Wednesday, March 23, 2011

Reinventing the Business Model to Stay Competitive

In the article, ‘Reinventing your Business Model’, the authors recommend several scenarios where changing the business model might be required. One of these, ‘the need to respond to a shifting basis of competition’, is what XXXXX was facing in the power systems industry. XXXXXX is a supplier of high voltage (HV) transformers to utility customers around the world. HV power transformers provide distribution, connections and efficiencies to the power grid. For the North American market, the product is manufactured in XXXXX and has sales, installation and service offices in the US. Even with having offices in the US, the product line is expensive as it is shipped from XXXXX. In addition, the XXXXXXX factory produces HV power transformers for many customers, and customizations for the North American market are not readily available. Industry competitors, producing power transformers in North America, are able to make them cheaper, deliver them faster and provide customizations for the American market. Wanting to remain competitive with their power transformer product line, XXXXXXXXXXXX made the decision to open a new HV power transformer production facility in XXXXXXXXXX. This plant will provide XXXXXXXXXXXXXthe opportunity to compete in the North American market. This decision represents a change in their business model from producing this product line solely in XXXXXX. Question: During difficult economic times, are we seeing other companies or industries making the decision to change their business model from local production (in the above example, XXXXXXXXXX), to expanding production abroad? Reference article: XXXXXXXXXXXXXXXXX

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