As stated in the earlier blog on aggregation of demand, here is a small variant of the aggregation of demand model. It is called Collective Business Model
Business involves a lot of negotiation; an every business would love to have a higher bargaining power. Such bargaining power comes when you are able to have larger numbers on your side - this is the underlying principle of having trade unions, industry associations etc.
These organizations essentially derive their strength from the large number of people/sub-organizations who face a similar challenge. The aggregation of the people enable them put across their demand collective and ensure there is more pressure on the person/organization they deal with. Their pressure mechanism on the vendors could be like those of threat to boycott the goods, a new quality standard etc.
This is in line with the adage - "Unite we Stand, Divided we Fall"! Business is common sense isn't it?
One question that lingers in the back of the mind, in all these collective business models is - does this always benefit the end consumer? The question remains to be answered.
Read in Kannada: http://somanagement.blogspot.com/2011/04/blog-post_19.html
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