Large and small enterprises outsource part of their production by hiring other companies to get involved in their marketing and some part of their overall day to day operations. This is nothing new. Essentially it had been going on since the industrial revolution. It is what turned small businesses into big businesses and is made outsourcing a valuable marketing tool.
For example, Henry Ford was at first reluctant to outsource, and kept his operation small. He tried growing their own rubber trees for tires.
Soon he realized they should leave the rubber business to someone who knew it well – the Goodyear company. Other facets of the automobile business such as parts, engines, headlights, and tires, are not part of the special expertise of car companies. They are more economically bought from the companies whose business it is to produce them.
No company can stand on its own. Of course competition between business enterprises that are essentially the same is good, but what about those that are complementary? Why not help the complementary company, while helping one’s own business?
At first this kind of outsourcing was mainly within countries and then grew into an international affair. Prices are set differently for purchases between manufacturers than they are for wholesale or retail dealerships.
However, with the lessening of trade restrictions, outsourcing which was seen as an alternative to high labor costs, escalated. It rose when the internet made healthy inroads into the economy, but hit a bump in the road with the dot.com debacle in the early 2000s.
Each country seems to own parts of other countries. However when one is economically strapped, they all suffer. We are now living through such a mix up of international assets. Although somewhat frightening when closely scrutinized, the long term objectives of such buying and selling and business venturing may yet prove to be exactly what the doctor ordered.
Encorpus provides small business consulting and strategies for business startups, product launches, marketing or business development. Encorpus customizes and personalizes every strategy, advisory session or business relationship to you and your company’s special DNA.