Friday 4 March 2016

Which business model is better? A moderate but stable one or an aggressive but risky expansion?


I want to share some interesting stories. Nowadays, most of us have adapted to 3G or even 4G and enjoyed superior internet speed on our smartphones. However, Japan adopted to 3G before many other countries. Moreover, long before Apple Pay, in Japan people already could use their mobiles to pay on self-service machines. The Japanese should have earned huge profits for their advanced and thoughtful technology and services, but they did not and Apple Pay is still widely seen as a big step of modern innovation. Why? Because people are not aware of what happens in Japan, as most of their products are self sufficient. Some Japanese companies have wonderful products, but they only focus on their domestic markets and have no incentive to enter overseas markets. Such behavior limits the profitability and scales of these Japanese companies which have incredible potentials. Comparatively, the American companies may start from their locals, but they always have the will to enter the global market. Therefore, they grow faster and the successful ones end up being multinational companies. These two different types of entrepreneurship have their own advantages and disadvantages. The Japanese model is moderate, the ownership of a company is stable and the loyalty of their consumers is relatively guaranteed; while the American model is more aggressive and better at expanding companies' influence. However, I prefer the American model, as it is very profitable to those successful and innovative companies, it also increases the competitiveness in a global scale so it will encourage self-motivated innovations and help the global economic growth.

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