The next business opportunity!
He draws the supply-demand curve on the tissue paper. I am looking at other curves in the Rainbow restaurant! He talks to the tissue paper and says "So when the government gives a subsidy, what it does is constrict the supply and expand the demand because the product gets cheaper..." I take the tissue paper, cleanse my curry'ed hands and look dumb at him.
I plead to him, "Can you speak in English, please, I don't get it! I want to make money and at the same time help the poor. You know, do good and do well. Show me the money!"
He mutters "Go and invest in a business/sector where the government is performing poorly and the people are dis-satisfied with it. Then see whether people (a few rich men or a lot of middle-class ones) are willing to pay for your service. Make money from the Neal n' Nikkis, recover your investments and then make it cheap for the Bunty and Bublis."
"Sounds interesting, aage bol!" He takes out another tissue paper and I groan, "Not there!"
"So if you want to make money from the West, look at an activity which is costly there (due to regulations or because labour is costly) and export it from India."
I said "Okay! Now I am really interested. How does it work?"
Once upon a time not too long ago, cars were made by the Indian government. They were of poor quality but there were no other competitors. Why? Because the sector was regulated to prevent entry of firms and it was believed the Indian consumer did not have money. You know, the government was trying to care for the consumer. Small businesses were unexposed to competition and had elaborate laws because the government cared for the small-scale employer. The government again made elaborate laws for the employees of the business because...you said it, the government cared for the employer. What did all this care result in?
Then slowly and steadily, you had firms entering and the market exploded. There were different kinds of cars, and a lot of people could afford a certain kind of car. Let is take the example of the car market further. What explains the anomaly that a resident in Sangam Vihar in Delhi (the largest slum township in Asia) has a car and a television but inadequate water and pathetic housing?
A government may have either a regulatory intervention and/or a production intervention in a sector. Taxing import of second-hand cars enormously (minus taxes they are comparable to the motorcycles produced in India) is a regulatory intervention. Producing cars (as it did earlier) is a "production intervention." When a government does a "production intervention" there is a huge business opportunity because there will be dis-satisfied customers. So it is not a surprise that private supply of water, electricity, schooling and security are on the rise according to the author here. Read about the market for schooling and the demand for private security, both earlier blogs of mine in a not-so-active blog Spontaneous Order.
When the government does a regulatory intervention that increases the cost of production of a good or service, look for a place that has a lower cost of production...make a business model and make money. So labour cost in the medicine field is huge in USA due to various regulations. Get nurses from India to USA, and patients from USA to India. No wonder nursing and medical tourism are sunrise sectors, again. Of course you need to make sure that there is a critical mass of people willing to pay for your service.
Both, Profit at the Bottom of the Pyramid and Government Dis-satisfied Sectors will be huge business opportunities in the future! Are any venture capitalists listening?
I plead to him, "Can you speak in English, please, I don't get it! I want to make money and at the same time help the poor. You know, do good and do well. Show me the money!"
He mutters "Go and invest in a business/sector where the government is performing poorly and the people are dis-satisfied with it. Then see whether people (a few rich men or a lot of middle-class ones) are willing to pay for your service. Make money from the Neal n' Nikkis, recover your investments and then make it cheap for the Bunty and Bublis."
"Sounds interesting, aage bol!" He takes out another tissue paper and I groan, "Not there!"
"So if you want to make money from the West, look at an activity which is costly there (due to regulations or because labour is costly) and export it from India."
I said "Okay! Now I am really interested. How does it work?"
Once upon a time not too long ago, cars were made by the Indian government. They were of poor quality but there were no other competitors. Why? Because the sector was regulated to prevent entry of firms and it was believed the Indian consumer did not have money. You know, the government was trying to care for the consumer. Small businesses were unexposed to competition and had elaborate laws because the government cared for the small-scale employer. The government again made elaborate laws for the employees of the business because...you said it, the government cared for the employer. What did all this care result in?
Then slowly and steadily, you had firms entering and the market exploded. There were different kinds of cars, and a lot of people could afford a certain kind of car. Let is take the example of the car market further. What explains the anomaly that a resident in Sangam Vihar in Delhi (the largest slum township in Asia) has a car and a television but inadequate water and pathetic housing?
A government may have either a regulatory intervention and/or a production intervention in a sector. Taxing import of second-hand cars enormously (minus taxes they are comparable to the motorcycles produced in India) is a regulatory intervention. Producing cars (as it did earlier) is a "production intervention." When a government does a "production intervention" there is a huge business opportunity because there will be dis-satisfied customers. So it is not a surprise that private supply of water, electricity, schooling and security are on the rise according to the author here. Read about the market for schooling and the demand for private security, both earlier blogs of mine in a not-so-active blog Spontaneous Order.
When the government does a regulatory intervention that increases the cost of production of a good or service, look for a place that has a lower cost of production...make a business model and make money. So labour cost in the medicine field is huge in USA due to various regulations. Get nurses from India to USA, and patients from USA to India. No wonder nursing and medical tourism are sunrise sectors, again. Of course you need to make sure that there is a critical mass of people willing to pay for your service.
Both, Profit at the Bottom of the Pyramid and Government Dis-satisfied Sectors will be huge business opportunities in the future! Are any venture capitalists listening?
posted by Naveen Mandava at 5:45 PM - Permalink
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