What are the typical market characteristics that make an service/product a commoditiy? If we look at the economic theory one would try and understand the following constituents to answer it.
A. Price elasticity
B. Demand Supply curve
C. Marginal Value of service/product to customer
D. Nature & behaviour of stakeholders/participants/Seller-buyer
E. Sensitivities of the above to extraneous factors: Substitutes/complements, exchange rates, wage-inflation, change in resources/capabilities brought to bear for service/productetc.
If we reflect the current outsourcing market in terms of the above factors we may probably agree to it. What do you think?
If the outsourcing market has indeed become a commodity, what is the means by which big organizations can command profitable growth? Is it through one or combination of the following:
1. Mergers & Acquisition - Inorganic
2. Innovation in Service offering - Organic
3. Innovation in resources (people, infrastructure, application, information) - Organic & Inorganic
4. Innovation in capabilities (Knowledge, organization, management, processes) - Organic & Inorganic
5. Others
Any thoughts. Feel free to share.
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