Key sources factors for organizations in the new economy

Abstract

The World is currently going through one of the worst economic downturns seen in decades. The US, the biggest economy in the World, has slipped into recession. But what we saw just before this recession in the last 5 years or so was also unprecedented- the economic boom, sky rocketing valuations of the companies and huge investments with very innovative business models. All this can be attributed to the new economic revolution called Information Revolution. With the advent of the Internet lots of new business opportunities were opened. The entrepreneurial instincts of the new age entrepreneurs lead them to venture into business on the Internet. But this so called Internet bubble burst very soon. And all the sky touching valuations crashed in no time. What we have observed in the last decade - is this a new phenomenon? Is it happening for the first time? Is the Internet just a fad or is it going to stay? Such questions started emerging in everyone's mind and people became very sceptical about the whole phenomenon. But the answer to all this questions is NO. This is not a new phenomenon; this can be explained by our very old business cycle theory. This has been proved empirically and theoretically that business cycles are one of the essential phenomena of the economy. And the happenings of last decade can be explained to a very good extent using the business cycle models. The New Economy is to be observed and understood carefully. The economy, which will emerge after this downturn is going to be more stable. The business models of different companies will get validated in this downturn. The pertinent question here is- has the rules of the game changed in the New Economy or is it the same as ever? I think the basic rules of the game have not changed but some of the parameters of the economy have changed or have become more volatile. The productivity of the economy has increased in the New Economy. The information flows very fast, which has made it more volatile. There is an increase in the real output of the economy, which is going to stay. We need to look at those parameters, which companies can use to their advantage. The business cycles are still going to stay in the changed economy; there will still be upturns and downturns of the economy. But the challenge for the companies is to take advantage of the benefits offered by the New Economy and at the same time prepare themselves for the downturn so that when the inevitable downturn comes they can easily sail through it. The Organisations should have a solid business model based on sustainable strengths. The Organisations need to look at their external environment and formulate their strategies accordingly. They should focus on long term relationships with the customers, sustainable margins, product and market diversification, and disintegration of business. They should have the internal strengths like Excellent execution skills, Processes and systems to manage the growth, try to leverage the inherent benefits of the global delivery model and the strong management team. The organisations should enhance their strong business models with the dgital business design. They should leverage the benfits and opportunities offered by the new technbology and the information flow. There are some companies like IBM and GE, who have a great business model complimented by the Digital Business Design. These are the companies, which have taken advantage of the New Economy and are doing well in the economic downturn as well.