Fair business practices
“Business Wisdom” is a contribution by Mr. Anil Laud, former MD of Siemens. He has several years of experience in the corporate world and wanted to share his experience and learnings with Professionals. Keep visiting this area regularly for the new articles.
Fair Business Practices
- Restructuring business during the downturn.
In order to improve the bottom line, if you are in a Capital intensive business one would cut down the Production capacity by reducing the plant, machinery and inventory. In the Knowledge industry though release of people (professionals) is the only resort.
Cost reduction is a typical Management Strategy. During the downturn it is useful to tighten the belt. However that is not the permanent solution. It is useful to stay trim at all times, however Value creation is the solution for all times.
The aim is to create a ‘Blue ocean’ strategy and for that you need the domain know-how.
- Benefit Contracting
This shows the confidence Supplier has in ensuring that the end-user ultimately benefits from all the investments. The benefit contracting is prominently visible these days in the SaaS (Software as a Service) offerings.
Large part of the Risk is carried by supplier as against the risk of initial investments being carried entirely by the buyer once the sale is completed. Of course the benefit derived by the buyer (end-user) from such an arrangement would have to be shared with the supplier