Tuesday, May 31, 2016

Smart Business of Smart People

Smart Business of Smart People

Increase in purchase power of people has opened up the manufacturing industries to produce goods and services and supply to the consumers. With international trades and commerce, the world become a global village where the suppliers and demanders are living hundreds of kilometres away from each other but they are in need of each other to run the consumers world.

Some of the developed countries like Japan, US, Germany, etc, are trying to outsourced the manufacturing industries abroad as the cost of production at home is higher. Therefore, some of their entrepreneurs started a "Service Company" that recruit selected manpower to handle international trades and communications. There are manufacturers of the products and there are purchasers of their goods. The service company patent the product in demand, sign secrecy agreement with the manufacturer and get them produce through the manufacturer as per its terms and conditions. The Service Company is a bridge between the Consumer and Supplier but ensure quality production from the manufacturer and smooth payment from the receivers. The brand image of the Service Company matters more. The manufacturers are unable to find the customers directly are in need of such intermediators. The service company carry customers in their net, therefore prescribe parameters of quality of goods from the manufacturers. The manufacturers otherwise unable to find customers on their own agree to the terms of the company and trade their business through the service company only. 

It is win win for all but the best win for the Service Company as they make profit by investing small cost on establishment. The bridge build money through the toll tax!!! For example, the chemical dyes and intermediates business, the market price of the dye is $ 20/kg, the Service Company buy it at $12/kg from the manufacturer, add its profit of $5/kg and leave $3/kg for the distributors. There is a clear savings of $8/kg for the buyers if they buy directly from the manufacturer but the trust and quality assurance allow the Smart Service Company to play its role and charge high profit for tying the note. After all, if the middle men are away, then how could the economy activities are multiplied? Economy is nothing but multiplying the economic activities to rotate the money circulation in more hands so that more employment opportunities are generated, purchase power of the people increased and the GDP of the Nation rise up. 

It is a Smart Business of the Smart People.

Punamchand
31 May 2016

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