New Age Business Models

asset

The new age mode for most of the businesses is the asset-light format and the marketplace model. This is an astonishing change that one observes around. Let’s consider a big brand, say, Uber. Uber has Intellectual Property and acts as an aggregator model for the world of travel. “Uberization” has become a new word among the current generation. This has been the impact of asset-light models around the world. If we look critically, many companies are yet to breakeven, even when their businesses are flourishing.

The old model of own, acquire and produce has taken a paradigm shift. Globalization has been the major vitriol for this. The opening of economies, FDIs, FIIs, lowering of interest rate and “a partially convergent cultural change” has contributed positively towards the companies outsourcing the so called “core product”. The tie-ups between the countries, trade treaties and an ardent potential in emerging economies have propelled the new business models. Franchising still persists, but the asset-light model has become a fad. The likes of Amazon, Flipkart, Ola, Urban Clap and many other service industries have become aware of the advantages of asset-light models. The advantages are multi-fold. The company can clearly focus on the core value proposition of delivering the service rather than wondering what is to be done on all fronts. This would also reduce costs, as an established veteran player well ahead in the learning curve would embrace the opportunity to tie up with the company.

Apart from the above, the chances of service failure would drop substantially. The Build Operate and Transfer (BOT) model is also a positive transformation of mindset in the Indian subcontinent. The positive footprint of the same is observed in a host of highways across the country. The major question one needs to ponder is whether the Indian Railways needs to go for a BOT, BOOT or a BOO model? There is a huge scope for improvement in the same and that would help a great deal to the country.

Another astounding move has been made by the Indian government on the procurement of supplies. The Government has embarked on creating a portal for itself called “Government e-marketplace” (GeM). This system would help the Indians to wean out corruption from the system to a great extent. There are more than 2 lakh products available on the website and it will be an end to end online process. There are thousands of buyer and seller organizations participating in the GeM process. The prices are available in the portal and thus, guzzling of money is reduced enormously. The buyers are the ministries and the offices at the state and federal (central) level.

As the business opportunities are expanding, there is a sense of consolidation in some markets where the same players have managed to gain huge market share. Apart from all these, the world is changing at a rapid pace. The competitive prices from the export-oriented countries are unmatchable. Thus, expertise is being given prominence and this is altering the landscape to the maximum. Diversification on one side (for the big companies) and asset-light model on the other, has proven to be a stunning bazooka to conquer the world of business! Albeit every rule has an exception, the growing trend suggests that the gap between a product business and a service business is reducing enormously.

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