Business Model Strategy
December 27, 2011 1 Comment
Businesses have evolved since the Internet has created an environment that connects businesses with consumers across the world. In past history, mom and pop stores were able to set up a business in a local community and mark-up goods and services. The good ole days are not amongst us and the business environment has changed.
With the upsurge in profitability of online retailers, local businesses are not able to survive. The extensive usage of the Internet has led the companies Craiglist, Amazon, and Google to capture a large amount of market share in their respective industries.
The alternative and highly successful business model is to cut costs ruthlessly and sell large amounts of quantity. Small and local stores are struggling to survive as the globalized companies have the ability to reach consumers without being limited to location. The term for selling products cheaply with an almost negligent marginal cost is known as deflationary economics. The shift to this type of business model is popular as consumers value cheap products that online companies have the resources to provide.
The best investment opportunities are with the companies that utilize the deflationary economics business model. In the future, watch for companies that are able to produce their products with costs that are below the average of competitors and are globally connected to their customers.
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