'Flexibility in core business model leads to success'

Bangalore, Sep 12 (UNI) Adoption of flexibility at the core of its business model by the automotive industry across the world has led to growth in profits and market share, according to a study report released by the IBM Institute for Business Value (IBV) here today.

Speaking after launching the report 'Changing lanes for success - Flexible Automotive Business Models in Times of Accelerated Change', IBM ASEAN Industrial Sector Vice-President K S Raghunandan said using profitability as the gauge for success, IBM researched 100 of the top automotive companies and found that most were financially successful in 2005 than 2001.

He said while only seven companies were making five per cent or greater profit in 2001, by 2005 the number increased to 30 and the number of under-performing companies across all revenue ranges significantly reduced during this period.

Mr Raghunandan said the study revealed that the automotive industry was changing globally more rapidly than ever before. Lower than expected product sales, high material costs and increased competition were just some of the roadblocks that had led several large companies to bankruptcy and pusing others close to it.

The other automotive companies have demonstrated flexibility in enhancing its products and services to take advantage of changing markets and new technologies, thereby increasing its market share and profits. Mere cost-cutting measures would not bring success.

On the Indian scenario, he said the Indian automotive industry was no different and the increase in competition, globalisation, technology and demanding customers would require more and more innovation in business.

The imperatives of the business would force the sector to apply business models that would differentiate them from others, he added.

UNI MV GD CS KN1832