#EXAMPLES OF PARADIGM SHIFT IN BUSINESS DRIVERS#
#EXAMPLES OF PARADIGM SHIFT IN BUSINESS FULL#

#EXAMPLES OF PARADIGM SHIFT IN BUSINESS FULL#

Being first allows one to enjoy the full network effect. The way to become a digital monopoly is to be the first to market a product that fits the needs of the consumers. That contrasts with the behaviour of many big traditional corporates which distribute most of their earnings as dividends, thus limiting the scope of their strategic investment strategies. On a side note, Softbank pays out less than 10% of its earnings to its shareholders and uses most of the rest to acquire category-leading start-ups so as to build up the long-term business. Softbank has also paid high valuation for top players such as Snapdeal, an Indian online retailing marketplace (for US$627 million), and IndiaвЂ™s Uber equivalent, OlaCabs (for US$210 million). Now backed by Softbank, Grabtaxi is in a stronger position to battle the bigger global player, Uber.

#EXAMPLES OF PARADIGM SHIFT IN BUSINESS DRIVERS#

And, the taxi drivers in its network have grown four-fold to 60,000. Over the past year, the number of Grabtaxi users has jumped six-fold to about half a million. And, it embodies SoftbankвЂ™s strategy of investing in category leaders within markets with immense growth potential. The deal was SoftbankвЂ™s biggest investment in a Southeast Asian firm. Last December, Softbank invested S$250 million in the taxi service aggregator app, GrabTaxi. вЂњInvestors must not be afraid to pay high prices for category winners with high growth ratesвЂќ Based on last NovemberвЂ™s performance, Softbank reaped a return of 4,350 times on the initial US$20 million investment it made in Alibaba in 2000. Look at SoftbankвЂ™s investment in Chinese e-commerce giant Alibaba Group Holdings and you know that its strategy has paid off handsomely. SoftBank Corp., a Japanese telecommunications and Internet corporation, advocates this mentality and actively invests in many top winners of each category across the globe. It maintains that to play the game, investors must not be afraid to pay high prices for category winners with high growth rates. This brings us to the new school of thought. In this situation, many small players are strangled and their big corporate investors are left with losses.Дiagram 2: Mega names Google, FaceBook and Twitter squeezing small players in net mobile internet ad revenue to gain market share

According to eMarketer 2012-2014 data, only Facebook has really been successful in gaining mobile ad-revenue market share. Although promising, the start-up cannot dent the dominance of Facebook and Google in the mobile advertising space. A big telecommunications company buys a small mobile advertising start-up with hopes that this acquisition will boost its digital business. Here is a scenario based on some real examples. However, dividend commitments restrict corporates and leave them with limited flexibility to buy potential acquisitions that can complement and grow the business well. There is nothing wrong with this strategy, especially since the duty of most listed firms is to ensure that investments and acquisitions are accretive for shareholders and dividend payouts are maintained. The traditional corporate mindset regards value-for-money investments as wiser and making more financial sense than paying top valuation for a market leader. Vicious Cycle of Investing in Value-for-Money Players

Examples of paradigm shift in business