-term business strategy that the changes identified in the Postal Service's business model paper support?
- Is that strategy financially viable and what risks could derail its viability?
- How much capital and cash is needed to execute that strategy?
- If existing capital and cash is not sufficient, what is your strategy to raise more capital?
- What are the risks to the shareholder and the existing holders of Postal Service debt and other unfunded obligations?