Changing business models with improved economy

IFE ADEDAPO writes on how businesses can leverage on the country’s growing economy

Nigeria was declared as the largest economy in Africa after the re-basing of the Gross Domestic Product to N510bn.

This was done in a bid to diversify the economy and reduce dependence on crude oil as the services, telecommunications, agricultural and the manufacturing sectors have been contributing significantly to the GDP in recent times.

This has prompted a change in the business environment in the country as it now competes more with other African countries and the rest of the world.

As the business environment is changing, strategies used in production and delivery of products and services are being improved on as a result of demand by consumers for improved services.

However, experts point out that the rebased GDP does not translate to improved lifestyle for Nigerians, adding that the inflow of foreign direct investment has exposed Nigerian businesses to stiff competition with imported products.

Therefore, the government is looking inwards to develop and support indigenous companies and as a result, business models in the country are gradually changing to become more sustainable to give inclusion to the lower and middle class including Small and Medium Enterprises in order to help them survive in the competitive business environment.

More women in business

A Principal Consultant, Experiential Consult Limited, Mrs. Aderoju Odunsi, says to promote gender equality, the intervention programmes by the Federal Government, which provides funds to support SMEs have given the first consideration to women in agribusinesses.

Odunsi adds that modern business opportunities in the agricultural value chain are being taken up by women and this has prompted other corporate organisations to support women enterprises as part of their business strategy.

A PricewaterhouseCooper report states that the business environment has changed significantly in the last decade and is set to change further in the coming years, driven by six groups of inter-connected forces for change.

The report titled ‘Measuring and managing total impact: A new language for business decisions’ notes that the economic balance of power is also shifting and is set to shift further towards emerging economies, adding that by 2050, it is projected that seven of the world’s largest 13 economies will be emerging compared with four currently.

This shift will bring with it the rapid growth of a large new middle class, notably in China and India. Competitive advantage based on access to cheap labour and materials will become a thing of the past; instead, the global battle for talent and access to knowledge will increasingly be the basis for competition, it states.

Technology and Internet penetration
According to the report, developments in technology have many pervasive effects because they allow businesses direct access to consumers and open up markets to new businesses of all shapes and sizes. It adds that IT allow businesses, consumers and communities to assemble almost instantaneously to influence or create alternatives to traditional business, government and community structures.

This will disrupt the established rules of competition by enabling small businesses to compete with larger ones and reducing the costs of cross-business collaboration, it explains.

In addition, the power of the Internet and social media has accelerated and heightened transparency by enhancing the availability of complex information; and as the horsemeat scandal in Europe earlier in the year exemplifies, the impact of any business lapses can quickly escalate and be very difficult to contain, the report adds.

Value is redefined

The report says that evidence in the business environment suggests that values are shifting to focus more on experiences, relationships and meaning rather than material gain, stating that these shifts will have an important bearing on business.

For example, it notes that people are becoming increasingly aware of the limitations and threats posed by conventional economic growth. The result of this is that consumers are becoming ever more environmentally and socially conscious, especially younger ones: they want to know more than ever about the products and services they use and who they buy them from. At the same time, trust in business has been declining.

Consumers influence business

The PwC report adds that stakeholders, other than shareholders, are having an increasing influence over business and are demanding more and better information as they pursue higher standards of responsibility and accountability from businesses. The high-profile controversies over some businesses’ tax affairs, environmental practices and working conditions highlight the need for greater openness and, as a consequence, the need for businesses to behave responsibly.

Moreover, the growth of the sharing economy and collaborative consumption looks set to continue – value networks are replacing value chains and consumers, it notes.

New opportunities and threats

For business, the report states that the changing landscape and the search for ‘good growth’ present both opportunities and threats as stakeholders bring their growing influence to bear, affecting diverse aspects of the business.

Products and services

Opportunities come from rapid growth in the emerging economies but new sources of competition are potential threats.

Customers

Changing customer needs in both existing and new markets offer scope for revenue growth, but revenue is at risk for those businesses which fail to keep in touch with their customers’ shifting values.

Production processes

Businesses which use resources more efficiently stand to benefit, but those that ignore pressure on resources are at risk – for example, if disputes become increasingly commonplace on both land and at sea and threaten resource availability.

Business models

Opportunities exist to develop new collaborative business models involving customers and/or suppliers to capitalise on the growth of the sharing economy and collaborative consumption – established models which fail to adapt could be threatened while reputation management and more open dialogue with stakeholders can improve business reputation (for example, by building trust and reinforcing the licence to operate).

On the other hand, “closed” businesses that fail to embrace new ways to communicate could be adversely affected (for example, if they are implicated in environmental damage or species extinction, tax avoidance or poor labour standards).
The Punch