5.4 Companies change their Business Orientations
Companies often take new directions in their business activities, but they might not realize that they are simply moving from one Business Orientation to another.
Here are a few examples of such transitions:
a) Expert Orientation → Product Orientation:
A software company that previously developed tailor-made solutions for clients creates a general product for a particular market. The company starts selling this product directly, through resellers, or via expert-oriented businesses. From this point forward, it focuses on further product development and marketing.
b) Expert Orientation → Self-Service Orientation:
A webmaster stops working with individual clients and launches an online platform that provides software for e-shop operators.
c) Expert Orientation → Commodity Orientation:
A manufacturer of electronic parts that used to produce custom components for large clients shifts to making universal, commodity-like electronic components for the global market.
d) Product Orientation → Expert Orientation:
An industrial product manufacturer is pushed out of the market by stronger competitors. As a result, the company leverages its technological expertise to offer specialized subcontracting services to large industrial clients.
e) Product Orientation → Self-Service Orientation:
A software company that previously sold its applications as standalone products transitions to offering them exclusively online. It no longer sells the applications outright but instead charges users a monthly subscription fee.
f) Product Orientation → Commodity Orientation:
A pharmaceutical company that once developed its own drugs shifts to producing only generic medications.
g) Self-Service Orientation → Expert Orientation:
A company that initially sells computer hardware through its retail stores transitions to serving corporate clients. It begins offering integration services alongside the hardware, eventually selling off its retail stores to become a dedicated system integrator.
h) Self-Service Orientation → Product Orientation:
An insurance company closes its network of retail outlets and focuses on developing innovative insurance products, which it distributes through third-party resellers.
i) Self-Service Orientation → Commodity Orientation:
A wholesale distributor of agricultural commodities invests in production, selling the commodities not just to end customers but also to other distributors.
j) Commodity Orientation → Expert Orientation:
A company that once manufactured basic materials for the electronics industry exits the commodity business and begins working directly with leading mobile phone manufacturers, providing tailor-made solutions.
k) Commodity Orientation → Product Orientation:
A company sells its paper mills (a commodity-based business) and shifts its focus to inventing and marketing specialized paper products.
l) Commodity Orientation → Self-Service Orientation:
An electricity producer invests in an electricity distribution network, purchasing electricity from other power producers to supply its customers.