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Old 27-11-11
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JamesMillar JamesMillar is offline
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Default Re: CROWDSOURCING -Think Global, Act Local

I think price can be a USP in its own right (everyone loves a bargin) and it can work as a business model but only in exceptional circumstances. (which I think is the point of hymstrategies comments - it rarely works because it's generally not sustainable).

Price based business models usually only work in very well resourced / funded operations and this is not typically the realm of SME's. As a strategy in its own right it requires a very careful analysis of your completion, your cost advantages (which to must have under that model), your ability to ride out counter price strategy. The only way you can normally obtain such a cost advantage is via vertical integration of the supply chain (back to manufacturing and in some cases manufacturing the components of the final product).

The best example that comes to mind is the Australian domestic aviation market. Every few years a small operator tries to take on the big boys (such as Qantas) and invariably they struggle to maintain price based competition whilst keep service levels to an acceptable standard (eg Tiger). However if the timing, resources and strategy are right it can work (virgin).

Would I recommend it as an SME strategy - possibly but unlikely. It's a very high risk strategy and most can't pull it off.
James Millar - Director - 360 Partners
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