What is a business model
One fateful decision we face when we establish a business model is the decision to determine the scope of services and products and their production mechanism!
Which is better?
– Specialize in specific products and services and focus on their production in quantities.
– Available customized detailability
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In fact, this question is very complicated, and unfortunately many businessmen quickly go beyond this bump without examining the implications of this decision, believing that both cases can easily be covered at the same time. The negative impact of this resolution will then be discovered, which we will demonstrate by analyzing each other’s features and disadvantages.
📍 let’s study the first option
This is specialization in specific products and services and is usually few with special specifications (specific colors – specific sizes – specific specifications) i.e. in other words have specific standard specs.
Features:
– Specialization necessarily means reducing costs in everything, but how?
If we talk about the product, for example:
- ” Specialization means that the procurement and storage process will be limited to specific materials, colors, specific spare parts and a specific production line
- Specialization means that the number of workers will be lower, it is very easy to complete the production process in this case and rely on machines more and speed up the processes.
- Specialization necessarily means that the chances of errors will be reduced so as not to change designs and specifications at a time, making it easier for employees to understand well what is needed and reducing the need to change the settings of production lines and machines at a time.
- Specialization helps professionalism and concentration greatly thereby raising quality.
H.I. ‘ Specialization helps penetrate markets and compete with prices.
If we study the advantages in terms of specialization in services, we can add to the above:
- ” Ability to rely on specialized staff and experts and thereby reduce cost.
- Fast service delivery.
- Professional and reputational improvement in this service specialty.
Defects:
– Specialization We have inspected a segment of customers who are looking for excellence or detailed solutions and products to suit them and their request.
-The specialization we have lost the ability to enter into some projects that require multiple supplies, for example:
My company specializes in door making and the project requires a resource able to complete the decorations.
– Specialization may hinder the process of breaking into new markets.
– Specialization may create a significant reluctance on the part of employees when imposing development, improvement or change of the technology used.
-The specialty needs to produce in large quantities or sell services significantly to achieve high profits because the profit margin is often low
📍 let’s examine the second option: detail in customized products and services. Options are usually varied (multiple colors – multiple sizes – varied specifications).
Features:
– Satisfy a wide range of consumers’ tastes.
– Access to multiple projects, several areas and several images.
-The profit margin is higher.
But in contrast what are the drawbacks:
– Increased costs due to the need to provide a minimum of multiple # raw materials and provide multidisciplinary staff and skills from design to procurement to production to installation.
– Increase the chance of error whenever the situation is new and produces or presents for the first time.
– The risk of delays and fines increases.
– Each case requires concentration and study from scratch sometimes.
– In the case of services, experts from outside the institution are required.
– Increased risks and opportunities for accidents due to employment’s lack of accumulated skills.
You may have concluded from the foregoing that the first option is the best! In fact, yes, the advantages support that… but?
The decision is not that easy in all areas and the results may differ in each case and in each specialty. This is why it is necessary to study # feasibility of each scenario individually. It is also very difficult to combine the two options in most areas because of the need to raise capital, multiple production lines and multiple staff disciplines.
We conclude by noting:
Developed countries greatly support the principle of specialization, when looking at the business strategy of global companies in particular, we note that specialization is a very clear issue, but the primary supporter of the success of this strategy is the suitability of supply chains, the nature of competitions, tenders and customer demands with this strategy.
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