Many companies often make choices dictated by economic or financial aspects. It can be rightly argued that it is the very purpose of a public limited company to generate profits and to redistribute those profits to shareholders. Noted.
On the other hand, the method of achieving these profits differs greatly depending on the products offered. While some companies can generate millions with “mouse clicks”, others must produce more “physical” goods or even offer services, each of which generates a margin calculated in francs or even centimes.
Thus, some companies are volume-oriented while others work on real added value.
In these uncertain times, it is interesting to note that it is not the business models that have been impacted but the type of products offered. For example, the field of IT platforms has outperformed, while companies offering “non-essential” services have seen their turnover plummet.
Does this mean having to review its business model and offer other, more “promising” products? This is not certain for several reasons:
- The pandemic is a period of crisis: we expect to return to a certain normality soon.
- Diversification does not necessarily mean becoming better: we produce more but not necessarily better.
- You cannot be good at everything, and experience, accumulated experience and know-how cannot be learned in two days.
- Some so-called “promising” markets are mature and entering such an environment can be very costly.
The choice for some companies will not be easy in the coming months. Alliances will be formed, structures will be reorganised and, unfortunately for some players, the market will consolidate.
It is not our purpose to say whether this is a good or a bad thing: the economy has always reinvented itself, with its share of good and bad reasons.
As at the end of a good meal, it is often necessary to choose between cheese OR dessert, even if gourmets will answer “cheese AND dessert”. As far as economy is concerned, it is to be feared that it will be “or” rather than “and”.
The future will tell.
Happy reading and a good start to autumn