Tuesday, October 3, 2017

APPLY STRATEGIC COST MANAGEMENT TO TAKE BENEFIT OF GST



GST has started playing its tune and the benefits of the music in healing the economic gaps will be witnessed after a year almost. Among these I find that there is an immense opportunity for the industry to take opportunity of expanding their business and developing new frontiers particularly into B2B segment which earlier used to work as only commission agents between the agency networks. Strategic cost management application will help to increase market share and revenue from a ready available market through the blessing of GST. This article depicts the road map for creating unorganized players into organized segment and making companies to win new market of new B2B players in those areas.   It’s a first mover’s advantage and always remembers the unorganized will be completely eliminated but certain fraction will be out. Unorganized players are currently in search of some avenue to save from GST affects and this is the right time to strike chord for growth of business.  The rest will be required to nurture to tap the potential of new market frontiers for sale of products. Remember these unorganized players cannot afford to sit at home for the sake for GST hence come ahead to create new B2B frontiers.  
Indian companies needs to think and apply strategic cost management tools to create new markets and frontiers from the current GST issues.

Developing new markets and reducing Branch fixed compliance cost under GST is the key success road map. This segment can be capitalized to convert into a main stream B2B network. This segment is about to evaporate as GST as increased the compliance cost and they are the ones who are under the unorganized segment of the market. This B2B of unorganized segment can be converted into organized provided the company applies the strategic cost management to grow the business network. They are less cost consuming and looking for some extra income apart from their mainstream business/profession line.

B2B expansion under this category will be faster as one is getting a ready distributor with zero cost of acquisition and converting the same into the main stream business line. B2B is one of the most efficient ways of increasing revenue without incurring any fixed cost to sale your products. B2B market expansion will be easier under the current circumstances as one will get ready well trained and well ready market. A company need its product development team to educate about the products and sales team needs to train these new B2B players about where and how to pitch. Hence less cost of acquisition, less gestation period for revenue generation and the best time for an opportunity as the GST have been implemented. Most of the companies will lose sight or will be compelled for entertaining any more non GST complaint middlemen who used to be ruling any product market.

Current GST rates might make few products less attractive and some people out of employment. This is the key for B2B market development. Those companies who are planning to expand can come ahead and educate and train about GST and replace these people with product where margins of revenue will affect the cost of operating for these B2B players.

We all know that in FMCG industry building the distributor business is the key aspect for saving fixed cost of having a branch etc.   This key area can be utilized again under GST as many companies will find huge compliance cost aspect under GST from multiple branches hence developing the B2B network is the best way to reduce fixed compliance cost for the companies as well as increasing a business network and revenue for the company.

Technology can be used judiciously to replace and educate these new B2B networks to increase business and reduce own fixed cost. The one who used to work in unorganized market segment can be easily attracted towards organized provided the products changes where margins makes sustainability of the B2B network praise worthy.

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