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Where is the Value-addition in a business? The answer may surprise you

"Business only has two basic functions, marketing, and innovation. Everything else is a cost", said Peter Drucker.

Many US corporations, in particular took this to heart or even to the extreme: own the brand and R&D. Outsource everything else.

Apple is a poster child for this approach but holds for several across many industries from garments to sneakers. Practically nothing of what Levis or Nike sell is made in the countries where the brand resides.

It would be interesting to see how business models evolve in response to the 'away from globalization' movement that is now taking root across the globe - in turn driven by the supply disruptions faced by businesses that were hitherto depending on Just in Time supplies from around the world.

Of course, even in the past, companies like Toyota showed that manufacturing & execution can be an edge too - or a liability, as for Tesla. The production glitches (mostly sorted out since) meant that Tesla partly gave up the huge headstart it had over old time auto companies in the Electric Vehicle (EV) space.

From the desk of Devina Mehra

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