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In my last post I promised to share a couple of my own observations on the importance of maintaining a good network of business and social connections. However, it seems that this axiom does not require further pondering, and I switched the accents a little bit to cover another aspect thereof, and that is, global b2b cooperation.
Let's start off by making a statement that holds true for most industries; with the Internet, practically anyone can enjoy what the world economy offers, and that is —almost unlimited supply of goods, products and services. That boils down to the fact that anyone can purchase batik from Indonesia on Ebay or order CAD drafting services on Elance to have 27 companies from Pakistan, Spain, Romania, South Africa and Ireland compete for your bid. A marvelous picture, isn't it?
Well, it is. The obvious benefit is the unbeatable price one may get shopping worldwide. It's true that global competition brought down prices for most products and services by eliminating the geographical component in the perceived value of a good or service and by increasing supply and accessibility to various markets.
Also, variations in local labor pricing in different regions of the world allow the service providers in developing countries to make more money than on the local markets. Alternatively, the SPs in the US and Europe reduce their rates to maintain competitiveness.
At the same time, global competition has another effect that many of us notice but few choose to recognize and act upon, and that is reduced quality. It is unrealistic to expect that a service for a dramatically reduced price offered by the same provider you've been dealing with for years will be provided on the same level of quality as before.
The explanation is simple. Instead of being the only guy in town making CAD drawings and getting away with outrageous prices just because he's the only one there, a service provider is now competing against dozens of Ukrainian drafters offering the same service for much less. Since the price is low, to maintain the same level of income he is used to, this guy needs to complete three projects instead of one before.
So, we end up with lower prices plus reduced quality of goods and services that are easily accessible on the global market. Is there an alternative to the second part of the equation, that is, reduced quality?
This is the part that has to do with global b2b cooperation. Instead of hiring your next door's service provider struggling to stay afloat, you may hire a highly qualified company elsewhere in the world — Czech Republic, or Latvia, or Thailand, that provides extremely good quality services that are cheaper just because labor is still not as expensive. Additionally, they may even be better than the guy next to you, and all that for a good price.
We at ACX Consulting do help small and medium businesses find their partners worldwide. We explore possible alternatives to your company's existing business processes, then figure out a plan to test and try those alternatives, and if proven operational, we continue on perfecting your newly acquired processes until you are satisfied.