Do you understand the New Economy?

As the economist Joseph Schumpeter noted, capitalism is largely a process of “creative destruction”: One era creates new tools and methods that supersede and destroy those of the previous era. As with the agricultural revolution and the industrial revolution, the changes being brought by the new economy today – most notably the internet-are not simply extensions of the old ways; they are significant, revolutionary breaks from the past. Today we are in the information age, which has seen the most rapid and complex changes of all. We are now moving from asset-based to knowledge-based competition.

In the New Economy there are eleven fundamental features:

1. Information has become a commodity. It is now sense making that has become the key lever for value creation
2. The internet gives buyers more information, wider choices, and lower switching costs. But it is a double-edged sword. While it has shifted power from sellers to buyers, it has also given sellers better tools to find and serve buyers.
3. The Internet is ruthlessly creating a more efficient supply chain, confronting many sellers with a margin squeeze. 
4. The battle for customers is becoming more intense. This puts a premium on creativity and innovation and means that brands are likely to grow in importance.
5. The single-channel business model is dying. Most market-places are becoming multi-channel games.
6. Purely transnational intermediaries are disappearing.
7. Business models are shifting from products to services and from services to superservices.
8. Web-based outsourcing is creating a powerful new business model: the networked enterprise with the ability to orchestrate.
9. Industry boundaries are disappearing, producing greater complexity and dangerous new competitors for most companies.
10. Going it alone is becoming increasingly unrealistic. A new chess game is emerging that incorporates more partnerships, joint ventures, and other forms of alliances.
11.  Local competition has become extinct.

The challenges of competing in the new economy have placed extraordinary pressures for change on companies of every kind. To develop an effective response, it is necessary to understand what these challenges mean at an organizational level.

Crowe Jamaica assist clients with making Smart Decisions which yield Lasting Value . Contact us for additional information about how we can with you to achieve your goals .

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