A few years ago the industry saw what most now conclude was a bubble. Business was booming and we found it hard meeting up with demands as just very few of us could render this service. We turned down multiple orders and outrightly rejected those who weren’t ready to pay up. The market had so much asymmetry in information dissemination making it hard for customers to understand how much the service we render them is actually worth. How time flies! Its a different story since the so called bubble bust. Technological changes have made entrants into our once exclusive club of service providers with much acquiescence. Anyone, he says, can build a website!!!
Recently, I saw a thread on Nairaland, suggesting that programmers form a cartel to fight the intense competition in their industry which most believe have crashed the price of web designing and programming even as it comes with a continuous drop in quality. Most believed this is a logical path to follow, considering that most businesses have one form of pseudo cartel or the other. But are cartels actually a viable option for businesses to mitigate intense competition and enhance quality product and service delivery? DO they actually service the benefit of the consumers on the long run or is it solely for the benefit of the members?
Private Cartels are mostly illegal in most countries as regulatory authorities abhor their activities due to their knack for constantly exploiting consumers without mercy. Most also feel, it inhibits innovation and protects poor product and service delivery for members who hide under the umbrella of the cartel to charge high selling cost. Despite these shortcomings, cartels and alliances are smart ways of enabling price protection and controlling demand and supply. Some organizations can achieve the same objectives cartels seek to have without necessarily retaining the nomenclature. Most businesses achieve this in the guise of forming associations seen in the eyes of government as a contact group and voice for a multitude of businesses which they can’t reach individually. Whilst this is a central part of their intentions they mostly use this associations to put barriers to new entrants, instill price stability and control demand and supply.
For consumers, associations and quasi cartels operated by businesses are characterized by disadvantages far outweighing its advantages. I believe in the spirit of the free markets, consumers should enjoy the benefit of price wars, endless supply of goods and services as well as constant innovation. Imagine if the likes of Yahoo, Hotmail and Google, came together and decide to charge people for using their email platform? The consequences surely, would not be to the benefit of everyone including them.
For businesses, threatened by over supply, minimal barrier to entry, price wars etc a logical way of remaining sustainable will be to pursue a business model that is focussed on quality service delivery, well managed brand identity and good customer relation. Identifying the right market is also key to remain abreast of the rest. There is no need pitching a product or service meant for a multinational to a small business. What is the point charging a small business that just wants a simple website where they can reached N200k??
It is also important to note that not all careers can make you stupendously rich. A road side mechanic can’t expect his business to some day make so much revenue he can afford to buy a jet! As important as teachers and lecturers are to society, the earnings are probably not commensurate their relevance and dependability. It is therefore important to research properly about their viability of your career choice. How viable is it? How much do people make from it on an average? Is there an opportunity for growth? Does the industry need a radically new and refreshing approach? Will consumers welcome a change? These are equally as important as a passion and drive to set out as a start up.