I was thinking about the business situation in real life and found a very interesting case in my home only.
My brother has an AC sales, distribution and repair business in Gurgaon. In last 5 years, he had seen his percentage margins going south slowly but steadily. The trend accelerated in last 2 years due increase in
1. Cost of Capital (10% Fixed income rates in India)
2. Cost of Labor
The repair is the worst hit business as cost of spairs and labor cost of mechanic has increased by 100% literally, while the unit repair rates are pretty same. Much of it has to do with the 15% food/commodity inflation in India. He has to decide to either run at loss or shut down repair business totally.
I am not sure what is the way out of this situation. I have advised him that Recession is round the corner. Wait for the inputs to subsidize.
Things apart, some of the concepts of marketing such as finding blue ocean of niche segments seem to be too hard to implement if you just have 0.001% of the highly fragmented market.
No comments:
Post a Comment