Business

Wednesday September 30, 2009

Agility key to staying afloat during crisis


THE agility to adapt quickly in a crisis will help keep businesses afloat, say panellists.

According to AirAsia Bhd chief executive officer Datuk Tony Fernandes, the economic crisis offers opportunities to gain market share as incumbents tend to focus on reducing costs instead of growing businesses.

“It’s important to have a good cost base and continue to innovate and grow the business.

“There is always business to be done when you have the right cost structure and value proposition,” he said during the session on Changing Your Game: The Making Of The Fittest.

He said airlines operated in a traditional manner and they “try to do everything themselves,” which required huge capital. AirAsia, in contrast, only has one type of passenger class and one cost structure.

“Of all our routes, 45 are new, which no one has done. During the severe acute respiratory syndrome outbreak, everyone stopped flying but we know Malaysians well enough. If the fares are low enough, they will risk their lives,” Fernandes said.

AirAsia mitigates the impact of high fuel costs by leveraging on its huge database and offers ancillary services like courier, food and merchandise as additional sources of income.

Lindsay Fox, founder of logistics specialist Linfox, said companies would focus on tidying their balance sheets during a crisis, hence they would avoid running warehouses and owning their own trucks.

“Businesses are returning to specialisation and focusing on what they do best.

“We take out the supply chain costs and responsibilities from them, and run the warehouses and get the goods transported from the fast-moving consumer good producers to the retailers,” she said.

“Everyone is equal in a crisis” and the ability to survive and thrive depended on how prepared businesses were to manage the change, she added.

For Sybase 365, the crisis had led to huge demand from Wall Street, especially for its risk analysis and management services, said its president, Marty J. Beard.

The database business grew 30% in the financial year 2008, which was also its best year with revenue surpassing US$1bil, he said, adding: “We took the risk of going into enterprise mobility nine years ago and it has paid off as 40% of revenue is derived from this segment.”

During the session on Play Of The day: Technology To Lead Recovery, Biocon Ltd chairman Kiran Mazumbar-Shaw said drug development was shifting from conventional discovery to biotechnology, as 40% of drug development in the pipeline was biotechnology-driven.

“India offers arbitrage advantage in terms of cost, as clinical testing for new drugs is less expensive in countries like India and China compared with the Western countries,” she said.


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